Tag Archives: ecosystems

Power of Partner Ecosystems

To the max. As much as possible. To the utmost extreme.

All of these define the term “nth degree.” As a math major, I know the term has roots in mathematics, where “nth degree” equations and roots have been around for decades. How does this apply to insurance?

The digital era of insurance is accelerating and shifting the business landscape. The digital era has put new technologies, data and capabilities in the hands of business leaders – offering them the opportunity to transform their business and customer experiences.

But an even more powerful transformation is in insurers’ market reach with the power of multi- and digi-channel partner ecosystems!

Buying vs. Selling

Generally, today’s insurance process is difficult, lacks transparency and is complex and often time-consuming. In contrast, many insurtechs and existing insurer innovations are refocusing to a “buying” over “selling” approach — through a multi-channel strategy that meets customers where and when they want to buy.

If distribution channels are easy to use with products that are easy to understand, then insurance has the opportunity to grow through friction-free, multi-channel distribution.

With the increasing competitive challenges to attract and retain customers, insurers must develop and use a broader distribution ecosystem that engages customers when and how they want … putting them first. A distribution ecosystem can rapidly reach more markets, potential customers and current customers with more purchase and service options by tapping into a growing array of channels beyond the traditional agent/broker channel. Distribution ecosystems provide new access avenues, capabilities and services that create the nth-degree impact – both for customers and insurers.

Simply put, this range of channels includes direct-to-customer, agent/broker, other insurers (for products you want to offer your customers), marketplace exchange or platform and embedded — provided across a range of soft, hard or invisible embedded partnerships as depicted below.

Together, this spectrum of channels represents the new multi- and digi-channel ecosystem for the digital era of insurance.

Multi- and Digi-Channel Ecosystems — Foundation of the Nth Degree

To compete for the next generation of buyers – millennials and Gen Z — let alone retain today’s Gen X and Boomers, insurers must be a part of and offer a range of distribution channels with which they interact, transact and integrate, to offer customers innovative, optimized solutions.

In our 2020 customer research on auto and life insurance, we found younger generations are open to buying insurance from a wide array of channel options, including:

  • For life insurance, they are 33% more open to new channels than older generations.
  • The preference gap between new and traditional channels is large for older generations – nearly 50% – as compared with only 21% for Gen Z and millennials. So, customers are much more open to different, new channels – creating an opportunity for growth.
  • The younger generation is twice as likely to buy auto insurance from a car shopping website or a vehicle manufacturer website or have it included in the purchase or lease of a vehicle.
  • Millennials and Gen Z are open to buying insurance from Big Tech like Amazon, Apple and Google.

Insurers looking to compete are ill-equipped to do it alone. They must create an ecosystem of connected channels, using a range of digital capabilities to connect with customers when and how they want.

Let’s face it…. we all interact with a wide array of different entities, businesses and individuals on a regular basis. Many of these entities have earned our loyalty and trust, providing a platform for future engagement. Many of these are now becoming channels for insurance — GM, SoFi, Ford, Petco, Airbnb, Uber, Intuit and more. At the same time, we are seeing partnerships form within the insurance industry — insurers selling each other’s products, leveraging new marketplaces to expand reach and strengthening the traditional agent/broker channel with new digital capabilities.

Together, the partnerships represent a powerful distribution ecosystem that places insurance directly in the path of a customer’s life journey events, where insurance is relevant and needed. Ecosystems provide a greater impact on sales because they are an “outside” customer approach instead of an “inside” product/process approach. This is the shift from selling to buying that is so crucial to today’s insurer growth. It’s an approach that naturally reduces infrastructure, operational and capital expenditures at the same time that it brings in more business with less effort.

However, in our joint research with PIMA last year, we found that of the wide array of 34 channel options, only 18% (or 6 of the 34) are being planned — reflecting a very narrow view of channels that significantly limit reach and revenue opportunities and create a wide-open field for those who dare to be creative in establishing a multi- and digi-channel partner ecosystem.

Next-Gen-Multi- and Digi-Channel-Gen Leaders

Who is taking advantage of this wide-open field, becoming next-gen multi- and digi-channel leaders? Some are starting in other financial services areas first (which provides insights to broader opportunities) while others are directly entering insurance. But they are all vying for the next-generation customer!

