The Ultimate Guide to Insurance Ecosystems

Insurers have to recollect participating in ecosystems to disrupt, as opposed to being disrupted.

Highlights

• Accenture analyzed 18 industries and observed that even though coverage is presently experiencing a moderate stage of disruption, it is amongst the ones most prone to destiny disruption.
• It has been predicted that via 2022, vendors that are slow to respond to modifications by agile, hyper-relevant competitors—we call them ‘residing companies’—may want to go through marketplace percentage erosion well worth a total of US$198 billion worldwide over the next 5 years. They might also forfeit the possibility to pursue new boom opportunities well worth $177 billion.
• Ecosystems are a major purpose of this wave of enterprise disruption. Rather than turning into victims of it, insurance groups can be a part of current ecosystems or design and execute their own to make sure they are the disruptors, rather than the disrupted.

Questions spoke back on this closing guide

• Why is the coverage enterprise liable to disruption?
• Are new technologies a danger or an possibility?
• How are insurtech groups disrupting the insurance gambling subject?
• How can insurers and insurtechs paintings harmoniously collectively?
• What is an environment?
• What is the distinction between a partnership and an atmosphere?
• How are ecosystems disrupting the coverage enterprise?
• If ecosystems are a chief supply of enterprise disruption, what are insurers anticipating?
• What can insurers deliver to the table in an surroundings?
• When it comes to ecosystems, wherein do insurers fall brief?
• What questions need to I ask while defining my surroundings?
• How can my commercial enterprise be an attractive atmosphere accomplice?
• What makes an ecosystem master?
• How can insurers pick the right ecosystem partner?
• What underpins a successful ecosystem?
• How can insurers play to win within the atmosphere?
• How can I nearly integrate the consumer in my environment?
• What position does blockchain play within ecosystems?
• How can blockchain deliver new efficiencies for insurers?
• How can insurers use Accenture’s ‘smart pivot’ to advantage from ecosystems?
• Case examine: the wise pivot in motion.

Why is the coverage enterprise susceptible to disruption?

Accenture’s analysis of 18 industries indicates that the coverage industry is surprisingly susceptible to future disruption. In 2013, whilst the first Disruptability Index observe turned into conducted, insurance turned into experiencing a low level of disruption but ranked fourth in its susceptibility to destiny disruption. Today, as foreseen, the level of disruption has risen appreciably. And this is just the beginning: the industry’s susceptibility has additionally escalated.

Why now? The coverage enterprise has one of the highest ratios of price of exertions to final price, that means that there is a outstanding deal of trapped fee in the coverage fee chain.

Since 2013, Accenture research has expected that each business, in coverage in addition to elsewhere, will need to grow to be a virtual enterprise. In an more and more linked world, clients manage maximum in their lives online. This manner that their belongings are online and they're familiar with receiving online studies tailor-made to them.  They are going to assume which you recognize who they are, what they need and when they need it. They will set high requirements on your service stages, and could call for which you are easy to transact with. Added to this is the reality that the nature of hazard is changing, as is the manner carriers tailor and serve insurance experiences for his or her clients.

The global goes to preserve converting, and the model that insurers have achieved for the past twenty years will likely now not be the version that they're going to execute in the subsequent twenty years. Disruption is possibly to boost up and accentuate. Insurance executives, therefore, can't afford to be complacent.

Are new technologies a risk or an opportunity?

New technologies, from artificial intelligence to big facts, are set to convert the insurance enterprise. This isn't any surprise, due to the fact the nature of coverage is information-, IT- and intelligence-intensive. The most charming (and potentially disruptive) trends lie at the intersection of latest technologies, wherein they combine to offer new, incorporated and numerous fee propositions. This is illustrated clearly by means of the gray ellipse inside the diagram underneath.

This is interesting for customers, because it introduces the opportunity of an cease-to-cease coverage proposition that covers everything from hazard protection to hazard advice and prevention, and a broader range of offerings. Then, there's the trend of insurtech organizations plugging into present coverage infrastructures, leveraging traditional companies’ purchaser bases and statistics sets while offering them appealing new enterprise efficiencies in the process. Insurance groups, old and new, are forging ecosystems in order to weather the ability disruption of the modern-day and future market.

If insurers don’t innovate and embrace new technology and approaches of partnering with different stakeholders, these new technologies, in all their iterations, turns into a force of disruption.

