A new new report from Capgemini and Efma has revealed that the Internet of Things (IoT) and increasing digital demand are forcing the insurance industry towards massive disruption.
The World Insurance Report 2016 (WIR) said the continued development of IoT, along with changing behaviors and preferences from Gen Y customers, is pushing the insurers to undergo significant transformation or risk falling behind emerging competitors such as FinTechs.
The Voice of the Customer Survey, covering over 15,500 insurance customers, disclosed that Gen Y customers are much less likely to have positive experiences with their insurers compared to other age groups.
The survey showed that around one-quarter of all customers plan to purchase or renew their insurance through digital channels in the next one year , while one-quarter of Gen Y customers prefer to buy insurance from non-traditional technology-led providers.
Capgemini global insurance leader and corporate vice president John Mullen said: "By not providing adequate engagement for digitally-advanced customers, carriers run the risk of pushing them toward a growing population of market entrants and non-traditional technology-driven competitors."
As per the report, the connected technologies, including innovations such as home ecosystems, wearable devices and machine-enabled drones, robots, and cars, are expected to be the key threats to the future of insurers.
These IoT technologies are expected to change traditional insurance business models, including the way insurers connect with their customers to their fundamental assessment and management of risk.
In addition, around 45% of affluent Gen X customers are interested to adopt connected devices, smart ecosystems and wearables compared against 30% to 35% of younger and non-affluent Gen Y customers.
The research was conducted in 30 markets across North America, Europe and Asia-Pacific, which represents 93% of the global insurance market in terms of premium income.
Image: The connected technologies such as home ecosystems, wearable devices and machine-enabled drones are the key threats to the future of insurers. Photo: courtesy of Stuart Miles / FreeDigitalPhotos.net.