The Future of Insurance: Opportunities in Ecosystems
Denise Garth | July 27, 2020
When we talk about the future of insurance, what we’re really talking about is the future of life. How will people live and how will businesses operate differently in the future and how will those differences affect insurers? If we look at “trending” economics, the world (and life) seem to both be drifting toward business ecosystems, which may have had their beginnings in simple distribution and marketing partnerships.
Marketing synergies seem to have always existed on some level, but over the past few decades, we have seen the rise of the integrated marketing partnership tied to value-added services, discounts and rewards-based loyalty programs. Reward programs are a functional bridge from simple marketing ecosystems into data-driven, micro-service ecosystems, where transactions and digital engagement wrap the customer up in ease and comfort.
Southwest Airlines makes a great example. Southwest had a good brand with an impressive track record for brand experience. They launched Rapid Rewards. They linked hundreds of partners to Rapid Rewards (850+ stores, dozens of hotels, car rental agencies and lifestyle products). They tied the Southwest Airlines Visa Card (in partnership with Chaseâ) into Rapid Rewards. Every purchase and transaction leads the customer right back to additional flights on Southwest. Every airline does this today and many other businesses like Starbucks, grocery stores, retailers, movie theatres, and more, based on the transactions with them, which drives both customer loyalty and company growth.
Imagine a global economy where ecosystems rule the customer relationship. People sort themselves into retail brand groups, much like sororities and fraternities. These brand groups promise to care for all of the concerns of the global customer. They operate by building an ecosystem based upon people’s basic needs: transportation/mobility, food/dining, entertainment/travel, income/financial security/insurance. How many brand groups will the world support? Is there any limit to what these ecosystems can accomplish? Is there any threat for insurers by not considering ecosystem participation?
If you want to know what the future of insurance looks like, it looks like people and businesses connected to powerful brands.
Today we can see a new generation of ecosystems being constructed, far beyond those just mentioned, when we look at Uber and Apple and Amazon and Grab. They are not just staying in their lane of travel, rideshare or retail. They are reaching into other ecosystems to link them together to provide a broader lifestyle value and deeper customer relationship. They want to be the hub of owning the relationship and influencing who else they link to via their ecosystems. These ecosystems are far more powerful and far reaching and will redefine winners based on whose ecosystem you are part of in the future. And these ecosystems are growing! In just a few moments, we’re going to look closely at three brand ecosystems and analyze how and why insurance needs to take ecosystems seriously.
In last week’s blog, we looked at COVID-19’s impact on the nature of customer engagement as it relates to ecosystems. We uncovered indicators that COVID-19 is pushing an already-primed market to adopt ecosystems in order to engage with customers the way in which they wish to be engaged.
In today’s blog, we’re going to look at ecosystems themselves. What do current and burgeoning next generation ecosystems have to teach us about how insurers are going to need to engage?
Three Large Ecosystems That Already Include Insurance
In technology, we see ecosystems from both an internal and an external vantage point. Ecosystems help us to build out the functionality of our platforms through APIs and microservices. They also help us to offer technology solutions that will fit insurers perfectly, because relationships can be customized based upon the functionality needed. Externally, insurance ecosystems will contain those channels and channel enablers that allow insurers to reach further outside of themselves. In these three case studies, we’ll see how successful companies consider both the internal and the external ecosystem as growth enablers. Let’s look at Uber, Grab and SoFi.
Uber and the Mobility Ecosystem
Forget all you thought you knew about Uber. Uber’s connectivity and marketshare and capabilities are moving so rapidly that keeping up is difficult. Let’s hit the highlights.
Uber is a mobility ecosystem. They started as a Rideshare provider, but they have expanded with the goal of owning the entire customer mobility relationship. They have over 100 million monthly active Riders around the around the globe, and 41.8 million active users in the U.S. They offer food delivery with Uber Eats. Uber car-sharing uses its partnerships with Avis, Herz, Getaround and Zipcar to provide rentals to those who wish to drive for Uber. In some/most cases, the rented car comes with insurance, unlimited mileage and basic maintenance. It is now possible for non-car owners to drive for Uber.
If you’re in a big city, you can use Jump, an Uber-owned scooter and bike service or you can use Lime, another scooter and bike service, by ordering service through the Uber app.
Uber is also partnering and investing in public transportation, creating partnerships with Masabi, TransLoc and Moovit to seamlessly integrate Uber into the travel journey, with the idea that mobility solutions will ultimately replace auto ownership. This would be an example of Uber’s internal ecosystem development, sharing the Uber API for logistical and transactional data. Uber is quickly becoming a one-stop digital mobility solution.
