Ken research announced recent publication on, “Insurtech and Customer Services: Lessons for the Incumbents” which provides an in-depth analysis of recent developments in the insurtech space and the impact on the insurance industry. The report discusses how conventional insurers are embracing new technology and how these innovations could transfigure many of the long-standing systems and processes within general insurance. It also looks at how insurers could benefit from the types of propositions offered by these new tech groups and the opportunities that may exist in the form of partnerships.
New delve into on start-ups from across the world focusing on the insurance industry, highlights the potential for start-ups to improve the industry in terms of insurance and technology, are focusing on ways to pick up client dealings. Insurance companies are benefiting from an influx of new technology and are focusing on how new insurtech products can redefine the way they interact with customers. Majority of incumbent established insurers believe the biggest impact to the industry will come from building new products in order to address the changing needs of the customer. Incumbents see these new products as an opportunity to redefine customer interaction. New digital capabilities and Internet of Things (IoT) devices that are dipping costs, varying systems and processes, and ornamentations in the consumer experience, have fuelled the emergence of insurtech. From an industry, which was initially burdened by outdated systems and paper-based operations, the insurtech space has emerged as one of the largest innovation ecosystems globally in 2016, and is set to refashion the industry in the years going forward. The insurance business is based on statistic. However so far this assessment has been guided by a set of data often limited and not precise. This situation has typically put the virtuous customer at a disadvantage vs. the more risky customers. This wave of insurtech, which transform smart phone into a tracking device that monitors your driving behaviours.
InsurTech startups are solving this inefficiency. All these start-ups can help save money on the insurance premium, and the digital transformation journey is not easy for the incumbent insurance players. For decades, these companies have been organised around policies and products, not customers, and the transformation requires them to step-up their technology platforms as well as their internal processes and capabilities. Historically, insurance companies do not interact with their customers and engage them on a regular basis. Incumbents and start-ups can work together to take advantage of each other’s diverse range of talents and break down the disconnect in priorities and approaches.
The majority of new players do not seek to replace existing insurance companies, considering themselves enablers rather than disruptors. By focusing on what insurers consider to be the main challenge for the insurance industry – providing customers with the most suitable product – insurtech start-ups can work alongside incumbents to effect swifter change. The report finds that a smaller number of insurtech companies are focusing on helping insurers cut costs and improve efficiencies through the use of data analytics and streamlining the back office – a trend already present in the banking sector. If start-ups can successfully help insurers reduce their cost of doing business by better analysing data and utilising new technology, such as sensors and wearables, the industry could pass some of these cost savings on to the customer while also improving its competitive position.
It has taken a while for banks and insurance firms squeeze fintech innovation, due in part to the amount of legacy systems in place, the heavy dependence on historical data, and the low risk appetite for new insurance-related products at most traditional firms. However, rapidly changing customer behaviour, the availability of smart devices, and innovation ecosystems achieving scale provided the industry with a much-needed push in 2016 to adopt insurtech in a huge way. Consumer behaviour has shifted to accentuate the sharing economy, and the products/platforms that best encompass these new behaviour patterns are likely to be the most successful.
One of the largest emerging areas within insurtech in 2016 was the development of apps and devices that monitor how consumers behave and make purchases, mainly driven through IoT. Policy management is a key theme stemming from most new insurtech developments, enabling consumers to personally manage and take more control of their insurance dealings.
Start-ups have recognized the gap in service when it comes to insurance – the lack of speed and efficiency in product purchasing and distribution, and the minimal autonomy granted to the end user. As a result, they have sought to fill the void. Many of the innovations stemming from insurtech cater to at least one of the three key themes outlined: speed/efficiency, customer centricity, and insurance/policy management. The start-ups behind these propositions are aiming to:
- augment the relieve of purchasing a product and obtaining cover
- facilitate users to manage their policies from a federal location
- place the customer as the absolute focal point of the proposition, by considering their attitudes, behaviours, and personal needs
Insurers should be looking to launch similar propositions or at least invest in technology to help these developments come about. There is also opportunity in the form of partnerships, where current insurers can look to join forces and collaborate with start-ups that possess more technical understanding of the modern consumer’s service expectations. Partnering-up also bodes well for containing the competition and minimizing the risk of losing market share to new entrants.
The future of InsurTech is promising, but there needs to be consistency in the attitudes towards new technology in the insurance sector. Insurers are unfamiliar with technology and are often deterred by its complexity. However, there are many pros and benefits, most of which we believe outweigh the cons. Insurance is not ignoring technology. However, it’s now more important than ever those insurers take an active approach and consider the effects of new consumer tech. Consumer purchasing habits are evolving rapidly, and more customers expect insurance offerings to fall in line with developments in other areas of commerce. Consumers now have higher customer-service requirement and expect providers to cater to their specific needs. InsurTech can act as a facilitator, but if it is not incorporated into core insurance strategies, it might emerge as a serious standalone competitor, putting at least some portion of insurers’ business at risk.
Recent years have seen several exciting innovations and propositions emerge from the InsurTech scene, all of which have the potential to disrupt the insurance market or provide alternatives to traditional practices.
The insurance sector has looked to follow other areas of financial services in introducing new technology-friendly platforms and encouraging users to take more control over their insurance obligations. For example, peer-to-peer (P2P) propositions and online policy management tools account for many of the new launches we’re seeing in this space.Start-ups are encouraging consumers to move away from traditional insurance practices through the introduction of peer-to-peer (P2P) platforms, where liabilities and risks are managed by the individual(s) instead of the insurer.
Topics Covered in The Report
- Insurtech Technology Market Trends
- Global P2P services in Insurance industry
- Global Insurance Industry Outlook
- Global Insurance Industry trends
- Insurance Industry Technology Trends
- Insurtech Technology Future Outlook
- Insurtech Technology Market research
- Insurtech Technology Market research report
- Insurtech Technology Market size
- Insurtech Technology Market trends
- Insurtech Technology Market future
- Insurtech Technology Market share
- Insurtech Technology Market growth
- Insurtech Technology Market analysis
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Ankur Gupta, Head Marketing & Communications