Outdoorsy + Roamly — Online recreational vehicle rental and outdoor travel business Outdoorsy said it is partnering with insurtech Roamly to provide insurance for RVs, travel trailers or campervans. With Roamly, commercial and personal policy owners can safely rent their RV, trailer or camper on marketplaces like Outdoorsy without losing coverage or worrying about loopholes.

SoFi, Ladder Life, Lemonade and Gabi — One of the best examples of a company looking at the customer across life, health, wealth and wellness is SoFi, a fintech organization – under SoFi Protect. SoFi started out as a student loan consolidator and provider and has rapidly expanded to owning the entire customer financial services relationship – life, wealth, health and wellness. The original focus on student loans has been capturing the next generation of customers – millennials, Gen Z and eventually Gen Y. SoFi now has over one million members and 7.5 million contacts, where members may represent family units. The company created “vaults” for customers to use for saving and spending, for categories like insurance, taxes, travel, house, emergency fund, etc. and offer insurance through an ecosystem of partners, including Ladder Life for life insurance, Lemonade for renters or homeowners insurance and Gabi for auto insurance.

State Farm and Ford — State Farm announced a partnership with Ford for usage-based insurance (UBI) using the auto telematics and connected data from eligible, connected Ford vehicles. Ford vehicle owners will be able to opt in to State Farm’s Drive Safe & Save program, which aligns premium to miles driven while also rewarding safe and good driving behavior with potential discounts.

John Hancock and Amazon — John Hancock announced the integration of its Vitality Program with Amazon Halo, allowing Hancock’s Vitality customers to use the Amazon Halo Band to earn Vitality points based on their daily efforts for a healthier lifestyle that should mean a longer life. The Amazon Halo Band, a wearable health and wellness device, will measure and analyze users’ activity, heart rate, sleep and tone of voice to provide individual health insights and help encourage healthier habits – thereby earning Vitality points.

Google, Allianz and Munich Re — Google is partnering with these two global insurers to cover cyber breaches and related risks for client businesses that use Google’s cloud services.

The Guarantors and Property Management Companies — The Guarantors is a fintech company providing innovative insurance products and financial solutions for residential and commercial real estate professionals as well as their residents and tenants. The goal is to be the most trusted “go-to” brand for insurance and financial solutions throughout the real estate industry.

Chubb — Launched Chubb Studio “digital insurance in a box.” Partners can access their products, services and claims digitally and integrate what they do into what the partner does – embedded insurance. Initial products offered include: health and well-being, home contents, gadgets, travel and small businesses.

And on the horizon are more companies whose first focus is financial services (such as banking) but that will be well-positioned to offer and provide insurance. The companies also have the motivation. With low interest rates and increased competition from digital leaders, banks need to grow their service portfolios. Consider their customer bases and the impact if they move into insurance.

Verizon — While fintechs globally have been vying for the next generation of banking customers by offering them custom accounts when they turn 18, Verizon has jumped into the game by offering mobile banking with a checking account for the younger generation. The new tool, called Family Money, has two options — monitorable checking for parents to observe and track what their children are paying for and a “savings vault” account with real-time alerts, rules, spending limits and locks. Verizon uses Galileo for the application programming interface (API) and payment processing platform and are offering bank accounts and a prepaid Visa card through Metropolitan Commercial Bank.

Google — Similar to Verizon, the company is vying for the customer relationship. Google’s “Plex” accounts are a mobile-first checking and savings account directly integrated into the Google Pay app. The company is partnering with about 10 financial institutions, ranging from big national banks to regional banks and credit unions, and customers will be able to choose which one they want.

Walgreens — Walgreens is launching a bank account in partnership with MetaBank, inclusive of a debit card, as a way to complement its current services and enhance its loyalty program and customer personalization.

H&R Block — H&R Block, in partnership with MetaBank, is offering an Emerald Prepaid Mastercard account that will do more than accept tax refunds loaded onto it, including allowing customers to withdraw cash, pay bills and perform other money management tasks.

Each of these have been dabbling in insurance, and these efforts are further evidence of their customer strategies.

Distribution Partner Ecosystems — Go to the Nth Degree

Market leaders and competitive market position in the future will be how insurers create distribution partner ecosystems that leverage their strengths and embrace partners to fill gaps and expand market reach. It’s all about the multiples!

In our 2021 Strategic Priorities research, we found that insurers with new products are blowing away their traditional product counterparts in leveraging partnerships and ecosystems across many different areas of the distribution spectrum noted previously. Unfortunately, too many insurers seem stuck in their traditional channels rather than expanding channel choice and reach, meeting the customer where and when they want.

