Insurance Ecosystem Models
Editorial by Hugh Terry
In this month’s edition of InsurTech Insights we take a look at ecosystem models.
Similar to last month’s on demand edition, it is helpful to have a discussion around definition. Ecosystem is a great buzz word, but what does it really mean in the context of insurance business models?
For me, ecosystem models are digital business models that initially engage with a customer on a need other than insurance and then through the strength of the relationship are able to provide insurance products appropriate to the needs of that customer (and initially allied to the product or services they are purchasing).
Generic examples of ecosystems are second hand car portals, real estate search sites, online medical advisory services, flight and travel portals, connected cars and connected homes.
The power of these models is – they reduce the costs of insurance distribution and provide rich information that allows targeted and highly segmented offers to be made. They also provide insurers with access to a wider set of data upon which to make better offers at the appropriate price.
Martin Blake, The Chairman of KPMG in New South Wales, in his article identifies a number of examples in Asia and Australia and provides three key pieces of advice to insurers looking to participate in digital ecosystems – become more agile & innovative, create a forward looking view and create partnerships & alliances.
Rick Huckstep, in his article, looks at a couple of examples including ZhongAn in China. Rick predicts that ecosystems will become the “business as usual” insurance distribution model and also starts to question the role of the insurer in these models. He asks whether reinsurers can play this role?
Is the future of insurance to be a component product offering within a broader ecosystem model? It certainly feels the case with P&C and arguably bancassurance and broad based price comparison sites who have already shown how life insurance can fit nicely within broader based wealth offerings. There is no doubt that digital is leading to industry convergence at an unprecedented scale and pace – and perhaps being a niche within these large models is not a bad place to be if your position is secure!
As usual, do look at the links below which provide further information around the topic. You can also register for our upcoming webinar on the 19th October where we will discussing the topic in more detail with a fantastic line up of panlelists.
The buying of insurance is going to change. The “sold, not bought” view of insurance has run its course for many lines of business. Customer expectations have changed and the inside-out approach to building silo-ed, exclusion-filled, fixed term products just doesn’t cut it anymore.
Change is inevitable. The traditional insurance model, based on serving customer needs through provision of homogenous products with prices decided through actuarial models, has started its gradual but inevitable decline. Evolving customer expectations, as well as the opportunities presented by new technological capabilities