Other parts of this series:
- Insurers are grasping the need for ecosystem partners in the new sharing economy
- Insurers must re-examine all their business operations to capitalize on the power of digital ecosystems
- Insurers must move now to secure a presence in digital ecosystems and be ready to seize new opportunities
- Insurers must balance the needs of their traditional businesses with the demands of new digital ecosystems
- Insurers can learn a lot from how Google is balancing the demands of its traditional and emerging businesses
- Insurers need to be alert to the role of the Internet of Things in the rise of digital ecosystems
- Insurers must be ready to compete in markets that will be increasingly disrupted by digital technology
- Insurers must change from being providers of products to digital ecosystem orchestrators
The transformation of the insurance industry, triggered by the growing importance of digital ecosystems, will require carriers to dramatically change the way they conduct their business.
They’ll need to move from operating as insurance utilities, which provide compensation for loss and damage, to become ecosystem orchestrators that monetize a wide range of services and access multiple markets and revenue pools. This is a huge leap. It clearly can’t happen overnight. But if insurers don’t start making the journey they run the risk of falling by the wayside.
Our research shows there are three major stages in this transition. As insurers move through these stages their business models become increasingly open and flexible, their range of services and revenue pools expands, and their engagement and interaction with customers rise.
Traditional insurer – This stage describes the status of most insurers today. They have well-established traditional businesses, although revenues are often coming under pressure, and they recognize the need to incorporate digital technology into their businesses. They are improving the digital experiences they provide their customers, expanding their digital channels and rolling out connected insurance products.
Solution integrator – These carriers have recognized the power of digital ecosystems. They are integrating solutions from partners, including other insurers, into their own ecosystems and other providers’ platforms to offer customers a variety of comprehensive protection solutions. These solutions, which are sometimes independent of any insurance product, provide carriers with valuable new markets and revenue streams.
Ecosystem orchestrator – These insurers are using an extensive range of digital ecosystems to monetize new technologies and services and access a variety of new sources of revenue. A continuous flow of customer data drawn from many digital touchpoints and connected devices enables carriers to monitor risk in real time. They can also adapt and develop new products to meet changing demand and behavior and quickly identify and exploit emerging opportunities.
The journey from traditional insurer to ecosystem orchestrator is likely to be challenging. But it’s a journey that is likely to be essential.
For further information about the effects of digital transformation follow this link. I think it will be helpful.