According to a recent global analysis from Capgemini and non-profit networking group Efma, capital investment in new insuretech startups is boosting service levels and customer uptake while “turning up the heat” on traditional insurers.
According to the estimate, by the end of 2020, the entire market capitalization of insure tech businesses would have surpassed $22 billion, making insuretech companies the “investment du jour” for opportunistic venture capitalists and private equity partners.
Insuretechs are gaining client adoption and prompting legacy insurance companies to adjust their proposition, according to the research, as new digital players place a greater emphasis on customization and user experience.
According to Capgemini, the transformation from “doing digital” to “being digital” is critical for incumbents. To offset the trend, incumbents are working with – or buying – younger providers.
“Although incumbents are experiencing clear data and analytics challenges (only a quarter of insurers are confident in their data handling abilities) they are not idle,” a release accompanying the report states. “To circumvent and overcome these limitations, many traditional insurers are buying and partnering with new-age digital players to enhance their capabilities and value proposition as part of the CARE equation, with a special focus on reach.”
The important phrase in the industry’s transformation, according to Anirban Bose, CEO of Capgemini Financial Services and a member of the group executive board, is “modularity.”
“Insurers must be prepared to tackle a broad range of future scenarios,” Bose states. “Modular offers, systems, and organizational structures will be indispensable to creating a robust and responsive value change. In the coming years, industry players will be defined by their strength within a hyper-specialized value chain, and insurers will increasingly become orchestrators.”