According to a new insurtech report from Capgemini and Efma, the COVID-19 pandemic has increased customer engagement and expectations when it comes to digital insurance, meaning re/insurers must accelerate their efforts to build digital capabilities.
The World InsurTech Report 2020 (WITR) also noted that the boundaries between insurance, insurtechs, big tech firms, and tech partners are blurring as more non-traditional players enter the insurance space.
The report recommends that re/insurers improve on high-impact focus areas including customer centricity, intelligent processes, product agility and an open ecosystem to remain competitive.
“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,” added 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 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, Capgemini and Efma report that 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, around 61% of insurers in July versus 57% in April believed COVID-19 impacted new customer acquisition, and 42% believed it impacted customer retention, compared with 29% previously
The report also contends that big tech firms have raised the bar for customer experience and trust during the pandemic, with policyholders’ willingness to purchase insurance from BigTechs increasing from 17% in 2016 to 36% in January 2020 to 44% in April 2020.
To improve capabilities, insurers can either build and buy technology or collaborate after weighing trade-offs of time, investment, autonomy, and differentiation.
Capgemini and Efma believe collaborating via partnerships is the most efficient way to get the technology needed to remain competitive in the marketplace.
“Partnerships with specialists via shared access will ensure all insurance industry players can focus on their core competencies and deliver better value while being cost-efficient,” they stated.
According to the WITR report, roughly 67% of insurers want to collaborate with insurtech, and 83% of insurtechs want to collaborate with insurers.
In addition, more than 60% of insurers and insurtechs are interest in collaborating with big tech firms.
“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,” the report concluded.
“It will also enable firms to focus on their core competencies and deliver better value through hyper-personalization and continuous co-innovation.”