The re/insurance industry is facing a “structural shift” in which effective collaboration with insurtech firms will be essential to meet changing customer expectations, according to the World Insurtech Report 2019 (WITR).
The report, published by Capgemini and Efma, outlined the potential for a new insurance ecosystem with an open marketplace, based on the development of new customer-centric experiences.
In particular, analysts highlighted four fundamental shifts that they believe are already underway in the industry.
First is a shift from product focus to customer experience, as 70% of insurers and insurtechs surveyed as part of the WITR said a focus on holistic risk solutions for customers was critical to future success.
Similarly, 70% of respondents recognised that the development of advanced data management capabilities would be critical.
The report also identified that a transition from asset ownership to a shared economy is critical, a view that 35% of insurers and insurtechs shared.
Finally, partnerships with specialists are expected to become preferable to the traditional ‘build or buy’ approach, as 90% of insurtechs and 70% of incumbents said they wanted more collaboration with the other.
“As the insurance marketplace evolves, insurers will move beyond their traditional role as payers covering customer losses to partners that identify and forecast risk, helping with insurance and related non-insurance needs,” said Anirban Bose, CEO of Capgemini’s Financial Services Strategic Business Unit and Group Executive Board member.
“To deepen customer relationships, insurers will have to collaborate more with InsurTechs who are already mastering the customer experience by leveraging the most innovative technologies and use of data,” she continued.
However, while the insurers may recognise the importance of the fundamental shifts outlined by the WITR, analysts also believe there continues to be a significant gap between expectations and current digital maturity.
For example, 79% of insurers said advanced data management capabilities are important, but only 37% have a concrete digital transformation strategy in place.
Similarly, only 32% of insurers are actively collaborating with ecosystem partners to provide value-added services, and fewer than 40% want to build technology infrastructure that is ready for open collaboration with insurtech firms.
The WITR concluded that success in the future market will be heavily dependent on insurers improving their digital maturity and enhancing agility, as well as their willingness to join an open ecosystem that can meet customer standards via collaboration with insurtechs.