P&C Specialist reports that investors and venture firms are piling into the digital insurance sector because they realize that the typical insurance customers are now web-native Millennials or Gen Zs whose interactions with carriers are far more digital than in the past. This has enormous implications for selling insurance but even more so for risk selection, fraud prevention and claims management. With Progressive and Geico capturing almost all new Auto insurance customers and new premium revenue, the rest of the industry faces a profound dilemma: either figure out how to adapt to changed customer expectations and risks at a much faster rate or go into perpetual runoff as their more loyal older customers die off. From the article:
“Whether it is selling policies online or expanding telematics, COVID has changed the dynamics of the sector. Companies have seen the need for doing things differently,” Christopher Grimes, a director at Fitch, told P&C Specialist.
The need for digitization and seamless customer experience and leveraging artificial intelligence and other digital tools are more apparent to many players than it did two years ago. “So, you see, valuations reflect that. Whether it’s the distribution or on the claims side, some of the services companies provide look more valuable than they did years ago,” Grimes added.
Going ahead, digital carriers will continue to draw the most funding with comparison marketplaces and companies with tech products that support insurance processes right behind, according to experts. “Investors are increasingly putting their money behind these companies as they modernize the way insurance is being purchased. It is similar to buying a product on Amazon or Shopify,” Alex Tong, Principal at Information Venture Partners, told P&C Specialist.
But regardless of the amount of industry flux, the insurance fundamentals of effective distribution and risk selection remain the same. Just in service to customers whose expectations and shopping behaviors have changed substantially. It’s a tough transition and to make it carriers need to rapidly increase their ability to deliver richer, finer-grained digital interaction and risk selection to customers whenever and wherever they are found.