InsurTechs see Covid-19 accelerate insurance digitalisation
By Robin Amlot
Insurers must explore new ways to build capabilities to meet the digital needs of customers as BigTechs and non-traditional players enter the insurance space, according to the World InsurTech Report 2020 (WITR) published by Capgemini and Efma.
With COVID-19 increasing customer engagement and expectations, the Report outlines a growing opportunity for InsurTechs, as insurers focus on their digitalisation efforts. As BigTechs make their presence felt in insurance, the boundaries between insurance, InsurTechs, BigTechs, and tech partners are blurring. “Insurers have to look beyond other insurance companies as their competitors, and instead include BigTechs and other new non-traditional players, which are often offering a superior customer experience,” said Anirban Bose, CEO of Capgemini’s Financial Services Strategic Business Unit and Member of the Group Executive Board. “Forming scalable relationships with InsurTechs will help insurers digitize faster and more efficiently, deepening their customer relationships and helping them to fend off these new entrants.”
“Insurers need to become more customer-centric in everything they do,” said John Berry, CEO of Efma. “InsurTechs’ maturity and willingness to collaborate to bring new technology solutions to insurers are accelerating, aiding insurers to meet rising customer expectations.”
Covid-19’s sector-specific influence
Covid-19 impacted sub-sectors of the insurance market in different ways as life and health experienced a hike in claims, while travel and auto felt a decline. However, all insurance providers have felt changes in how their customers engaged with them. Even with over 90% of incumbents fully able now to conduct business remotely, they felt the Covid-19 impact on their new customer acquisition and retention. Some 61% of insurers in July vs. 57% in April believed Covid-19 impacted new customer acquisition, and 42% of insurers in July vs. 29% in April believed it impacted customer retention.
Customer-centric BigTechs are digital stars
BigTechs have raised the bar for customer experience and trust during the pandemic, providing consumers with crisis-proofed processes, real-time responses, and intuitive customer care. Policyholders’ willingness to purchase insurance from BigTechs has increased from 17% in 2016 to 36% in January 2020 to 44% in April 2020. To compete with BigTechs, insurers need to focus on critical priorities, notably in areas where InsurTechs may help, including delivering superior customer experience (94%), crisis-proof processes (90%), deliver real-time response (87%), be a caring partner (86%), and have insurance-as-a-utility (70%.) While utilising the cloud and open APIs is essential, insurers are falling short. Only 19% of insurers represented in the report say they have touchless processes, 29% have human-centred design capabilities and digital-ready systems, 38% have implemented open APIs, and 48% have a cloud-native enterprise.
More competition means more collaboration
To improve capabilities, insurers can either build and buy technology or collaborate after weighing trade-offs among four factors: time, investment, autonomy, and differentiation. Collaborating via partnerships is the most efficient way to get the technology needed to remain competitive in the marketplace. Partnerships with InsurTechs via shared access will ensure all insurance industry players can focus on their core competencies and deliver better value while being cost-efficient. Willingness to collaborate amongst the players in the insurance space has been increasing.
A new mindset will be required for firms to shift from capability and asset ownership to shared access to foster efficiency and encourage partnerships with specialists. It will also enable firms to focus on their core competencies and deliver better value through hyper-personalisation and continuous co-innovation.
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May 31, 2023