Today's digital giants didn't just change the game, they rewrote the rules. They turned customer insight into capital, behavioral data into billion-dollar products, and user experience into enduring brand loyalty. They've built trillion-dollar empires by knowing their customers better than the customers know themselves.
It's mad to think that there's only a handful of these ecosystem drivers that include the likes of Amazon, Alibaba, Apple, and Google. But that's not the craziest part. What's incredible to me is that these ecosystems don't exist in insurance. After all, what these established ecosystems do well is simply to maximize the value of a customer by maximizing their value to a customer. This is achieved through continuous, data-driven innovation and activated through a well-orchestrated ecosystem of partners.
Now consider insurance: an industry that holds more data than most tech platforms could dream of. Not just consumer data but also operational, behavioral, environmental, and risk data. To top it all off, even more data is only an arm stretch away and available from connected cars, smart home devices, wearables, and IoT systems.
The insurance industry collects fresh, high-value insights from millions of interactions every single day, yet most of it sits idle, trapped in outdated systems, fragmented across silos, and rarely used to its full potential. This is a massive missed opportunity, and it's not a stretch to say that the sector really does have the opportunity to emulate e-commerce's proven, multitrillion-dollar, customer-centric business model.
However, the issue is far more than a technology change. This shift and the huge commercial upsides that accompany it require a business model and mindset change. Rather than seeing customers as policyholders, insurers must recognize them as the central product. By harnessing the extensive data sets at their disposal, the sector can create hyper-personalized experiences, optimize pricing strategies, and drive entirely new revenue streams.
This customer-centric shift isn't just about meeting consumer demand for digital services, it's about fundamentally reshaping profitability by applying a successful, established approach.
There are many ways that these business models drive growth through value creation. Building around the customer means you integrate experiences, partners, products and services around people. However, insurers are not typically built this way. Most are built in legacy policy administration systems with data models that sit atop, trying to abstract that policy-focused data into a customer cohort, drive insight and then reapply it back into experiences.
This is far too slow. Like a hot sales lead, customer data is a perishable asset. Its value fades fast if not acted on in the moment. Customers want buying insurance to be fast and frictionless, without being dragged through a long list of opaque, hard-to-answer questions. When we are in a claims process, we need insurers to see and respond to our data in real time. Even when we are being sold new coverage, we ideally need it a few clicks away, or, better still, embedded and in context. And when we move to experiences centered on helping us understand, navigate or even mitigate risks, we need that real-time, too. Tomorrow is nearly always too late.
But this isn't just about speed or seamless claims. It's about making sure the cover we receive fits our individual needs, now and as they evolve. It's about removing stress from the claims experience, not adding to it. And it's about transforming renewal from a transactional moment into a meaningful interaction.
That means having the data to offer genuine advice, based on how a customer's life has changed, or, better still, eaching out when a change is detected through partner data. That's what it means to value a customer - using insight to anticipate their needs, build trust, and position the insurer as a true partner - not just a silent presence that reappears at renewal time with a price hike.
In essence, insurers must massively increase their knowledge of their customers, not just acquire their data. Insurers must then act on this knowledge through embedded, adaptive, and risk-mitigating propositions that meet the demand of dramatically changed demographics, economics and lifestyles.
This requires a business model change, enabled by a new technology foundation and driven by an evolving culture. Core technology built for insurers - especially when built on MACH foundations and designed to function like a true ecosystem driver - can only realize its full potential if it's matched by changes in mindset, structure, and culture.
- No more silos. Everyone in your organization needs to be customer only, not just customer first. Teams must look and act more like agile software development squads than artificial clusters of mixed functions. Actuaries, developers, product owners, experience designers, data engineers, etc., must all work together constantly with clear goals and outcomes.
- Change must become a constant, and roles must move from operational management to customer experience improvements. Claims handling becomes claims optimization.
- Experimentation needs to rise dramatically. Learning fast means never failing. Where all data is mined as a perishable asset and acted on, this includes ways of making people's understanding, use, and experience better, as well.
- Technology must become an enabler of new, unimagined futures, not just an operating entity and IT constraint. Any line of insurance and even complementary non-insurance products needs to be managed and operated from one core platform. There can be no IT bottlenecks or downtime for any reason. Where interoperating partners aren't just about application programming interface (API) models, the issue is about how quickly those partnerships can be applied to experience outcomes.
All of this needs to happen in a business model where the time to generate value from new insights is attainable in minutes, not days.
There's a compelling commercial imperative behind all of this. Happy customers, who easily self-serve through digital interactions and access human support when it counts, are more satisfied and more loyal. Ultimately, they form more trusted relationships and will buy and do more with their insurer.
When your customers buy multiple things from you, their value over risk will start to look far more interesting. We aren't just talking about "multi-car" type propositions, as useful as they can be, we are talking about insurance portfolios or relationship products.
Take life insurance, a market set to transform over the next 18 months to five years. It suffers from increasingly low relevance and low penetration rates. Lifestyles, demographics and life stages have changed dramatically. The propositions this market offers should change as well, adapting as people's financial and health profiles change. Current products, sold once and then engaged when someone dies, need to give way to more holistic protection and life models.
Perhaps underwriters and actuarial roles will finally be fused with customer experience and analytics functions, creating holistic models that when combined will stretch far beyond "policy" thinking.
However, as a result of this need for technological and business model shifts, insurers with their current legacy and modern legacy footprints will struggle. As it is, adaptivity is too slow and expensive. New insurers are emerging, and the market dynamics are now forcing legacy insurers to change -- from regulation asking them to treat customers better, all the way through to new digital and intelligently orchestrated experiences.
Insurance has a new battleground. Deeper relationships, more loved products and services, generating more value through more propositions. This has to replace price-led competition.
The value chain model is broken. Ecosystems aren't optional, and customers aren't things you bolt on to your technological core. They should sit at the center, and everything should interoperate around them.
The reality is that even if you want to operate as a "value chain" business, your best way of minimizing costs and maximizing distribution still lies in being able to value customers and service them in any channel, 24/7, in an increasingly intelligent and personalized manner.
This is the new commercial battleground for insurers. It seems most don't realize it yet. But the emergent competitive forces are beginning to bite, and we see many new emergent forces acting on the industry. Shareholders will start to see this gap, along with capital investors who are already diving in.
We are in exciting times for an industry long held at a tipping point.
