Other parts of this series:
- Insurers need to respond quickly to win and retain customers in a market hugely disrupted by Google and Co.
- Insurers are equipped to meet rising consumer demands, but their advantage could be eroded
- Insurers can learn from Google and Co how to disrupt and dominate a target market
- Insurers must become constantly relevant to their customers or they will lose revenue opportunities
- Digital enablers help insurers nurture innovation and develop products to fuel revenue growth
- Insurers should align their market roles with key digital enablers to drive up revenues and curb costs
Google and other digital giants Apple, Facebook, Amazon and Alibaba have dramatically changed the relationship between customers and suppliers. Consumers have more clout than ever before. Insurers must respond quickly to this shift or risk losing substantial revenues.
Google’s recent decision to shelve its Google Compare aggregator business may have given insurers some respite from competition from the giant digital services company. However, the threat that Google, and other digital giants, pose to insurers hasn’t gone away. It’s only just begun.
Google, together with Apple, Facebook, Amazon and Alibaba, is without doubt eager to expand its financial services business. And insurance is likely to be high on its agenda. But the biggest challenge these companies have unleashed on insurers is their dramatic disruption of consumer behavior. By introducing highly-personalized digital services, which can be accessed by consumers whenever and wherever they wish, they have radically changed relations between customers and their suppliers. Consumers want such high quality service from all their suppliers. They’re now dictating the terms of their relations with their product and service providers. We’ve entered a new era – the consumer-to-business (C2B) era.
The C2B era is going to place big demands on insurers. It’s turned conventional business practices on their head – it’s now the consumer, not the service provider that’s defining the terms of engagement. Insurers will need to deliver services that match those provided by Google, Apple, Facebook, Amazon and Alibaba (GAFAA) and other digital innovators (see above). Furthermore, they must figure out how to capitalize on the explosion of data emerging from the myriad of digital interactions between consumers and suppliers. This is where much of their new business is going to come from. We estimate, for example, that up to 80 percent of today’s banking revenues could be delivered by alternative digital channels by 2020. A similar shift is likely to occur in the insurance industry.
If insurers don’t adapt quickly they’re going to lose out on these new revenue opportunities. The potential will be snapped up by one of the GAFAAs, some nimble fintech start-up or a vendor from another industry extending its services across a digital ecosystem. Meanwhile, carriers’ traditional revenues will steadily shrink as their customers migrate to suppliers that can provide the digitally-enabled products and services they demand.
In my next blog post, I’ll discuss some of the strengths insurers can build on to successfully compete in the C2B era.
Until then, take a look at some of these links. I think you’ll find them worthwhile.
