Continued slow growth in the insurance sector is turning the focus of US insurance executives inward as they grapple with operational issues, according to the latest Insurance Industry Outlook survey by KPMG.

Of the 102 senior US executives surveyed, 22% see their top initiative in the year ahead as improving operational processes and 21% cite navigating regulatory change compared to 12% last year.

As a result of slow growth in the insurance markets only 15% of executives identify organic growth as the top priority for their business, down from 20% last year.

That is shifting attention to growth by acquisition, with 48% of respondents saying they expect to buy a business in the next two years.  

KPMG’s US National Insurance Practice Leader Laura Hay says executives “more clearly understand what a tough environment they are in and what it demands in terms of attention”.

“It isn’t that they aren’t also focused on growth, but in an environment of slow growth and tough pricing insurers must focus on value creation through efficiency, innovation and client centricity.”

The survey finds that 47% of executives see pricing pressures as the main barrier to growth, down from 59% last year, and 47% cite regulatory and legislative pressures, up from 41% last year. 

Investment plans are not suffering, with 70% of executives saying they have significant cash on their balance sheets to put into their businesses and 55% saying they will boost capital spending.

Technology will be the main investment focus of 64% of companies, up from 49% a year ago, while 41% say they will boost spending on new products and services – up from 34% last year.

Only 2% of executives expect US growth to improve significantly this year with 70% not expecting recovery till the end of 2014 or later.

As a result of industry and national economic conditions, many executives don’t expect to increase their workforce and 28% believe their company workforces will never again reach pre-recession levels.

Finding qualified staff is a significant growth barrier for 16% of companies and human resources management issues in areas like performance management, succession planning, staff development and retention, recruiting and compensation will be major areas of concentration over the next two years.