This crisis has accelerated change, especially in a sector in constant evolution, such as the insurance industry, which has seen how, after a stage of slow but constant transformation.
The Demand For Change
Like the rest of the service sector, the insurance world has had to rapidly adapt its sales processes and communication channels to cope with new demands.
And we are not only talking about markets strongly impacted by the pandemic, such as travel (at Aon, we have seen an increase in the sale of travel insurance in 2021 of more than 120% compared to 2019), but all lines have seen how the sale of a digital product has skyrocketed (invoicing from digital channels increased in 2021 by more than 20% in the sector).
According to the World Insurtech Report 2021 published by Capgemini, the propensity of consumers to take out insurance has increased by 7% compared to pre-pandemic levels, which speaks to the excellent health of the sector.
What is striking about the report is that 50% of holders have favored changing insurance companies, opting for digital models such as those proposed by BigTechs and insurtechs.
And this is where the real disruption is taking place. While the sector is rapidly adapting to the new times, insurtech has seen how the crisis has boosted its growth.
According to the latest CB Insights report, 2021 was the first year in the historical series in which investment in insurance exceeded $10 billion, reaching a total of $15.4 billion in investment and 566 operations. This represents an increase in investment in insurtech of 90.1% compared to 2020 and 102.6% compared to 2019.
Whenever we talk about this type of company, the same question arises: are insurtechs a threat or an ally? The reality is that there is no single answer, although, at Aon, we opt for the latter.
If our business model is easily disrupted through innovative technologies, it is possible that these new players could put our survival at risk in the medium or long term.
In most cases, the continued proliferation of insurance is presented more as an opportunity. One, because this possible threat could be the final push for many players in the sector to promote those digital transformation plans that have been in the drawer of their respective executive committees for years.
And two, because both parties (corporation and insurance) can benefit from the close collaboration between them through a simple collaboration agreement or the co-creation of new products and services.
Thus, on the one hand, large companies can make processes more efficient in an agile and rapid manner or offer new products or services to their clients, relying on the technological capabilities of insurance.
While on the other hand, the insurance companies will have access to both the large corporation’s customer base – having the opportunity to test their technology in real life – as well as the knowledge and experience of their professionals, who will be able to help them redefine or pivot their business model.
Business to reach a more extensive customer base. The latter is susceptible in a highly regulated sector such as insurance.