Insurers move beyond standalone products in shift to ecosystem solutions
Digital ecosystems offer insurers new ways to strengthen customer relationships and generate revenue. But they require substantial changes to the way those firms operate. Customer demand for digital services is pushing insurers away from standalone products toward protection and assistance solutions delivered through partner ecosystems.
Digital ecosystems offer insurers new ways to strengthen customer relationships and generate revenue. But they require substantial changes to the way those firms operate.
Customer demand for digital services is pushing insurers away from standalone products toward protection and assistance solutions delivered through partner ecosystems.
To succeed, insurance providers need to secure strong ties with product and technology partners, share data across multiple platforms, and use automation and AI to coordinate their solutions. They also must make sure their offerings are available to customers when they’re most needed.
It’s a demanding task. But the rewards for those that get it right promise to be substantial.
Within five years, around 30% of the global economy, an estimated US$100 trillion, could be generated by digital ecosystems, according to McKinsey. The company describes the emergence of digital ecosystems as the “single largest economic transformation of human history.”
“We are entering the era of the solution-oriented ecosystem,” says Kristel Lataste, Global Head of Digital Growth at Allianz Partners. [13:08]
Key takeaways
- Clients increasingly expect digital access to insurance services that are easy to reach, simple to use, and available whenever needed.
- Delivering ecosystem solutions requires insurers to build strong partnerships, share data across platforms, and use automation and AI to coordinate service delivery.
- Insurers are quickly adopting ecosystem strategies with none of the executives polled at the online event reporting that their firms are sticking with just standalone products.
- Data silos, partner alignment, legacy technology, and internal culture all need to be addressed when building ecosystem solutions.
- Regulators are critical to the development of digital ecosystems and can be growth barriers or catalysts.
- Speakers outline seven key steps to deliver successful customer-centric ecosystem solutions.
With annual revenues of more than €10 billion, Allianz Partners is a global provider of insurance and assistance services to its business partners.
Lataste acknowledges that the transition is challenging. Insurers need to integrate often complex technology infrastructure and data resources with the operations of their partners while also overhauling their internal business processes. Allianz Partners’ process for providing roadside assistance, for example, requires major changes.
“We not only need to rethink the process on our side, but also rethink the process in co-creation with the different partners that are playing in the ecosystem or partnering with us.” [20:24]
Lataste was speaking at an online event hosted by Qorus and Allianz Partners that discussed the opportunities and challenges facing insurers as they move from standalone products to ecosystem solutions. Alongside Lataste were Uğur Çağlar, CEO at Turkcell’s insurance provider Wiyo, and Marcelo Frontini, Qorus Regional Director in Brazil.
Insurers are quickly incorporating ecosystems into their business strategies, according to executives polled at the event. None of them said their firms were sticking with just standalone products. Twenty percent said their firms are already offering integrated packages built around specific customer needs, while a further 30% reported that their companies are embedding offerings into customer journeys on partner platforms. The remaining 50% said their organizations are in transition and have started bundling products with basic services.
Major hurdles to embedding ecosystem services
Lataste’s caution about the difficulties facing insurers adopting ecosystem solutions resonated with many of the executives at the event. When asked to identify the biggest of four major hurdles to embedding services, they responded as follows:
• Data silos: Discrete data sources make it difficult to gain or share insights from customer data — 42%.
• Strategic alignment: Finding the right partners, agreeing on shared incentives, and building sufficient trust to create integrated offers is a common challenge — 33%.
• Legacy technology: Established systems don’t connect easily to partner platforms and make it difficult to deliver integrated solutions across ecosystems — 17%.
• Culture shift: Moving the mindset of employees away from traditional sales targets to collaborating with external partners is hard — 8%.
Insurers’ experiences in Turkey and Brazil show how regulation can either be a barrier to ecosystem growth or a catalyst for expansion.
Current rules in Turkey restrict Wiyo, a subsidiary of mobile phone network operator Turkcell, to providing embedded insurance only for device protection. Similar local rules limit the provision of embedded travel insurance to companies selling travel services.
“We are working with a working group that's comprised of embedded insurance companies and ecosystem providers to propose to the regulator an expansion to this framework,” says Çağlar. [32:29]
Wiyo sells credit insurance and accident cover as well as device protection. It markets standalone policies through its call center and digital platform but most of its sales come through embedded channels. Greater regulatory flexibility would allow Wiyo to expand its embedded offerings.
The company is looking to provide cover for ecommerce purchases, utility payments, pet healthcare expenses, event cancellations, and personal cybersecurity risks.
Qorus’ Frontini highlights the role of Brazil’s financial services regulator in promoting ecosystem growth.
By removing the barriers to data sharing, the regulators have opened the way for customers to easily and securely move across digital platforms, says Frontini.
He adds that insurance in Brazil, like in Turkey, has a low market penetration and offers providers substantial opportunities for growth. Embedded offerings in mobile banking apps, for example, could include travel cover, personal loan protection, and fraud insurance, says Frontini.
“The main benefit in the long term is that the regulators are forcing the market to standardize.” [54:45]
Key steps to successful ecosystem solutions
Speakers at the event outlined seven steps to delivering successful customer-centric ecosystem solutions.
- Redesign the business around the customer journey. Identify where the customer journey begins, keep the digital experience consistent, and remain engaged.
- Build strong ecosystem partnerships. Select strategic partners that can provide technology or business advantages, and work with them to co-create customer solutions.
- Share data across ecosystems. Customer and transaction data need to flow through APIs, apps, and other interfaces to ensure a consistent, high-quality user experience.
- Rebuild processes and systems for AI-first business models. Use automation and AI to support faster, smoother customer journeys and shift focus from connecting processes and systems to intelligent orchestration.
- Transform workforce culture. Encourage an employee mindset that embraces innovation, collaboration, and transparency.
- Keep embedded offers simple, relevant, affordable, and instant. Successful ecosystem offers tend to be narrow in scope, easy to understand, tied to familiar risks, affordable, and presented at the right moment.
- Work with regulators to grow ecosystem opportunities. Keep regulators informed about the economic and social benefits of ecosystem expansion to open opportunities for further business growth.
Standalone products are no longer enough for insurers that need to stay close to customers who are increasingly shifting to digital services. Embedded ecosystem solutions allow providers to deliver protection and assistance through the digital platforms and services that customers already use. But insurers will need to build new partnerships and make major changes to their systems and processes to deliver them.
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