We see big bets being made in new business models, products and services from fintech, insurtech and incumbent insurers that are focused on capturing customers when and where they want through a broader market network of partners. But the challenge for those not embracing a distribution partner ecosystem is that they will have decreasing opportunities for partnerships the longer they wait, limiting their market reach and growth opportunities as a new generation of buyers increasingly turns to alternative channels.

The question is… are you ready and willing to take your distribution strategy to the max… to the nth degree? Your customers are waiting.

The Recipe for Embedded Insurance

My grandchildren are curious, a trait they definitely inherited from me. Whenever they get a cool new toy or technology gadget (yes, even the 1½-year-old loves these!) and have put it through its paces for a while, their attention inevitably turns to trying to figure out how the thing really works. This can result in the destruction of the item to get a glimpse of its guts, to see how the parts all work together to create the engaging experience they just had.

They are the perfect audience for the book series The Way Things Work by David Macaulay. The simple text and detailed, colorful drawings in these books “pull apart” items “from levers to lasers, from cameras to computers” to show curious kids (and their parents) the inventive thinking and innovation that goes into the things that make life easier, engaging and more enjoyable.

If there was an illustration in this book of traditional insurance distribution, what do you think it would look like? Maybe something like a Rube Goldberg contraption? (For those who don’t know the name, he drew cartoons in which Professor Butts solved a simple task in the most complicated, inefficient and hilarious way possible.) Most people studying the diagram of insurance distribution, especially customers, would agree that the process is complicated, confusing and inefficient — needing an innovative makeover!  

I have previously highlighted the increasing use of ecosystems and partnerships to expand beyond the traditional agent/broker distribution channel. This creates a win-win-win for insurers, their ecosystem partners and most importantly their customers. Insurers and their partners can quickly tap into new markets, and both potential and current customers benefit from more purchase and service options. Distribution ecosystems also help meet customers where and when they want to buy, creating friction-free experiences and evolving insurance from something that had to be sold to something people want to buy.

These ecosystems create a satisfying experience, just like that cool new toy that your kids and grandkids spend time with. 

Embedded Insurance: Creating Innovative and Interesting Partnerships

Distribution options fall across a spectrum of channels, including direct to customer, agent/broker, other insurers, marketplace exchange or platform and embedded. Embedded insurance is among the newest options, and numerous interesting examples of partnerships between insurers and other industries are popping up, including with GM, Ford, Tesla, SoFi, Petco, Airbnb, Uber and Intuit.

Insurance can be “soft” embedded, offered as an opt-in option during the purchase of another item; “hard” embedded, included as an opt-out option with the purchase of another item; or “invisible,” included in the purchase of another product without the option to remove it (e.g., bumper-to-bumper warranty with a new car).

I’m convinced that ecosystems will play a big role in the future of the industry. So, until the next The Way Things Work book adds a chapter on them, let’s do our own examination of how embedded insurance can produce a better result for all stakeholders customers, insurers and ecosystem partners.

The Customer Is the Critical Core Component

Majesco has long promoted/used a framework of three macro trends to help explain the forces driving change in the industry: people, technology and market boundaries. Multi- and digi-channel ecosystem/partnership strategies embody all these categories. No innovation in insurance would be possible without all three, but people are the most important. The greatest, most innovative technology or business model will only last if individuals and business owners see the value in it.

Why do people see value in ecosystem/partnership and embedded distribution models? Some clues can be found by looking at three different models of how people think and make decisions especially about insurance.

Jobs to Be Done

The famous business professor Theodore Levitt gets cited often as a pioneer of the Jobs to Be Done (JTBD) concept, with his quote, “People don’t want a quarter-inch drill, they want a quarter-inch hole.” The idea is that customers don’t necessarily think about products the way the businesses selling them do. To customers, products are an input to accomplishing a larger task, while the business is narrowly focused on making the sale. In his book, The Jobs to Be Done Playbook, Jim Kalbach says: “JTBD is not about your product, service or brand. Instead of focusing on your own solution, you must first understand what people want and why it’s important to them. Accordingly, JTBD deliberately avoids mention of particular solutions in order to first comprehend the process that people go through to solve a problem.”

In traditional distribution, the insurer takes a narrow, inside-out view, where the policy purchase is viewed as the beginning and end of the “job.” But, while customers do want to complete the purchase, it’s just one task in a series they need to do to complete their “job,” which could range from being able to drive their car or buy a home, to setting up their financial wellness plan, and more. 

