Digital transformation in the insurance industry has become extremely important for large corporations, as well as for startups in the innovation ecosystem. These organisations frequently work together to drive new business models focused on better understanding current users, implementing agile and efficient technologies and improving the user experience.
In recent years the number of emerging companies in the insurtech sector, which combines technology with insurance, has seen steady growth. According to Statista, there are currently 1,544 companies worldwide using disruptive technologies to transform this sector, and altogether they have received financing to the tune of $2.9 billion (around €2.4 billion).
The fundamental challenge for these companies is to respond to new customer needs and preferences in a digital environment, where personalisation and the user experience have become more relevant than ever. Big businesses are also part of this transformation, often in collaboration with young startups, with the aim of boosting the versatility, speed and efficiency of services.
The main change that insurers are facing with 21st century customers is to adapt to their timescales, agility and need for personalisation. According to Capgemini Efma’s World Insurance Report 2020, over 50% of users want tailor-made insurance, but only half of insurers offer that.
“The customer should be at the forefront, and processes need to be simplified for them to have a positive experience”, asserts Pilar Andrade, CEO of Lisa Seguros, a startup that was a finalist at Open Talent 2019 Spain and took part in the Open Talent acceleration programme. This entrepreneur had worked in traditional insurance before entering the insurtech world, when she realised that customers were increasingly demanding digital services: “They preferred you to send things to them by email or with a link, to look at it when they had time to make their decisions calmly”.
To do this, it is vital to implement disruptive technologies that allow for the design of products and services adapted to customers’ needs. “What we want is for technology to become a means of helping customers to decide what they want to insure, and that they only pay for what they need”, indicates Andrade.
Other customer demands are immediacy and delocalisation. For example, Juan Luis Torres, Country Manager of Bdeo Mexico, a startup that took part in a Fast Track in 2017 and has carried out a pilot with BBVA Mexico, explains that “remote appraisals via video calls came about as a result of a customer’s need”. To meet this demand, Torres explains, anti-fraud security features and components specific to the insurance market were added, “including artificial intelligence, blockchain and augmented reality technologies”. Torres, whose startup took part in InnovaHome by BBVA Open Innovation, says that offering this service completely remotely saves customers time and money, an experience that is highly valued by them.
Making an effort to find out what customers’ demands are and to improve their experience through disruptive technologies is a sure bet on the path of insurance industry digitalisation, but to that we have to add a key feature – the ability to adapt quickly.
According to the Accenture report The Rise of Insurtech, 86% of insurers believe that they need to innovate faster and faster to simply maintain a competitive advantage. This is an area in which young startups have a great deal to contribute, since they have the agility needed to launch new services and adapt existing ones, or even to quickly reinvent themselves in the face of changes in user needs or in the market.
One example is the case of small claims without structural damage, where the speed of the process is highly valued. “Claim reports that used to take more than a week to process, can today be resolved in a matter of minutes with Bdeo. The user experience is unbeatable, because they see how quickly their problem is reported and solved”, says Torres.
For large companies, one of the key things about digitisation and open innovation is to enrich their processes through productive partnerships with the digital ecosystem.
BBVA’s collaboration with Bdeo is precisely one of the examples that reflect how joint work between large companies and startups really works, especially when it helps to solve specific industry challenges. For this reason it is essential to have open innovation systems that will identify potential partners who can bring innovation – in terms of technology, business models and ways of working – from the entrepreneurial world to the world of big business.
If anything is characteristic of the times we are living in, it is that the ability to learn and embrace change has become a critical skill to keep being competitive and generating value, in all sectors. Open innovation is the springboard for change.