Leading provider of global professional services and management consulting, Accenture, recently published a new report, Evolve to Thrive in the Emerging Insurance Ecosystem, which is based on the central premise that every insurer needs to adopt an adaptive ecosystem strategy to survive in the insurance industry of tomorrow.
Accenture, one of the world’s leading management consulting and professional services firms, recently published a new report that advocates hybrid and adaptive insurance business models as the key to success in the insurance landscape of the future.
The so-called ‘platform’ business model has seen particular success in recent years, with players such as AirBnB and Uber operating in their entirety using a platform model that is capable of aggregrating new forms of supply and demand at a single access point. As opposed to offering one single service or a limited range of services, many of these innovators are creating and orchestrating ecosystems that bring products and companies from various sectors together and that provide consumers with access to pioneering solutions, which address a range of everyday needs.
Innovative new business models are increasingly compelling incumbents across countless industries to incorporate similar approaches, and insurers are certainly not exempt from this new reality. In its new report, Accenture looks at the possibilities for insurance carriers to seize the opportunity to build a new digital value chain, in order to remain relevant as the world moves from product-based models to platform-based models, and from linear supply chains to complex, interconnected ecosystems.
In one of Accenture’s recently conducted surveys, 75% of insurance executives agreed that digital ecosystems are having a noticeable or transformative effect on the insurance sector. Similarly, 74% of insurers indicated that digital ecosystems are ‘altering or transforming how the industry delivers value.’
Success factors in tomorrow’s insurance ecosystem
Accenture contends that, by cooperating with ecosystem partners, insurers can drive increased sales, deliver better consumer experiences, and potentially even provide everyday advisory services and information in order to help protect the safety of customers and their assets. To achieve this, the report has outlined five key steps to success, namely:
1) Evaluate whether customers’ needs are met today over the lifecycle of events (e.g. birth, purchasing a car, starting a new job) and how that could change between now and 2022.
2) Determine how insurance products and services should be clustered with other products and services for a complete living service that answers the customer’s needs.
3) Build a partner and platform strategy to get collaboration going with the right partners. Understand the roles, capabilities and strategies of each partner and build barriers to entry for competitors.
4) Develop business models based on vision, strategic orientation, investment focus, and operating model. These models should be based on highly efficient insurance platforms, easy-to-use interfaces with other players (APIs), and superior analytics capabilities.
5) Develop a roadmap for rollout and create investment business cases for the business models. Consider adopting a portfolio approach to spread risk – in other words, test different concepts, for instance, the development of your own platform and / or joining select other platforms as a partner, and collaborate with different partners.
In addition to outlining this step-by-step method for insurance carriers to achieve success, Accenture identified four success factors for insurance platforms and ecosystems:
- The right value proposition
- Embracing ‘coopetition’
- Moving early to secure advantage
- Distributing risks across a portfolio
The five Cs of the platform economy
In concluding its report on thriving in the emerging insurance ecosystem, Accenture maintains that every insurer needs an ecosystem strategy going forward. This strategy should prepare insurers for a future in which it is not involved in only a single ecosystem, but instead many. The means by which this strategy selects and forsters the right ecosystems for its business objectives will define prospects for the future. For insurance carriers, achieving competitive advantage will thus depend on the strength of the partners and ecosystems it chooses, as well as its plans to help these grow. With this in mind, the report has classified ‘the 5 Cs of the platform economy’ – which can be seen in the figure pictured below.
To read or download (PDF) the full Accenture report – Evolve to Thrive in the Emerging Insurance Ecosystem – click here.