Insurance in the tech world – collaboration as key to face the business evolution?

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Insurance will change within the next 10 years, more than it has over the past 100 years. Main drivers behind this change are the availability of technology worldwide and the changing customer expectation. We all are affected by the current economic challenges and by technology in general. In fact, the influence that technology  can have […]

Insurance will change within the next 10 years, more than it has over the past 100 years. Main drivers behind this change are the availability of technology worldwide and the changing customer expectation.

We all are affected by the current economic challenges and by technology in general. In fact, the influence that technology  can have on us and our decisions is as much significant as our relationships with corporates.

The current change towards more efficiencies and a better customer experience via technology is clearly visible and reminds me of the shift in the banking industry driven by FinTech’s starting in 2008. However, today we have a different situation with a clear and stable legal and governed framework, experience, current economic pressure, and collaboration amongst InsurTechs as well as corporates. A different situation and a lot more experience. Nevertheless, the biggest change and impact comes from the evolving customer preferences (everything digital, seamless, social active, experience).

The evolving business landscape[1]

Current business situation and challenges

Most of the incumbents are maintaining business. This is possible because 90% of the insurers had acquired the business capabilities to conduct business remotely [2]. However, the customer engagement challenge has not gone away. In fact, ineffective customer engagement during the crisis may jeopardize loyalty trust and affect the Net Promoter Score. An opportunities lies in the effective collaboration between Incumbents and Insurtechs and others. In many cases, both can benefit from each other in terms of scalability , resulting in a better customer retention and/or engagement. Even so, while collaboration is clearly a key for success, it is also difficult to achieve. Many incumbents have responded with their own innovation lab, in-house innovation department or by joining one of the many startup incubators. Moreover, some of the insurers participate via a corporate venture vehicle. But there is also the opportunity to collaborate with BigTech firms, pure Technology provider and system interators. In particular the areas of collaboration are Real time response, flexibility, crisis-proof processes, partnership and digital experience. Both incumbents and Insurtechs are aligned  about the importance of these topics. Whereas all of the topics are important, the focus remains on the customer. The responsiveness, processes and partnership are constantly improved for incumbents and Insurtechs. However, the digital experience is where both parties differ dramatically today. And let’s not forget about the ever increasing competition fueling the race to the top.

Let’s keep in mind , collaboration might be effective but is not the only option to get (new) capabilities on board. Build, Buy or Collaborate. These considerations should also be put in perspective to the time.

[3]

Now requires immediate action, New is good to have capabilities, whereas Next is the aspirational or target state.

Conclusion

In summary, incumbents as well as Insurtechs need to find a way of collaboration with each other and others like BigTechs. The way how to do this is to control this collaboration. Hence it is a sensible decision for e.g. an incumbent to have a digital business unit which takes care of this part. Also, tying innovation with success KPIs might be useful to do. The evolving industry landscape requires fresh thinking and data driven action.

The industry is changing in terms of needs, environment and players, and the industry itself can now be described as a larger pool of Incumbents, InsurTechs and BigTechs. The players can now enrich products with experience, assets with data, build or by decisions with partnership, and ownership with shared access.

 

[1] Capgemini World InsurTech Report 2020

[2] Capgemini World InsurTech Report 2020

[3] Capgemini Financial Services Analysis 2020

 

Discover more about our expert, Andreas Pages

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