Insurers must explore new ways to build capabilities to meet the digital needs of customers as ‘BigTechs’ and non-traditional players enter the industry, according to the latest World InsurTech Report 2020 published by Capgemini and Efma.
The report outlines a growing opportunity for InsurTechs, as insurers focus more on digitalisation efforts after increased customer engagement and expectations following the pandemic.
As BigTechs “make their presence felt” in insurance,Capgemini warned that the boundaries between insurance, InsurTechs, BigTechs, and tech partners are blurring.
It is now calling on insurers to improve on high-impact focus areas, including customer centricity, intelligent processes, product agility and an open ecosystem to remain competitive.
Anirban Bose, CEO of Capgemini’s Financial Services Strategic Business Unit and member of the executive board said: “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.
“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.”
John Berry, CEO of Efma, said: “Insurers need to become more customer-centric in everything they do.
“InsurTechs’ maturity and willingness to collaborate to bring new technology solutions to insurers are accelerating, aiding insurers to meet rising customer expectations.”
The report also explored how Covid-19 has impacted sub-sectors of the insurance market in different ways.
Life and health experienced a hike in claims, for example, while travel and auto felt a decline. However, all insurance providers have felt changes in how their customers engaged with them, according to the report.
Despite over 90% of incumbents able to fully conduct business remotely now, 61% of insurers in July vs. 57% in April believed the pandemic impacted new customer acquisition, and 42% of insurers in July vs. 29% in April found it impacted customer retention.
In addition, policyholders’ willingness to purchase insurance from BigTechs has increased from 17% in 2016 to 36% in January 2020 to 44% in April 2020.
In order to compete with BigTechs, insurers now need to focus on critical priorities, including delivering superior customer experience (94%), crisis-proof processes (90%), real-time responses (87%), be a caring partner (86%), and have insurance-as-a-utility (70%.)