Article Synopsis :
Business-to-business-to-consumer (B2B2C) distribution is not new to insurance. Bancassurance (insurance sold via banks) has been a successful model for many years, and other non-insurance players already distribute insurance in many markets.
Oliver Wyman expects this trend to accelerate in the near future, driven in particular by improved customer access from digital players and by technological advances that make it much easier to fit insurance into partner ecosystems.
To win in B2B2C, insurers will need to build distinctive capabilities and make clear choices about positioning. In particular, long-term success will depend on the ability to offer differentiated propositions and services to unlock the real value in partnerships.
The report defines ‘B2B2C Insurance’ as the sale of life and non-life insurance products via non-insurance intermediaries, and also the direct sale of insurance products to customers (B2C). B2B2C Insurance encompasses a wide range of potential partners for insurance companies, from banks to car manufacturers, telecom companies, utility providers, retailers, e-commerce and other digital players, where the traditional focus has been on selling annex insurance products as supplements to the partners’ core product – such as motor insurance for a car sale, creditor insurance for a mortgage, or mobile insurance for a mobile sale.
The B2B2C business model can be very attractive to insurers seeking new modes of differentiation. Consider the following:
B2B2C Insurance is a promising opportunity – B2B2C insurance is a multi-billion-dollar market with high growth potential. Several leading players active in the space have experienced double-digit growth over the last few years, and have made their ambitions known.
Serving this segment is complex – Working in this segment requires the deployment of a whole range of specific capabilities and competences. While players with existing B2B2C business and capabilities have some competitive advantage, there is room for more competition and for more differentiation in the way partners are being served.
Differentiation is key – The main risk for insurers operating in this segment is value leakage to the partner, leaving the insurer as a mere risk carrier. The report identifies several strategies that can help insurers fight the risk of value erosion.
Several players are actively positioning themselves in the B2B2C space – Recent moves from large insurance groups demonstrate an appetite to take quick advantage of opportunities.
Insurers considering B2B2C should ask themselves three questions:
- Is there an opportunity for us in B2B2C Insurance?
The answer will depend on multiple factors, including:
- The current starting point of the insurer in terms of product offering, geographical presence, capabilities, competitive advantage and strategic priorities
- The market potential and economics for B2B2C insurance for the products and geographies being considered
- The competitive environment and strategies deployed by the competition to address the B2B2C segment
Note: Insurers without existing B2B2C Insurance capabilities should not immediately rule out a move into the space, especially if the market shows great potential. Instead, they should carefully consider which existing capabilities could be used to their advantage.
- Where should we compete and what will this require?
Once an opportunity has been identified, the second step is to decide in which areas the insurer wants to play:
- Types of partners (industry, size, business model)
- Product scope (niche vs. mass market, single product vs. multi-lines)
- Geographical scope (national vs. regional vs. global)
- Strategic differentiation axes (how do you want to differentiate yourself?)
Note: A clear positioning on all these dimensions will form the core of the insurer’s B2B2C strategy. The decision should be influenced by a clear understanding of the specific potential in each area and the required investment to capture each opportunity.
- How to get there, and which capabilities and operating model should be deployed?
Once the positioning and strategy are defined, the third step consists of defining the transition path to deploy the strategy:
- Plot capability requirements against existing capabilities
- Define a strategy to acquire or build missing capabilities
- Define the overall operating model to support the activity
- Build the transition plan
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Digital Insurer's CommentsWe agree with the report that insurers should embrace B2B2C not as a threat but an engine of growth and value creation; an invigorating opportunity to ‘think outside the insurance box’ toward the creation of new and differentiated value propositions for partners and customers.
B2B2C is fundamentally about partnership. Ultimate success in the space requires an in-depth understanding of the partner’s business, their strategy, and, most importantly, the profile of their customers. Do your homework. Know thy partner. Cutting corners can lead to expensive mistakes.
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