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October, 2021

Retention Vs. New Business in Insurance

Oct 7th, 2021

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Table of Contents
01    Retention Vs. New Business in Insurance: Latest Research
02   The Insurance Monthly Roundup
03   What Data Reveals About Insurance and the Pandemics
04   Insights: Evolving US & Europe Insurance Landscapes
05   Working with Insurtechs or against them?

 

Retention Vs. New Business In Insurance: Latest Research

Customer acquisition expenses have been rising and are set to further rise from 15.8% of GWP in 2018, to 16.6% in 2020, and up to 17.9% in 2022. Instead of pursuing an omnichannel approach for retention, many Insurers continue to engage customers primarily by call and traditional mail. The latter is relatively expensive and makes seamless integration difficult, requiring several steps to digitize, analyze, and integrate communications. 

 

According to Mantra Labs latest report ‘Elevating Conversational CX in Insurance’ — Only 35% of insurance executives actively prioritize retaining customers as more important than new business. Research shows customer retention is at least four times as cost-efficient as pursuing new business. 

Carriers who prioritized CX before the pandemic have already gained an early advantage. Mature CX organizations are more than six times as likely to exceed their customer retention goals. Investments in digital front-office transformation would better align Carriers with their customers’ engagement needs and improve cost efficiency.

Elevating Conversational CX In Insurance

Read the full report.

The Insurance Monthly Roundup

A quick roundup of the month’s insurance and insurtech news.

(India)

  1. The Mother of All IPOs — India is seeking a valuation of at least $109 billion for state-backed Life Insurance Corp — likely to be at the end of the financial year, meaning it could “drain liquidity and impact the secondary market to some extent.
  2. India’s general insurance industry turned it around after posting an aggregate net profit after tax of ₹38.7bn ($522m) in FY2021 from a net loss of ₹14.0bn in FY2020.
  3. Pune-based DigiSafe — an Indian insurtech broker for rural insurance is set to launch across India — bringing simplified insurance products across motor, health, livestock, crop and life to the customer’s doorstep.
  4. Mumbai-based GOQii is looking to expand as an insurance company — by having integrated wearable devices with insurance packages tied to its remote exercising platform GOQii Play.
  5. Indian startup, ZestMoney, raises $50M to expand into insurance, having obtained a corporate agent license from IRDAI, and has a customer base of 11 million, of which 70% are from Tier II and III cities and are first time credit seekers.

(Global)

  1. The Global Insurtech Market is expected to Garner $158.9 Bn by 2030 growing at 32.7% CAGR, according to Allied Market Research.
  2. Global InsurTech funding balloons to $4.8 billion in Q2 2021, with 162 deals, marking a 210% increase over Q2 2020.
  3. German insurtech startup Getsafe raises $93 million in Series B round, and expands its product line to include home, personal, dog, drone, bike theft and car insurance.
  4. Australian insurance startup Cover Genius Pty Ltd. boosted its valuation to A$1 billion ($729 million), after raising $72.8M from investors including Japanese insurer Sompo Holdings Inc.

Delivering Superior Customer Experiences over Video.
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What Data Reveals About Insurance and the Pandemic

While the pandemic drove a surge in buyers for health insurance policies, insurance providers said they still suffered huge losses. This was partly because of the large number of claims, especially during the second wave this year, and partly because of the hefty cost of treatment for Covid-19. 

According to data released by IRDAI and MoHFW, here are the five key insights into how Indian Healthcare fared during the multiple Pandemic phases till now:

  1. At least 24.34 lakh health insurance claims for Covid-19 treatment have been filed between last March and September 7 this year — totalling ₹30,806 crore — of which 85% have been settled.
  2. In 2019-’20, the average health insurance claim hovered around ₹30,000, indicating the average amount charged by hospitals for treatment. The average insurance claim for Covid-19 treatment was ₹97,302, more than three times the amount.
  3. Four states account for 64.5%, or 15.71 lakh, of the country’s health insurance claims for Covid-19 — Maharashtra (₹8,956 crore), Gujarat (₹3,587 crore), Tamil Nadu (₹3,308 crore) and Karnataka (₹2,677 crore). Arunachal Pradesh filed the lowest claims, a total of just ₹7.75 lakh.
  4. At least 23%, or about 76 lakh of India’s Covid-19 patients had to be hospitalised. Which means about 32% of hospitalisations were covered by government or private insurance.
  5. Under the Pradhan Mantri Jan Arogya Yojana, a cashless health insurance scheme introduced by the Central government for low income groups, 3.27 lakh patients were hospitalised for Covid-19 in 2020-21. At least ₹1,157.66 crore was sanctioned for Covid-19 treatment under the scheme in 2020-21.

Conversational Intelligence: The Next Big Thing In Customer Experience

Read our Latest Blog here.

Key Insights: Evolving US & Europe Insurance Landscapes

According to the Capgemini’s World Insurtech Report, 2021 – US & Europe markets have seen vast disruption due to the emergence of Insurtechs and Big Tech players. Capital is changing the rules of the game. Here are some key insights from the report:

  1. Full carriers — insurtechs that both develop and distribute insurance products — are the fastest growing category by volume in both the US and Europe accounting for more than 54% of funding.
  2. Distributors — insurtechs that only dispense insurance products — are declining in numbers, which is a sign that full carriers are becoming stronger, coupled with some exiting the market through incumbent acquisitions.
  3. Enablers — insurtechs that provide incumbents with software solutions — remained the most significant category and account for more than nearly half of the total Insurtechs investments.

This has resulted in the Insurance sector’s end-user spending in technology and IT services to reach $225 billion by 2022, while Insurtech market growth expectations for 2020-24 are at a stunning +36% growth.

A Tech-Enabled World for Future Pandemic Phases
Read our latest blog here.

Working with Insurtechs or against them?

The pandemic created the right conditions for innovative tech firms to rise up as viable alternatives: 50% of customers are now open to getting coverage from insurtech startups or Big Tech. And insurers risk being removed entirely from the value chain. In response, insurers have accepted they need to work with insurtechs.

  • Global insurtech funding has already reached $7.38 billion in H1—fueled in part by insurers looking to boost their digital capabilities.
  • Incumbents are also securing strategic partnerships to integrate tech into their operations. UK-based Tractable has partnered with 20 auto insurers globally to enhance their claims management with AI.

Incumbents will seek to address their shortcomings by widening distribution through third-party platforms—albeit while surrendering direct customer relationships—and offering more preemptive insurance products.

According to a recent Capgemini report, Traditional insurers are stepping up their capabilities game. Here are the insights from studying the partnerships and acquisitions of the 15 largest insurers globally that includes 44 deals in 2020.

  • Business Lines:

P&C insurers still account for the lion’s share of capability enhancing deals (698%), followed by health (17%), and life insurers (15%).

  • Deal Goals:
    Developing new digital offerings such as on-demand  or pay-per-use insurance was the most common objective of these deals (42%), followed by accelerating time-to-market (37%). Notably only 21% of these deals focused on improving service or claims customer experience.
  • Impact:
    Improving reach was the primary goal for 56% of these deals, followed by enhancing convenience (28%) and Advice (16%).

CX Trends 2021: How Businesses are Winning Customer Experience Moments
Read our latest blog, here.

Business cognizance for the new-age digital insurers

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