Re/insurers should look for opportunities to harness new technologies that increase customer interaction value, improve agility and add flexibility in product development through InsurTechs, IBM advised in a recent study.
The banking and transport sectors have already undergone a widespread shift with the ecosystem model smashing traditional paradigms, and whilst being slower to jump aboard the bandwagon, the re/insurance industry is following suit.
Most outperforming insurers have invested in or are working with InsurTechs while almost three in four insurance C-suite executives believe they are disrupting the industry, according to IBM’s ‘Friend or foe?: InsurTechs and the global insurance industry.’
Commenting on the business model shift various sectors have already undergone, IBM said that ride-sharing services are commonplace today, although “taxi companies held cast-iron monopolies in almost all major cities as recently as five years ago.
“Startups such as T-Mining and Convoy are remaking shipping and long-haul transport, traditional bastions of entrenched interests and systemic inefficiencies.
“Healthcare and life sciences are being recast through the impact of rapid digitization, demands for efficiency through integration and the Internet of Things (IoT).”
Re/insurers aiming to capitalise on this broader operating model paradigm shift should seek to become a part of new relevant platforms, IBM said, these should be “ideally based on open standards – to orchestrate new concepts and ideas.
“Using their own brand and capabilities, and with the help of agent and broker networks, insurers can aim to remain life companions for their customers.”
The IBM study found that while almost three in four insurance C-suite executives believe InsurTechs are disrupting the industry, only 43% see this same disruptive effect in their own business – a discrepancy that points to overconfidence in their more traditional processes.
However, the impact of InsurTechs on the insurance industry is expanding and insurers that fail to embrace InsurTech solutions could find themselves threatened by more innovative counterparts and new market entrants.
Areas IBM highlighted as being prone to change include; personalization of products and customer relationships, innovative offerings such as hourly car insurance, a shift toward preventative advice and other risk management services.
InsurTechs are also helping insurers reach their customers in new ways: 26% are creating fully digital solutions, 10% are engaging in peer-to-peer insurance, and 3% in on-demand insurance for specific periods of time.
Innovative re/insurers who leverage InsurTech services stand to be rewarded with expanded offerings and deeper policyholder engagement across channels, geographies and lines of business; success for InsurTechs, IBM said, lies in the ability to identify scalable niches and look beyond insurance into new adjacent areas that can be integrated into the insurance value chain.