Traditional Insurers Need Open Ecosystems, Partnerships to Remain Competitive, CapGemini Report Finds
Staff Writer | May 14, 2020
Consumers of all ages are developing a "millennial mindset," and prefer to conduct their own research via various channels and purchase insurance products themselves, according to Capgemini and Efma’s World Insurance Report 2020. Consumers are turning to non-traditional players such as "bigtechs" and product manufacturers for innovative, personalized offerings with enhanced customer experience (CX) and are increasingly relying on digital channels in the face of the COVID-19 pandemic.
To remain relevant, incumbent insurers must re-evaluate their portfolios and harness partnerships, shaping existing products to meet fast-evolving customer needs and preferences.
Digital adoption is no longer a function of age. Capgemini’s report shows that the number of Gen X and older customers making daily online and mobile transactions such as shopping or bill payments has doubled, rising from 30% of Gen X and older respondents in 2018 to 64% in 2020. The COVID-19 lockdown will further fuel this trend as consumers are forced to use digital channels for day-to-day transactions, irrespective of age or tech know-how.
New trust equation in insurance
The report groups today’s insurance customers into four categories – pioneer, inquisitive, experimental, and follower – based on their social behavior and shopping preferences. Today’s customers trust online research including reviews, testimonials from family and friends as well as broker and agent advice and feel empowered to make independent policy purchase decisions. Would-be customers are looking for convenience, and non-traditional firms such as digitally-agile BigTechs or product manufacturers offer an unmatched customer experience, tempting more and more customers to take a chance on a new provider. The appetite for BigTech insurance is accelerating fast: while only 17% of World Insurance Report 2016 survey respondents said they would consider purchasing insurance from a BigTech, the number has doubled by 2020 (to 36%.)
Hyper-personalization is key
The report recommends that insurers better connect with their policyholders through hyper-personalized and experience-led engagement. Simply put, insurers need to offer the right products, at the right time and via the right channels. Also, as customer preferences are evolving faster than ever, continuous assessment through real-time data management is highly needed so that customer experiences evolve at par with consumers’ needs and desires.
Consumers want flexibility and ease when surveying insurance providers. For example, more than 50% want usage-based insurance because it offers hyper-personalization as well as value for money, but only half of insurers offer this kind of option. Although traditional insurers understand the importance of getting in front of consumers at the right moment, they are not acting on it. They sometimes lack the right tools and techniques to predict when to push appropriate products, reducing their ability to act at the right time: only 35% of insurers are providing agents with digital tools that help to determine policyholder life events such as marriage, new child, or home purchase; in fact, only a quarter say external data tracking is useful.
Policyholder data can be captured using a variety of sources (within the realm of data privacy regulations). By joining open-API ecosystems, insurers could better understand when consumers might need a new product, suggests the report.
In addition, while consumers are turning to comparison websites and company websites to gather information on policies, less than 30% of insurers think their websites are useful for sharing policy information and only 37% say comparison websites help educate customers. Insurers may want to consider investing in online channels that empower customers to make decisions with the click of a button. Without seamless omnichannel engagement options, traditional insurers face losing out: 75% of customers would switch insurers if seamless policy servicing was not available across all channels.
Transforming into "inventive insurers"
Insurers must evolve quickly from one-size-fits-all products to offering experiences that align with policyholders’ specific and individual preferences. While BigTechs are gathering real-time data through voice assistants, wearables and other IoT devices, and interactive chatbots, only 38% of insurers capture data from real-time IoT devices and 33% mine data via natural language processing-based support systems (e.g. chatbots).
The report concludes that in this new landscape, those that succeed will be the ‘Inventive Insurers’, incumbents that understand customers’ needs and preferences and that leverage available ecosystem data to deliver personalized and time-sensitive products.
“Today’s competitive and fast-changing environment has been inexorably altered by the COVID-19 pandemic. Cross-generational digital adoption and the unprecedented impact of the pandemic are compelling reasons why established insurers need to transform their operating models,” said Anirban Bose, CEO of Capgemini’s Financial Services Strategic Business Unit and Member of the Group Executive Board. “The end game will be to become the insurer that provides hyper-personalized experiences to be able to compete head on with BigTechs. There has to be a reason for consumers to choose to stay with insurers and hyper-personalization can be that reason.”
“Strategically-savvy frontrunner insurers are ramping up collaboration with mature InsurTech firms to develop innovative solutions as, now more than ever, customer experience will be the differentiator for those that thrive in the future,” said John Berry, CEO of Efma.
