Other parts of this series:
In my last post I discussed the overall 2016 World Economic Forum theme of “Mastering the Fourth Industrial Revolution”. This week I want to address the specific issue of disruption caused by platforms.
The stakes couldn’t be higher. As our chairman and CEO, Pierre Nanterme, noted at the outset of the conference, digital is the main reason just over half of the companies on the Fortune 500 have disappeared since the year 2000.
On the opportunity side of the ledger for insurers is the Internet-based platform business model, which was the topic of an insightful panel discussion among highly successful platform architects and owners, an economist, and Pierre. He quoted from the recently released Accenture report, Technology Vision 2016, to the effect that digital technology and the Internet of Things are going to dramatically change the way business looks.
The report underscores just how important platforms will be for corporate growth. Eighty percent of surveyed executives say platforms will be a key part of their growth strategy, and 30 percent report their organizations are already building them.
The panelists pointed out that the typology of successful platforms will vary significantly. Some carriers might build platforms that remain completely within their respective companies, such as online premium-payment and claims-reporting systems. But the panelists—as well as 75 percent of the executives Accenture surveyed—expect that platforms will result in a blurring of industry boundaries. They will also lead to industry and cross-industry ecosystems of business collaborations in which companies can drive more value to their customers than they could on their own.
Some carriers’ platforms might be intra-industry. An example is Progressive’s premium-comparison model. Other platforms would cross industry lines. Think connected automobile telematics that collect and communicate policyholders’ driving habits.
Some carriers will build these ecosystems themselves; others may prefer to reduce their costs and lead time by joining an existing one formed by another player inside or outside of the insurance industry.
There are insurers who are concerned that, in the latter case, the owners of the platform may eventually capture all of the value that flows through the network. One of the panelists, a business professor at New York University, dismissed this notion. Platform owners consider all participants as partners, he said, and they recognize that shared value is essential to the viability of the platform.
Next time: The tech-driven economy’s impact on insurers’ future workforce. In the meantime, you might want to watch these panel sessions from Davos.