How are insurtech companies disrupting the coverage playing subject?

There are many approaches in which insurtechs are leveraging modern-day technology to disrupt the modern-day coverage environment. The examples of Extract and Flock reveal this disruption in action:

Xtract recognized a mission within the coverage industry. Claims had been being processed thru a drop-down menu with out a visual enter from the purchaser, leaving a claims handler with the obligation of creating an vital, expensive choice with insufficient statistics. Xtract uses intuitive AI to visually re-create insurance incidents, with the functionality to drop them onto Google maps, to drop pins, and to click at the sector of harm to create a image of what happened. In addition to this, it has released a self-serve system so the coverage holder can use their cellphone to re-create the incident in front of the claims handler. This takes approximately a minute and creates a single decision point. Based on preceding trials with top-five insurers which can be processing on common 300,000 claims a year, this technology could keep more than $40 million yearly by means of decreasing 1/3 party intervention, phone calls and more.

Flock had the imaginative and prescient of quantifying complicated risks in actual time by using ingesting real-time data from multiple resources, ensuing in an instantaneous, granular expertise of these risks and the losses that might result. The commercial enterprise started within the drone industry, trying to apprehend real-time drone flight threat. For instance, if a consumer is flying a drone from A to B, they can enter relevant data regarding factors consisting of climate and place. Off the returned of this, Flock constructed a risk analysis platform to quantify and charge that threat.

These progressive data units have given the organisation an part against insurers which can be suffering to rate the dangers of sports or belongings that haven’t been round that lengthy, with especially little ancient statistics. As a end result, Flock fees its drone coverage through the minute, sells it with the aid of the hour, and gives customers the option of purchasing it over their cellular telephones. The insurer has released more than a few bendy merchandise that include legal responsibility insurance and agency cowl for up to £25 million in damages, that's aimed toward telematic fleets run by the arena’s largest drone fleet owners like Atkins and the BBC. Since launching in 2018 the commercial enterprise has taken off, and today it helps heaps of customers fly safer and smarter. This fulfillment is permitting it to diversify into new areas, tapping into some of information-driven coverage and hazard management merchandise in the drone enterprise, from an on-demand coverage app for micro-SMEs, to an publicity-primarily based corporation product for the sector’s largest drone fleets.

How can insurers and insurtechs work harmoniously together?

The emergence of huge numbers of insurtechs presenting a extensive kind of solutions and talents is a actual possibility for incumbent insurers to innovate via collaboration. Start-united statesregularly have a deficit of conventional coverage information, even as vendors can benefit from distinct skill sets and mindsets, alternative ways of harnessing technology, and fresh views on each new and current marketplace segments.

When given the functionality, insurers are great at unlocking the massive quantity of data they have at their disposal and capitalizing on their enormous marketplace reach. This can allow begin-united statesto apply their era to a degree that could have been not possible on their own. Insurers, therefore, can offer insurtechs the functionality to bridge the distance between old and new.

What is an environment?

The fee of a a success surroundings is more than the combined cost each of the gamers might be able to make contributions—or leverage—on its personal. 

An ecosystem is a community of gamers, from both within or outdoor the enterprise, who paintings together to outline, build and execute market-creating patron and patron solutions. Successful ecosystems are defined via the intensity and breadth of capacity collaboration many of the set of players. Each birthday party gives you an critical detail or capability of the client solution. The power of the atmosphere lies in its complementary nature. No single participant wishes to personal or perform all components of the answer. Together, the competencies of all parties inside the ecosystem are amplified, allowing the cost of the surroundings to be greater than the blended cost of all of the players on their own.

What is the difference between a partnership and an atmosphere?

A partnership describes a commercial enterprise in which the contributors have a shared industrial hobby. An ecosystem tells a broader story wherein the stakeholders are connected with the aim not best of obtaining a commercial gain, however also of disrupting the market through leveraging progressive reports which are possible due to the partnership.

How are ecosystems disrupting the coverage enterprise?

In Accenture’s recent research, extra than half of the coverage executives (51 percent) we surveyed stated their agencies are already starting to experience a few shape of disruption from competitors that have partners in other industries. This disruption is concentrated on the maximum essential factors on the value chain. For instance, insurers stated the very best tiers of disruption in the areas of services and products (60 percent) and customer service (fifty seven percentage).

