Other parts of this series:
- Perfect storm threatens to sink insurers’ earnings by nearly 40%
- Smart digital strategies enable insurers to double their earnings
- Insurtech firms show big insurers how to thrive in the digital economy
- Defensive digital strategies help insurers strengthen earnings
- Insurers should prepare themselves for constant digital transformation
Successful insurtech firms are setting the pace in their use of digital technology to grow their businesses and delight customers. Traditional insurers can learn much from their example.
Traditional insurers can overcome increasingly adverse market conditions by emulating insurtech start-ups and launching aggressive digital strategies to expand their businesses and ramp up earnings.
Crucial to the success of such offensive strategies are the extensive disruption of target markets, or sub-markets, and significant improvements in the customer experience that insurers deliver. Furthermore, these market-focused initiatives should be backed by defensive strategies that deploy digital technology to increase the efficiency and effectiveness of insurers’ business operations.
Successful offensive digital strategies adopted by insurtech firms, often in tandem with traditional insurers, usually comprise one or more of the following initiatives:
Develop, test and launch new business models: Insurers esurance and Achmea, for example, have hooked into the Internet of Things to develop business models that generate value by providing motorists and home-owners with services that reduce their risk and also encourage risk-averse behavior. Long-standing P&C insurer Apollo has teamed up with Airbnb to provide insurance to home-owners who use the accommodation service. Furthermore, healthcare has offered insurers plenty of scope to develop new business models. Vitality and John Hancock, for example, are working together to encourage consumers to live more healthily by offering a variety of personalized incentives in the US. In Europe, Vitality is working with Generali to launch its personalized wellness program in Germany and France
Personalize consumers’ digital experience: Digital giants such as Facebook, Amazon and Google have taken the lead in providing their users with highly personalized digital experiences. Insurtech firms have been quick to follow their example. The roll-out of the Internet of Things, and the appearance of analytics platforms such as Fitsense that track multitudes of wearable devices, has further extended the ability of digital service providers to satisfy customers’ changing needs. Start-ups Trōv and Snapsheet have built highly personalized insurance offerings that can be quickly and easily accessed by consumers using mobile devices. Prominent insurance provider Aegon has launched Kroodle, an insurance service delivered across the Facebook social network service.
Become a platform service provider: The rise of platform businesses, that interlink companies and customers across digital ecosystems, has created a wealth of possibilities for smart start-ups looking to get a footing in the insurance industry. Outshared and Insuritas, for example, offer insurers a variety of platform-based products and services. Analytics specialist EXL is delivering business process solutions to several leading insurance providers. Major insurer Aon is building a risk consulting practice underpinned by advanced analytics technology.
Top-performing insurtech firms have demonstrated the effectiveness of offensive digital strategies. By implementing such strategies, traditional insurers can accelerate their drive into essential new markets, build greater value within their businesses, and fuel earnings growth.
In my next blog post, I’ll discuss the importance of defensive digital strategies. Meanwhile, have a look at these links. I think you find them useful.