Novel coronavirus has altered the dynamics of multiple industries across the globe. While e-commerce and delivery businesses have massively surged due to the lockdown, some industries are now on the brink of being disrupted. The core necessity of such out-of-the-box thinking and unconventional approach stems from the need to sustain their businesses in a new, changing world. The insurance industry is one such prime example. While agents have no other option but to work from the boundaries of their homes, digitization had to be immensely embraced in order to reshape the entire value chain of the insurance ecosystem. Experts are eyeing radical changes in terms of customer experience, ensuring a seamless customer engagement process, and most importantly, the collaboration with notable tech giants in order to redefine the entire insurance experience for customers. This issue’s cover story delves into the trends of the holistic Insurance industry and the game-changing strategies that key players are adopting globally to not only sustain their business but to reshape and redefine the offering going forward.
INSURTECH: GLOBAL PERSPECTIVE
(Farhat Zishan compiles the latest trends and insights from the World InsurTech Report 2020 by Capgemini and Efma.)
Mapping the latent needs of customers
The entire Insurance industry has suffered a blow in the face of the global coronavirus pandemic. Experts believe that there have been significant changes in terms of customer engagement during this critical timeframe of 2020.
But the good thing is that experts have mapped out certain demands and needs of customers which have become evident during this crisis. Addressing these properly can lead to better business results for insurance companies –
Redefining the essence of Insurance – Consumers have stated that they perceive Insurance as a utility – offering them time-flexible coverage options, on-demand or usage-focused packages, and of course, incentives based on usage frequency.
Ease of access – With rising technological adoption, consumers have expressed the desire to make these services much more accessible. They are increasingly opting for insurance services that are accessible at any time, anywhere, and can communicate with the service providers via a wide range of channels.
Empathetic and timely response – One aspect that needs drastic attention is the speed of services. Consumers are expecting quick, hassle-free services and expect a touch of empathy and selfless support when professionals are handling their claims.
These needs can be skillfully summed up with the following image –
The stellar rise of InsurTechs
As uncertainty broods all across the ecosystem, companies had no other option but to resort to digitization and innovation. A survey conducted by Capgemini Financial Services has stated that 60% of the industry players have launched in-house innovation teams. 30% of the respondents have stated that they have allocated separate funds for innovation and separate digital products related to their core businesses. And that has led to the rise of InsurTechs – which refers to the innovative technologies and new digital tools developed to optimize the performance of insurance companies, to deliver a better customer experience, and unlock the potential of advanced analytics.
According to the latest reports and statistics, the global InsurTech market size will continue to grow. The growth of revenue will hit the point of $1,119.8 million by 2023. Statista mentions the improvements in claim processing in the USA and worldwide. Using new technology, insurers proceed to claims faster and more efficiently.
InsurTechs have already been segmented by industry veterans –
Enablers – These are fledgling companies and startups providing a software solution to large insurance companies. Highly preferable for large scale companies seeking digitization in any end of their value chain.
Distributors – These companies are fully engaged in launching insurance products and their primary focus is enhancing customer experience by providing a wider range of information and choices.
Full carriers – These companies are a combination of Enablers and Distributors, as they both develop and distribute insurance products. They are miles away from the traditional business model of insurance companies and are constantly integrating technology into their business processes to completely redefine their core offerings.
BigTechs have emerged in the Insurance market
Notably large companies with established technology, in other words, Bigtechs have started to enter this industry; either via collaboration or investments. Companies like Apple, Google, Facebook, and other tech behemoths have started utilized to technological prowess in designing next-generation insurance products and instill more competition in this already-dynamic market.
Recently, Apple has secured a license that will allow them to sell third-party insurance products in India and is partnering up with Acko General Insurance to enter the auto insurance market. Tencent, one of China’s leading technology companies, have already introduced their own product – the WeSure Insurance platform and have managed to acquire 25 million users and a 40% renewal rate in merely 2 years. The same trend is observed for Google, with its increasing collaboration with rising tech-driven health insurance companies like Oscar Health, Clover Health, and Collective Health.
Interestingly enough, it’s not just the tech revolutionary companies that have recently sparked their interest in this industry. Non-traditional players have started to look into this industry as well. Swedish furniture and home accessories giant IKEA has introduced an online insurance product in the Netherlands named HEMSAKER. Since they maintain close contact with customers, properly utilizing all their touch-points for their self-made insurance products can surely revolutionize the insurance industry as a whole.
A new mindset for an evolving industry
As the entire industry moves towards disruption, opinion leaders have devised a new mindset that should be required going forward. The companies must be agile in responding to customer queries and take active measures to increase customer trust. Companies should shift from a product mindset and become more customer-centric in terms of their services.
As Eric Sibony of Shift Technology rightfully puts it,
“If established insurers exploit the new ecosystem for an innovative mindset, they can strategically compete in the game like new players”.
It is certain that the world will not ever be the same. But if the leaders of the Insurance leaders can embrace the changes and act accordingly, then an ever-exciting time awaits on the other end of the road.