Uber has also hit hurdles. Uber’s goal is to use autonomous vehicles in many areas for both deliveries and rides, but a truly autonomous vehicle use is taking longer to implement than most people had anticipated. Still, undaunted, Uber is championing autonomous travel and deliveries. Uber purchased, for example, autonomous trucking venture, Otto, in order to build up Uber Freight. Imagine the impact that Uber Freight could ultimately have upon trucking insurance, both with autonomous trucks and with a trucking network where insurance is supplied as a part of each shipping transaction.
Grab and the Lifestyle Ecosystem
Grab is a Southeast Asian company that is already a full-fledged ecosystem with hundreds of mature services based around its easy-to-use app. With all that it does, you might call it a super-app. What’s interesting about Grab is that they have taken the mobile app experience to its optimal use. They have integrations and API sharing with all kinds of businesses, including insurance, allowing the Grab app to manage people’s logistical, financial and lifestyle decisions.
A Grab user can order transportation and pay for it. They can book hotels and pay for them, order their groceries, make fund transfers (similar to Venmo), and make and receive deliveries. They can order tickets and gifts. But what makes them unique is that they don’t just offer up singular options, but like Uber, they have taken the customer experience to the next level by offering up a wide breadth of options within each sphere. For example, Grab offers these 11 different traveling options, just within its vehicular transport.
- JustGrab: the closest car or taxi for fast travel.
- GrabShare: split the cost with people going the same direction.
- GrabCoach: book a mini-van or a bus.
- GrabAssist: for transportation that caters to your accessibility needs
- GrabHitch: carpool and save 40% on everyday fares.
- GrabCar: private ride.
- Plus, or Premium, for different levels of luxury cars.
- GrabFamily: car seat equipped etc.
- GrabPet: for furry friends
- GrabHire: receive a personal driver, book by the hour and make unlimited stops
Grab offers insurance for people on the move, much in the way we discussed in our recent mobility blogs. Not only do they offer travel coverage (underwritten by Chubb), they also offer ride insurance (also underwritten by Chubb) with $100,000 of coverage for accident and free vouchers if your ride arrives late. And on top of all of this, if you use Grab, you are accumulating GrabRewards points that will pay off in vouchers and discounts. Grab currently boasts 187 million users.
SoFi and the Financial Ecosystem
One of the reasons that insurers should be paying attention to ecosystems is that on some level, all of these ecosystems are about improving the user’s financial health and wellbeing.
In this regard, SoFi is a model for marketing and networking genius. They meet their market at the point of financial need. SoFi started out as a provider for consolidating student loans, able to offer better interest rates for students than their standard student loans. They were very focused on Millennials, and now they have shifted some focus to Gen Z and eventually they will shift into Generation Alpha. As they have grown, they have expanded their relationships and partnerships so that they now offer a near-complete financial experience.
Over the course of the last year, they set up relationships with Root insurance for auto, Lemonade for homeowners or renters insurance, and Ladder Life for life insurance.
They also have their own SoFi investment service with an “all-in-one” trading app, 401(k) rollover services, no fees and fractional shares because they want to make investment accessible to those who may have just retired their student loan debt. They have a relationship with Samsung Pay for money management. They even offer cryptocurrency investment.
SoFi’s recent partnership with Korn Ferry is an example of the ecosystem that holistically contributes to the well-being of the member. SoFi helps members get better jobs by giving them access to Korn Ferry Advance assessments, resume reviews, career coaching and more.
In light of these short case studies, what can insurers take away as food for transformation? First, insurers should consider the shifting sands of customer trust and loyalty. For decades, insurance has been the home of trust and loyalty (low churn), but the younger generation is finding trust in large tech companies and hip corporate brands that cater to them with the engagement methods that they find are easy to use and make their lives easy.
This younger generation will soon be the primary buyers of insurance. They will be seeking ways to buy it at the point where they have motivation and a prompt. (See last week’s blog on the Fogg Behavior Model.) Customer behavior and the streamlined digital experience are going to be the marketer’s best friends. Consumers will quickly trust those companies that seem to meet their immediate needs without placing hurdles in their way.
Where do insurers fit within the new realm of a younger demographic and connected ecosystems?
The short answer is, “Everywhere!”
Insurance will fit into new platforms and new ecosystems in new ways using new channels. It may be offered on-demand or embedded in another brand’s ecosystem. It may fit as a core brand, surrounded by value-added services that the insurer has built with partners and networks. Insurance will fit anywhere there is a risk product needed to enhance the customer experience.
Insurance will still fit within bricks and mortar agencies, but it will also fit into 100% virtual operations. It will fit into places it has never been before, using newly available data to perform real-time underwriting and issuance.
PwC has identified a host of different ecosystems already in play, including hospitality, education, housing, digital content, etc. When we look at these ecosystems, we realize that insurance has a place within all of them. There is a role for insurers within mobility ecosystems, financial ecosystems, entertainment networks and even rewards-based airline networks. With that in mind, we need to recognize that there is no single role for any insurer, but there are a host of new opportunities, all of which may be viable. The short-term goal must be for the insurer to prepare to fit the role it chooses.
