Written By: Seth Rachlin | Capgemini
The mismatch between what customers want and what insurers are offering signals an untapped opportunity for insurers to make the most of changing customer preferences.
In my previous blog, I briefly highlighted today’s glaring gap in emerging-risk insurance coverage. Now, I’ll delve deeper into some additional findings from Capgemini’s recently launched World Insurance Report (WIR) 2019.Customers feel unprotected from emerging risks
Our survey of more than 8,000 insurance customers across 20 markets revealed that policyholders are highly concerned about exposure to emerging risks. Individuals said they were most worried about new medical and health risks, while worries about exposure to threats from a changing business environment were keeping business customers up at night.Customer perception of emerging-risk exposure varied by region. For instance, those in European countries such as the Netherlands, Sweden, and Germany were less worried about medical and health concerns, likely because of their countries’ relatively mature healthcare and health insurance environments. Similarly, a full 92% of business customers in Japan said they have medium-to-high exposure to rising natural catastrophes – while, globally, customers did not cite disruptive environmental patterns at the top of their list of coverage concerns.Existing insurance policies do not appear to prioritize emerging risks. WIR 2019 customer survey responses indicate a vast coverage gap in current insurance offerings. Emerging risks and demand for new offerings: Customers’ view vs. insurers’ view (%), 2019
Almost 87% of individual customers reported medium-to-high exposure to new medical and health concerns, but only one in 10 said their current insurance policy adequately protected them against this risk. Similarly, among surveyed business customers, only 12% said their current policies comprehensively covered risks from changing employment trends spurred by automation and the gig economy, as well as frequent regulatory reforms.Cyber risk is another area that demands insurer attention. Both individual and business customers rated cyber threats as top risks, but only 3% of individuals and 18% of businesses said they felt well protected. Clearly, the time is now for insurers to enhance commercial cyber coverage offerings and to explore cyber threat coverage for individuals.A few insurers have begun to supplement their cyber insurance portfolios. Global insurance broker Marsh launched a cyber self-assessment tool that enables customers to address issues before the underwriting stage and to obtain greater insight into cybersecurity preparedness. The online cyber self-assessment tool is available to Marsh’s US clients with a global rollout planned for later this year. [1]Insurers do not appear to fully recognize the demand impact created by emerging risks – with less than 45% acknowledging that emerging threats are triggering customer demand for new offerings.Product pipelines lack alignment with customer expectations
The emerging-risks coverage gap underscores the need to move beyond sustaining innovation to a disruptive approach that includes new or refactored products. We found that although insurers are beefing up their product development pace, product pipelines for covering emerging risks are not equally robust. Less than 40% of life and health insurers have built a pipeline of new products to cover new risks comprehensively. Product development pace and new product pipeline for comprehensive coverage (%), 2019