A report by IBM highlights why insurers must collaborate with insurtech providers. The report, Friend or foe? Insurtechs and the global insurance industry, draws on the views of 1,200 insurers, insurtech businesses and venture capitalists.
Focusing on a digital future
With insurtech now as established and accepted as fintech, 81 per cent of “outperforming” insurance businesses are said to be either investing in or already working with insurtech businesses. The report identified the following as key areas of focus:
- Customer relationships: 56 per cent of insurers said that insurtech will help to personalise interactions with customers and create stronger relationships
- Enhancing the service offering: 80 per cent of insurtech specialists said that preventative insurance and other valued-added services are redefining the role of insurers and changing the traditional concept of insurance
- Distribution: Insurtech offers new and more efficient ways to engage with customers, with 26 per cent of insurtech providers creating online-only solutions to provide the speed and immediacy that customers now seek
The threat to incumbents from insurtech startups has been a common theme in recent years. But it looks like the threat may not be from insurtech companies themselves. Instead, according to the report, it’s coming from direct competitors who are seizing the opportunity to build their businesses on a digital platform. Insurtech providers are not so much disruptors as enablers, with only 18 per cent of them purposely pursuing disruptive strategies.
Entrepreneurship through partnership
To stay relevant, insurers should think about becoming insurtech “entrepreneurs". Rather than competing with insurtechs, they should try to engage with them to evolve their business models.
As an insurtech partner, RDT provides the right foundation for insurers to become entrepreneurs. RDT enables insurers to differentiate their businesses and create distribution scale through Equator, its centralised rating hub. As the report says, insurers need to “join digital hubs to expand reach and scale more quickly”.
RDT also promotes a customer-centric approach through developments such as the innovative app technology used by its exciting new customer, Trice. In addition, RDT promotes the “building block” approach described in the report, whereby digital enhancements can be added swiftly to a platform and tailored to customer requirements.
As the report says, “insurers will not be able to develop everything on their own, and must actively seek collaboration partners and opportunities”.