- Incumbents are behind insurtechs on meeting policyholders’ evolving demands.
- In response, insurers have accepted they need to work with insurtechs.
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Incumbents are playing catch-up with insurtechs to meet policyholders’ evolving demands, like multichannel access to services and data-driven preemptive coverage, per Capgemini’s and Efma’s “World InsurTech Report 2021.”
As incumbents miss the mark on changing customer expectations, insurtechs have emerged as serious competitive threats. Customer intent to buy insurance rose by 7% since the pandemic began, but incumbents’ shortcomings—like limited digital capabilities and a dearth of proactive outreach—harmed customer relationships.
The pandemic created the right conditions for innovative tech firms to rise up as viable alternatives: 50% of customers are now open to getting coverage from insurtech startups or Big Tech. And insurers risk being removed entirely from the value chain as insurtechs like Pie Insurance in the US and insurtech unicorn Marshmallow in the UK become carriers.
In response, insurers have accepted they need to work with insurtechs.
- Global insurtech funding has already reached $7.38 billion in H1—fueled in part by insurers looking to boost their digital capabilities.
- Incumbents are also securing strategic partnerships to integrate tech into their operations. UK-based Tractable has partnered with 20 auto insurers globally to enhance their claims management with AI.
Incumbents will seek to address their shortcomings by widening distribution through third-party platforms—albeit while surrendering direct customer relationships—and offering more preemptive insurance products.
- Embedded insurance. In line with our expectations, the Capgemini/Efma report said embedding coverage at third-party points-of-sale was key to boosting sales. Already, the likes of Ikea and Toyota offer superior personalized journeys through such integrations.
- Shift to predict-and-prevent proposition. Insurtechs are disrupting numerous insurance lines with preemptive solutions that mitigate costly claims and help customers avoid damages—home insurtech Hippo’s policies come with smart home monitoring devices to identify issues like water leaks before they cause more damage. These solutions would help fix customer relationships harmed after many insurers refused to react to claims caused by the pandemic.
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