At a time when insurers are thinking ahead and deciding what part they want to play in the InsurTech revolution, Thomas McCourtie, analyst, general insurance at Verdict Financial, discusses some of the highlights from a new report published by Verdict Financial titled Insurtech and Customer Services: Lessons for the Incumbents.
Recent years have seen several exciting new 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.
Gap in service
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.
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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:
- increase the ease of purchasing a product and obtaining cover
- enable users to manage their policies from a centralized location
- position the customer as the absolute focal point of the proposition, by considering their attitudes, behaviors, and personal needs
Insurers should be looking to launch similar propositions or at least invest in technology to help these developments come about.
In the Verdict Financial report, we see the likes of Aviva and AXA, established providers, committed to investing in consumer technology and offering new services to accommodate the modern customer.
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, but 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.
Now is the time for insurers to think ahead and decide what part they want to play in the InsurTech revolution.