We constantly hear stories of insurers and brokers having to ramp up their digital efforts in order to meet rising demand amid the COVID-19 pandemic. Now, a new report has shone a spotlight on just how important these efforts are.
The World InsurTech Report 2020, published today by Capgemini and Efma, outlines a “growing opportunity” for insurtechs as insurers focus on digitization. It suggests that the boundaries between big technology firms, insurtechs and tech partners are slowly blurring along insurance lines with providers needing to focus on product agility, customer centricity and intelligent processes in order 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.”
In particular, the report highlighted COVID-19’s influence – noting that while life and health experienced a spike in claims, travel and auto noted a decline. However, all insurance companies have seen changes in customer interaction and engagement and even with 90% of incumbents able to conduct business remotely, most still felt the impact of COVID-19 on customer retention and acquisition. Indeed, that number has only increased over the course of the pandemic, with 61% of insurers noting that the pandemic had impacted customer acquisition in July compared to 57% in April.
It was noted too, that BigTechs have raised the bar for customer experience during the pandemic and policyholders’ willingness to buy insurance from these firms has leapt from 17% in 2016 to 44% in April, 2020. As such, insurers need to focus on delivering a superior customer experience, crisis-proofing their processes, offering real-time responses and generally being a more caring partner.
The report goes on to note that increased competition can also lead to more collaboration – it suggests insurers can either build and buy technology or look to collaborate. The report found that 67% want to collaborate with insurtechs; while 85% of insurtechs want to partner with technology providers and 83% wish to partner with insurers.
Ultimately, the report concludes that a new mindset is needed so that firms can shift from capability and asset ownership to foster efficiency and encourage partnerships with specialists. Doing so should allow insurers to focus on their core competencies and delivering better value to customers.