All industries are experiencing some form of disruption – including insurance. Products, services, and customer experience are all impacted, and insurance ecosystems are a major cause of this disruption. Insurers can take action to get ahead, and with the right partners and path forward, ensure that their ecosystems are the right economic choice.
Property & Casualty (P&C) carriers need to deliver more specialty data, services, and capabilities to support and enhance their processing and decision-making, and an ecosystem of connected partners makes this possible in entirely new ways.
What Are Insurance Ecosystems?
Platform companies, sometimes referred to as “ecosystems” themselves, such as Amazon and eBay, are organized to meet evolving market needs by orchestrating connections between buyers, sellers, products, data, and service providers. This refers to the complete end-to-end transformation of your business to an open, connected “platform” model, wherein the ultimate customer experience is a byproduct of a central service augmented by numerous connected providers of supplementary data, products, services, and other enhancements that contribute to a holistic end offering.
Many industries predict they will experience disruption due to new innovations enabled by technology, new competitors and regulators, social and cultural shifts, and demographic shifts, according to the Accenture Disruptability Index. Disruption is prevalent across all industries, and insurance is no exception.
Disruption within the P&C industry is being driven largely by the following factors:
- New insurance providers
- New insurance models
- New insurance processes and delivery models
- New insurance products
- New insurance pricing
More and more insurance companies are looking to implement insurance ecosystems, but it’s not always easy to make it a reality. According to Accenture, 97% of insurers who were surveyed believe they have what it takes to be an attractive ecosystem partner, but less than 5% were identified as ecosystem masters.
So what exactly makes an organization an ecosystem master? Accenture defines the term ecosystem master as “[…] companies that aim to disrupt their industry using ecosystems, plan to lead as many ecosystems as possible, and target 5% or more growth through their ecosystem initiatives.”
One term that comes up often is “insurtech,” which refers to “a company using technology to disrupt the insurance industry,” according to Investopedia. An insurtech ecosystem, for example, is specific to technology, whereas an insurance ecosystem encompasses a broader scope of assets.
Why Are Insurance Ecosystems Important?
Insurers need to offer consumers a greater variety of more relevant and attractive experiences and offerings, according to Accenture. Choosing the right partners is essential, because it means bringing the necessary skills and scope “to help secure a more profitable ecosystem opportunity.”
Insurance ecosystems are certainly on the minds of many companies: “More than half of insurance executives say their companies are already starting to experience disruption from competitors that have partners in other industries.” Insurance companies are seeing the largest disruption levels in their products and services offered (60%) and the ways customers receive service (57%).
Ecosystems are a large cause of disruption within the insurance industry, but carriers can design their own insurance ecosystems instead of becoming targets. In many cases, insurance companies are already recognizing the importance of these ecosystems; 84% of insurance executives say ecosystems are important to their strategies, and 54% are actively seeking ecosystems (however, many don’t have what it takes to lead an ecosystem) according to the Accenture report.
How Insurers Can Select the Right Partners
Accenture provides the following tips on how to choose the right insurance ecosystem partner:
- Consider scope, skill, and scale: Insurers should look for partners that offer capabilities that can extend carriers’ current offerings but also offer new products and services. Introducing partners with a variety of capabilities, especially those that insurers don’t have on hand, can prove beneficial. It’s also important to consider the size of a potential insurance ecosystem partner and ensure that they are capable of serving the needs of your customers.
- Select partners who can enhance customer experience: Insurers should make a point of choosing partners that can provide the assets, domain expertise, and technical capabilities required to create a frictionless customer experience.
- Evaluate character, collaboration, customer focus, and incentive: These are all important characteristics that can make — or break — a potential partnership.
3 Steps for Insurers To Get Started
- Consider strategy and priorities. Accenture recommends that insurers should consider the following questions: What role do they want to play in customers’ lives? How bold will their aspiration be? What will the market play be? It’s important to determine a clear path forward and distinguish clear, well-defined goals that are also realistic and attainable.
- Take an honest look at yourself. Insurers need to look at their businesses truthfully and without rose-colored glasses. What are the capabilities, culture, and technologies? Are there any gaps or challenges?
- Pick your partners. This is the time to look for insurance ecosystem partners with the assets, domain expertise, and technical capabilities to support your ecosystem strategy. It’s important to look for partners whose goals and visions align with yours.