See also: Embedded Insurance — Both Old and New

With embedded distribution, the insurer recognizes that insurance is just one task in the customer’s job and makes it easier for the customer to complete this task by stringing it together with one or more other tasks in the job. This allows the customer to save time and effort by completing several tasks at once instead of dealing with them separately.

System 1 and System 2 Thinking

In his book, Thinking, Fast and Slow, the Nobel Prize-winning behavioral economist Daniel Kahneman described human decision making and thinking as a two-part system. System 1 thinking produces quick (i.e., instantaneous and sub-conscious) reflexive, automatic decisions based on instinct and past learnings… the familiar “gut reaction.” System 2 is slow, deliberate and reason-based and requires cognitive effort.

Good decisions about complex issues like insurance should be based on System 2 thinking. The problem with System 2 is that it’s hard! And our natural preference as humans is to minimize effort. During the traditional research and buying processes, the effort that is needed can lead many customers to seek shortcuts to in-depth research and analysis or delay a decision altogether. Embedded distribution can ease some of the System 2 effort because the insurance offering is viewed in the context of the “job” the customer is currently doing, making it easier to understand how it will be used and what it does (and doesn’t) do.

Fogg Behavior Model

Another very useful framework for understanding people’s decisions and behaviors is the Fogg Behavior Model, developed by BJ Fogg, the director of the Behavior Design Lab at Stanford University that we highlighted in our customer research and that a number of insurtech startups have used in designing their business models. The model translates behavior into a simple formula consisting of just three components: prompts, motivation and ability, all of which must occur in the same moment for a behavior to occur.

This model highlights an inverse relationship between motivation and ability. If someone has low ability for a behavior (i.e., it’s hard to do), a high level of motivation is needed (plus a prompt) to make it happen. Similarly, if someone has low motivation for a behavior, whoever wants them to do it must make it extremely easy (and provide the right prompt). Using this model as a lens for how people make insurance decisions reveals the weaknesses of traditional insurance distribution that ecosystems and embedded insurance can exploit. Let’s take a look at the three components.


What triggers people to think about buying insurance? 

There are two basic categories of prompting events that align with mandatory and discretionary insurance. Simple examples of mandatory prompts are auto and homeowners insurance in personal lines or workers compensation in commercial – the customer must buy these to own the car or home or to run a business that has employees.

Discretionary prompts align with other events that cause people to think about protection of the things that are important to them. In our 2020 consumer research on life insurance, we actually found that life events had a stronger impact on younger generations in terms of considering life insurance purchases, as seen in Figure 1, which shows the gaps in the ratings between Gen Z / millennials and Gen X / Boomers.

Figure 1: Gaps between generations in impact of life events on L&A insurance purchase consideration

In the traditional distribution model, insurers need to fight for share of mind so people think of them when one of these prompts occurs. Large personal lines insurers like GEICO, Progressive and State Farm spend millions of dollars on advertising – not to cause people to drop what they’re doing and begin the buying process but to stay top of mind for the times when important events cause people to think about the need to buy or update their insurance.

In the embedded approach, the insurer receives in-the-moment top-of-mind awareness because the offering is placed directly in the path of purchase of another product or service… at the right time and in the right place. This is a great strategy for well-known brands and startups alike. A startup insurer won’t have the same brand equity as one of the major advertisers, but it can get some “rub-off” equity as a featured option by a trusted ecosystem partner from whom the customer is purchasing a product or service, or the startup could be white labeled with the partner’s brand.


Motivation, with respect to insurance, is closely related to prompts and has two types I like to call “forced” and “fuzzy” that align with the mandatory and discretionary prompt categories. Mandatory coverages can be highly motivating, but to some people they can carry a negative feeling of being “forced” to buy insurance (of course, most people probably would buy these coverages even if not mandatory). “Fuzzy” motivation is a more emotional feeling about the value and importance of insurance… and it’s vitally important to the purchase of discretionary products like life insurance.  Fortunately, Gen Z / Millennials place high importance on life insurance, even more so than their older counterparts, as we found in our 2020 consumer research.  

Figure 2: Importance of life insurance

In traditional distribution, insurers rely on these two types of motivation to drive customers to their websites, agents or call centers. It’s a strategy based on hope. In embedded insurance, the insurer piggybacks on the motivation that has driven the customer to buy a product or service. This is a strategy based on intimate knowledge of your current and potential customers.


