Insurers must embrace new business models to stay relevant as the industry undergoes a “tectonic shift” triggered by rising consumer expectations and shifting dynamics, Capgemini says in a new report.

Findings from the consultant’s annual World Insurtech Report suggest 41% of customers would consider usage-based insurance and 37% are open to on-demand coverage.

“There’s no looking back for today’s digitally empowered consumers,” the report says.

“With new business models picking up steam and new players entering the value chain, insurers must decide which of their key differentiators will help them to garner a compelling position in the new ecosystem.

“Moreover, as customers grow comfortable purchasing policies digitally, traditional channels such as agents [and] brokers may lose relevance, although these channels currently play a significant role in product-demand generation.

“As conventional channels lose impact, the fate of established demand-generation methods remains to be seen.”

Capgemini Australia Insurance Director Easwaran PR says the local market is “seeing varied levels of progress by the established insurers transforming to new business models using digital products and services, for instance with bots, operational process redesign, etc.”

“The report determines that success in the future marketplace is heavily dependent on insurers’ ability to evolve into inventive insurers,” he told insuranceNEWS.com.au.

“A successful inventive insurer will use open platforms to better develop innovative ways to make sure the customer remains at the centre of their business.”

The report flags a “bouquet of offerings” approach that insurers should consider.

Such a strategy allows an insurer to serve a broad spectrum of customers’ financial and non-financial needs by collaborating with insurtechs and other partners.

“A bouquet of offerings is likely to garner higher perceived value compared with single offerings,” the report says.

The report is based on surveys and interviews with executives from incumbent providers and insurtechs in 20 markets including Australia, the US, the UK, Singapore, Japan, France and Germany.