Nearly 50% of insurers expect to make M&A deals over the next three years so they can also acquire new technologies, a new survey by Willis Towers Watson has revealed.
According to the global broker, the insurance industry has lagged behind other sectors in adopting digital technologies due to regulations, reluctance and cost. Based on the latest study findings, 74% of insurers believe that the sector has failed to show leadership in digital innovation.
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Now, the number of insurers prioritising investment in digitalisation has increased, with 49% of insurers looking to score acquisitions directly driven by the desire to acquire digital technologies. This includes 14% that intend to make more than one purchase.
“Insurers recognise the importance of building a sustainable digital infrastructure to improve customer engagement and as an essential distribution channel, which is likely to be addressed through internally-driven innovation, joint ventures and M&A activity,” said Fergal O’Shea, EMEA Life Insurance M&A Leader at Willis Towers Watson.
“For those that hesitate, there remains the commercial risk that they will get left behind and fail to capture future generations and younger policyholders who are more likely to engage via digital distribution,” O’Shea added.
Insurers have also realised that digitalisation can make business operations more efficient – it could help them manage cost, streamline processes and enhance customer experience.
“The tools and technologies now emerging are often so far removed from insurers’ previous experience – unlike, say, digital transformation of distribution – that external innovation models are likely to be their only way of expanding their digital capabilities. This is expected to lead to a wave of new M&A activity in the years to come,” said Andy Staudt, EMEA P&C Insurance Leader at Willis Towers Watson.
According to the survey, nearly all respondents expect distribution to be the area where digital technologies have the greatest impact over the next five years. Claims processing, loss adjustment and customer management are also considered as strategic priorities.
Web and mobile delivery channels are seen as the stand-out technologies over the next two years while big data, automation, robo-advice and sensors singled out as key areas over the next half-decade.
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