Most customers do not think of insurance as being “easy to do business with.” In some of our early consumer research, we found that insurance ranked at or near the bottom in terms of being easy to research, buy and service compared with other businesses customers interact with. The life and annuity industry ranked worse than property and casualty. Even cable and mobile phone companies ranked higher in many categories, two industries with traditionally poor customer service.

Since then, many insurers have made great strides in simplifying processes and products with new data sources, digital technologies and cloud-based platforms. However, JD Power’s recent study on customers’ P&C insurance digital experience reveals that insurers are having a hard time keeping up with continually rising expectations for digital capabilities; the study says insurers are “stuck at providing only ‘good enough’ digital user experience.”

In the traditional distribution model, insurers rely on motivated prospects who have been prompted by an important event to reach out to them to research and buy insurance. If the insurer’s processes and products are too complex and exceed the prospect’s abilities (and patience), the insurer loses the business. In the embedded model, motivated customers can add insurance to a product or service during the purchase process, usually with just a few clicks. Easy peasy!

See also: Why Open Insurance Is the Future

Make Multi- and Digi-Channel Distribution Your Strategy

Traditional distribution channels have served the insurance industry well for hundreds of years. They still work and are vitally important. But people, technology and market boundaries have changed dramatically in just the past few years, and insurance distribution must keep up. The new and growing spectrum of channel options now available, especially the exciting opportunities for embedded insurance, will give innovative insurers and their partners tremendous opportunities for growth, with new markets, new offerings, satisfied and loyal customers…and growing books of business.

What is prompting you to adopt a multi- and digi-channel distribution strategy? Are you motivated to take action? Do you have the ability? These are the components that drive decisions and actions…and innovative insurers are deciding to act!

Ready for the Fully Connected Future?

Have you ever entered a store when the automatic door wasn’t working? Or, have you ever come to an escalator that is simply stopped, and you have to walk up or down? It feels strange when common automations don’t work. If you are like me, you might even experience that disoriented, woozy feeling when your mind thinks it is stepping onto something that is supposed to move.

People are wired to gravitate toward ease of use. They naturally exhibit streamlined behaviors, like making shortcuts in the grass between two sidewalks, and they quickly adopt automations that will make life easier. Just look at how rapidly we adopted smart phones.

How must insurers, right now, prepare for an even more automated and streamlined future, with the shortcuts that people will create, whether we want them or not?

Streamlining and innovation happens with partnerships.

The restaurant industry offers an example, as it adapted to the radical changes in dining behavior that the pandemic forced. Daddy’s Chicken Shack, for example, in Old Pasadena, California, is using facial recognition kiosks to provide a completely touchless payment and service experience. Kiosks were already on the rise as a sort of automation that could reduce lines and front-line work for restaurants such as McDonald’s that struggled to find workers. Kiosks may also improve sales and customer engagement. But the facial ID features from PopID took the kiosk from “data entry point” to “data security and touchless payment,” while streamlining the process for customers at the same time that it was keeping them safe.

Automated payments and touchless technology are the next escalators of our time. But they require effective partnering. It takes more than a kiosk to automate a payment. In this case, it takes the facial recognition technology vendor (PopID), a card reading technology (Ingenico) and a payments hub vendor (Datacap), plus a dozen more payment-related companies that help to create an omni-channel payment ecosystem. This is not only streamlining through partnerships but innovating, as well.

See also: Insurance Outlook for 2021

Streamlined partnerships rely on connections

No process can become automated without connections. Innovative organizations will find the transactional hurdles and prepare their systems to accept two-way connections, then use those connections to make life easier for the customer.   

Google Maps, for example, can now connect commuters with automated parking location and payment via two integrated apps, Passport and ParkMobile. Google Waze is testing touchless fuel payment at Exxon and Shell gas stations.

Connections are made more efficient through ecosystems

Insurance may not fit cleanly into every retail experience, but it is absolutely ripe for fitting into customers’ lives and businesses. The key for insurers is to think beyond a single transaction and be “partnership-ready,” which also means becoming “ecosystem-ready” — whether for mobility (well beyond auto insurance) or for a combined life, health, wealth and wellness experience. Companies that can achieve an early entry into this space have a tremendous opportunity to create and grow a loyal base of customers.

Given the nature of ecosystems, insurers can assume multiple roles, from owner of the unifying platform, to orchestrator of the products and services or provider of products and services. What insurers achieve will depend on their ability to enter the market while it is still an uncrowded “white space.” Of course, moving early requires leadership with an appetite for taking informed risk, ability to move quickly and capacity to build partnerships within and outside of insurance.

