Other parts of this series:
- New platform businesses offer P&C insurers a precious opportunity to expand and ramp up revenues
- P&C insurers must transform their workforces if they want to benefit from the rise in platform businesses
- P&C insurers need flexible and responsive liquid workforces to make their platform businesses soar
- Key steps to help P&C insurers build the liquid workforce they’re going to need in the digital economy
Platform businesses, built on sprawling digital ecosystems, offer property and casualty (P&C) insurers a much-needed opportunity to secure closer relations with customers, open new markets and generate additional revenues.
P&C insurance providers are fast realizing that digital disruption is as much an opportunity as a threat. They’re worrying less about digital technology eroding their traditional businesses. Instead, they’re looking at the benefits it can deliver.
One of the reasons for this shift is the growing appeal of digital ecosystems. Throughout the world these ecosystems are spawning a host of “platform” businesses that generate value through multiple digital interactions between suppliers, partners and customers. It’s a phenomenon that’s changing the economics of business. Companies can now quickly build big, sustainable businesses without having to own extensive resources or production capacity.
Already, 83 percent of insurers expect to incorporate platform business models into their growth strategies within three years. Furthermore, 81 percent of insurers believe platforms will be the glue that brings organizations together in the burgeoning digital economy.
Platform businesses offer P&C insurers a much-needed opportunity to secure closer relations with their customers, open new markets and generate additional revenues. It’s no wonder P&C companies are enthusiastic about their potential. For close to a decade P&C insurers have had to contend with contracting premium income, rising customer expectations, increasing competition and growing market disruption caused by the onslaught of digital technology.
Digital giants Apple, Amazon and Google, which pioneered platform businesses, have shown just how effective they can be. Think of Apple’s iTunes, Amazon’s on-line shopping service, or Google Maps. These platform businesses have intimate digital connections with hordes of consumers and generate revenue from multiple sources. Once they’re established, it’s difficult for rivals to overhaul them. Moreover, they’re well placed to seize new business opportunities that emerge within the ecosystem.
Progressive multiline insurers such as Allianz, Ping an, AXA and USAA are building digital ecosystems that host a variety of platform businesses. Many other insurance providers, including P&C firms such as American Family and Progressive, are using ecosystem partnerships to create new platform ventures. A swarm of P&C start-ups, including Beam Technologies, CoverHound, Lemonade, Metromile and Trōv, are establishing niche platform businesses that are likely to operate within many different digital ecosystems.
This surge in platform businesses is going to reshape the P&C business radically. New business partnerships and technology alliances will be essential. The boundaries between markets are going to blur. And relations between insurers and their customers will need to be closer and more active.
To capitalize on the potential of digital ecosystems, and build lucrative platform businesses, P&C insurers will need new technology and new business models. Most importantly, they’ll require new attitudes to their workforce.
In my next blog post, I’ll discuss the skills and competencies insurers must have to build successful platform businesses.
Until then, take a look at these links. I think you’ll find them useful.
TECHNOLOGY VISION FOR INSURANCE 2016 REPORT
Learn more about this year's insurance trends in the Technology Vision for Insurance 2016 which takes a look at the primacy of people in the digital age.