If insurers fail to create their very own ecosystems, they run the danger of being restricted to the position of a pure threat cover company. Other gamers may also then be in a better position to offer a greater nuanced and treasured customer revel in, to impose their logo, and to own the patron relationship.

While techniques for coping with disruption differ from agency to agency, it's miles clean that if vendors proactively layout or execute their personal ecosystems, they are able to make certain that they're the disruptors and now not the disrupted. Many insurers that have diagnosed this opportunity have already positioned themselves definitely to capture value and tackle disruption head-on.

Ecosystems are a primary source of enterprise disruption. What are insurers awaiting?

More than 4 out of 5 of the insurance executives we spoke to recounted that ecosystems are vital to their method. Fifty-4 percentage said that they're actively searching for ecosystems. Out of all the industries Accenture surveyed, the level of interest registered by way of the coverage industry become the best. However, at the same time as insurers may additionally acknowledge the value of ecosystems as a catalyst for superb exchange, many are ill-ready to put into effect an atmosphere strategy in their business.

Only five% of insurers can be described as atmosphere masters.

Ninety-seven percent of the insurers surveyed suppose they have what it takes to be an attractive atmosphere associate, but their pursuits and abilties don’t constantly line up. When we examined the attributes of organizations excelling at ecosystems, handiest five percent of insurers may be defined as ‘ecosystem masters’. Overall, in relation to the mastery of ecosystems, insurance ranks as the second lowest of all of the industries examined.

What can insurers convey to the desk in an environment?

Insurers can be an vital, worthy element of an atmosphere. Insurers have the information, distribution channels and innovation practices that many tech start-u.S.Would envy. They have many years—regularly centuries—of industry experience and institutional understanding of the complex regulatory surroundings. For these reasons, insurers are extra than able to turning disruption into an possibility with the right companions.

The common coverage participant has unmatched depth and richness of statistics at its disposal, allowing it to offer a fantastically personalized, targeted carrier. Insurers don’t best provide additional expertise, however additionally regulatory competencies that permit it to promote insurance across multiple geographies—some thing that a generation business enterprise, as an example, does no longer have. It additionally brings longstanding relationships with clients, and a legacy of accept as true with. By partnering with the right players, insurers can practice these talents to reinforce the ability for frictionless business.

When it involves ecosystems, where do insurers fall brief?

If insurers are probably such an asset to an atmosphere, in which do they currently fall brief? According to our research, the deficit lies in functionality, way of life, generation and resources. If these problems may be addressed, insurers can be capable of make the most the surroundings opportunity absolutely.

Insurance executives say technology is the maximum essential element to get proper in an ecosystem. The net of things, analytics, and different leading-edge technology which include synthetic intelligence, are reworking insurance—yet the industry as an entire is lagging in adoption. In reality, many companies which have piloted siloed era have not generated the predicted value from these investments. The solution is to grow to be more incorporated. As insurance companies pursue market-leading ecosystems, they'll no longer best need to cautiously check their readiness but near the gaps—cultural, technological and other— to ensure they are an powerful atmosphere participant and the form of associate others are looking for.

What questions should I ask while defining my atmosphere?

No be counted how sophisticated a enterprise is, its possession of the right ecosystem talents is not a given. You can check your business’s readiness to take part in an atmosphere, in addition to apprehend the desires and parameters of your ecosystem, by way of asking these questions:

• How can I create a higher enjoy?

This query specializes in your consumer interactions. How can you already know greater approximately your patron, what they cost, what price they are inclined to pay, how they need to transact together with your commercial enterprise, and how they need to be serviced following that transaction? Most importantly, how will you figure a way to change that revel in and do it at scale, now, in real time.

• How can I enhance the business judgment that I have?

This question challenges you to make choices that undoubtedly impact the danger that your business takes on, how you fee your providing in the marketplace, and how you may acquire this the usage of the statistics and experience you have garnered in the beyond, in addition to ability new sources of data.

How can my business be an appealing environment partner?

Choosing to open your enterprise up to environment opportunities isn't simplest approximately how different agencies can benefit you, however what strengths and talents your business brings to the desk. The environment won't care about your business, however in case you listen to atmosphere partners and reply via supplying competencies they need, it will make you extra appealing to funding. You can check your commercial enterprise’s beauty and readiness to end up an atmosphere associate or connection by asking your self the subsequent questions:

1. What makes my business stand out in an atmosphere?

In different words, what does your commercial enterprise must provide a potential ally in trade for them partnering with you?

