July 1, 2019
Ernst & Young recently released their 2019 Global Fintech Adoption Index, an in-depth report based on “27,103 online interviews with digitally active adults” from 27 markets all over the world, including Hong Kong, Germany, Brazil and the U.S. These interviews allowed EY to take a deep dive into global attitudes toward fintech, as well as into the global adoption trends of five different kinds of fintech: money transfer and payments, budgeting and financial planning, savings and investments, borrowing, and, most pertinently, insurance.
The results indicate a strong interest in insurtech across the globe. Eighty-six (86) percent of all respondents were aware of at least one insurtech service, and nearly half of them (48 percent) actively made use of insurtech—defined as “using a premium comparison site, feeding information into an insurance-linked smart device (e.g. an app used to track fitness for discounts on health insurance), or buying products such as peer-to-peer insurance.”
The report notes that non-financial services companies often facilitated adoption of insurtech, for instance by “equipping cars with ‘black boxes’ to provide data for telematics insurance.” This goes hand in hand with the report’s warning to incumbents about the rise of non-financial services companies. “Challengers and incumbents alike face a new competitive threat that comes from outside the financial industry altogether.” These types of companies leverage their existing customer relationships to offer holistic solutions coupled with other complimentary services, which may include insurance.
According to the report, companies like retailers or technology platforms often have the advantage of already pivoting to digital, where they streamlined their consumer propositions in the name of efficiency, convenience and cost. One in four respondents said they would use a fintech challenger or disruptor over an incumbent because the challenger had “more attractive rates or fees.”
However, incumbents still possess a crucial advantage over the companies seeking to disrupt all areas of the financial services industry: the second most common reason in 2019 for a respondent to use an incumbent rather than a challenger was trust. And the most common reason? That a respondent was “not aware or [had] limited understanding of how fintech challengers work[ed].”
As we have heard time and again at InsureTech Connect, Dig | In and other major insurtech conferences, incumbent brokers acting as the “trusted advisor” for their clients is paramount if they wish to weather the global transition to a highly digital world. Incumbents, as they begin to implement their own insurtech solutions, have the opportunity to level the playing field by not only building off preexisting relationships, but also by leveraging the trust they have built up over the years with their clients.