An ecosystem is defined as a physical environment in which all organisms interact with each other. The insurtech ecosystem works in a similar manner by allowing insurers to seamlessly interact with consumers — without barriers.
There are many different ways the insurance industry defines this powerful digital business model. Accenture, for example, defines it as “a network of players, from either within or outside the industry, [working] together to define, build, and execute market-creating customer and consumer solutions.”
The management and consulting firm McKinsey & Company describes the insurtech ecosystem as “interconnected sets of services in a single integrated experience that enables insurers to embed their insurance products into seamless customer journeys.”
Regardless of how it is defined, when done right, this digital ecosystem provides insurers with an effective way to engage with customers and build lasting relationships with them.
Insurance companies can create new sources of revenue by rethinking their traditional roles and adopting an ecosystem mind-set. – McKinsey & Company
The Ecosystem Opportunity
The insurtech ecosystem allows companies, carriers, wholesalers and agencies to reach beyond conventional capabilities in a highly personalized manner, offering customers the most appropriate products based on their individual needs. However, the ecosystem is about more than just a connected hub of insurance products. A key benefit of the digital business model is its ability to facilitate processes by systematically connecting policyholders with relevant services.
For example, a workers’ compensation insurer with an interconnected system can leverage insurtech capabilities to facilitate an injured worker’s coordination of care throughout the recovery process — from beginning to end. Using data-driven capabilities, the insurer can electronically link together its network physicians, physical therapists, rehab clinics, pharmacies, etc.
On the employer side, business owners can have access to personalized functions to help them with processes such as implementing return-to-work programs and work site modifications, as well as coordinating treatment for an injured worker in another state.
The ability to extract data across multiple interconnected touchpoints and learn more about customer buying habits, preferences and activities makes digital business models revenue-generating powerhouses. It’s why, according to research by McKinsey & Company, insurtech ecosystems are key in supporting overall productivity strategies — not just in lead generation, but in lowering distribution costs, increasing customer retention, and improving risk prevention and claim reduction.
Benefits to ecosystem-based models in insurance include:
- Enhanced agility to provide superior customer experiences.
- Access to new or enhanced capabilities.
- Increased operational efficiency.
- Accelerated innovation and faster product development.
- Improved ability to scale.
- Reduced operating costs and higher margins.
Source: Ernst & Young Global Limited
Most insurtech experts agree that the initial step in implementing a successful insurtech ecosystem is for companies to line up their ambitions and capabilities. For example, what role does the company want to play in their customers’ lives? How aggressive is the company planning to be when it comes to implementing and connecting services, and can the company scale? What products and services are more likely to create the greatest number of benefits for all invested parties? Do systemic barriers exist that will require a large investment of time, money and resources? Which processes can be automated, outsourced or delivered through partnerships?
According to Accenture, insurance companies must meticulously take stock of their capabilities, culture and technology in order to identify the gaps that must be addressed and the strengths they can leverage. This will allow them to utilize their vision and future market priorities as a guide moving forward.
The increase in insurtech ecosystems is efficiently driving growth and innovation in every sector of the insurance industry. Understanding the ecosystem’s framework and how it all comes together is the first step in the insurtech journey to digital success.
As the insurance industry model changes, insurers and brokerage firms are looking to capitalize on insurtech opportunities to improve operations and better serve the needs of today’s digitally immersed customers. At Direct Connection Advertising and Marketing, we understand the importance of leveraging insurtech capabilities. Whether you are launching a new product or implementing new service capabilities, our marketing experts can give your brand the competitive advantage it needs — at every stage of the buying cycle.
For additional information, contact Brad Nevins at email@example.com or 707.759.5391
To learn more about how to stay ahead of the competition & increase market opportunities with emerging technology, download our white paper: Into The Future With Insurtech.