Other parts of this series:
Traditional insurers can release value trapped in their businesses by learning from start-ups the power of disruption.
Low revenue growth and modest investment returns are forcing big insurers to maximize the value they’ve built up in their businesses over many years. Often, much of this value is trapped. Insurers can’t access it because it’s embedded in outdated systems and processes.
Digital transformation projects I’ve been involved in recently have released value trapped in big insurance businesses by increasing agility, responsiveness and innovation at these companies. Insurtech ecosystems have the potential to unlock further value.
By bringing insurance providers into close, continuing relationships with a diverse range of start-ups, these ecosystems can show carriers the power of disruption. Traditionally, insurers have viewed disruption as something that’s inflicted on them by competitors, especially agile insurtech firms. However, when managed correctly, such disruption can be an effective tool for releasing value within a business. Working alongside start-ups, within an insurtech ecosystem, will allow insurers to identify and implement disruptive strategies that will unlock business value.
I’m not suggesting that big insurers disrupt their whole businesses and try to operate like agile start-ups. Instead, carriers should adopt some of the disruptive practices that start-ups have perfected and apply them to specific parts of their businesses. Then, if this is successful, they can introduce them more broadly. What’s more, insurers that are part of insurtech ecosystems could pull in skills and talent from some of their start-up partners to help them introduce these practices.
Where should disruptive practices be applied? Much depends on the specific characteristics of each organization. However, our research has identified some of the key areas of business where digital technology combined with disruptive practices can release substantial value.
Increasingly relevant: Top performing digital organizations know how to become, and stay, relevant to the specific needs and demands of their connected customers.
Network-powered: By working closely with their ecosystem partners, forward-looking companies can quickly bring the best products and services to their customers.
Technology-driven: Top digital performers use advanced technology, together with extensive data management resources, to quickly innovate and scale up new applications.
Asset-smart: By constantly optimizing their assets, smart companies can switch swiftly to new business models to gain an advantage over competitors.
Hyper-lean: A big commitment to intelligent operations, with extensive automation and artificial intelligence, enables high-performing companies to free up resources for greater innovation.
Agile workforces: Companies with flexible workforces, that combine in-house talent with on-demand external skills, can quickly gain an edge over rivals in traditional and new markets alike.
Insurtech ecosystems offer insurers a great opportunity to pull these typical start-up practices into their businesses. The value these disruptive practices might release could be substantial.
If you’d like to discuss further the potential of insurtech ecosystems, please get in touch.
In my next blog post, I’ll describe the important role insurtech ecosystems can play in insurers’ digital transformation plans. Until then, click onto the link below for more information about how insurers can benefit from working closely with insurtech firms.The rise of insurtech: How young insurance start-ups and a mature industry can bring out the best in one another. The rise of insurtech: How young insurance start-ups and a mature industry can bring out the best in one another.