The insurance industry contributes over 25% of the UK's total net worth. Yet despite accounting for a quarter of national assets, the sector is facing what PwC has called a "consumer crisis of confidence." Today, just 27% of consumers trust their insurance providers, and less than half would turn to them for advice. Many insuretech businesses are looking to exploit this lack of trust, providing a fresh approach through simplified claims processes, transparent fee structures and self-service models. Traditional insurers can't ignore the rising threat.
So what is insuretech?
Technology-oriented starts-ups that use innovative technical solutioons to power new insurance business models.
A New Influencer
Like their contemporaries in Fintech, Biotech and Adtech, Insuretechs are predominately small and lean, with agile online platforms for the digitally savvy customer. They tend to focus on differentiation, be it through social responsibility, quirky branding, or a singular product offering. And these points of difference are creating a compelling reason for consumers to take notice.
But the impact of insuretech goes deeper than look and feel. IBM recently surveyed more than 1,200 executives globally across traditional insurers, insuretechs and venture capital companies. It found that "57% of global insurance executives said "insuretechs are already driving innovation across the insurance industry" - but only 43 % of traditional insurers predict a disruptive effect on their business or operating models.
They are also becoming integral to the buying experience, with 34% of customers globally using their companies exclusively or in association with incumbent firms. This percentage is likely to increase as insuretechs mature. Just consider how online shopping has transformed the retail sector. Insuretech is poised to do the very same.
81% is outperforming insurance businesses have already invested in or partnered with insuretech businesses, i.e Munich Re Digital Partners' backing of Wrisk, Axa's investment in Trov, and XL Catlin's investment in Lemonade, Slice and GeoQuant. There's value in creating a joint offering that places customer experience at the heart. As was the case in the aftermath of aggregator disruption, most remaining firms are in talks to leverage insuretechs - whether by pooling resources, technology or brand value.
However insurers plan to repsond, talent will be key to the success of any transformational project. With major players like Aviva already moving towards a digital-first approach, the challenge for insurers to attract digital and tech talent ahead of the competition can't be underestimated.
Studies and surveys continue to rally in support of insuretech, and the sector needs to innovate, but how will you determine the best approach? After all, it's the business and HR Leaders within every company that must source talent that can navigate this new operational context. They will need to ask themselves do we have the right skills internally? Where are our gaps? How will we attract these skills externally - and how will we ramp-up to meet the business demand? Without the right talent to drive your initiatives through, you run the risk of being quickly overtaken by insuretech competitors.
To learn more about how you can attract digital insurance specialists and insuretech talent, contact Avencia on firstname.lastname@example.org