Technological disruption in the insurance industry is seen as an opportunity, not a threat, by most CEOs in the sector.
This is according to the 2017 Global KPMG Insurance CEO Survey, which found 61% of insurance CEOs see tech disruption as an opportunity.
Gary Reader, global head of insurance at KPMG International, says insurance CEOs are bullish about their growth prospects, and according to the survey, most think they will outperform the market.
"They say they are already disrupting their competitors. And they feel they are transforming their businesses in order to get closer to their customers."
In fact, 81% believe they are actively disrupting the sector and 85% are confident in their company's growth prospects this year. However, 36% believe emerging technologies are the greatest risk they face.
"While CEOs have reason to believe they are making progress, our view of the market is that few are yet taking bold enough steps to be truly disruptive. Indeed, many are focused on incremental change rather than large-scale, enterprise transformation," Reader adds.
The group surveyed over 100 insurance CEOs - as part of KPMG International's annual CEO Outlook survey - and the results suggest insurance CEOs will need to pick up the pace of transformation and innovation if they hope to remain competitive in this rapidly-evolving environment. The research showed most insurers are now undertaking some form of emerging technology implementation.
"Some are pushing their way towards the cutting-edge by partnering with insurtechs to develop new artificial intelligence, machine learning and robotics solutions, while others are doing more fundamental work, focusing on transforming their capabilities with investments in areas such as cloud implementations," Reader says.
He says many are certainly saying the right things about innovation and disruption, with less than a third admitting to struggling with the current pace of technological change.
But KPMG believes more must be done to bridge the gap between ambition and action, as only 48% of those surveyed say they plan to increase investment in innovation over the next three years. However, 69% say they plan to invest into digital infrastructure over the next three years.
Inherent risks
This year's survey revealed that many of the traditional insurance risks have fallen down the CEO agenda. Cyber risk, ranked the top risk by insurance CEOs in 2016, tumbled to seventh place this year.
"Yet, in discussion with our clients around the world, we see strong signals that many are moving beyond a generic view of cyber risk to develop risk, resilience and mitigation plans in the context of the parts of their business that could be most seriously affected. We believe the risk remains very much top of mind," the report says.
Another change is that only one-in-five CEOs are concerned regulation will inhibit their growth over the medium-term. In response, insurance CEOs seem to be shifting their strategic priorities to focus on innovation, emerging technologies and data.
The top two priorities ? both cited by 25% of CEOs ? were to foster greater innovation and become more data-driven, while 24% say their top priorities include implementing disruptive technologies. More than three-quarters view cyber security as an opportunity rather than an overhead cost.
"The problem is that the vast majority of these efforts are happening at the functional or project level rather than the enterprise level. If insurers truly want to reinvent their customer proposition, they need to take a much more fundamental approach to their transformation and innovation initiatives," says Reader.
KPMG found that although insurance CEOs may be confident in their current market position, they also recognise they face an uncertain future where new innovations, technologies and operational risks will upset the status quo and catalyse further disruption.
As insurers start to transform their organisations and embrace new models and technologies, the risk landscape is changing. The survey found that 36% of CEOs are concerned about emerging technology risks (up from 29% in 2016), ranking this as the top risk for CEOs this year.
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