New research published by Capgemini and Efma shows that, for the first time, 50% of insurance customers are willing to consider coverage from new-age digital players, as incumbents seek strategic partnerships to remain competitive.
The World InsurTech Report 2021 notes that insurtechs and big tech players are leveraging significant capital inflows to boost technological development and fuel innovation, putting pressure incumbent insurers.
Many consider new age digital players to be offering greater personalization and emphasis on customer experience, in response to which insurers are increasingly looking to partner or acquire insurtechs.
According to the report, between 2018-2020, the 5 biggest tech companies and a large auto manufacturer which offers insurance services added almost 2.5 times the total market capitalization of the 30 largest insurers globally in 20201.
And by the end of 2020, the total market cap of listed insurtechs surpassed $22 billion.
“The insurance industry is evolving, the keyword for its future is modularity. Insurers must be prepared to tackle a broad range of future scenarios,” said Anirban Bose, CEO of Capgemini’s Financial Services and Group Executive Board Member.
“Modular offers, systems and organizational structures will be indispensable to creating a robust and responsive value change. In the coming years, industry players will be defined by their strength within a hyper-specialized value chain, and insurers will increasingly become orchestrators.”
John Berry, CEO of Efma, also commented: “As traditional insurers expand their ecosystems to remain competitive, they must increasingly consider the value achievable through trusted partners, including BigTechs, InsurTechs and non-traditional players like original equipment manufacturer (OEMs).”
“The numbers clearly suggest that exponential InsurTech growth is here to stay, so delivering superior customer CARE is essential. Future success in the industry will depend on players’ existing capabilities across the value chain, willingness to invest, and desire to own the customer relationship.”