In this blog series, I’ve been looking at why insurance carriers need a platform and ecosystem strategy, regardless of whether they operate their own platform or participate in that of a third party. The race is on between industry incumbents and tech startups to define the digital ecosystems of the future.

For now, it’s the digital brands such as Apple and Amazon that are in the lead. However, large companies in most industries are beginning to contemplate platform-based business models as well as their place in the future ecosystem.

There is a surge of investment, including venture capital and acquisitions, going into the next wave of platform companies—as many as 70 percent of unicorns are platform companies. Insurtech, meanwhile, has emerged as a vibrant segment of the fintech market. In 2016, the number of deals involving insurance tech startups climbed 42 percent to more than 170, with a total value of $1,7 billion.

As these organizations—and companies such as automakers, makers of Internet of Things devices, and others—start to build their ecosystems, insurers must decide where they will play. They have three main options: launch a platform of their own, join an existing ecosystem to leverage the platforms offered by other parties, or a combination of these strategies.

70 percent of insurers agree that ecosytems are creating an environmnt for otherwise unlikely partners

Plug into other platforms and their ecosystems

Insurers can use APIs to embed their products into other platforms, customer ecosystems and shopping experiences such as those of social platforms, travel sites and retailers. This is a good way to secure access to new customer pools quickly and cost-effectively; it can also open opportunities such as selling on-demand, small-ticket insurance in a scalable manner.

Jumping into another ecosystem can give insurers rapid access to new customer bases and improve their customer experience. However, it may mean that they lose some control over the customer interface and relationship because they are leveraging another organization’s brand and touchpoints.

Own a platform and orchestrate an ecosystem

Creating their own ecosystem (e.g. for health services or real estate) can give insurance carriers the ability to expand into new markets and create compelling new customer experiences. It can also allow them to add more value for customers and monetize their customer relationships by offering third-party services as part of their extended offering.

Insurers could aggregate and offer value-added products and services that cater to a wide range of financial and lifestyle needs on their own digital platforms. They could partner with other financial services firms, healthcare companies, automakers, and more to provide high-touch, personalized lifestyle and financial services.

They might, for instance, assist customers with moving to a new city, starting a family, or improving their lifestyle.

Insurers that want to build their own platforms and orchestrate the ecosystem will face high barriers—they will need to attract customers and lure in strong partners. The window of opportunity is closing as companies across a range of segments try to establish themselves as the platform providers and ecosystem orchestrators of choice.

The hybrid approach

In practice, most insurers will pursue different strategies for different lines of business or different market segments. They could develop their own ecosystem for lines of business or geographies where they have a strong consumer-facing brand and advice-led sales, and leverage other ecosystems for products that are highly commoditized or to extend their reach into new markets.

My last post in this blog series will outline a strategic approach to ecosystems and platforms for insurance carriers, as well as the critical success factors.

Read more:

Evolve to thrive in the emerging ecosystem

Accenture Technology Vision for Insurance 2017 report

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