Close to one-third of today’s consumers are using the services of insurtechs for their insurance needs. However, these emerging companies have a weak spot, and this opens up interesting opportunities for established insurers.
That is among the takeaways from Capgemini’s latest World Insurance Report, which gathered the insights of more than 8,000 consumers, along with 100 industry experts.
“Insurtechs are becoming integral to the insurance experience,” the report’s authors state. A total of 31% of consumers saying they use them exclusively or in combination with traditional firms, Capgemini found. “Insurtechs have also been successful in delivering better experiences on key digital interactions of importance to consumers, such as instant claims notification and access to innovative and customized products.”
Insurtechs may be disrupting the insurance market, but they have an Achilles heel, the report’s authors add. That weak point is trust, or not enough of it. While 40% of consumers trust traditional insurance companies, only 26% trust the Insurtechs.
With the entrepreneurial energy insurtechs bring to the table, and the greater trust and experience traditional insurers have, there are great opportunities for uniting these forces. The Capgemini authors urge that insurers and insurtechs collaborate to deliver even stronger offers to consumers. “Insurtechs and incumbents have complementary strengths, with insurtechs offering better value to money and timely and efficient service, and insurers offering superior security, brand identity and support for personal interaction.” In fact, most insurers prefer partnering with these firms versus outright acquisitions.
The following modes of collaboration were mentioned in the report:
Venture capital investments. “Make investments or take equity positions in insurtechs.” Examples include XL Group’s XL Innovate, Allianz Ventures, and the $200 million MassMutual Ventures Fund.
Strategic partnerships. This is the most popular option preferred by insurance executives. “Some insurers are exploring partnerships aimed at leveraging insurtech strengths.” Examples include AXA partnering to sell insurance through Alibaba’s e-commerce platform, and Allianz partnering to sell products through the Simplesurance portals.
Incubators. “Incubators providing budding entrepreneurs with infrastructure, resources and mentorship to build their ideas.” Examples include AXA’s Kamet development lab and Allianz’s AllianzX, which sponsors a 100-day entrepreneur-in-residence program.
In-house incubators. “Some firms seek to establish incubators by staffing them with dedicated in-house innovation experts, many with backgrounds at startups or outside the industry.” Examples include MetLife’s LumenLab and Manulife’s Lab of Forward Thinking.
Acquisitions. “Insurers can also consider acquiring an insurtech firm.” Examples include Allstate’s purchase of SquareTrade, a provider of technology device insurance.
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