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Recent disasters, pandemic 'fuelling consumer changes'

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The consumer shift towards digital channels and demand for tailor-made insurance products has increased even more, driven by recent natural disasters and coronavirus lockdown measures, according to consultancy Capgemini.

But the industry is not responding quickly enough and risks slipping further behind “Big Tech” titans such as Google and non-traditional players like Tesla, which now offers auto insurance in the US.

In Australia, the trend has been sparked in part by last season’s bushfires catastrophe.

“We’ve seen a shift over the past six months in regard to how customers are looking to engage insurance providers,” Director of Insurance Industry Practice Easwaran PR told insuranceNEWS.com.au.

“The Australian bushfires saw an increase in customers looking for hyper-personalised, accessible insurance in regard to claims and minimisation measures, which providers continue to struggle with.

“What we see today is customers looking at various channels like online reviews to help inform and influence their purchase decision.”

About 36% of consumers in 32 markets including Australia say they will consider buying insurance from a “Big Tech” company, up from 17% in 2016, according to Capgemini’s annual World Insurance Report.

Released last week, the report says insurers must evolve quickly from their one-size-fits-all approach to provide tailor-made products that are unique to policyholders’ specific needs and preferences.

More than half of the 8000 customer respondents say they want usage-based insurance. However, 50% of more than 150 insurance executives who were interviewed for the report say they do not currently provide it, and a similar number believe product-fit is “not necessarily important”.

“Simply put, insurers need to offer the right products, at the right time and via the right channels,” the report says.

“Also as customer preferences are evolving faster than ever, continuous assessment through real-time data management is highly needed so that customer experiences evolve at par with consumers’ needs and desires.”