The World Insurance Report (WIR) from Capgemini, in collaboration with Efma, has found Insurers face losing significant ground to the likes of Amazon, Google and Apple as a willingness from customers to buy insurance products from BigTech – coupled with a need for improved customer service across digital platforms – provide multiple opportunities for new players to take advantage.
The report maps out a landscape in which future power struggles between traditional insurers and BigTech is likely to unfold, underlining an importance for data volume and comprehensiveness of the customers digital experience.
“The use of data and being able to offer a truly digital customer experience are both critical for the insurer of the future, something Big Tech firms like Amazon and Google excel at.
The threat from such entrants is more real than the insurance industry might want to admit. Insurers, risk assessors by nature, must urgently turn their gaze inwards and consider the competitive risks within their own industry in order to evolve and survive,” said Anirban Bose, Global Head of Financial Services and Member of the Group Executive Board at Capgemini.
Statistics show a need for adaptability and innovation, as insurance firms ranked third after retail and banking on cross-industry customer experience scores, with the greatest difference among customers aged 18 to 34. While more than 32% said they had a positive experience with their bank, less than 26% reported a positive experience with their insurer.
The report also showed an increasing preference by customers for easy-to-use websites on which to conduct insurance transactions, with more than 40% considering a mobile app as an important channel.
Additionally, with the arrival of new technologies, almost 46% of tech-savvy customers and 38% of those aged 18-34 are willing to receive proactive, personalised insurance offerings through a variety of channels, which could lead to new revenue opportunities.
These factors combine to create an increasingly attractive, and likely, intervention by Bigtech. Strong reputations and a superior track-record for customer experience position large, multinational technology organisations favourably to leverage such assets.
Globally, 29.5% of customers said they would consider buying at least one insurance product from a BigTech firm, a 12% increase from 2015. This includes a suggestion that more tech-savvy users are most likely to switch loyalties from traditional insurers.
As the need to be digitally agile becomes increasingly clear, successful collaboration with InsurTechs is seen as an essential factor for the efficient and cost-effective development of digital capabilities across the industry.
Insurers recognise this, with over 80% citing evolving customer preferences as the most critical factor driving digital agility. The report found that a high percentage of insurers are testing smartwatches and wearables, with more than one-third deploying telematics, and over half investing in speech recognition and blockchain.
Vincent Bastid, Chief Executive Officer (CEO) of Efma, said, “To gain value from their investments, insurers must think about the big picture and develop a holistic approach that is strengthened by InsurTech capabilities, rather than piecemeal adoption.”
Traditional insurance firms must innovate their way out this unfavourable position. By fostering a more sophisticated digital ecosystem from which to provide a real-time, personalised service, it can likely remain out of BigTech’s reach, while driving greater operational efficiency, the report concludes.