Data privacy is set to be the catalyst for the emergence of a totally new business model: the trusted ecosystem.
Last time, I argued that the data monetization business model, which is now beginning to emerge, is already setting itself up for massive disruption—with the unlikely catalyst set to be data privacy and ownership.
I should add that the growing desire of individuals to take control of their own data will likely not just apply to personal data, but to other data generated by devices owned by the individual. For example, who owns the data generated by the telematics “black box” in a vehicle? Is it the vehicle manufacturer, the insurer… or the vehicle owner? If it’s the individual, he or she might be happy to share it anonymously with organizations performing a public service, such as predicting traffic flows or scheduling road-building—but not with a company that will use it to develop a targeted offer. These are complex questions that arise out of the data monetization world, but the answers will help to propel insurance into the ecosystems-of-trust world.
Regulation will clearly play an increasing role in driving this change. Today’s data privacy and usage laws are still immature, and only certain countries have them in place. But I think that is likely to change over time, particularly if we have any highly publicized uses of personal data that seem inappropriate, unduly intrusive or even malign.
It seems to me that the red business model in the diagram below will be characterized by clear lines of data ownership, most notably with individuals owning their personal data and probably the data generated by the devices and objects they own, or maybe even those they use. This will mean a radical shift in emphasis for insurers (and business generally). It will mean that the best position will be on the same side of the desk as the customer. In data monetization, the insurer (and others) use data to understand (and thus serve) their customers better—but also sell (monetize) that data to others after having captured it. Moving forward, it will be necessary to build a trust relationship to earn access to the data in the first place, which will in turn imply a different type of dynamic between customers and service providers.
In its purest form, the insurer (or somebody else) would essentially become the customer’s agent, and would use or share that data only to obtain benefits desired by the customer. The service provider, in some sense, effectively becomes a life coach addressing a higher and higher percentage of the needs and intentions of the individual or household. The notion of data ecosystems remains, but now trust becomes the controlling force or guiding principle.
Insurers, I would argue, already have a head start in this trust-based economy because people are used to giving their insurance companies a lot of sensitive information—and the notion of trust is already built into the relationship. The legal notion that the insurer-insured relationship is one of uberrima fides (ultimate trust) is something that could be brought into the bright light of day, and polished over time until it’s a genuine diamond.
Over the longer term, I would think that insurers could start to carve out a role for themselves as custodians of personal data, risk managers and advisors. We at Accenture believe that tomorrow’s digital insurer will have to form part of an ecosystem of suppliers in order to fulfill customer needs—customers have shown already they want solutions and advice rather than just insurance cover. Who better to manage the customer’s data on his or her behalf than trusted advisors formerly known as insurers?
Oh, and then there’s the specific opportunity of providing insurance against misuse of data, including identity theft. But that’s a whole topic in its own right.
In conclusion: Who controls the data controls the industry, any industry, all industry.
That’s true in the data monetization business model, now emerging. (The 2009 claim by Google’s CEO, Erik Schmidt, that the company’s mission is to store all the world’s information was no throwaway line.) Companies that understand the importance of data are finding new ways of gaining access to it—the pre-eminent way, as I argued, is by providing “free” services that generate that data.
However, the world of data monetization is itself likely to be disrupted as the rules of data ownership and usage are redefined, and the business model I have called “trusted ecosystems” emerges.
I believe that the notion of trust will be central to this new model. Consumers will only part with their data to companies or advisors they trust to use it to their advantage, and the more personal the data the greater the trust will need to be. Insurers could be well positioned here.
To prepare for these disruptions, insurers, along with most other businesses, need to be thinking beyond their current business models to explore and invest in next-generation opportunities to generate revenue. How you position yourself now will likely determine your competitiveness in the future. It is important to invest in your current business, but it will also be important to take a stand on—and invest in—emerging models.
To broaden your thinking about data and data strategy, download From digital wallflower to digital disruptor to explore six technology trends that are shaping the future of insurance.