Technology continues to change the game of insurance. To keep up with InsurTech and tech giants, established insurers need to change their ways or risk being left behind. How is the market changing and what can companies do to keep up?
The next 10 years will see the greatest change in insurance yet as the rise of digital technologies and data transform how risk is identified, managed and priced.
Officials and shareholders need to change with insurance in order to maintain success. Established, arguably old fashioned, insurance companies will see new competition emerging as new players entire the digital smarts to meet the needs of the ‘one-click society’ who cherish transparency and convenience over anything else.
Insurers who can rise to the new challenges of innovation and digitalisation stand a chance in the modern age. However, there is the large threat of the insurance world soon being dominated by giants like Uber and Amazon.
Change is coming
Customers, companies and the industry are bracing themselves for the transformation. Marketforce and other companies have found in its surveys that many in the insurance industry feel the disruption is long overdue or are frustrated that the change in innovation and technology has not affected the market quickly enough.
There are numerous companies competing or emerging to be the next Uber. “Many incumbents fear the looming threat posed by existing tech titans Google, Apple, Facebook and Amazon, with their resources and access to rich data,” states Marketforces’s The Future of General Insurance Report.
However, InsurTech start-ups are also beginning to enter this competition with funding at record highs of £218m and the number of deals up to 75%. Surveys by Marketforce feel that consumers area also seeing the threat of InsurTech companies as a fast approaching reality, where nine out of 10 of those surveyed believe that in the next two years the insurance market in Western Europe will become more competitive. 89% of the same respondents also find that there is a risk that traditional insurers will be driven lower down the value chain when InsurTech gain control of customer relationships – 49% believe this is to be a significant risk in the market.
InsurTech companies employ the use of data analytics, automation and AI to be successfully customer focused. Companies like Amazon and Uber are able to understand customers like never before, transforming their experience and expectations of the market.
“InsurTech is changing the landscape,” argued Marketforce. “By embracing three key concepts in all their dealings with customers – simple, smart and fair.”
Traditional insurers need to innovate quickly in order to keep up with the tech giants. To be successful, officials can start implementing the theme of InsurTechs by treating customers fairly, keeping terminology and jargon simple and investing in technology involving data, advanced analytics and AI to attract the next generation user.
Learn to Survive
Luckily, it appears that many insurers are heading in this direction, with seven out of 10 of those surveyed by Marketforce having appointed a head of innovation in the last 12 months and six out of 10 have launched an innovation centre.
It appears that insurers are attempting to learn from InsurTech, through collaboration and investment. For example, 44% of Marketforce’s respondents have partnered with an InsurTech innovator, compared to 35% in 2017. However, insurers need to see the urgency and gain momentum to maintain success.
In order for insurers to match the rapid innovation occurring with start-ups and tech giants, they must pick up the pace. According to Insurance Innovators’ research, there is little evidence to show that disruption in the market will come internally, but will most likely be from new players, or established giants like Uber. The only way for insurers to compete is by reinventing their customer offerings through technology adoption.