Insurers also need strong technology capabilities, including next-generation solutions that are cloud-native, digital-first and ecosystem-ready. The solutions need to break the software down into thousands of consumable application programming interfaces (APIs), offering ready-to-use insurance apps as well as a network of third-party plug-and-play services and apps.

In my blog last year on ecosystems and engagement, we identified three key ecosystems that every insurer needs to consider: the mobility ecosystemthe lifestyle ecosystem and the financial ecosystem. And more are emerging all the time.

Insurance already touches life in so many moments of the day, but how should insurers look at their future capabilities in light of fitting into these key ecosystems? Where can insurers place new products that fit seamlessly into these life streams, and how can they develop and maintain a framework that allows for quick reactions to customer trends?

Insurers will find, as they prepare, that every connection they create makes the organization a little more resilient. Channels will grow organically. Products will be launched with less delay. Customers will be served in automated ways that suit them, with relevance and accuracy. Learning, through greater data exchange, will yield improved experiences in claims-related risk.

But insurers must prepare. Humans are wired to use automation and streamline experiences. So, how can we further automate payments? How can we automatically begin providing insurance when people walk or drive or fly into situations where they need insurance? Streamlining and innovation are made possible through partnerships. Partnerships are enabled by ecosystem-ready insurance processes.

Gateway to Claims Transformation

The words “platform” and “ecosystem” are trending and in danger of becoming overused and losing their true meaning, but when used in the proper context they are powerful and highly relevant. The insurance claims management process is a perfect use case for just how critical these structures can be in achieving transformation. And my latest endeavor with Claim Central Consolidated is an excellent example of a platform and ecosystem that enables carriers to make that happen.   

The property claims process has historically been stubbornly long, complex and more costly than necessary. The factors contributing to these conditions include a disjointed overall workflow, which is a result of the many manual tasks, different staff and third-party skills required and the disparate, non-integrated systems needed to fully adjudicate and resolve the claim.    

In simple terms, a platform is a group of technologies that are used as a base upon which other applications, processes or technologies are developed. The word “ecosystem” derives from the Greek words oikos meaning “home,” and systema, or “system.” In the early 1990s (go, class of 1990),  James F. Moore originated the strategic planning concept of a business ecosystem, now widely adopted in the insurtech community. 

Using biological ecology as a metaphor, Moore revealed how today’s business environment parallels the natural world and how, just like organisms in nature, companies must coexist and coevolve within their own business ecosystems. He identified radically new cooperative and competitive relationships and provided a comprehensive framework that businesses can use to enhance their own collaborations with their customers, suppliers, investors and communities. Who knew we would be applying this type of thinking to technology? 

Platforms and Ecosystems for Insurance Claims

Powerful and exciting insurance industry ecosystems have emerged – made possible by digitization – and continue to evolve like living organisms, as connected sets and cluster ecosystems within the larger and broader ecosystem of services in a single integrated experience. Platforms enable and support ecosystems in that they connect offerings from cross-industry and inter-industry players in P&C, Life, Health and Accident.

Platforms and the ecosystems they support will increasingly enable insurers to turn strategic visions into realities. Today, insurers succeed by offering products. In the future, insurers will win by providing access to risk prevention and assistance services—and by offering the right product to the right customer at the right time.

Claim Central Consolidated

Many people have asked what I’ve been working on since exiting WeGoLook.  I am thrilled to be spearheading the perfect example of the power and potential of a platform-based ecosystem within Claim Central Consolidated, a global leader in property and auto insurance claims technology, services , data and insights, and pioneers of digital claims fulfilment. Our market-leading technology solutions are completely transparent, simplifying the claims process and significantly improving policyholder service satisfaction on behalf of leading insurers across the globe. 

