KPMG Poll Captures Opinion On The Industry's State

The survey also addressed: competition, areas that will contribute to future growth, the future of mergers and acquisitions in the industry, and legislation most impacting the insurance business.

Over the next 3-5 years, 51.2% of respondents said competition would come from within the industry, followed by 24% for international financial services companies. Banks garnered 10.1%; brokerage firms, 7.8%; and new entrants, 7%. Last year, the 2 leading sources of competition also were insurance companies and international financial service firms, with response rates of 62% and 15%, respectively.

Future growth will be most helped by good underwriting with a 25.9% response, the KPMG poll found. Customer focus got 25.2%; distribution, 18.5%; product focus, 16.3%; and, technology, 14.1%.

In 2003, the responses were: underwriting, 32%; distribution, 30%; customer focus, 20%; product focus, 12%; and, technology, 6%.

Participants believed mergers and acquisitions in the industry would decline slightly compared with the past 12 months. The number who said M&A would increase slipped to 52% from last years 59%, while those who saw it declining grew to 13% from 11%.

An overwhelming 83.2% said the Sarbanes-Oxley Act of 2002 would most impact the industry, a dramatic increase over last years 58% response.

Fred Donner, a partner with KPMG, said the sense that international financial services players will again be a major presence in the insurance industry reflects sentiment expressed 4 years ago but which had diminished in the last couple of years. Four years ago, 53% of respondents said international financial services firms would be a major competitive force in the industry.

Reproduced from National Underwriter Edition, October 1, 2004. Copyright 2004 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.