Insurtechs have gained better access to capital allocation from investors in recent years and by the end of 2020, the total market capitalization of listed insurtechs has exceeded $ 22 billion, according to the Insurtech Global Report 2021. But capital isn’t the only thing insurtechs have access to: more than half of customers are also now willing to consider insurtech for coverage.
The increase in willingness is likely due to the fact that access to capital has led insurtechs to develop their digital capabilities and improve the customer experience. The report by Capgemini, an information technology and consulting firm, and EFMA, a nonprofit organization for banking and insurance analysis, includes surveys, discussions, interviews and analysis of more than 900 insurtechs.
Seth Rachlin, executive vice president and global insurance leader at Capgemini, said insurtechs are focused on reach.
“Throughout our series of Global Reports this year – both in the Insurance and Insurtech Report – we have focused on what we call the CARE Equation, which stands for convenience, guidance and scope.
Convenience comes with 24/7 access, fast response time, and omnichannel access to policy and account management. Clients also want personalized advice and the ability to manage their risk profile throughout the life cycle of their policy. Customers expect insurers to reach out and engage in meaningful ways based on their preferences, for example through risk prevention proposals or capabilities to offer non-intrusive assistance when needed, Rachlin explained. .
“Investor capital has enabled insurtech to invest in areas that can add value and challenge existing players,” said Rachlin. “This orientation perfectly matches the needs of incumbent operators. “
According to the survey results, 75% of insurers say their advanced data processing capabilities need to improve and face challenges using predictive analytics throughout the value chain, and 70% are researching collaborations to better assess customer knowledge and preferences.
Rachlin said the insurtech market potential is expected to grow at a CAGR of 36% in 2020-2024.
“We expect some of these players to have a fundamental influence on the future shape and size of the industry,” said Rachlin. “Now we also anticipate that the focus will be on increasing capacity and we anticipate that there will be a process of natural selections as investors focus on fundamentals. But, as we saw in the dot-com bubble, you only need a handful of very successful businesses to change the world.
The report predicts two scenarios if the trends continue:
- Embedded insurance as added value within a third-party ecosystem. Insurance would be delivered to the point of sale.
- Added value at the heart of complex offers. The customer relationship would be central and the products would be predictive and technology-based.
“To navigate today’s dynamic environment and be future-proof, insurers must move from digital to digital, and to do so, they must adopt a modular and specialized value chain where each actor is involved. is focusing on its strengths, ”Rachlin said. . “In this environment, we see insurers increasingly becoming orchestrators of their value chain and leaders or participants of other third-party ecosystems.