‘Living business’ insurers are funding new growth by optimizing costs in the core business and pivoting growth strategies to profitable areas beyond the core.

As I mentioned in my previous blog post, there are a few insurance companies that have developed a profound and dynamic understanding of their customers, based on a sophisticated data and analytics capability as well as an authentic receptiveness to what customers tell them. They also have the ability to convert this insight into meaningful, timely actions.

We call these companies ‘living businesses’.

Insurers that are striving to be living businesses are becoming agile and hyper-relevant, delivering intelligent experiences, engaging in responsive innovation and outperforming their peers. According to Accenture’s Living Business Survey, insurers with a high ‘vitality’ score are significantly more confident of their readiness to survive disruption, and more than five times as likely as those with low scores to report year-on-year revenue growth rates that are 50 percent greater than their peers.

I also mentioned earlier that there are five pathways or capability sets for insurers wanting to become living businesses:

  1. Target new opportunities.
  2. Design for customers.
  3. Build engagement.
  4. Scale with partners.
  5. Rewire culture.

Over the next three posts, we’ll look at some real-world examples of insurers successfully using these capability sets, beginning with those that are setting their sights on new opportunities.

Targeting new opportunities

Targeting is about identifying and selecting new value and business models wisely. It includes recalibrating investments based on a better understanding of whether a new idea or opportunity represents a beneficial disruption worth pursuing. It also requires balancing core growth with disruptive growth to fuel responsive innovation.

Insurers should:

  • Understand customers’ changing digital needs and preferences.
  • Pivot growth strategies to profitable areas beyond the core.
  • Fund new growth by optimizing costs elsewhere.

All of the ‘high performers’ in our survey—a group of 30 financial services companies, including 13 insurers, that achieved high ‘vitality’ scores (the ‘living businesses’)—are planning to invest more in growth in areas beyond their core business in the coming three years. This compares to 86 percent of other insurers in the survey. And 87 percent of high performers said these capabilities will be highly important in the next three years, compared to 69 percent of other insurers.

Carriers already on this path include Allianz, AIG, Prudential and Munich Re. All have pioneered innovative models for servicing small businesses and farmers in emerging markets, and offer a wide range of niche products, from pet, travel and event cancellation insurance in mature markets to small-business and crop insurance in developing markets. They enable quick and easy purchasing, often using inventive online and mobile channels.

As part of its Renewal Agenda, Allianz identified ‘growth engines’ as one of the five pillars of its business strategy for the three years to 2018. Allianz X, the group’s digital investment unit formed in 2013, plays a key role in driving growth beyond Allianz’s core operations. It has identified and invested in 15 start-ups across five continents—from BIMA, a microinsurance solution provider that uses mobile technology to serve low-income customers, to an Indonesian on-demand service provider and an AI system that is helping shape the development of autonomous vehicles.

Some are investments in disruptive new ventures with high growth potential, such as N26, a leading digital direct bank in Germany. Others offer technologies that have been used by Allianz to help achieve its strategic goals of enhancing the productivity of its core operations, simplifying its business and supporting the growth of its traditional products. The success of this strategy enabled Allianz to announce, early in 2019, that it had doubled its investment in Allianz X to €1 billion (US$1.14 billion).

As these insurers have done, carriers wanting to target new opportunities should look inward and ask, “What is it about our company that makes us relevant to customers now?” Asking this question and acting on it will allow them to develop a robust targeting strategy, with a view to new opportunities.

In my next post, I’ll look at how leading insurers are designing for customers and building engagement.

In the meantime, read the report to find out how Living Businesses can keep pace with a fast-changing market.

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