Capital investment into new insuretech companies is accelerating service levels and customer adoption while “turning up the heat” on incumbent insurers according to a new global report from Capgemini and non-profit networking group Efma.
By the end of 2020 the total market cap of insuretech’s passed $22 billion, the report states, with insuretech companies now the “investment du jour” for opportunistic venture capitalists and private equity partners.
With new digital players putting greater emphasis on personalisation and user experience, insuretechs are gaining customer adoption and forcing older insurance companies to shift their proposition, the report explains.
Key to this transition for incumbents is shifting from “doing digital” to “being digital”, Capgemini states.
Incumbents are also partnering up with younger providers – or buying them, to combat the trend.
“Although incumbents are experiencing clear data and analytics challenges (only a quarter of insurers are confident in their data handling abilities) they are not idle,” a release accompanying the report states. “To circumvent and overcome these limitations, many traditional insurers are buying and partnering with new age digital players to enhance their capabilities and value proposition as part of the CARE equation, with a special focus on reach.”
According to Anirban Bose, CEO of Capgemini Financial Services and group executive board member, the key word in the industry’s evolution is ‘modularity’.
“Insurers must be prepared to tackle a broad range of future scenarios,” Bose states. “Modular offers, systems and organisational structures will be indispensable to creating a robust and responsive value change. In the coming years, industry players will be defined by their strength within a hyper-specialised value chain, and insurers will increasingly become orchestrators.”