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18 September 2017
Australia’s major insurers are building their digital strengths in response to the insurtech challenge, according to IT consultant Capgemini.
“Insurance companies are investing heavily into advanced analytics, robotics to lower their claims costs, because insurtechs target them on aspects where they are weak,” Head of Financial Services Mohit Jain told insuranceNEWS.com.au.
Capgemini’s annual World Insurance Report shows more than 60% of insurers in Australia prefer a mixed approach of working with digital disruptors to reach tech-savvy consumers and the so-called Gen Y cohort, a highly prized group of consumers born between 1983 and 1999.
“They are at the forefront of how the industry will evolve,” Mr Jain said. “They are more likely to change providers if the other providers [have] better engagement.
“The insurance companies now have to provide far better engagement through the life cycle of the insurance policy.
“From our perspective… the industry has changed more in the past three years than it has in the past 100 years. It will change even more in the [next few years].”
Mr Jain says last week’s launch of the latest Apple iPhone is an example of “technology that will allow for a lot of digital disruption in terms of what insurers can provide for their consumers”.
More than 100 industry leaders and 8000 consumers in 15 markets, including Australia, were surveyed for the Capgemini report.
The survey says about 31.4% of consumers rely on insurtechs either exclusively or in combination with incumbents for their insurance needs.
Almost 46% are unwilling to fully walk away from insurers, citing better security and fraud protection, while 43.7% say brand recognition is a reason for staying on.
About 39.8% trust their insurers, compared with 26.3% who trust insurtechs.
“One area where they score over tech is the aspect of trust,” Mr Jain said.
“Partnership is the best way for incumbent insurers to use that complementary strength to offer better products and services to consumers.”