The Pacific Insurance Conference in Hong Kong recently brought together over 300 insurance executives to discuss the future of the industry. One of the key topics of discussion was the rise of ecosystems, driven by changing customer expectations and technological advancements.
The importance of a successful ecosystem strategy was highlighted, with reference to Jack Ma's statement about the sustainability of ecosystems compared to empires. Insurers recognize the need to embrace ecosystems to better engage with customers, expand their customer base, diversify revenue streams, foster innovation, and enhance customer loyalty and satisfaction.
McKinsey has identified several types of ecosystems relevant to insurers, including B2B commercial services, health, housing, mobility, and wealth & protection. The estimated value of these ecosystems is expected to reach $21.4 trillion by 2025.
Insurers can play different roles in ecosystems: builder, orchestrator, or participant. Builders construct new ecosystems with diverse products and services, orchestrators form strategic partnerships across ecosystems, and participants provide products and services within an ecosystem's value chain.
The panelists at the conference emphasized four key factors for insurers to succeed in ecosystem roles:
1. Mutual opportunity creation: Insurers should nurture partnerships to expand their offerings and transform their thinking to meet customer needs.
2. Entrepreneurial drive: Insurers need the courage to experiment and try new initiatives within ecosystems while remaining practical and focused.
3. Authentic partnerships: Ecosystems rely on genuine partnerships with meaningful incentives, clear accountabilities, and alignment of interests.
4. Data and technology focus: Engaging ecosystem partners and customers digitally is crucial. Insurers should capture and utilize the vast amount of data generated by ecosystems to gain actionable insights, while ensuring responsible data management and privacy protection.
The rise of ecosystems in the insurance industry is driven by the potential to make insurance more relevant to people's lives. Insurers that successfully integrate themselves into their customers' everyday ecosystems are expected to thrive in this evolving landscape.