The insurance industry is undergoing a fundamental transformation, fueled by evolving customer expectations, innovative offerings and new players entering the market. In this rapidly changing landscape, incumbents must recognize the needs and preferences of an emerging generation of policyholders, and re-think the way they do business, according to the World Insurtech Report 2019 by Capgemini and Efma.
The insurance industry is heading towards a marketplace model, the report says. Globally, insurance partnerships and collaborations are on the upswing, and the result of this is a trend toward bundling products and services via platforms that can satisfy all of customers’ financial and non-financial needs.
By adopting a marketplace approach and providing a wide-ranging bouquet of products and services, insurers will be able to identify customers’ needs more effectively because of new and increased touchpoints, have the opportunity to partner with other firms to speed time-to-market for new offering, gain an edge over competitors and drive growth by targeting new prospects.
Towards a digitally-integrated ecosystem
For insurers to succeed in this new landscape, the report says, it is critical for incumbents to boost digital agility by adopting three critical capabilities: real-time data gathering, advanced analytics, and re-engineering complex processes and automating them. By capturing real-time data, insurers will be able to deliver innovative, timely and personalized services to customers.
Ultimately, the end-goal here is to develop a digitally-integrated ecosystem, it says, “which seamlessly interconnects insurers with customers and partners to enable the efficient flow of information and services.” Technologies including APIs, cloud, and blockchain can help with insurance ecosystem integration by enabling the seamless and secure transfer of data between diverse systems.
As the industry transitions towards a marketplace model, new specialized roles will emerge. In addition to the traditional integrated business role, new functions include that of supplier, aggregator, and orchestrator.
Suppliers will be in charge of providing services to third parties for distribution, while aggregators will source products and services from third parties to distribute via its channels. Meanwhile, orchestrators will act as trusted parties to connect producers and distributors.
Collaboration is key
One of the main topics covered in the report is the need for incumbents to collaborate with other industry players, and most particularly insurtechs. And in this regard, both established insurers and newcomers say they are ready to work with one another. A survey conducted as part of the research paper found that 70% of insurers and 90% of insurtechs are willing to collaborate.
Among the key capabilities insurers believe they can acquire by working with insurtechs, they cited the abilities to develop new offerings (84.2%), managing customer experiences (78.9%), and filling the gaps in existing business processes (78.9%).
The report mentions the example of a recent partnership between Swiss Re and French cybersecurity insurtech firm OZON which saw the creation of a new risk management solution for small and medium-sized enterprises (SMEs) that combines insurance with cyber-attack protection services.
Another example is the collaboration between London-based Aon and Dublin insurtech Skytek to help insurers monitor real-time marine risks and to identify risk accumulations for enhanced underwriting and reinsurance programs.
World Insurtech Report 2019 infographic:
