A guide to future-readying your insurance business
Insurance ecosystems are helping companies transform, modernize and stay on pace with current trends.
All industries are experiencing some form of disruption, including insurance. Products, services and customer experiences are all impacted, but thankfully, insurance ecosystems are helping companies transform, modernize and stay on pace with current trends.
Property and casualty carriers need to deliver more data, services and capabilities to support and enhance processing and decision-making. An ecosystem of connected partners makes this possible in entirely new ways.
Why are insurance ecosystems important?
Insurers need to offer consumers a greater variety of more relevant and attractive experiences and offerings, according to Accenture. Choosing the right partners is essential because it means bringing the necessary skills and scope “to help secure a more profitable ecosystem opportunity.”
Insurance ecosystems are certainly on the minds of many companies: More than half of insurance executives say their companies are already starting to experience disruption from competitors that have partners in other industries, according to Accenture.
To combat this disruption, many insurance leaders are turning attention to ecosystems; 84% of insurance executives say ecosystems are important to their strategies, and 54% are actively seeking ecosystems (however, many don’t have what it takes to lead an ecosystem).
Why is the insurance industry vulnerable to disruption?
The pace of change in insurance continues to speed up with the move to the cloud, alongside smart, connected technologies and automation. Being able to define new areas and categories of insurance and then rapidly market to global customers makes it easy for new companies to enter markets and disrupt current situations. All insurers, regardless of size or location, need to be thinking about how they can operate in a fast, dynamic world.
Are new technologies a threat or an opportunity?
New technologies are an opportunity. Take usage-based insurance in the automotive industry, for example. Telematics, IoT, and other technologies make it possible to truly personalize insurance down to specific metrics, including miles driven, driving habits and time of day. This level of information was not available even a few years ago. With a greater connection to habits and behaviors captured through technology, new types of insurance based on well-defined risk can be offered.
How are InsurTech companies disrupting the insurance playing field?
InsurTechs are taking advantage of new technologies, digital connections and growing access to customer information. These areas will only further expand the chance to capture new opportunities and launch new offerings. However, InsurTechs often need access to a core platform to orchestrate a complete end-to-end solution. Partnerships between InsurTechs and core providers are, therefore, very important. Core platform providers need to do their part and provide an open approach to developing and working on their products. Openness enables InsurTechs to deliver disruptive technologies that connect to core systems so carriers can rapidly create an opportunity for differentiation.
How can insurers and InsurTechs work harmoniously together?
Insurers are committed to delivering end-to-end products for their customers. They want to be able to leverage emerging technologies in a way that complements, improves and even extends current offerings and processes. To make this possible, an insurer’s core systems must be able to connect and work harmoniously with the latest InsurTech offerings.
What is the difference between a partnership and an ecosystem?
An ecosystem is a connected network of people, systems and software organized to deliver a complete solution. A partnership shapes the level and effectiveness of collaboration between different entities in the network. Insurers want to develop a robust ecosystem of vendors and technology to fulfill their strategies. They are looking for core system providers who can deliver solutions that already include partnerships with InsurTechs, as well as the ability to expand to more partners in the broader ecosystem as new technologies and InsurTechs emerge.
When it comes to ecosystems, where do insurers fall short?
Carriers are leveraging various vendors in the insurance ecosystem, but they are struggling to orchestrate it properly. Robust core systems that enable you to bring all the functionality together are crucial to carriers’ success. And this is where we see a lot of insurers trying to do this through endless coding projects rather than using low-code tools to configure an integration for their unique needs.
In addition, many insurers typically make a few of the same mistakes, such as:
- Partnerships within the ecosystem selected as stand-alone, singular functionality without considering the specific technology solution and how it assists in cross-functional, multiple business usage.
- Investments made that do not lead to the optimization of current technology and functionality as well as not being leveraged for more than an isolated purpose.
- Lack of a strategy that brings the tools and technology together around a platform that can be at the core of the wider ecosystem.
What questions should I ask when defining my ecosystem?
Defining an insurance ecosystem starts with researching what is out there for the types of business you write, where you are, and how you operate. Some important questions to ask are:
- What are the latest innovations in my LOBs?
- What regions/geographies are we looking to grow in?
- Are there tools out there that can help improve my sales and service strategy?
What underpins a successful ecosystem?
Success is taking full advantage of the ecosystem to optimize efficiencies across the board. For example, instead of having an underwriter check several different tools, an ecosystem platform gives them the ability to get what they need in one tool. Plus, having rules and workflows set to automate low-level risks frees them up to analyze the more complex tasks in their day-to-day.
Andy Yohn (mailto:andrew.k.yohn@duckcreek.com) is the vice president of product management and co-founder of Duck Creek Technologies. He brings a solid mix of technical and business skills together through his 30+ years of working in the insurance automation industry. The opinions expressed here are the author’s own.
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