KPMG is embarking on an in-depth consultative project to help insurers around the world as they prepare for the forces and mega trends which will shape the global insurance industry well into 2020. These mega trends which are global and macroenconomic forces that impact business, economy, society and cultures – include climate change and the shift to low carbon green economic growth, changes in natural resource availability and location, infrastructure requirements, urbanization, demographic change and increasing global interconnectivity.
These mega trends present insurers with a dizzying range of opportunities – and threats. As global insurers continue to deal with the ongoing financial crisis and significant regulatory changes while seeking opportunities for growth, forces are building which will transform the industry over the next decade, according to a report from KPMG International.
KPMG is embarking on an in-depth consultative project to help insurers around the world as they prepare for the forces and mega trends which will shape the global insurance industry well into 2020.
Four overarching mega trends: the Environment, Demographics, Technology, and Social Values and Ethics
The report ‘The Intelligent Insurer: Creating value from opportunities in a changing world’ identifies four overarching mega trends that are likely to greatly impact the global insurance industry: the Environment, Demographics, Technology, and Social Values and Ethics. Coupled with an uncertain and ever-changing economic and political landscape, these forces will have a profound impact on insurers and their strategies now and well into the future.
“It’s imperative that insurers study and make the necessary adjustments to effectively prepare for and adapt to these trends in order to compete, meet customer needs, satisfy stakeholders and create value for investors,” said Frank Ellenbürger, Global Head of Insurance, KPMG International. “Addressing these challenges now will shape their prospects for success in the world of tomorrow.”
KPMG presented an initial discussion paper at the International Insurance Society’s 2012 IIS Seminar, 17-20 June in Rio de Janeiro. To help insurers in setting their future strategic course, the discussion paper raises critical questions about what insurers need to consider to meet multiple, unprecedented challenges.
Drawing on the views of some its member firms’ most influential experts and opinion leaders, the discussion paper addresses the four mega trends and how they impact the four main key components of the insurance business model:
- products and markets
- distribution and operations
- governance and people
- regulation and capital management
Francesca Short, Partner, KPMG in the UK comments “The launch of the Principles of Sustainable Insurance by the IIS are timely – by understanding and developing solutions for sustainable development, the insurance industry creates expanding opportunities for growth. We are already seeing the more forward looking insurers adjusting their investment profiles and risk models.”
“To continue the dialogue, KPMG is leveraging social media channels to gain further insights and opinions on these important topics,” said Ellenbürger. “The outcome will be a shared understanding of how the global insurance industry is rising to the challenge of creating sustainable, long-term value in a turbulent world.”
Future mega trends pose risks and opportunities for Africa
Future mega trends and strategies to deal with them will be particularly relevant for Africa given the predicted rapid population growth, rates of urbanization, infrastructure requirements, dependence on rain fed agriculture, and vulnerability to climate change. According to the IPCC’s Fourth Assessment Report, the period between 1980 and 2003 saw a significant increase in weather related disasters world wide with estimated losses from damage caused by natural disasters totaling USD 1 trillion. The hardest impacted by these natural disasters were low-income developing countries. Many developing countries, particularly Small Island Developing States (SIDS) and Least Developed Countries (LDCs), have been unable to respond to the economic cost of disasters due to their difficult socio-economic situations; and impacts are often worsened by poor emergency response capabilities. Whilst these mega trends in Africa do pose significant threats, they also present opportunities for innovation, smart growth, building resilience and enhancing adaptive capacity.