See also: Insurance Ecosystems: Opportunity Knocks

Developed and proven in Australia, Claim Central recently expanded to the U.S. market, initially focusing on the property claims market with the successful rollout of TradesPlus – a network of over 40 trades types which are easily accessed within our Exchange. The Claim Central platform comprises three basic components offering a number of solutions and choices within many evolving cluster ecosystems embedded in our broader platform:

  • ClaimLogik Plus end-to-end claims lifecycle management platform, built with the vision of providing a single platform that connects all parties involved in resolving a claim, available in three purpose-built versions;
    • Growth Edition – best suited to smaller businesses such as 1099’s
    • Business Edition – best suited to SME scale insurers, IA firms or TPA’s;
    • Enterprise Edition – best suited to higher volume claims handling such as larger TPAs or carriers
  • TradesPlus+ Managed Repair
    • cloud-based platform connecting insurers directly with a pre-screened, on-demand marketplace of suppliers to carry out claim-related services and property repairs.
    • Insurers have direct access to suppliers including:
      • Contractors
      • Emergency Services
      • Inspectors
      • Adjusters
      • Experts
      • Housing
    • Virtual Inspections as a Service (VIaaS)
      • connects remote desktop assessors directly with policyholders to inspect and assess their claims using our live video streaming and collaboration platform LiveLogik 
      • enables insurers to secure inspections and damage assessments without the risk, cost and time associated with deploying traditional field adjusting resources during the COVID-19 crisis.

The Power and Potential of Ecosystems

McKinsey research found that ecosystems will generate $60 trillion 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.

Platform businesses are the most efficient value creators, compared to other types of businesses, because they harness the power of distributed supply and network effects. The network effect is a phenomenon whereby increased numbers of people or participants improve the value of a product or service.

Purpose-Built Insurance Ecosystems

The P&C insurance industry has already developed ecosystems to support specific business functions, and continues to do so. Some of the earlier examples date back to 1980 when information providers developed platforms linking auto insurers to collision repair facilities for the purpose of streamlining the accident repair process. These ecosystems quickly expanded to include independent appraisers and adjusters, autoglass and car rental vendors, salvage pool and towing operators, parts providers and others. Today they are beginning to include telematics service providers and auto manufacturers and dealers.

New property claims ecosystems such as Claim Central have emerged to include a full suite of segment specific cluster ecosystems including contractors, inspection technology, digital payments and other service providers which enable insurers to resolve claims in hours instead of days or weeks. According to Paul Carroll, editor-in-chief of Insurance Thought Leadership, “Innovation will focus less on bells and whistles and more on improvements across entire processes and organizations. But incumbents must start preparing.”

See also: The Word of the Year Is…’Ecosystems’

Ecosystems: Not if but When

Look no further for a brilliant and powerful new ecosystem extension than the recent announcement that Credit Karma, a unit of Intuit, has partnered with Progressive Insurance to offer usage-based auto insurance to Credit Karma’s millions of financial service smartphone app members using its integration with DMVs to obtain instant driver and vehicle information.

“It is not a matter of if, but when the insurance industry will have to adopt an ecosystem approach. The industry is not immune to the changing demands of the market” – Dr. Geoffrey Parker, Professor of Engineering at Dartmouth College and a visiting scholar and Fellow at the MIT Initiative on the Digital Economy.

I feel blessed and excited to be a tiny part of it!

Want Some Insurance With That?

Some 25 years after the publication of Nicholas Negroponte’s seminal “Being Digital,” it feels trite to write about how digital capabilities and the expectations they create among customers have transformed even traditionally sleepy industries like insurance. Yet, the digital transformation of insurance is not a narrative of progressive evolution but rather a story of successive and disruptive waves. And we are on the cusp of a third one. 

The first wave saw insurers learn to exploit digital tools to sell directly to customers. Established players as well as a plethora of tech-first startups proved it was possible to sell insurance online to customers without the benefit of an agent. 

The second wave, still in flight, focuses on customer experience, bringing better and easier ways for insurers to process applications, serve customers and pay claims. These efforts have brought new efficiencies to an industry hyper-focused on cost while at the same time addressing the needs of consumers who expect immersive and contextualized digital interactions with all the businesses they patronize.

The third wave, in its infancy, focuses on ecosystems, that is the embedding of insurance within the value chains of other industries. An online world, dedicated to selling us cars, homes, travel experiences and financial services is now discovering the opportunity to bundle insurance with the goods and services they provide. Such bundling addresses customers at the moment of need, at the life event – a new home or car purchase, for example – which triggers the need for insurance protection. Insurance in such a model is, as the title and summary of this article suggest, like French fries, a digital side dish suggested as an add-on to the main course. In the years ahead, we will increasingly see more and more businesses ask the question, “Do you want insurance with that?”

Whose brand is it anyway?

Big Tech has done the spade work for this third wave of transformation. Well before COVID-19, customers were becoming increasingly receptive to the idea of buying insurance from Big Tech firms. And around 44% of the consumers we interviewed as part of Capgemini’s World Insurtech Report 2020 said they would consider coverage offered by Big Tech.