The World Insurance Report 2020 draws on insights from two primary sources – the 2020 Global Insurance Voice of the Customer Survey and the 2020 Global Insurance Executive Interviews. This primary research covers insights from 32 markets: Argentina, Australia, Belgium, Brazil, Canada, China, Colombia, Denmark, Finland, France, Germany, Hong Kong, Hungary, India, Italy, Japan, Malaysia, Mexico, Morocco, Netherlands, Nigeria, Norway, Philippines, Portugal, Saudi Arabia, Singapore, Spain, Sweden, Switzerland, Turkey, the United Kingdom, and the United States.
- Meet the Board: Marissa Buckley
- Big Data and Insurtech: A Carrier Perspective
- Traditional Insurers Need Open Ecosystems, Partnerships to Remain Competitive, CapGemini Report Finds
- Electronic Chat with John C. Siegman
- 4 Ways AI is Empowering Insurers During COVID-19
- 6 Big Changes to Insurance from the COVID-19 Crisis
- Electronic Chat with Christopher Ewing
- Independent Agency Staff Morale High During COVID-19, New Survey Finds
- Electronic Chat with Brad Epker
- Tapping AI to Improve Policyholder Experience
- Electronic Chat with Manisha Bhargava
- ITA Pro Magazine, March/April 2020
- COVID-19 a Game Changer for Workers’ Comp
- Electronic Chat with Steve Comer
- COVID-19 Pandemic Forces Cancellation of ITA LIVE 2020
- Leveraging Digital Resources in the Time of COVID-19
- Electronic Chat with Robert Hartwig on COVID-19 and Insurance
- Celent Study: Most Small Businesses Still Unclear on Importance of Cyber Insurance
- The January/February 2020 ITA Pro is here!
- Deloitte: New C-Suite Roles Mean More Opportunities for Women
- Electronic Chat with Pankaj Parashar
- Electronic Chat with Tara Kelly
- Electronic Chat with Chuck Wilson
- ITA, InsNerds Collaborate to Enhance ITA LIVE 2020 Content and Coverage
- How SMBs Can Compete in Digital Ecosystems in the 2020s
- 4 Ways Insurance Can Prepare for New Data Privacy Laws
- Brewer Lane Ventures Launches and Hires Insurtech Vet Martha Notaras as Managing Partner
- 2020 GIA Cohort Launches on January 14
- The November/December 2019 ITA Pro is here!
- Electronic Chat with Joshua Snead
- Electronic Chat with Wendy Aarons-Corman
- Simplifying the Move to a Third-party Print Provider
- Take a Business-Driven Approach to Continuous Improvement for Core Systems and Processes
- Electronic Chat with Ron Glozman
- Guidewire’s Data Guru Mike Byam on How Insurers are Using Internal and Third-Party Data
- Electronic Chat with Russ Bostick
- Electronic Chat with Rock Schindler
- Electronic Chat with John Siegman
- Electronic Chat with Martin Burlingame
- Insurtech Landscape 2019: Top 5 Takeaways
- Grinnell Mutual Tackles Massive Transformation -- in Stride
- A Candid Conversation with Paul Mang
- SageSure Insurance Managers Improved Competitiveness by Consolidating Payments to a Single Digital Platform
- Digital Does Matter in Insurance-- And Insurers are Missing the Mark
- The 22nd-Century Insurer: Taking a Cloud-First IT Approach
- The September/October 2019 issue of ITA PRO magazine is now available in digital format here:
- ITA Pro Magazine May/June 2019
- Spotlight on the 2019 IASA Conference
- ValueMomentum Selects Erie as Site of Regional Development Center
- Capgemini and Majesco Become Alliance Partners
- Electronic Chat with Dr. Dan Shoham
- Electronic Chat with Todd Greenbaum
- Martha Notaras: The “Outsider” with an Amazing Inside View
- Electronic Chat with Larissa Tosch
- Martha Notaras Will Join ITA LIVE 2019 as a Keynote Speaker
- Five Things to Consider When Evaluating Your Cyber Risk
- ITA Pro Magazine, January/February 2019
- Synergy Between Insurers' IT and Analytics Teams Key to Operationalizing Insights, Says Novarica
- Major Ransomware Attack Could Hit U.S. with $89B In Economic Damages
- ITA Announces 1st of Three Keynote Speakers at ITA LIVE 2019
- Electronic Chat with Jeroen Morrenhof
- Legacy Systems Are Dead. Really? Don't Count On It.
- Now Accepting Nominations for the 2019 ITA Bridge Awards
- It's time to register for ITA LIVE!
- Registration is Now Open for ITA LIVE 2019!
- What to Expect from a Digital Experience Platform Implementation
- ITA Pro Magazine September Edition is Now Available
- It's National IT Professionals Day
- Save the Date for ITA-LIVE 2019
- OneShield Software and UrbanStat Work Together to Improve Real-Time Analytics and Risk Decision-Making
- ITA LIVE 2019 - SAVE THE DATE!
