Ecosystems that are built around customer needs, wants and expectations are the biggest disruptive threat that insurers face.
In a hyper-connected world, the best digital experience shape customer expectations. As a result, they expect hyper-personalised online experiences, products and services that are relevant to their lifestyle and financial decision-making. Insurance firms designing or joining a digital ecosystem to respond with agility to customer demands and expectations will win out. Moreover, they will win out by disrupting the market with innovative experiences. Insurers can also embed their insurance products in a seamless customer journey.
Undoubtedly, in a post-pandemic world, these expectations are evolving dramatically as consumers migrate online. As a consequence, the ability to offer timely products and services will be a major lever for customer-led growth.
What do we mean by an ecosystem?
An ecosystem is essentially a customer-centred network. This network offers products and services from various cross-industry players. McKinsey asserts that beyond opening up new revenue streams, ‘the substantially larger benefit … may come from contributions through touchpoints along the value chain, data on the customers’ preferences and activities, or the services themselves …”
Has disruption from digital ecosystems already started?
Accenture research from last year found that just over half (51%) of insurance executives were starting to experience disruption from competitors that have partners in other industries. Here’s the thing. The most critical points in the value chain: products and services and customer service have the highest levels of disruption at 60% and 57%.
One thing’s for sure, inertia won’t make the problem go away, so failure to act will cost. Accenture reports that by 2022, insurers that are sluggish in responding to changes from agile, hyper-relevant competitors could lose market share worth US$198 billion worldwide over the next five years. Furthermore, they may lose growth opportunities worth $177 billion.
As a result, Accenture thinks that failure to create or design their own ecosystems could see insurers reduced to pure-play risk cover providers. While 54% of firms are actively seeking ecosystems, many are ill-equipped to roll out an ecosystem strategy in their business.
What’s holding insurers back?
This can be summed up in four words: capability, culture, technology and resources. But as we discussed in a recent post, innovating from the ‘outside in‘ could help legacy insurers leverage the external expertise and agile methodologies they need to design or join a digital ecosystem without any major organisational change or disruption.
Driving customer-led growth – know your customers
Here are a couple of questions to think about to scope out an ecosystem strategy built around your customers’ needs and expectations to drive growth.
- How do your customers use your digital products and services?
- Are you able to map every customer touchpoint?
- Additionally, do you have the right data at your fingertips to enhance the user experience at every touchpoint?
- How are you able to personalise interactions and tailor products and services to make the customer experience frictionless?
- Lastly, how will you identify underserved or missed users?
Building your ecosystem capabilities
If your insurance firm is looking for an ecosystem approach, what capabilities, culture shifts, technology and resources does your business need to build your ecosystem to drive customer-led growth? We’re here if you need our help.