Data ownership is the question that will usher in the next wave of disruption. Insurers should be thinking about how to prepare for a totally new business model.

At one level, there’s an upside for consumers to the scramble for data gold: more relevant offers and solutions, less spam and junk mail. And, as the Accenture 2013 Consumer-Driven Innovation Survey shows, insurance customers in particular are willing to share personal information in order to optimize coverage and premiums, and to receive more personalized products and services.

However, as the value of data becomes better appreciated, individuals are starting to question whether they should not be benefiting from their own personal data more directly, perhaps even in monetary terms. Two other factors are fueling this change in mindset.

One is the slow realization that those holding these vast stores of data actually possess a lot of sensitive personal information over which individuals have no control (as discussed in a previous blog). People are wanting to take back control of this data. As a result, data privacy laws are becoming more common as regulators take up the issue.

The second, related factor is the question of data ownership. At present, the principle seems to be that whoever collects the data owns it—and thus can resell to companies (or other organizations) that wish to use it (for more, see my previous blog The data feeding frenzy: Don’t be lunch).

All of this raises significant privacy and libertarian concerns, which are becoming mainstream especially as the Internet of Things gathers momentum, providing even more personal and location-based data. (The Internet of Things describes the growing number of objects that are fitted with sensors that are connected to the Internet.) Another concern is that with all this information at its disposal, marketing could soon cross a line between persuasion and undue influence.

I believe that there are already signs that the dynamics of the data world are in flux, putting the data monetization model at risk. You can see it in the emergence of companies like Reputation.com, Respect Network and Datacoup that offer Joe Public ways to profit from personal data—and, in a certain measure, to control what it’s used for. Another approach is offered by Microsoft HealthVault, which aims to provide a safe place to store health-related information.

One extreme case is Jennifer Lyn Morone, who has registered herself as a corporation in Delaware in order to take control of her personal data—an “attempt to establish the value of an individual in a data-driven economy” (in the words of The Economist).

If this shift occurs—and I believe it will—it will turn the data monetization business on its head. It will tilt the balance of power back towards the individual, a move away from an enterprise-centric business model to a people-centric one. Welcome, in fact, to the largely unmapped and unthought-about realms of the red business model, which I have tentatively called “trusted ecosystems”.

More about them, and the issues we have to consider, in the next blog.

Riding the digital S-curve: Disruptions and new business models in insurance
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