2. Have my potential partners identified a specific want that my business can deal with?

If you pay attention to capability ecosystem companions, it's far quite possibly that they'll convey a clean idea which you haven’t notion of. This is due to the fact they see your business from a totally exceptional attitude, bringing new opportunities and thoughts that would benefit all parties.

What is an ‘surroundings grasp’?

In defining what it approach to be an atmosphere grasp, Accenture searched for corporations that are getting the subsequent three things proper:

1. Aiming to disrupt the enterprise the use of ecosystems.
2. Planning to lead as many ecosystems as possible.
3. Targeting 5 percentage or greater boom via their surroundings projects.

How can ecosystems help providers to innovate?

If insurers make investments the time, skills, technology and assets to strategically enforce ecosystems in their groups, they may gain rich rewards. Consider these examples:

South African fitness insurer Discovery has made splendid strides in its bid to understand the whole capability of its Shared Value Insurance enterprise version. The provider has partnered with main coverage groups round the arena, each of which incorporates the Vitality platform into its enterprise version. Not best has the Vitality platform been praised by means of its customers for its blessings, however Discovery is assured that by using 2023 its ecosystem can help enhance the fitness of 100 million human beings globally.

The Generali Group, based in Italy, introduced a home coverage policy that blends clever-domestic generation supplied with the aid of Nest Labs (a Google-Alphabet organization enterprise) with its supplying to in addition protect its customers’ homes. For instance, Nest Protect’s era detects smoke and carbon monoxide, and sends indicators to clients’ phones. This partnership creates brought price for the client, and decreases chance for Generali as an insurer. In a pass to embody the Internet of Things (IoT) and digital ecosystems, Generali:

• Launched Jeniot, a organisation that gives innovative IoT and connected coverage services inside the regions ofurban mobility, the smart home, health and the connected running
• Created Welion, an integrated welfare company that specializes within the health environment.
• Launched a marketing campaign in Italy entitled ‘Call for Growth’, to drive partnerships with progressive begin-u.S.From the arena.

Chinese insurer Ping An Insurance has also leveraged ecosystems as a key detail of its approach to turn out to be a unmarried supply for financial, health and life offerings. Through its majority share in Autohome, which dominates the net automobile sales market, it could mine treasured facts and establish a foothold inside the self sufficient vehicle sector. The insurer’s property income and funding environment, Haofang, boasts dozens of real estate builders and greater than 12 million participating purchasers. Ping An is leveraging this network to create new sales streams by way of supplying distribution for its mortgages, wealth management and different related products. Finally, its Good Doctor platform connects a big network of hospitals and has assembled a huge team of medical doctors, 900 of whom are committed to providing 24/7 unfastened on line consultations to approximately 77 million sufferers. This surroundings on my own is well worth an anticipated US$480 million in annual sales, which in 2018 accelerated by 78.7 percent over the preceding year. Together, these structures role the carrier perfectly for numerous and nuanced increase inside the coverage area.

The actual energy of Ping An’s ecosystems is that whilst they cowl diverse territory, they combine efficiently to address a wide spectrum of customer wishes and to realize the insurer’s over-arching objective.

How can insurers pick out the right surroundings associate?

Although insurers may also need a seat at the atmosphere table, they need to be intentional about deciding on who joins them there. If an insurer is savvy approximately choosing and interacting with the proper companions, it will be capable of effectively collaborate outdoor of its core commercial enterprise, achieving economies of talent, scale and scope.

Skill—Insurers need to look for companions that supply them get admission to to a wider range of abilities, abilties and technologies which they would not in any other case have had, together with customization, personalization and virtual advertising.

Scale—The right ecosystem companions bring more size and reach. For example, a companion with scale may have tremendous quantities of statistics that may be used to tell better patron insights and reviews. Some of the maximum a hit ecosystems are powerful records aggregators with a clean approach on how to percentage and leverage facts inside the excellent interests of all parties.

Scope—Insurance businesses ought to pick out ecosystem partners that assist expand their client value proposition. The right accomplice need to, consequently, have skills that expand the form of the service’s providing and introduce new services.

