The importance of partnerships between insurtechs and insurers
The insurance industry’s digital transformation has ushered in a new era of innovative partnerships between traditional insurers and insurtech companies. A decade ago, traditional players were often reluctant or unable to embrace new technologies. Today, though, we find ourselves at a paradigm shift in the industry. As insurers modernize their technological infrastructures, it has become evident that insurtech solutions can help them reach digital-first consumers who rely on online platforms to secure insurance, rather than traditional routes.
There are several benefits both players can offer each other and ensure mutual growth as we look to the next phase of digital transformation in the insurance industry.
Reaching new audiences
Over the past few years, consumers have become increasingly concerned with risks shaping our environment. The pandemic was an important example, but major disruptions are becoming more commonplace, whether it’s shipping delays, climate disasters, strikes, new regulations and the like. As a result, customers don’t want the same insurance solutions that have been available for the last decade, they want fit-for-purpose protection tailored to our rapidly changing environment. Further, younger consumers want their products from digital-first channels. According to Deloitte, spending on digital products accounts for as much as 3.2% of Gen Z’s monthly spending.
By integrating protection directly into an online purchase journey, insurtechs can connect directly with this next generation of customers. Insurtechs work with insurers and underwriters globally to provide innovative protection solutions tailored to a specific consumer base. Insurtechs also leverage relevant data to refine and tailor solutions with insurers to offer the best value to consumers. It’s a continuous, mutually beneficial system that ultimately results in better offerings for consumers.
This is a departure from the product mindset of traditional insurance models. Traditional insurance players often build an insurance product and then attempt to mass distribute it through their channels, whether through a broker or directly to consumers. However, we’ve reached a point where this model is outdated. Consumers today want protection options that cater to their specific needs when they are purchasing a product or signing up for a service online.
By working together, insurtechs and insurers can meet consumers with tailored protection products at the right place, at the right time and at the right price.
Benefits of insurer and insurtech collaborations
When insurers and insurtechs successfully collaborate, both parties stand to benefit. Their collaborations result in:
● More innovative solutions. Working together, insurtechs and insurers can develop creative solutions by using the information available from insurtechs’ data sources and digital distribution channels. These partnerships help identify areas where customer needs aren’t being met and create insurance or protection solutions specifically designed to address those gaps.
● A better assessment of risk. Through data analytics and AI, insurtechs can often offer improved risk evaluations, making it easier to spot fraud while also customizing offerings to customers’ behaviors and preferences. This is particularly beneficial for insurers who constantly strive to counteract the significant costs associated with fraud.
● Expanded distribution channels. Insurers can reach new markets and demographics, especially younger consumers who are more accustomed to purchasing products through digital channels, by partnering with insurtechs.
● Efficient processes. The automation of processes and using data-driven insights can speed up decision-making processes for insurers.
To help ensure a successful collaboration between insurers and insurtechs, it’s important to communicate early on what they wish to achieve through the partnership. When values and goals don’t align, a mutually beneficial partnership becomes difficult. It’s essential to maintain a flexible mindset and dedicate time to developing creative solutions alongside one another. Strong backing from senior management also helps solidify the foundation of a strong partnership and allow both sides to effectively collaborate.
As insurtechs have continued to gain momentum and scale globally, insurers have recognized the value of forming strategic partnerships to expand their distribution channels, reach new audiences, and enhance risk assessments. Most importantly, these collaborations enhance the accessibility and quality of products for end customers. We stand at the cusp of a transformative era for the industry, where insurtechs and insurers are entering strategic partnerships to cater to the diverse and dynamic needs of modern consumers.
