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Agile InsurTechs offer collaborative future-proofing support for traditional insurers

Ramesh Darbha
September 9, 2020

Capgemini’s World InsurTech Report 2019 established that the insurance industry is gradually shifting to a marketplace model in which firms collaborate with ecosystem players to create a bundled set of offerings. In my opinion, the principal objective of a marketplace model is to give policyholders a holistic experience – to engage them with meaningful encounters at multiple touchpoints. A marketplace model also enables insurers to recommend products during life events when customers might need coverage most.

I believe the marketplace model offers numerous benefits, including exposure to potential partners. Traditional insurers and InsurTechs are interested in collaborative partnerships with companies around the globe from both financial services and non-financial services sectors.

Insurance industry partnerships – interest from incumbents vs InsurTechs (%), 2019

Sources: Capgemini Financial Services Analysis, 2019; World InsurTech Report 2019 Executive Interviews

Among others, partnerships between established insurers and InsurTechs allow both parties to gain by leveraging the strengths of the other. We know that through collaboration InsurTechs can leverage incumbents’ industry expertise, brand value, and vast customer data while incumbents can acquire new capabilities based on emerging technologies such as artificial intelligence and advanced analytics by partnering with InsurTechs. The upcoming World InusrTech Report highlights that collaboration also allows industry players to acquire capabilities in the fastest and cost-effective manner, with the trade-offs being lack of control over the solution and no differentiation.

The road to a flourishing partnership, however, is not without challenges.

Expectation gaps

The World InsurTech Report 2019 identified disconnects in expectations between traditional insurers and InsurTechs when defining the critical building blocks for the new insurance marketplace. Perceptions around the value of collaboration were particularly disparate.

More than 60% of InsurTech firms said they could help incumbents develop a holistic technology infrastructure through collaboration, while less than 40% of incumbents shared the opinion. When asked about data security, only 25% of InsurTechs and 10% of insurers said the issue had collaboration potential, even though data breaches are a hot topic in the industry.

Therefore, with substantial gaps in expectations and capabilities, fruitful collaboration that drives marketable industrialized products can be challenging to establish.

Third parties can facilitate collaboration

An external partner can help bring established insurers and InsurTechs to the collaboration table. Capgemini’s ScaleUp Qualification Program facilitates collaboration between established financial services firms and mature startups. It offers a 360-degree assessment of a mature startup’s readiness to collaborate incumbents effectively.

The process identifies four pillars for effective collaboration between incumbents and newcomers. Each startup’s maturity to partner with a large insurer is evaluated based on its ability to:

  • Put the right people in the right position
  • Financially support the business to stay in the market for the long run
  • Gain market traction that delivers measurable success
  • Provide technology tools that are secure and enable frictionless collaboration, as well as scalability.

ScaleUp Qualification outlines an innovation-as-a-service solution to accelerate cooperation from the initial partnership agreement to successful product industrialization. For large insurers seeking to restructure and begin a joint business venture, the plan offers a step-by-step Diagnose, Scout & Design, Orchestrate, and Industrialize process.

A four-step process to launch a joint insurance business solution

Source: Scale-Up Qualification: Making collaboration effective for intuitive customer experience

With a comprehensive solution for both insurers and InsurTechs, third-party facilitators create an environment where these firms can collaborate to create an integrated set of offerings.

For more insights on insurer-InsurTech collaboration and how other external partners can facilitate this collaboration, download Capgemini’s World InsurTech Report 2019.

Additionally, keep an eye out for the 2020 report to be published in September – it explores various approaches to acquiring solutions and offers an insight into the key trade-off factors that industry players must weigh in while choosing to collaborate. Register for your free copy of the report, and feel free to connect with me on social media to exchange ideas about this topic.