What underpins a a success ecosystem?

Many factors are vital to the ongoing achievement of an ecosystem, however the foundational detail of a great ecosystem is believe. Trust can make or damage an surroundings. A agree with incident related to one participant will affect the complete surroundings. This seemingly ‘soft’ feature has a real economic effect. The Accenture Competitive Agility Index discovered that extra than half (fifty four percent) of the 7,000 businesses analyzed have experienced a fabric drop in trust at some point throughout the beyond and 1/2 years. When a fabric drop in believe takes place, the common insurance organisation will enjoy a 2.6 percentage drop in revenue boom and a three percentage EBITDA boom lower. Therefore, inside the case of a $25 billion organisation, this equates to a $650 million lower in sales growth and a $750 million EBITDA growth lower.

How can insurers play to win within the ecosystem?

It’s time for insurers to head all-in and construct marketplace-main ecosystems with depended on partners. Here’s how:

1. Shape the market play

Forward-thinking coverage agencies will start their ecosystem adventure with a clear strategy defined via the following questions:

• What role do they want to play in clients’ lives?
• How formidable will their aspiration be?
• What might be the marketplace play?

Accenture has witnessed 3 important marketplace performs inside the coverage enterprise: Improving the present cost chain to reshape economics and stories; end-to-quit cost chain disruption wherein insurers can appearance to monetize the potential of ecosystems through marketplace adjacencies; and reinventing the best-fee components of the fee chain, growing new ‘living commercial enterprise’ models that realise principal revenue out of doors in their core businesses. With a corporation strategic goal in place, prevailing insurers will define the imaginative and prescient, commercial enterprise case, priorities and roadmap for his or her marketplace play(s). The roadmap need to in reality define how the surroundings will incubate, release and scale environment propositions, products and services.

2. Take a glance in the mirror

Insurers can end up successful surroundings partners if they begin with an sincere have a look at their own surroundings competencies. Carriers have to look at their talents, subculture and technology, figuring out any gaps that want to be addressed or strengths to be leveraged so one can be an appealing environment partner. This evaluation need to be knowledgeable via the enterprise’s imaginative and prescient, method and destiny market priorities.

3. Pick your partners

Leading insurers will select the right atmosphere partners to assist their market play. They will deliberately are looking for companions with the belongings, area understanding or technical talents to help their ecosystem approach. This should be complemented by way of a foundation of trust, collaboration and client recognition, and need to give a boost to every other’s desired positioning. If companions have similar governance and protection procedures and standards, the mixture can be differentiating and could breed accept as true with.

How can I practically combine the consumer in my atmosphere?

Ecosystems can play a pivotal position for insurers that want to come to be greater patron-centric. A dominant ninety one percentage of clients whom Accenture surveyed said that the patron enjoy is important. In order to apply your ecosystem to the gain of your clients, you need to take into account how regularly you currently talk to them, what you are telling them, and what channels you use to engage them.

The role of entrepreneurs has changed. The floor interplay with the purchaser is fueled by way of the dynamic, data-pushed orchestration behind the scenes that results in that connection. Through our experience, we have discovered that ecosystems can benefit clients when their interactions are supported by using the right statistics. You want to apprehend how your purchaser interacts together with your digital property as a way to customise and adjust them, personalizing each contact point in which possible. There are no shortcuts, but in case you actively measure the coolest and the bad, you may be able to apprehend your customer and adapt your atmosphere accordingly.

What role does blockchain play within ecosystems?

Blockchain is getting higher and displaying capabilities we didn’t realize about before. In the beyond six months, Accenture Digital has demonstrated blockchain’s talents in eventualities that were no longer thought feasible at the beginning of the year.

The use of blockchain structure by way of the Australian Stock Exchange proved that we could technique equities transactions in real time, at a quantity this is required to assist the inventory trade. In Singapore this 12 months, for the first time, Accenture Digital proved that we ought to have four blockchains running collectively in cross transactions throughout blockchains, confirming that interoperable blockchains are feasible. As insurers and their ecosystems end up agile and begin taking advantage of the virtual tools to be had, the fact is that the gear are simply going to preserve enhancing. The effect of blockchain on ecosystems is best starting to be explored as we keep advancing and studying extra.

