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Ecosystems in insurance: The next frontier for enhancing productivity

 Insurers are facing a productivity challenge, struggling to achieve significant gains compared to other industries. The spread in operating costs between high and low performers has also increased over the past decade. While insurers typically focus on functional excellence and structural simplification to improve productivity, there is potential for more by tapping into ecosystems.



Ecosystems, which are interconnected sets of services in a seamless customer experience, have emerged across industries. For insurers, embracing ecosystems allows them to embed their insurance products into customer journeys and address customer needs effectively. This approach can generate new leads, lower distribution costs, increase customer retention, and improve prevention and assistance to reduce claims.


Some insurers have already seen positive impacts from adopting an ecosystem strategy. For instance, Ping An's online car-purchasing platform, Autohome, generates one-third of customer leads for the insurer's P&C and financial services businesses. Discovery, a South African insurer, has shown that users of its health-and-wellness-management platform have fewer hospital stays and chronic conditions.


To succeed in ecosystems, insurers need to define their strategic goals based on their brand positioning and existing assets. They should invest in technological capabilities such as scalable and flexible API-based IT architectures to enable quick integration into customer journeys. Data management and analytics capabilities are also crucial for leveraging new touchpoints and data.


On the organizational side, insurers should focus on partner management, digital agility, and providing a consistent cross-channel experience. Legal structures that facilitate linking different offerings, especially in non-insurance business contexts, are also essential.


Insurers need to find the right balance between making, buying, and partnering to achieve speed and scalability. Building services internally, partnering with external entities, or acquiring innovative services and talent from other industries can all contribute to success. Insurers should leverage their resources, including customer and data assets, to develop new offerings and attract partners.


In summary, insurers can enhance their productivity strategy by embracing ecosystems, integrating their insurance offerings into seamless customer journeys, and leveraging data and partnerships to create new value.

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