Carriers who adhere to platform business strategies run the risk of degrading their ties with customers.
Insurance companies were among the first companies to recognize the great potential of platform companies. They quickly saw the benefits of working with digital platform operators to expand their marketing and engage with new customers. Carriers and brokers were early users of the Google AdWords platform, for example, and in the UK, automotive companies quickly reported new online aggregates.
Now, a great challenge for many insurance companies is to transform themselves from being organizations that simply use other companies' digital platforms. Instead, they should be much more complex, but much more lucrative, ecosystem companies. This transformation is crucial. It not only gives insurance companies much greater opportunities to grow their businesses. It also enables them to become much more resilient to digital interference. Our research shows that 38 percent of organizations that build ecosystems do so to disrupt their industries, while 46 percent respond to disruptions.
Insurers who simply adhere to their business strategies risk deteriorating their relationships with customers. They could liberate themselves from merely providing commoditized "white-label" products to organizations that control the digital platforms. Such a low-margin business would provide insurance companies with opportunities for growth.
Many insurance providers begin the journey to become an ecosystem company. Eighty eight percent of the insurance managers who participated in our global research confirmed that their organizations are actively trying to participate in ecosystems and adopt new business models. This is well above the industry average of 46 percent. The opportunity to innovate has been cited by most executives, in all sectors, as the biggest advantage their companies can get from participating in an ecosystem. Other attractions were stronger revenue growth, entry into new markets and better access to new customers. (See illustration below).
Enthusiasm for ecosystems among many insurance managers contrasts strongly with the usual lack of readiness within their organizations to switch to this new business. Insurance companies, along with healthcare providers and retailers, often do not have the opportunities they need to become successful ecosystem companies. They are far from telecommunications companies, banks and tools.
One of the insurance companies' biggest shortcomings, as I mentioned in my previous blog post [Link] is the usual absence of an effective ecosystem strategy. Other common weaknesses include an incorrect culture and talent pool. Their main strengths tend to be their ability to innovate and the appropriateness of their technical resources.
In my next blog post, I discuss the most important features of good ecosystem partners. Meanwhile, take a look at these links. I think you find them useful.
The cornerstone of future growth: Ecosystem.
Ecosystem Power Games: In addition to platforms.