Other parts of this series:
Insurers should consider companies from other industries, as well as their traditional competitors, when looking for partners in the emerging platform economy.
Insurers looking to secure close ties with their customers by providing them with living digital services will also need strong links with a wide range of new business partners. Many of these partners will operate in industries very different from the insurance sector.
The rise of digital ecosystems, built on open technology platforms, is providing consumers with a host of online services, products and experiences. Most insurers will need to link, and possibly combine, their living services with those of other ecosystem suppliers to win and retain customers. Such partnerships will also enable insurance providers to capitalize on new, often unexpected, revenue opportunities. Furthermore, close co-operation with other firms within their ecosystem will enable insurers to better gather and analyze essential consumer data.
Several far-sighted carriers are already working with companies outside the insurance industry to deliver living services to their customers. Allianz in the UK, for example, teamed up with BMW to provide owners of its motor vehicles with usage-based insurance. American Family formed an incubator with Microsoft to encourage start-ups to develop connected-home products.
Seventy percent of the executives we canvassed for our Technology Vision for Insurance survey agreed that the rise of ecosystems is presenting them with unlikely potential partners. Some of these surprising partners will probably be competitors. Insurers should consider the example of digital ecosystem pioneers such as Amazon and Netflix. These firms are strong rivals but in some parts of their businesses, such as cloud computing services, they co-operate with each other. Lots of insurers will be able to identify some aspects of their new ecosystem businesses where they can benefit from collaborating with their competitors.
An important area of potential co-operation between carriers is the development and maintenance of the technology platforms that support digital ecosystems. In my previous blog post, I discussed the advantages and draw-backs of creating an in-house platform or alternatively adopting a platform operated by a business partner. For some carriers, this is unlikely to be an either-or option. They will probably develop their own platforms for lines of business, or markets, where they boast a strong brand presence or a very effective distribution channel. For areas of their business that are highly commoditized, or where they’re looking to enter new markets, these carriers are likely to use a partner’s platform. A hybrid platform strategy allows insurers to strengthen their cross-selling and advisory services while also reaching plenty of new customers and building long-lasting relationships with them.Insurers are recognizing the growing importance of living services and the technology platforms that deliver them. Ninety-four percent of the insurers we surveyed acknowledged that a platform-based business model, and ecosystem partners, was critical to their success. Carriers need to move swiftly to identify areas in their businesses that will benefit from collaboration and to select the partners that will help them succeed in the digital economy. Opportunities for such partnerships will diminish quickly. Early-movers are likely to gain a lasting advantage over slow-moving rivals.
For further information about the importance of living services in the insurance industry, have a look at these links: