September 2024 | Signature Research

Insurance M&A: Resilience, Digital Disruption, & Value Creation

The latest insurance M&A trends and why a race to acquire new digital capabilities is heating up

M&A activity in the insurance sector has remained strong, even as the broader market faced challenges. With the industry ripe for digital transformation, the next 12 to 24 months are expected to see heightened deal activity. Key drivers include the pursuit of advanced technologies, value creation through innovation, and a focus on staying competitive in an evolving landscape.

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Creating value through digital transformation

Digital transformation is driving insurance M&A, cited by nearly one-fifth of our respondents, as firms seek growth and cost efficiencies. While new technologies offer opportunities for post-deal value creation, risks include obsolescence, costs, and talent shortages.

Unlocking growth with data and analytics

With 82% of insurers using predictive modeling, data and analytics are key to optimizing operations and driving growth. Priorities include risk management and competitive advantages—though challenges such as cybersecurity and data silos persist.

An AI revolution in M&A

AI is transforming the M&A landscape, and disruption is expected in both data analysis and due diligence. But navigating regulatory complexities and ensuring proper integration remain key challenges for dealmakers looking to leverage AI's full potential.

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Bridging the talent gap

Talent shortages—particularly in data and tech expertise—present major challenges, specifically a lack of in-house expertise, leading many firms to pursue "acqui-hire" deals. Cultivating a culture open to change and innovation is crucial for successfully integrating talent and tech post-transaction.

The evolving role of tech in due diligence

Challenges within tech due diligence include IT integration and the need for specialized focus on AI and cybersecurity. Outsourcing due diligence is also growing but presents its own complexities.