Forget insurtechs: your next competitors will be Google, Amazon, and Facebook
May 27, 2018 by Jason Contant
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Just under one-third of customers globally (22.8% in Canada) are willing to buy insurance products from “BigTech” companies such as Amazon, Facebook and Google, a new report has found, suggesting a greater need for traditional insurance providers to “develop future-ready operating models to satisfy evolving customer preferences.”
The World Insurance Report 2018, released earlier this week by Capgemini in collaboration with Efma, found that “tech-saavy and Gen Y segments are notably more likely to make the switch.” It also said that within financial services, insurance trails banking and retail in delivering customer experience. While 41.7% of Gen Y and 35.1% of tech-saavy customers had a positive experience with their bank in Canada, only 26% of Gen Y and 26.3% of tech-saavy customers in Canada indicated their insurance experience was positive.
“Though performing relatively better than the average, there is still room for the [Canadian] insurance industry to develop a better connect with customers to be on par with the leaders,” the Canadian results said. “Relatively lower positive experience across all demographic segments indicate that insurers have not been able to keep up with the fast rate of evolution of customer preferences and expectations.”
The global report surveyed 10,000 personal lines customers in 20 countries, including Canada, covering all three broad insurance segments – life, non-life and health insurance.
“The large, multinational technology organizations that represent BigTech are taking slow, deliberate steps towards establishing a presence in the insurance industry by leveraging their strong reputation for superior customer experience,” said a joint press release from Capgemini and Efma. In Canada, 22.8% of customers said that they would consider buying insurance from BigTech firms, a 10-percentage point increase from 2015, when only 12.1% indicated such a preference.
Gen Y and tech-savvy market segments (defined as customers that use online and mobile channels frequently to conduct transactions such as purchasing electronics, clothes, food and groceries, paying bills, etc.) appear most inclined to switch loyalties from traditional insurers. These customers not only cite lower positive experiences with traditional firms, but they are also more likely to change their insurance provider within 12 months.
“The threat from such entrants is more real than the insurance industry might want to admit,” said Anirban Bose, global head of financial services and member of the Group executive board at Capgemini. “Insurers, risk assessors by nature, must urgently turn their gaze inwards and consider the competitive risks within their own industry in order to evolve and survive.”
Other Canadian survey findings:
- P&C and health insurers are relatively more active in capturing real-time data compared to life insurance firms.
- From a P&C insurer perspective, the Top 3 factors driving the need to enhance digital agility are evolving customer preferences (84.1%); rising pressure on margins and opportunity to improve efficiency (52.4%); and emergence of new business models (47.6%).
- More than 50% of insurers said their firms were piloting or deploying artificial intelligence solutions; and
- More than 40% of the surveyed insurers are expecting a payback time of 12 months or less for investments made in digital transformation/automation.
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Why should any broker in the Insurance Industry have to be licenced? If people are buying online, what is the point.
Expertise and knowledge of the Insurance Industry is why you would purchase coverage from an expert, otherwise there is absolutely no point for any broker to be licenced.
What happened to protecting the consumer (against themselves).
The only thing that a consumer wants is the lowest possible price for insurance. They normally are hesitant to provide information about their situation (to a human licenced broker), what makes you think they will be honest when answering a few questions in cyber space?
This is where cyber space will fail. At a time of loss (eg: water in any way shape or form) and the insured did not purchase the coverage (because that will never happened to me, mentality), this is where the rubber meets the road. I have no problem with technology, but unfortunately you cannot protect the consumer against themselves. when you have such a platform. We will experience lawsuits, tying up our court systems with cases that normally would not have occurred.
I personally have tried out some of these website with purchasing coverage online to test various models and if I wasn’t an insurance expert, I would not choose most of the coverage offered because I just would think I don’t need it. It occurs daily where an insured will sit with their broker and will state “all I need is Fire Insurance, I don’t need anything else”, then 6 weeks later, they’re the one’s that have the pipe burst.
The problem with online, is they offer strictly basic, then the consumer has to build the product. The consumer is not experienced to purchase coverage online, because all they care about is the bottom line, instead of the overall package and protection they are afforded with a licenced broker.