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KPMG Sees ‘Revolution’ Coming to U.S. Insurance

Changes could 'remake the industry in a new form'

In its annual survey of the American insurance industry, KPMG sees big changes coming down the pike.

The survey, subtitled “Revolution, not evolution,” says the industry “faces a potential upheaval that could challenge incumbents and remake it in a new form.”

Read: 2014 May Bring More Insurance M&A

One of the biggest changes that the industry can expect is more M&A activity. Fifty-four percent of executives surveyed say their company will probably buy up others in the next year—a jump from just 34 percent who said the same last year.

This matches the 34 percent of executives who cite “strategic acquisition” as a top investment priority for the next year, topping the list of investment areas. In second place was marketing at 25 percent, followed by IT and strategic talent at 24 percent each.

Read: M&A Activity on the Rise: Survey

IT also appears on the executives’ list of threats to their businesses. Seventeen percent say they’re concerned about cyber threats, and 11 percent see disruptive technologies as a risk.

The biggest perceived risk is the impact of new regulations and legislation—which echoes the results of a similar survey of the Canadian insurance industry. In June, KPMG found that P&C executives viewed the regulatory burden as their top risk, followed closely by catastrophes.

The American executives’ second-highest risk is the evergreen concern of losing share to lower-cost producers.

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