Insurers who have switched to the cloud are set to exploit a wave in insurtech alliances triggered by the COVID-19 pandemic.
The COVID-19 pandemic is likely to accelerate cooperation between carriers and insurtechs. And the cloud will provide the technology platforms and tools for this collaboration to work.
Insurance companies that have moved much of their IT workloads to the cloud and can partner with cloud-based start-ups will benefit significantly. They can work with insurtechs to discover promising opportunities, develop innovative products and reach many new customers.
Many insurance companies already use cloud services to collaborate with insurtechs. Our in-house researchers have identified about 80 cloud-based innovations announced by insurance companies over the past five years. Over half of these innovations are the fruits of partnerships with insurtechs. And I'm sure there are many more cloud collaborations that have not been published.
More operators will announce ties with insurtechs in the coming months.
Notable insurtech collaborations include Zurich Insurance's partnerships with CoverWallet and Snapsheet, as well as the recent alliance between Zurich Connect in Italy and home service launcher Yolo. In September, AXA XL announced a partnership with the American start-up Neptune Flood Insurance to provide homeowners with protection in flood zones. Earlier, AXA revealed plans to partner with Democrance, a start-up based in the United Arab Emirates, to provide financial services tailored to meet the needs of consumers in developing countries. Another operator involved in working with insurtechs, München Re, collaborates with well-known start-ups Trōv, Spruce and Next Insurance.
Expect more carriers to announce bands with insurtechs in the coming months.
The signs of greater cooperation are clear. In the wake of the COVID-19 pandemic, most large traditional insurance companies realize that they need to promote closer relationships with their customers. They need to deliver more customized services and experiences. And they have to go fast. Many new competitors are looking at their customers. Large digital service providers are particularly keen to expand their presence in the insurance sector. As the researcher CB Insights recently stated, Apple, Google, Amazon and Facebook are all entering the insurance business.
Transport companies can strengthen their defenses by building strong ties with innovative insurtechs. These start-ups have built their businesses on cloud services. They are inventive, flexible and responsive to changes in customer needs. They can help insurers to please their customers. In addition, they can support insurance companies as they expand into new growth sectors such as healthcare, and connected homes.
Technology develops burns.
Insurtechs can also help carriers close another gap in their armor. Our research shows that the lack of expertise is one of the biggest obstacles to successful cloud implementations. Insurtechs often have access to digital technology that is jealous of traditional insurance companies. Specialist cloud knowledge is particularly scarce. Collaboration with start-ups gives insurers access to skills they would often struggle to attract and retain.
The courtship between transport companies and start-ups will not be one-sided. Most insurtechs will be eager to cement closer ties with conveyors. There is no doubt that many of these young companies have built impressive business models and developed innovative technologies. But few of these companies have had the opportunity to build strong balance sheets. Technology development burns cash. The financial uncertainty triggered by the COVID-19 pandemic will cause many insurers to seek security in partnership with large, well-funded insurance providers.
The opportunity for insurers to take advantage of alliances with insurtechs has seldom been better. The fast-moving airlines will be able to field the best partners.
Are you looking for more information on how insurance companies can get the most out of their cloud services? Take a look at some of the links below. They provide useful insights. Or send me a message. I'm anxious to hear from you.
Cloud Imperative for Insurance (PDF)
Considerations for an Effective Cloud Strategy (blog post)
Cloud Services and Solutions
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