KPMG: Over half of insurance CEOs anticipate major M&A disruption
Partner content, in association with KPMG Insurance
A new major report by Big Four giant KPMG has revealed that over 50 per cent of CEOs in the insurance sector expect high-impact M&A deals to affect their businesses, a figure higher than in any other sector in the survey.
Huw Evans, Partner and head of insurance at KPMG, explained to Morning Wire that: “This tells you that firms are increasingly looking to scale up, as they invest more in technology and have to invest more in talent.
“It also tells that some of the smaller players are also doubling down on their investments so that they can make the best possible business they can, the other factor.”
“There is a lot of private capital interest in the insurance market that’s continuing to roll in, and that’s also helping drive that M&A, across the insurance ecosystem,” he added.
The majority of respondents (73 per cent) agreed AI is a top investment priority, down from 81 per cent in 2024.
Still, the report noted that 67 per cent of CEOs expect to see a return from their AI investments over the next three years, up from 21 per cent in 2024.
Evans stated that a lot of money has gone into AI innovation in the sector, so “unsurprisingly”, boardrooms are demanding to see something from that.
“The pace of change within the technologies that are being deployed means that CEOs are expecting to see some of that come through and have a concrete benefit, which reflects that there is a move within the market away from lots of little point proof of concept experiments, towards trying to integrate AI solutions into wider change journeys,” he explained.
Cybercrime is the biggest threat to growth
However, with the rise of tech comes cybercrime risks, as highlighted in KPMG’s report, with most insurers (83 per cent) citing cybercrime as one of the biggest threats to their growth.
“Insurance is an interesting position because insurers sell cyber insurance to the whole economy, but they also have to protect their own businesses from cyber criminals who are quite naturally attracted to a sector that has a lot of money,” Evan highlighted.
He pointed out that his team is seeing a much greater focus on real-time threat monitoring and a lot more focus on identity and access management to ensure there aren’t backdoors into their systems.
“Many more real-time assessments of how resilient their systems really are, because firms don’t feel they can rely on assessments done one or two years ago,” Evans added.
Cybercriminals are always trying to innovate and change their operating methods, so “firms are much more focused than they were a few years ago, on staying on top of the latest trends and the latest types of attack so that they can try and repel them.”