Today’s insurance models are characterised by the customer’s needs. Personalisation, speed, transparency, simplicity and the ease of digital are becoming buzzwords. And in a market still viewed by many as confusing and consumer-averse, it’s no surprise that insurtechs pose a threat, with propositions that clarify, simplify and prioritise the customer experience. But all is not lost for the traditional insurer, who can harness the power of insurtech in several ways.
In this article, we break down the many routes you can take to protect your market share, reach out to new customers, and move with a sector that is facing up to the need for change.
Joint ventures are a popular way of blending old and new, as we have seen with AXA and Trov, Hiscox and Digital Fineprint, and Munich Re and Wrisk. In all cases, the traditional insurance model has been reimagined with the best elements of the insurtech model to leverage the unique benefits of each.
In big organisations, ideas and progress are often slowed down by red tape. Drawing on the agile structure and practices of insurtech companies enables partnerships to capitalise on more opportunities. Insurers can also expect access to the latest tech, IP and improved product design, where insurtechs benefit from the reputation of a trusted brand, as well as deeper industry networks, investment and infrastructure.
It’s important to note that the most successful unions tend to emerge through more involved collaboration, where priorities are carefully defined, individual strengths emphasised and areas of weakness mitigated. The resulting propositions are flexible, customer-focused and forward-thinking.
This avenue is being explored by many of the key players in a show of commitment to future-proofing and advancing the insurance industry. Allianz, Aviva and AXA are already acting as advisors to smaller insurtechs, investing time, capital and energy in digital channels to create Allianz X, Aviva Ventures and AXA Strategic Ventures. The trend is not exclusive to insurers though, with tech companies hopping on the bandwagon too. Google Ventures, Amazon and SoftBank are diversifying into insurance start-ups, signifying wider confidence in the market advantage of insurtechs.
Developing in-house capabilities
Insurance model transformation is a costly business, requiring a great deal of time, money and resource without guaranteed success. On the other hand, this move is bold and progressive, placing tech at the forefront and upskilling existing teams in a manner that is thought-leading. Aviva’s Digital Garage is a good example of large-scale change predicting positive results, as the insurer looks to become a fully fledged fintech.
Top insurers are investing in the coaching of insurtech start-ups through incubators such as startupbootcamp. Programme partners such as Admiral, Swiss Re, Zurich and XL Catlin select the most promising insurtechs to benefit from workshops, pitch tips and creative collaboration rooted in innovation for the 21st century customer. This benefits traditional insurers by sowing the seed, where future partnerships can grow out of initial mentorship.
Whichever method feels the most appropriate, insurers must be clear on their business objectives. Ask yourselves…
- What problem are you trying to solve?
- How will your customers benefit?
- Where can tech help you create operational efficiencies?
- Do you want to bold or pragmatic in approach?
- How can you engage the talent you need ahead of competitors?
Organisational transformation is as much about a cultural change as it is about implementation. After all, what use is a digitally enabled, customer-focused proposition without placing it in an environment where people truly embrace it?
Avencia can ease this journey, developing talent acquisition strategies that reflect current and projected market conditions. According to PwC’s recent global survey, “Over 80% of insurance CEOs are concerned about a shortage of digital skills, the highest percentage of any industry”. With our support, you can identify specialists from across the digital and insurance worlds, and leverage your brand to cut through the noise and reach the talent you need.
To learn more about how Avencia can guide you, download our brochure here.