How deeper insurtech partnerships will increase speed of change

Esben Toftdahl Nielsen, Co-Founder & Chief Commercial Officer, Penni.ioEsben Toftdahl Nielsen, Co-Founder & Chief Commercial Officer
The year 2020 is a year we will all remember. The COVID-19 pandemic has taken its toll on the world, and forced changes in ways we would not have imagined. The insurance industry is no exception. The pandemic is profoundly affecting how customers interact and engage with insurance companies.

The importance of digital customer engagement across the insurance value change is more important than ever. According to a survey by Mckinsey, insurance agents have experienced a significant decrease in new business during the crisis (up to 40 per cent). Similarly, online sales channels are reporting a significant increase in volume. Being able to respond to changing market conditions are of utmost importance for insurance companies.

Now we are at the beginning of a new year. Even though there is light at the end of the tunnel, the crisis is not over. Maybe far from it. No one knows. With this in mind I would like to provide my top three predictions for the year 2021.

In times of crisis, priorities tend to shift away from innovation to more profitable investments with a clear return.

I believe that the postcrisis winners will be those that are prioritising innovation now despite the urge to play it safe.

Digital customer engagement will be the top priority

Following the crisis, I expect we will see continued investment in digitalisation of customer engagement across the insurance value chain. Insurers are now looking into how the post-corona operating model should look, and they are acknowledging the fact that the way they used to interact with customers will not return.

Embedded insurance models will grow

Embedded insurance is a $3tn market opportunity (Fintech Futures). Embedded insurance makes sense because no one wakes up in the morning and thinks, ‘I should buy insurance today’. The insurance always tags along with a product people really want, like a car or a house. Moreover, digital adoption during the COVID-19 crisis is not temporary (Mckinsey, 2020), it will only grow further postcrisis. This means that customers will increasingly engage digitally with non-insurance companies and get insured through those engagements.

Deeper insurtech partnerships to increase the speed of change

Speed of change will be a priority for insurers in 2021. We have witnessed how important it is to be able to adapt quickly to changing market conditions. A way for insurers to make change happen faster is to partner with mature insurtechs offering plug-and-play solutions. We are seeing insurtech companies maturing, which leaves a good option for insurers to establish partnerships with insurtechs around core capabilities instead of building in-house.