Insurers in the EMEA region are looking for more merger and acquisitions (M&A) deals in order to meet the growing demand for new services from the customers, reveals a report by Deloitte.

Growing customer expectations is one of the biggest challenges for the insurance industry over the next three years, as per the survey of 200 insurance leaders across the EMEA region.

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To deal with these challenges, a majority of insurers (62%) believe that non-traditional products will play a key role in gaining new customers. Deloitte North and South Europe insurance head David Rush said: “Customers’ expectations have evolved. Experience in other industries has taught them to expect more and they have become used to being able to access relevant services in one place.

“Despite the fact that insurers are bullish about the industry’s progress in adapting to the new digital age – 80% think the industry is keeping up with technological advancement – there has been little genuine disruption in the market so far.”

According to the report, nearly 81% of insurers are considering to forge a collaboration in existing markets, while nearly half (44%) have firm plans to make partnerships to foray into new territories.

About 49% insurers said that the main reason for M&A activity is the need to expand products and service offerings.

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Meanwhile, Brexit is proving to be a dampener for M&A activity as over three-quarters (78%) of all respondents said Brexit is decreasing their longer term M&A appetite.

Over half (52%) of the participants in the survey expect to  make two or more deals over the next three years.

Deloitte global insurance sector financial advisory leader Ian Sparshott concludes: “Against a backdrop of surplus capital and continuing low GDP growth and interest rates, M&A remains a critical growth strategy for many insurers.

“The survey results suggest M&A activity will centre around core markets and products but also be used, either via acquisition or partnership, to access technologies that enable improvements within the industry.

“This could include distribution, new products, underwriting capabilities or claims process improvements. However the successful integration of newly acquired assets will be crucial in determining the success of this strategy.”