Other parts of this series:
Platform businesses will enable insurers to work more closely with telcos and retailers to provide customers with highly personalized products and services.
Major telecommunications companies (telcos) and big retail chains are set to become prominent distribution partners for insurers looking to expand their markets. They boast extensive sales networks and large numbers of highly-engaged customers. Many of these customers have yet to buy insurance.
Insurers in South Africa and in many other countries have begun using the sales infrastructure of telcos and retailers to distribute products such as personal accident cover and life insurance. Sanlam and Old Mutual, for example, distribute funeral insurance through Shoprite Checkers’ retail network. In the US, Metropolitan Life is promoting its insurance products in Walmart stores. And in the southern African telecommunications arena, Hollard has forged ties with MTN and Cell C.
The rise of platform businesses, which span several digital ecosystems, is likely to deepen and extend relations between insurers and their telco and retail partners. These digital platforms will enable carriers to work more closely with such partners and deliver more personalized products and services.
Platform businesses are being spawned by the digital disruption that is sweeping not only the insurance industry but also the telecommunications and retail sectors.
Major telcos are having to adjust to shifting consumption patterns, growing customer demand for highly-personalized real-time digital experiences, increasing competition from new market entrants and the need to secure additional revenue streams.
Retailers face similar challenges. Many of them are responding by investing in digital technologies to expand their storefronts, improve customer experiences, develop social media channels, enhance decision-making and reduce infrastructure costs.
Platform businesses will enable telcos and retailers, as well as insurers, to change substantially how they conduct business. They’ll be able to co-operate with a wide range of partners, across many parts of their value chains, to curb costs, improve efficiencies and deliver digital products and services to highly-focused markets.
The emergence of platform businesses provides insurers with an ideal opportunity to forge closer ties with retailers and telcos. Our research shows, for example, that 52 percent of retailers worldwide are already investing in comprehensive digital technology platforms as part of their business strategies.
Instead of simply capitalizing on the established distribution networks of retailers and telcos, insurers should rather align themselves with the new platform businesses these organizations are building. By embedding themselves within common digital ecosystems they can share infrastructure, expertise and even customers to create new revenue streams. Furthermore, they can harness such digital alliances to become market disruptors – opening new markets and business opportunities.
Carriers that move quickly to establish strategic cross-industry platform partnerships are likely to secure a significant advantage over their more staid competitors.
In my next blog post, I’ll discuss the steps insurers need to take to build effective platform businesses. Meanwhile, take a look at these links. I’m sure you’ll find them useful.