Insurers must decide whether to build their own digital platform or use that of an ecosystem partner. Both options have advantages and disadvantages.

To design and deliver intelligent, real-time living services takes a variety of capabilities. For example, most insurers’ current workforces would not be up to the task. New roles such as ecosystem manager would need to be created, and many incumbent professionals would need to be retrained and digitally enabled.

Notwithstanding these other factors, the digital platform is a critical part of an organization’s service capability. Insurers looking to roll out living services to strengthen their ties with policyholders need secure, robust, open technology platforms that can adapt quickly to the fast-changing demands of the digital economy.

One of the biggest questions facing carriers looking to provide their customers with living services is whether to build their own digital platform or use that of an ecosystem partner. Both options have advantages and disadvantages.

The main advantages to insurers of creating their own digital platform are:

  • They can expand into new markets and reach more customers.
  • They can create new customer experiences and further monetize relationships with customers by adding third-party services to their offerings.
  • They can become ecosystem orchestrators and differentiate their digital offerings through the strength of their partnerships and the benefits they provide customers.
  • As ecosystem orchestrators, insurers can generate value by encouraging business partners to use their platform to deliver digital products, services and experiences.

The disadvantages of opting to build a digital platform include:

  • The high cost of setting up and maintaining an open platform used by many different suppliers.
  • The shift to becoming a digital service provider for other platform users could distract insurers from their core business.
  • Opportunities to secure key business partners and capture new customers are fast diminishing as companies across a wide range of industries jostle to become platform providers and ecosystem orchestrators.

Opting to use another organization’s digital platform to deliver living services has several benefits. They include:

  • By using application program interfaces (APIs) to link to a third-party digital platform, insurers can roll out living services quickly and at low cost.
  • Access to the digital platforms of ecosystems orchestrators with strong brands and extensive reach allows insurers to connect with, and influence, large pools of new customers.
  • Insurers can benefit from third-party services provided by an ecosystem orchestrator, such as legal consulting, reputation management and cyber security.
  • Established digital platforms offer carriers the ability to swiftly introduce, and scale up, complementary services such as on-demand small-ticket insurance.

However, relying on another organization’s digital platform also has some important potential pitfalls.

  • Insurers risk losing control of their customer relationships if their products are integrated with another organization’s brand and consumer touchpoints.
  • Carriers may be reduced to competing on price and terms, rather than brand value and customer satisfaction, because the ecosystem orchestrator running the platform they use aggregates insurance offerings and allows customers to make price comparisons.

There’s no clear-cut answer. Much will depend on the circumstances of each company. However, the illustration below provides a useful guide.

The primary pillars of a platform economy: convenience, community, collaboration, curation, connection.

These five components are vital to the success of a platform business. When selecting the best platform route, insurers should ensure that it will meet these key requirements.

In my next blog post, I’ll discuss the importance of partnerships for insurers looking to deliver living services. Until then, these links provide plenty of useful insight.

Living Services: The next wave in the digitization of everything.

Technology Vision for Insurance 2017: Technology for people.

The Voice of the Consumer: Identifying disruptive opportunities in insurance distribution.

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