The pandemic, however, accelerated the market, underscoring the urgency of digital innovation while at the same time creating a climate in which it’s all the more challenging. This incongruent dynamic strengthened the position of insurtech startups, whose nimble, digital-first approach has equipped them well to navigate this unusually turbulent period.
Key sectors such as life insurance, our company’s focus, have seen demand spike over the past year, reinforcing the need for more efficient, scalable processes to onboard policyholders and manage the customer life cycle. Meanwhile, the migration of customers’ personal and professional lives online has only served to heighten their digital expectations and lessen their patience for subpar online experiences, ensuring that after the pandemic ends, digital will be at the forefront of the new normal.
Insurtechs will pave the path forward, leveraging partnerships and cutting-edge technology to accommodate growing demand and deliver seamless digital experiences.
When the pandemic struck late last winter, many traditional insurers were caught flat-footed. A Deloitte survey of insurance industry insiders found that 79% believed Covid-19 had exposed gaps in their companies’ digital capabilities and strategies. By contrast, insurtech startups’ fluency in AI, data analytics and digital infrastructure caught the market’s attention, with investments in such companies surging 71% in Q2 2020 compared to the previous quarter and climbing 63% in Q3 2020 compared to Q2, according to CB Insights.
Boasting an array of digital insurance products, robust technical infrastructure and personnel drawn from both tech and insurance, insurtechs have become increasingly attractive partners for traditional insurers. A 2020 Capgemini-Efma survey revealed that 67% of insurers are interested in insurtech partnerships — a finding that’s hardly surprising given that less than 30% of insurers in the survey reported having “digital-ready systems.”
The market changes ushered in by Covid-19 will allow insurtechs to further execute their vision by bringing in new pools of low-risk consumers willing to share their data online. Utilizing AI, insurers can process customer data more quickly — speeding up key processes such as onboarding and claims payment. AI-based solutions only stand to improve as more customers turn to insurtechs because it is customer data itself that undergirds and boosts the accuracy of AI models.
This, in turn, leads to smoother online experiences, which are vital to acquiring and retaining customers. As a recent Bain & Company analysis notes, customers who experience problems in their digital interactions with insurers tend to show less loyalty toward their insurance providers. Only a solid data infrastructure and extensive, accurate customer data can fill the gaps between customers’ expectations and the reality of what many insurers are offering. For a growing number of insurers, the solution for closing those gaps will lie not only in internal investments, but also in external partnerships with or acquisitions of insurtech startups.
The underlying trends upending the traditional insurance industry predated Covid-19, but as the pandemic accelerates the shift toward digital, insurtech is reaping the gains. With tolerance for red tape and slow, analog experiences lower than ever, digital-first insurers are staking their claim in the new normal. As insurtechs strengthen their foothold in the months and years to come, the entire industry will be transformed. Insurers’ days as technological laggards are rapidly coming to a close.
Source: Forbes
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