Almost 30% of customers globally would be willing to buy insurance from BigTech firms like Google and Amazon, according to a new study – and insurance companies are still playing catch-up when it comes to delivering technology-enhanced customer experiences.
According to the 2018 World Insurance Report, produced in a collaboration between consulting firm Capgemini and banking and insurance non-profit Efma, BigTech firms are poised to enter the insurance market, while insurance companies still struggle to deliver a superior digital experience.
“The use of data and being able to offer a truly digital experience are both critical for the insurer of the future – something BigTech firms like Amazon and Google excel at,” said Anirban Bose, global head of financial services at Capgemini. “The threat from such entrants is more real than the insurance industry might want to admit. Insurers – risk assessors by nature – must turn their gaze inwards and consider the competitive risks within their own industry in order to evolve and survive.”
Insurance firms ranked third after retail and banking in the report’s cross-industry customer experience scores, with the greatest difference being among millennials. More than 32% of Gen-Y customers said they had a positive experience with their bank, but less than 26% said they’d had a positive experience with their insurer. The report also found that customers across all segments accept digital communications at the same level as more conventional channels. More than half place a high value on company websites for conducting insurance transactions, and more than 40% feel that mobile apps are important channels, the report found.
It’s vital that insurers catch up to their peers in other industries when it comes to technology, because BigTech firms are poised to take advantage of their missteps. BigTech companies like Amazon are slowly establishing a presence in the insurance industry, according to the report – and 29.5% of customers said they’d be willing to buy at least one insurance product from a BigTech firm. That’s a 12-percentage-point jump from 2015, when just 17.5% of customers were willing to consider purchasing insurance from a BigTech.
Millennial and tech-savvy customers are the most inclined to switch from traditional insurers, the report found. They cite fewer positive experiences with traditional insurers, and they’re also more likely to change insurance providers within 12 months and are more open to purchasing insurance from BigTech companies.
To keep these younger customers, insurers need to stay on the technological cutting edge, according to Efma CEO Vincent Bastid.
“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 a piecemeal adoption,” Bastid said.