Policyholder willingness to purchase Big Tech coverage is on the rise

Sources: Capgemini Financial Services Analysis, 2020; Capgemini Voice of the Customer Survey ‒ 2016, 2018, and 2020; Capgemini Research Institute, Consumer Behavior Survey 2020.

The fact that Big Tech has earned and retained customers’ trust during various lifestyle interactions is the catalyst behind their increasing willingness to buy insurance, too. Customers say they can count on tech giants for stellar digital experience, intuitive services and real-time response. 

So far, Big Tech has been making slow, yet deliberate, inroads into the insurance space. Google subsidiary Verily announced plans in August 2020 for its own insurance company (backed by the commercial insurance unit of Swiss Re Group) to provide tech-driven employer health insurance plans. Verily has also made a health-tracking smartwatch for research use. Amazon invested in Acko Insurance to offer auto coverage via the India-based startup’s platform. Big Tech firms are also integrating existing products (Apple Watch or Amazon Alexa) into the insurance value chain or developing convenient and time- and money-saving offerings that appeal to a broad range of policyholders.

These findings with respect to Big Tech are consistent, of course, across industries. The erosion of traditional brands in favor of new digital ones has occurred in every sector.

See also: Pioneering Use Cases for IoT in Insurance

Equally important is the extent to which the willingness to buy from Big Tech extends to a broader ecosystem of digital-first businesses. Disruptive industry-specific players, most notably in automotive, are as big a change agent as Big Tech. Buying car insurance from Carvana, home insurance from Zillow or small business insurance from Quickbooks makes all the sense in the world, particularly when these digital behemoths demonstrate the power to use data to make the right offer at the right time at the right price. 

The challenge to the industry to adapt is profound.

What’s an insurer to do?

As Big Tech and other online powerhouses look to turn insurance into the new French fry, insurers must consider the implications of this digital third wave and choose strategies through which they both embrace and differentiate in the new world of embedded insurance.

Most obvious and relevant is the ability to embrace the new channels. Insurers have always relied on third parties for distribution. A shift in mindset to see e-businesses as the agents of the future requires cultural change and paradigm realignment but is not revolutionary from a business model perspective.

The bigger challenge in many respects is on the technology-side. The constraints of legacy systems and brittle enterprise architectures, which shockingly persist 25 years after Negroponte, limit the ability of insurers to plug and play seamlessly in the new ecosystem. Developing an API framework that enables insurers to connect safely and securely with a broad array of distribution partners – what we at Capgemini call Open Insurance – is a prerequisite to being part of the coming disruption and not a victim of it.

Along with the API-ification of insurance technology comes significant requirements to up the game with respect to data. Succeeding in the new ecosystem, as noted above, requires being there at the right time with the right product at the right price. Doing so requires real-time customer insight, which comes from data mastery. We have been slow to get there. Less than 40% of insurers say they have access to IoT devices and natural language processing (NLP) support systems to enable real-time insights. Producing and leveraging analytics at scale will be the battlefield for this third wave of digital.

Not all French fries are created equal

It will, of course, take more to succeed in the new ecosystem than technological advances. 

Competitive differentiation among insurers will need to come from the insurance product itself. In a world where traditional brands have ever-diminishing salience, product and price are the only bases for competition. The standardized products the industry currently offers will force an inexorable race to the bottom, where the cheapest wins. Look for product innovation to be the true benefit of the third digital wave.

See also: Do You Know What You Don’t Know?

The demand is already there. Only some insurers see it.

Incumbent insurance executives interviewed as part of the World Insurance Report 2020 were behind customer expectations regarding new products. Only half of the executives we talked with said they had rolled out usage-based insurance (UBI), such as pay-as-you-drive (PAYD) offerings. Conversely, customers’ year-over-year interest in UBI climbed from 35% in 2019 to more than 50% in 2020. Less than half of the insurers we interviewed said they effectively target promotions at critical life-phase moments, and fewer than 25% said they use artificial intelligence systems to track external data.

The challenges to insurance product innovation are not trivial. Complex regulatory regimes create significant hurdles, making almost impossible the “fail fast” mindset that drives innovation in other sectors. But the challenge for insurers is indeed existential. As the aficionados of one or another fast-food empire will attest, the fries may be a side dish, but they are often the best part of the meal. Insurance should learn from this example.