GenAI, M&A Drive Growth Agenda for Insurance CEOs

From inflationary pressures to the intensity of extreme weather events, insurance leaders have been grappling with a multitude of challenges. Anticipating and staying ahead of the compounding and interrelated risks in the marketplace, or what we at KPMG refer to as “compound volatility”, remains at the forefront of how CEOs are approaching their agendas. Against this background, here are three main takeaways from our KPMG 2024 CEO Outlook.

Embracing a Digital Growth Agenda

Despite increased talk of a possible ‘soft landing’, the cloud of economic uncertainty lingers with 50% of insurance CEOs citing it as their top challenge right now, followed closely by 48% who say it’s the race to embrace and embed Generative AI (GenAI) and other technologies. While GenAI is seen as a key challenge, leaders are recognizing its importance towards achieving growth, with 81% saying it is a top investment priority, far surpassing the 64% of CEOs across sectors who said the same. Asked of the main benefits of this technology, the number one response from insurance executives was faster data analysis, which in turn, helps improve efficiency and enhance the customer experience. Leaders understand that while many questions remain regarding GenAI, one critical aspect is clear, embracing and implementing this technology is crucial for future growth.

Key Driver: M&A

Another key pillar insurance CEOs see as crucial to their success is leaning into M&A. In fact, when asked what the most important strategy is for achieving organizational growth over the next three years, M&A was the top choice for insurance leaders at 32% compared to just 26% across other sectors. Over half of insurance CEOs said they have a high M&A appetite compared to 45% of CEOs across industries. In terms of timing, a majority (52%) of U.S. insurance executives said they are preparing to pursue M&A activities by the latter half of 2025. It is worth noting that more than one in five insurance leaders said advancing digitization and connectivity across their business is their top operational priority for attaining growth over the next three years. The findings underscore a readiness among insurance leaders to engage in robust dealmaking and invest in digital advancements, to thrive in a volatile market.

Prioritizing Cybersecurity to Enhance Risk Management

As operations become more digital, so do cybersecurity risks. The evolving cybersecurity landscape presents significant threats to the insurance industry, where protecting customer data is essential. While 54% of insurance CEOs feel prepared for a cyber-attack, only 43% are confident their organizations cybersecurity can keep pace with AI advancements. Nevertheless, the industry is actively addressing these concerns, with 64% of executives increasing their investment in cybersecurity to protect their operations and intellectual property from AI threats. Insurance leaders recognize the high stakes for getting their cybersecurity strategy correct and will continue to focus on making strategic investments in this vital area.

The Path Forward

The insurance sector has historically been characterized by its resilience to challenges and unpredictability. Navigating this era of compound volatility, will require constant optimization, innovative tools, and creative strategies to address societal and business needs both now and in the future. By embracing these elements, insurance companies will be well-positioned for long-term sustainable growth.