Other parts of this series:
- Brokers must quickly prepare themselves for a digital future
- Eight big technology trends that insurance brokers should understand before finalizing their business strategies
- Insurance brokers need to correctly realign their businesses with emerging technology trends
- Six powerful approaches to help brokers find the answers to tough questions about digital disruption
To make the correct transformation decisions and build the most effective business models for the future, brokers need to employ highly rigorous and innovative thinking. Here are six transformation frameworks that will enable them to identify, select and evaluate the best ways to reshape their businesses and become successful brokers of the future.
Brokers have some big choices to make. Major shifts in the insurance industry and the emergence of powerful new digital technologies are causing huge disruption in their traditional markets. They need to embrace emerging technology trends and realign their businesses to capitalize on the opportunities they create. But which trends should they select? Which parts of their businesses should they transform? And, which should they tackle first?
To make the correct transformation decisions and build the most effective business models for the future, brokers need to employ some highly rigorous and innovative thinking. We’ve identified six transformation frameworks, shown below, that will help brokers identify the best ways to reshape their businesses and become successful brokers of the future. By employing a combination of these approaches, they’ll be able to identify, select and evaluate the new business models that will define them in years to come.
All of these frameworks have been employed by organizations that have successfully adapted their businesses to the demands of the new digital economy. By employing a combination of these frameworks, brokers will be able to protect their core business while also launching new services that will provide additional value to their customers. Platform business models, that create value by interconnecting business partners, services and customers across multiple digital ecosystems, are likely to be integral to these twin goals. Around 83 percent of insurance executives expect platform businesses to be part of their growth strategy over the next three years.
The new business models devised by brokers are likely to address one or more of these key roles:
Next-generation risk placement: By using digital technology to connect different parties and assess risk, the broker is able to structure and place risk across a variety of insurers (eg. Aon, Hiscox and Insureon).
Outcome-driven loss prevention: Using analytics systems and a variety of structured and unstructured data sources, the broker provides high-margin advisory and consulting services that help customers understand and manage their risk (eg. AIG, Marsh Risk Consulting and Mactavish).
Risk marketplace with valued services: The broker orchestrates a variety of strategic partnerships with data providers to offer customers a common platform that delivers a marketplace of value-added risk services and products (eg. American Family Insurance).
Innovative carrier solutions: Big data and analytics systems enable the broker to synthesize information from a wide range of customers and deliver critical insights to a variety of carriers that help them increase revenue, develop new markets and access alternative sources of funding (eg. GRiP).
New risk services: By applying data-driven risk analysis and transfer services, the broker is able to create new insurance markets. Disintermediation can be avoided by providing potential competitors with services that enhance their ability to deliver risk-based services to their customers (eg. Friendsurance and Watford Re).
Developing, implementing and refining business models should be a continuous process. The key to success in a highly disrupted market is to make rigorous strategic choices that build on an organization’s capabilities and exploit emerging opportunities.
For further information about how to thrive in an increasingly disrupted and digital business environment, have a look at these links. I’m sure you’ll find them worthwhile.
The Broker of the Future: Winning in a Disruptive Environment
Brokers of the future are digitally sophisticated, able to deliver transparency, strategic risk advice and control for today’s customers.