Other parts of this series:
New entrants are redefining the insurance distribution ecosystem with multi-industry partnerships and low-cost, highly personalized digital service.
Fintech companies and startups have invested significantly in insurance—to the tune of an estimated US$4.9 billion over the past five years, and $2.6 billion in 2015 alone. Distribution has proven to be especially attractive to new entrants, approximately 65 percent of which are focused on this aspect of insurance.
Many new entrants are threatening traditional distribution models with scalable, digital platforms that are enabled by analytics. What’s more, their operating models are based upon powerful multi-industry partnerships that allow them to extend their value proposition outside the typical limits of insurance distribution.
This shift from the “I” of insurance distribution to the “we” of platforms and partnerships is causing traditional insurers to re-examine the way they do business.
Established carriers urgently need to form partnerships
Accenture research shows that 72 percent of carriers have already formed, or plan to form, partnerships outside their industry. However, leading players are already inking some of the best deals—we’ll look at some of them later in this series—and laggards must proceed urgently in order to not be left behind.
New entrants want to own the customer experience
It’s not surprising that new entrants have focused on the distribution space. After all, underwriting and taking on risk is capital-intensive and highly regulated. And insurance distribution is an area where customer-centric, digitally savvy players can carve out a slice of the market with tailored, highly relevant service and product offerings. Their strategy includes:
- Low-cost delivery through digital channels, which emphasizes a simplified, transparent and personalized buying experience.
- Leveraging convenient, point-of-purchase touch points, such as bundling auto insurance with vehicle purchase.
- Collecting data from wider, deeper sources to foster stronger customer relationships and establish other residual revenue streams.
Capturing opportunities in the platform economy
While this blog series is focused on insurance distribution, carriers should be cognizant of a more general push toward the platform economy—the need to partner across industries to gain or enhance capabilities, offer better customer outcomes and extend the insurance value chain. Indeed, the platform economy was identified in Accenture Technology Vision for Insurance 2016 as one of six key technology trends affecting carriers.
In the following two weeks, I’ll share examples of how new entrants and insurance incumbents are leveraging partnerships to create more collaborative, personalized insurance distribution ecosystems. Tune in next week as I look at the strategies—and success stories—of two new entrants.
- To read more about the platform economy—and other key technology trends affecting insurers—register to download Accenture Technology Vision for Insurance 2016 (PDF).