- Insurance Technology Association Announces New Editor-in-Chief
- August 2018 Edition ITA Pro Magazine is Now Available
- Enterprise Architecture in an Agile World
- Top 10 Tips for Securing Your Mobile Devices and Sensitive Client Data
- Industry Insight: 4 Global Insurance Trends in Digital, Data, Content Services and Security
- Diving Deeper into Prioritizing Your Strategic Digital investments
- Why Content Rules
- How Mass Personalization Will Open the Small Business Benefits Market
- At Year End 2017, Will Your Organization Be Protected from Cyber Risks?
- Do Insurance Bots Dream of Mitigating Risk?
- Conditioned to Respond
- Managing & Mobilizing Insurance Data in a Connected World
- Race to the Finish Line
- New Tools, New Opportunities in Claims
- ITA LIVE: Reaching Insurance Industry Crossroads
- Advice to Insurance IT Leaders: Keep Your Eye on the Ball
- New Date, Venue for ITA LIVE 2017
- Guidewire Makes Major Push to Small and Midtier Market by Acquiring ISCS
- Insurance Disruption is Happening Right Now
- Insurity Adds Strategic Investment Partner, General Atlantic
- Beyond Transformation: The Convergence of Finance, Risk, and Actuarial Functions
- The Rapid Evolution of Consumer Protection Regulation
- Talent Hunt: Finding, Attracting, Retaining Top People
- Insurers Flexing Their Distribution Models
- Technology Driving Disruption in Insurance
- Fear of ‘Next Bubble’ Challenges Life, Annuity Carriers
- Technology Allows Commercial Lines Insurers to Stand Out
- Single Sign-on Viewed as Biggest Tech Challenge for Agencies
- ISCS Observes 20th Anniversary; Scurto Predicts Major Changes Ahead
- Policyholders and Their First Impressions
- Progressive Making Progress on the UBI Front
- High and Dry: Insurers Search for Disaster Recovery Plans
- Insurers Sign The (Un)Dotted Line
- Reflections of a Retired Insurance CIO
- Mobile Device Management Just One Answer to BYOD Issue
- Lessons from GEICO and Progressive on Winning the Critical Buying Stage
- You Are a Target for a Cyber Attack
- Web-based Systems are the Next Evolution in Claims Technology
- Gaining a “Wow” Experience from Web Users
- Time to Shift from Business/IT Alignment to Business/IT Alliance
- Healthcare Insurers Changing to Consumer Model
- Organization is the Key for Selecting Software Vendors
- Analysts Expound on the Needs of the Mid-tier Insurance Market
- Finding the Cure for Obamacare’s Website
- New Software Solutions Benefit Insurers on the Inside and Outside
- Products, Market Impede Investment in Systems for Life Insurers
- Combatting Cyber Threats: Predict, Prevent, Persist
- The Future of Telematics Heads Beyond Insurance
- The Shame in Cyber Security Lapses
- Building Policy Administration Systems for the Future
- Insurers Look Into The Eyes of Their Policyholders
- It’s a New Dawn for the ITA
INSURANCE IT NEWS
- IMS Announces New Industry Partnership with Conversational AI Platform Provider, SmarTek21
- PLNAR Announces Allan C. Robinson III Has Joined the Board of Directors
- ISB Global Services Joins Guidewire PartnerConnect Solution Alliance Program; Publishes Ready-for-Guidewire Integration
- DataCubes Announces Company Name Change to Convr
- ClarionDoor Unveils New MGA Hub
- "Summer of Accelerate" to Deliver Continuing Education to Independent Agencies
- FRISS Partners with eviid to Help Prevent Fraud
- Messagepoint Launches Rationalizer
The Email Chat is a regular feature of the ITA Pro magazine and website. We send a series of questions to an insurance IT leader in search of thought-provoking responses on important issues facing the insurance industry.
ITA LIVE 2020
ITA LIVE 2020 –SAVE THE DATE!
April 5th – 7th, 2020
The Diplomat Resort
Become a member today to receive updates – www.itapro.org/MR
BLOGS AND COLUMNS
Without a very strong focus on data as a strategic and vital corporate asset, insurers will struggle to keep up with the necessary changes in the “new... READ MORE
How does a small- to medium-sized business (SMB) begin attempting to understand the digital ecosystem customer... READ MORE
You have surely heard it said that small businesses are the growth engine for America. Today, the phrase has a special ring to it for benefits... READ MORE
With stagnant growth and lingering low interest rates, the life insurance industry faces a challenging future... READ MORE
Finding insurance carriers willing to write commercial lines risks has always been a challenge for producers... READ MORE
As Guidewire Software prepares for the start of Connections, its 11th annual user conference that begins on Nov. 2, Brian Desmond, chief marketing... READ MORE