An instance of the way blockchain can deliver new efficiencies for insurers

Accenture and Generali Employee Benefits (GEB) these days debuted a first-of-its-type blockchain solution for the worker benefits industry. Blockchain era is capable of create a extra related atmosphere amongst stakeholders. This establishes a dependable, incorporated channel to exchange information, that's especially relevant to the insurance enterprise as blockchain’s capabilities streamline guide coverage approaches. Participants in the reinsurance system for captive or pooling offerings are capable of get right of entry to the identical facts, in real time, across the commercial enterprise. Processing mistakes are reduced through strategies inclusive of automatic reconciliation and smart contracts, which might be completed online and seen to all customers of the blockchain. In 2018, two worldwide clients of the Generali Group—one in all which is Syngenta, a leading agriculture organisation—and neighborhood insurers in Spain, Switzerland and Serbia successfully demonstrated a prototype of this precise answer, illustrating its relevance to the marketplace.

How can insurers use Accenture’s ‘wise pivot’ to benefit from ecosystems?

It is no secret that insurers need to convert so that you can supply results and set themselves up for the subsequent wave of coverage. Ecosystems are the best car for this, as collaboration permits agencies to adopt new techniques, technologies, facts or capabilities tons quicker than they might have on their own. As a commercial enterprise, you could add muscle in the regions you are attempting to develop, expand your geographic attain, and disrupt or guard your marketplace. Ultimately, to grow to be an attractive atmosphere companion and embody innovation, you want a strategic pivot to the brand new. The blessings move both approaches, as the right environment will serve as a catalyst on your enterprise’s clever pivot, and permit you to generate price thru innovation.

Insurers want to pressure robust and continual movement. Transformation is an ongoing adventure that calls for agility and regular innovation.

Our ‘sensible pivot’ model suggests a 4-pronged technique. First, rework the center of the business to force up funding ability. Second, grow the core enterprise to preserve the gasoline for increase. Third, scale the brand new business as you perceive and amplify new increase areas at tempo. And fourth, pivot wisely by means of optimizing investment greenbacks and capital through the years, and moving to new enterprise fashions and projects at the proper time. 

A a success wise pivot have to be supported via a brand new method to organizational trade, which we name the rotation to the brand new. With this approach in place, you'll be well placed to convert and develop your present day commercial enterprise, whilst scaling new agencies in parallel.

Case Study: The Wise Pivot in action

At our recent Digital Insurer Network meeting, Mike Sutcliff, the Group Chief Executive of Accenture Digital, shared the not unusual characteristics of groups that have efficaciously pivoted towards the new. They finished this through taking the subsequent steps:

1. First, the senior leadership crew agreed on the enterprise goal for his or her efforts. This underpinned all pilot and prototype work inside the company. This was an immediate top-down effort rooted in a selected view of why the enterprise became integrating new generation and the way this need to be accomplished.
2. The integration of generation and the jogging of the business came about in parallel. The individuals who scaled effectively didn’t remove them from the core enterprise, and phase the new and the antique. They gave the crew piloting the new technology or approach the energy, if the pilot labored, to scale it in the business. That private connection and person responsibility made a large distinction.
3. The management’s teams invested inside the foundation and infrastructure that were required to enable the size to arise earlier than the pilots have been finished.

These businesses were all willing to check, fail, study and move quick, all of which was underpinned via strategic-questioning and assist from management.

Conclusion

To keep away from fee degradation and make certain relevance for the destiny, insurers need to end up disruptors earlier than they're disrupted themselves. And in nowadays’s competitive enterprise panorama, they cannot and need now not cross it alone. If providers attention sharply on the desires of the purchaser and pick the proper set of atmosphere companions to meet these desires, they will enjoy the particular mixture of abilties, data, clients and enterprise information with a purpose to power their commercial enterprise’s innovation.

In flip, insurers need to apprehend that their organizations are a effective source of intelligence of their very own proper. With the proper technology, resources and skills, insurers should see themselves as surroundings leaders.

Waiting isn't an option. To discuss how Accenture can help you innovate the usage of ecosystems, please get in contact.

To study more, I advocate exploring these sources:

Ecosystems: Cornerstone of future increase

Evolve to Thrive in the Emerging Insurance Ecosystem

Three Things Ecosystem Masters Get Right

Accenture’s Wise Pivot go-industry research

Disruptibility Index for insurance