Insurers confident against digital-only players

“Established firms have years of underwriting and claims data which they can leverage.”

Insurers confident against digital-only players

Insurance News

By Lucy Hook

The overwhelming majority of personal lines insurers are confident in their ability to compete with new, digital-only players, despite just a tiny fraction saying they themselves are completely, or almost all, automated.

A whopping 92% of insurers surveyed in a new LexisNexis study said they believe that digitisation has allowed new types of insurance to emerge and disrupt the market, and while just 4% say they have completely adopted automation, 91% are moderately confident that they can stave off the competition.

Digitisation has seen its highest penetration among insurers as part of the application process, while the lowest level of automation has been seen in claims.

“Our research suggests that insurers have prioritised automation in the application process which helps smooth the journey for the customer – vital in this highly competitive sector of the market,” Selim Cavanagh, vice president of UK Insurance at LexisNexis Risk Solutions, told Insurance Business.

Alongside creating an easier process for consumers, applications is one the easier elements of an insurer’s process to digitise, Cavanagh explained.

“One of the chief barriers to wider adoption of digitisation is simply cost of replacing legacy systems and processes, rather than a lack of understanding of the benefits,” he said.

Almost a third of motor insurers, and exactly a quarter of home insurers, are still stuck in manual when it comes to underwriting processes, the report found, but according to Cavanagh digital quoting and underwriting processes will be the natural next step for insurers. Many anticipate that this will help them price policies more accurately, “and as an insurer’s underwriting strategy is its bedrock, and is based on years of experience in the market – it is understandable that digitisation has been slower to happen in the quoting process,” he said.

“Even though we see how innovative insurers are, many may also be hindered by the current challenging market conditions which lend themselves to slim profit margins and little time to upgrade legacy systems.”

When it comes to battling the new digital players, insurers have seen the success of digitisation in some aspects, Cavanagh said, but the established firms “have years of underwriting and claims data which they can leverage to compete against the new entrants, and many are investing in new data sources, analytics and IoT specialists to enable them to serve the changing needs of today’s consumers.”

Related stories:
Customers are demanding more in the event of a loss, says Cunningham Lindsey 

Keep up with the latest news and events

Join our mailing list, it’s free!