Almost half of insurers expect to acquire new technologies through mergers and acquisitions (M&A) in the next three years, according to a Willis Towers Watson survey.

The global broker says that having lagged behind their financial services peers, increasing numbers of insurers are now ready to invest in digitalisation.

The survey shows 74% of insurers believe the sector has failed to show leadership in digital innovation. Respondents blame the length of time required to commercialise new technologies (32%) and the size of investment required to transform (24%).

Nearly all respondents (94%) expect distribution to be the area in which digital technologies have the greatest impact over the next five years.

Fergal O’Shea, Willis Towers Watson’s Europe Middle East and Africa Life Insurance M&A Leader, says banks had a head start because they have more contact with customers.

“The quality and frequency of the information exchange between insurers and customers, who may simply be renewing a policy once a year, just isn’t the same,” he said.

“However, insurers recognise the importance of building a sustainable digital infrastructure to improve customer engagement and as an essential distribution channel, which is likely to be addressed through internally driven innovation, joint ventures and M&A activity.

“For those that hesitate, there remains the commercial risk that they will get left behind and fail to capture future generations and younger policyholders who are more likely to engage via digital distribution.”

The survey questioned 200 senior executives in the insurance industry to map changing attitudes to digital technologies.