Here’s how legacy insurers can win back customers from insurtechs

Quarerly Global Insurtech Funding

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Insurtech funding has been on the rise over the last few years, increasing from $2.22 billion throughout 2017 to $4.15 billion in 2018. In the first two quarters of 2019, insurtechs already secured $2.86 billion, indicating that it could be another record-breaking year for funding in the segment.

A new survey from Oliver Wyman based on 5,000 respondents across the UK, Spain, France, Germany, and Italy sheds some light on the opportunity incumbent insurers have to stave off competition from insurtechs.

Here are the key insights from the survey: Some fintech users would happily switch back to incumbent insurance providers — and given their trust in incumbents, these players can sweep in to win them back by offering similar services.

On average, 61% of fintech customers would be happy to use a traditional insurer if they offered similar propositions and pricing as insurtechs. Across the five countries, Spanish and French customers most prefer traditional insurers over insurtechs if they have the same proposition and pricing (66%), compared with 53% of Italians saying the same. Hence, incumbent insurers have the opportunity to win back over half of fintech customers if they’re able to provide them with the same services.
Trust likely plays a great role in both customer retention and attraction. On average, trust in traditional banks and insurers lies at 60%. However, trust in financial services incumbents varies depending on geography: 71% of Germans trust incumbents, compared with 48% of consumers in Italy. Trust is likely a big advantage incumbents have over new startups, as they have proven the sustainability of their services over a long period, which they can leverage to attract and retain customers.

The bigger picture: The survey indicates that it’s not too late for incumbents to win back customers, but they likely can’t do it by themselves.

To up their digital game and offer more personalized solutions, insurers can partner with insurtechs. Flexibility, price, and speed of obtaining insurance coverage are the main reasons customers consider new digital insurance propositions, according to Fady Khayatt, insurance partner at Oliver Wyman.

Given that insurers are the furthest behind in terms of digital transformation compared with other financial services institutions, they’ll likely need startups’ help to improve their services to retain and win back customers. A number of incumbent insurers have already teamed up with insurtechs operating a business-to-business (B2B) model in order to launch more tech-savvy services.

Allianz, for example, partnered with insurtech Trov to digitize the products for its car manufacturer business, while Zurich started working with insurtech Greater Than, which uses an in-car reader to take driving behavior into account when pricing insurance policies.

Here’s an industry opinion as told to Business Insider Intelligence:

“It’s interesting to see another survey where trust in traditional firms comes out …read more

Source:: Businessinsider – Finance


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