New York, NY (Nov. 27, 2000) — KPMG LLP, the professional services firm, surveyed 175 senior insurance executives at its 12th Annual Insurance Industry Conference and found that insurance firms are pursuing a number of future strategic options. In addition, the executives felt that more strategic e-business vision is needed.
According to the survey results, only 10 percent of the insurance execs see their firms holding their present strategic course. Facing increased competitive pressures and M&A activity, 30 percent see themselves in an acquisition mode, 28 percent say they will pursue a niche specialty product or market focus, 17 percent will seek out an alliance partner, and 15 percent feel their firms will be acquired.
“In light of regulatory changes and overseas competition, companies are repositioning themselves,” said Christopher J. Swift, national industry director for KPMG’s Insurance practice. “The landscape has changed, and it is evident that insurance firms are laying out a more strategic course.”
In response to the question “over the next three to five years, who do you see as your major competitor,” 53 percent noted international financial services companies and 32 percent said insurance companies.
In response to questions on e-business, 40 percent of the insurance executives said their firms lacked a strategic vision and 26 percent said their firms lacked e-business skills. Furthermore, 53 percent felt their firms were even with competitors on e-business progress, yet 30 percent voiced that they were significantly behind.
“So much is written on the e-business front that one would get the feeling that their firm is behind,” said Swift. “I can assure you that e-business issues are certainly something that all firms are grappling with.”
In terms of marketing, the insurance execs continue to see the baby boom generation as their bread and butter, with 51 percent saying that they have a high degree of preparedness in serving the changing needs of boomers. Only 17 percent felt they were prepared to serve the needs of Generation Y. “It’s imperative that they develop a more rounded marketing approach,” adds KPMG’s Swift. “This will also help diversify revenue streams.”
KPMG received the following responses:
Given the increased competitive pressures and expectation for increased mergers and acquisition activity within the industry — what course of action do you think your company will pursue:
|Be an acquire.||(30%)|
|Position itself to be acquired.||(15%)|
|Seek alliance partner.||(17%)|
|Hold the course||(10%)|
|Pursue a niche specialty product or market focus.||(28%)|
Having recently marked the one year anniversary of the Leach-Bliley act, how would you assess its effect on the financial services industry?
|Little future significance.||(3%)|
Over the next three to five years who do you see as your major competitor?
|International financial services companies.||(53%)|
|New entrant to the industry.||(7%)|
To what degree is your senior management actively involved in driving the implementation of the e-business strategy at your company?
What is the biggest threat to succeeding at e-business within your company?
|Not having one person in control of e-business initiatives.||(9%)|
|Lack of e-business skills in general.||(26%)|
|Not willing to take on risk.||(11%)|
|Lack of e-business investment.||(14%)|
|No strategic vision.||(40%)|
With respect to e-business initiatives, is your company:
|Greatly ahead of competitors.||(2%)|
|Slightly ahead of competitors.||(15%)|
|Even with the competition.||(53%)|
|Significantly behind competitors.||(30%)|
As to Web site capabilities: When do you expect your company to be able to offer full transactions to customers, with back-end data bases linked to the web?
|Currently have such capabilities.||(11%)|
|In next six months.||(7%)|
|In next year.||(15%)|
|In next two years.||(31%)|
|In next three years.||(36%)|
To what degree do you think your company is prepared to continue to serve the changing needs of the baby boomer generation?
To what degree do you think your company is prepared to market to Generation Y?
(Note: the reason categories add up to more than or less than 100% is that some respondents had more than one answer for each question or did not answer each question)
KPMG LLP, the accounting, tax and consulting firm, is the link between business and technology, providing objective business advice of uncommon clarity that helps clients achieve market-leading results. KPMG LLP is the U.S. member firm of KPMG International. KPMG International’s member firms have more than 103,000 professionals, including 7,000 partners, in 159 countries. KPMG’s Web site is www.us.kpmg.com. KPMG Consulting, LLC is a leading provider of Internet integration services and can be found on the Web at http://www.kpmgconsulting.com or reached through the firm’s site.
Article reprinted from the Insurance Insider, Copyright © 2000 KPMG LLP. Reprinted with permission of KPMG LLP. All Rights Reserved.
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