New technology is allowing partnerships between insurers and non-traditional industries that are opening large new product distribution streams for the insurance industry.

Capgemini’s local Insurance Leader Daniel Rademeyer says a recent deal between insurtech Honey Insurance and power company AGL is an example of the kind of new partnership that is shaping future growth and opportunity.

“Non-traditional players in the market are now being introduced which is opening up a new client pool for insurers – incumbents and insurtechs – to play a big role,” Mr Rademeyer tells insuranceNEWS.com.au.

Insurers are increasingly seeking strategic technology partnerships to remain competitive as half of customers say they are now open to “new-age” insurtechs, Capgemini and Efma’s World InsurTech Report 2021 reveals.

An analysis of more than 900 insurtechs in the US and Europe, the report says unprecedented access to capital investment is fuelling insurtech maturity and customer adoption and “turning up the heat on incumbent insurers”.

“New age digital players are offering greater personalisation and emphasis on customer experience, thus achieving maturity and customer adoption. In response, incumbents are attempting to strengthen their tech capabilities by partnering with or acquiring insurtechs,” it said.

By the end of 2020, the total market cap of listed insurtechs surpassed $US22 billion ($30.41 billion) and insurtechs are leveraging the inflow of investor capital to deploy predictive modelling, advanced data analytics, API open insurance and Internet of Things connected devices, providing “predict-and-prevent” propositions.

“Insurtechs are fast becoming the investment du jour,” the report said. “Opportunistic venture capitalists and private equity partners are deploying early-stage capital.”

Embedded insurance, where coverage is embedded at the point of sale or point of service, is “what the new generation is looking for,” Mr Rademeyer said, and in Australia, the focus is on claims and efficiencies from the consumer perspective.

“When the rubber really hits the road is when the consumer needs to go through the claims’ experience,” he said. “These connective connected devices, especially with home products, prevent a lot of claims events from occurring. Having these devices in place de-risks the overall consumer position.

“Within the insurtech community, they see this opportunity and they drive the technology. That is where you will see the partnerships with incumbents continue to rise.”