Strap: According to Capgemini and Efma’s report, For the first time, 50% of insurance customers are willing to consider coverage from new-age digital players, as incumbents seek strategic partnerships to remain competitive.
Copy: A report unveiled by Capgemini and Efma’s titled as World InsurTech Report 2021, published on September 16 reveals that InsurTechs and BigTech players are leveraging significant capital inflows to boost technological development and fuel innovation, turning up the heat on incumbent insurers.
The report adds, New age digital players are offering greater personalization and emphasis on customer experience, thus achieving maturity and customer adoption. In response, incumbents are attempting to strengthen their tech capabilities by partnering with or acquiring InsurTechs and shifting from “doing digital” to “being digital”, it said.
The report highlights that tech giants and InsurTechs have secured unprecedented access to capital allocation from investors and are bolstering their digital capabilities, increasing their lead as innovation frontrunners.
The report said, “Between 2018-2020, the 5 biggest tech companies and a famous auto manufacturer which offers insurance services added almost 2.5 times the total market capitalization of the 30 largest insurers globally in 2020 and by the end of 2020, the total market cap of listed InsurTechs surpassed $22 billion.
InsurTechs are fast becoming the investment du jour, with a range of investors supporting and enabling the wave of flowing capital. Opportunistic venture capitalists and private equity partners are deploying early-stage capital, the report adds.
While reinsurers are actively playing two critical roles: enabling InsurTechs through investments and providing essential underwriting capacity, it said.
Digital technologies are making the difference for new age players who are flush with investment capital and insurtechs are leveraging the inflow of investor capital to further improve their CARE offerings through digital technologies like AI, Advanced data analytics, open APIs, IoT, etc.
Although incumbents are experiencing clear data and analytics challenges (only a quarter of insurers are confident in their data handling abilities) they are not idle, the report adds.
To circumvent and overcome these limitations, many traditional insurers are buying and partnering with new age digital players to enhance their capabilities and value proposition as part of the CARE equation, with a special focus on reach, it added.
“The insurance industry is evolving, the keyword for its future is modularity. Insurers must be prepared to tackle a broad range of future scenarios. Modular offers, systems and organizational structures will be indispensable to creating a robust and responsive value change. In the coming years, industry players will be defined by their strength within a hyper-specialized value chain, and insurers will increasingly become orchestrators,” said Anirban Bose, CEO of Capgemini’s Financial Services and Group Executive Board Member. “As traditional insurers expand their ecosystems to remain competitive, they must increasingly consider the value achievable through trusted partners, including BigTechs, InsurTechs and non-traditional players like original equipment manufacturer (OEMs). The numbers clearly suggest that exponential InsurTech growth is here to stay, so delivering superior customer CARE is essential.