Insurance companies are increasingly seizing the opportunities presented by InsurTech disruptors, rather than warning against the challenges they pose.
The shift has seen an increase in collaboration, according to a new survey by Capgemini, titled ‘World InsurTech Report 2018’.
The report found that insurance executives across the industry believe that InsurTechs will be a major catalyst for redefining the customer experience, delivering widespread efficiencies, and creating new business models.
Almost 96 percent of insurers said they are looking to collaborate with InsurTech firms, in order to improve their services and keep up with consumer demand for digital capabilities and better customer service.
Seventy-eight percent of respondents also said that partnering with InsurTech firms to develop a new solution was their preferred approach, rather than looking to acquire them.
This increased willingness to ally with InsurTech companies has come about due to the rise of potential new foes. Insurance incumbents now see disruption from BigTech companies, such as Amazon and Alibaba, as the greatest potential source of competition.
According to the CB Insights Quarterly InsurTech Briefing, the InsurTech sector saw investment increase at a compound annual growth rate of 37 percent between 2014 and 2017.
Asked about the current and potential impact of InsurTechs, 67 percent of incumbent insurers said they could “redefine customer experience”, with 92 percent of InsurTech executives agreeing, while 37 percent said they could “bring in new business models”.
Meanwhile, 35 percent felt that InsurTechs would enhance incumbent insurers’ capabilities.
Collaboration is key
Almost 96 percent of insurers said they were looking to collaborate with InsurTech firms, with particular interest in a Software as a Service (SaaS) approach (the report uses the term ‘Solution as a Service’). A 78 percent majority expressed a preference for “partnering to develop a new solution”.
On the flip side, 33 percent revealed they were considering acquisitions.
Commenting on the report, Anirban Bose, CEO of Capgemini’s Financial Services Strategic Business Unit, said:
It’s clear that insurers and InsurTechs see collaboration as the key to success in the evolving industry ecosystem, with re-imagined customer experience at its heart. Finding the right chemistry between collaborators to create a sustainable, agile position in the industry is the key to determining who will be future industry leaders.
Traditional insurers believe that a new wave of competition is likely to come from a combination of manufacturers and BigTech firms. Among incumbents, 81 percent identified Amazon as the primary source of potential competition, with 60 percent pointing to other BigTechs and manufacturers.
“New competition requires incumbent insurers to be agile and innovative. Collaboration with the right InsurTech partner will facilitate the journey to attain the right position as industry disruption continues,” said Vincent Bastid, secretary general of Efma.
Internet of Business says
Insurers are starting to recognise that disruption and innovation can ultimately benefit them, should they seize the opportunities presented by new technologies and business models. While InsurTech firms are in some cases challengers, they also offer excellent partnership opportunities, as explored in our interview with RSA’s Paul Middle.
These kinds of collaborations will be key to making insurers sustainable and relevant as rumours of BigTech movements into finance and insurance abound.
Newly accessible data streams also pose new opportunities and challenges for insurers. For example, British Gas Insurance is exploring what the connect home means for insurance, while John Hancock is pushing fitness tracking for its life insurance policies.
Data analytics is disrupting how employees at insurance companies work from day to day too, as well as their relationships with brokers and underwriters, as MicroStrategy’s Robert Davis explained at our recent Internet of Insurance event.