Today, insurers win by offering a product. Tomorrow, insurers will win by providing access to prevention and assistance services – and by offering the right product to the right customer at the right time.
By Tanguy Catlin, Ulrike Deetjen, Johannes-Tobias Lorenz, Jahnavi Nandan, and Shirish Sharma
Chicago, IL (Mar. 16, 2020) – It is no longer news that digital technologies are reshaping customer expectations and redefining industry boundaries. Apple now offers a credit card; Uber Technologies is in the midst of entering the logistics sector; Ping An of China has expanded beyond insurance and into everything from healthcare to housing; and Amazon has moved beyond retail and bookstores to such an extent that no sector feels safe from “getting Amazoned.”
As traditional industry borders fall away, ecosystems—and the digital platforms that often enable them—will greatly influence the future of insurers. Our research has found that ecosystems will generate $60 trillion in revenue by 2025—which will constitute 30 percent of global sales in that year. Consequently, many insurance executives are looking beyond industry borders to understand the growing opportunities and threats that come from new partners and competitors in the ecosystems relevant to them, from mobility to healthcare and beyond.
In 2018, we described how the rise of ecosystems and digital platforms offers insurers an opportunity to take on new roles and realize new sources of revenue. Since then, ecosystems have gone from hype to reality: insurers are increasingly aware of using ecosystem opportunities to expand their core business of risk aggregation to prevention, mitigation, and related services. However, many insurers still struggle to build the technological and organizational foundations as well as the necessary partnerships to generate value from their ecosystem approaches. In this article, we focus on the pathway from vision to reality across three stages: strategy, enablement, and value generation.
Insurers in the context of ecosystems
Insurers have invested in and partnered with players outside the industry for years. An analysis of insurers’ investments over the past two decades shows that approximately one-third of start-up financing by insurers went into the health industry, followed by finance, mobility, and housing, as well as the commercial (B2B) ecosystem. Of course, it is worth noting that these investments do not necessarily represent full ecosystem integration, but they do demonstrate insurers’ financial interests in these industries that could possibly represent a starting point for deeper relationships.
Indeed, most insurers are aware of the ecosystem opportunity and have begun integrating offerings beyond their core insurance products. According to a July 2018 survey by technology firm DXC Technology, 22 percent of European insurers said they were already part of an ecosystem that could provide additional services to customers; another 46 percent said that becoming part of an ecosystem would be a high priority within the next two years. These trends toward ecosystems are found across companies in Asia, Europe, and North America.
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SOURCE: McKinseyTags: Ecosystem, McKinsey, platform, strategy