The Faster You Move, the Better the Fit
If ecosystems are the future, where do they fit into your company’s strategic priorities? How quickly can your organization respond when it recognizes an opportunity to build or participate in an ecosystem?
The longer your organization waits, the more difficult and more expensive it will be to try to make that leap. In the past, it may have worked to be a fast follower, but with today’s pace of change, insurers should work their way closer to the leading edge of the pack. Early responders seem to be making the right business and financial choices to create a different kind of future. Capturing the opportunities is enabled (or limited) based upon the insurer’s ability to transform, integrate and launch new initiatives and products. At Majesco, we have designed and constructed platforms, such as Majesco CloudInsurerâ Core Insurance Solutions and Majesco Digital1st® Insurance that support ecosystem participation, no matter what your chosen role. For an in-depth look at how platforms will be utilized by insurers to capture growth, be sure to download Insurance Platforms: A Burning Platform for Market Leadership in the Digital Era of Insurance.
- The Road Ahead for P&C Insurers: How to Understand Customers Better and Navigate the Post-COVID Insurance Market
- Electronic Chat with Jake Tamarkin, Co-founder and CEO, Everyday Life
- Strategic Planning in the “New Normal” Digital Era of Insurance – Your Next Move
- Insurer Tech Investment Priorities See Major Shift in a Post-COVID World
- Plug and Play Selects 25 Insurtech Startups for Winter Batches
- Digital Transformation – A Top Strategic Priority and New Reality
- Four Steps to Successful Migration of Insurance CCM Applications
- COVID-19 Accelerates Insurance Digitalization to Meet Customer Demand: World InsurTech Report 2020
- Electronic Chat with Greg Williams, Co-Founder, President & CEO, Acrisure
- Electronic Chat with Matt Perlman, Partner, IA Capital Group
- Insurer Digitalization: Are you a Competitor or a Laggard?
- Leaders are Leading and Creating the Future of Insurance Distribution
- 3 Things You Need to Know About No-Code
- Electronic Chat with Adam Kiefer, CEO, Talage
- Underwriting in 3D: Using Data to Adapt and Improve Life Insurance Sales
- Getting Past the "Gelato Syndrome"
- Insurers Know CX/UX is Important, but Don't Agree on Execution, Study Finds
- Electronic Chat with Steve Lekas, Branch Insurance
- How AI Can Attract Millennial Talent to the Insurance Industry
- Preventing Data Breaches
- A New Boom for Life Insurance: Shifting Away from the 250-Year-Old Policy Transaction
- Electronic Chat with Ty Harris, Founder and CEO, Openly
- A Digital Wildfire Creates a Burning Platform for Digital Insurance Business Transformation
- Digitalization, COVID-19 Spurring More IT Investment in Cybersecurity
- Electronic Chat with Michael DeGusta, CEO, ClarionDoor
- U.S. Consumers Significantly Underestimate Flood Risk, New Survey Finds
- The Future of Insurance: Opportunities in Ecosystems
- Electronic Chat with Todd Greenbaum, CEO, Input 1
- Majesco to be Acquired by Thoma Bravo
- The Evolving Role of Managing General Agencies
- Electronic Chat with Char Hu
- Electronic Chat with Allan L. Egbert, Jr.
- Electronic Chat with Christopher Tramontano and Zbigniew Gawienczuk
- Data Science is Gelato
- Insurance Innovation: Alive and Kicking
- Independent Agents Divided on Digital Experience, New Survey Finds
- Electronic Chat with Michael Jones
- Electronic Chat with Paul VanderMarck
- As Auto Insurance Premiums Shrink, Insurers Need Mobility Ecosystem, New Study Finds
- Property & Casualty Insurers Raise Digital Games as COVID-19 Elevates Customer Expectations, J.D. Power Finds
- Electronic Chat with Bobbie Shrivastav
- Meet the Board: Marissa Buckley
- Big Data and Insurtech: A Carrier Perspective
- Traditional Insurers Need Open Ecosystems, Partnerships to Remain Competitive, CapGemini Report Finds
- Electronic Chat with John C. Siegman
- 4 Ways AI is Empowering Insurers During COVID-19
- 6 Big Changes to Insurance from the COVID-19 Crisis
- Electronic Chat with Christopher Ewing
- Independent Agency Staff Morale High During COVID-19, New Survey Finds
- Electronic Chat with Brad Epker
- Tapping AI to Improve Policyholder Experience
- Electronic Chat with Manisha Bhargava
- ITA Pro Magazine, March/April 2020
- COVID-19 a Game Changer for Workers’ Comp
- Electronic Chat with Steve Comer
- COVID-19 Pandemic Forces Cancellation of ITA LIVE 2020
- Leveraging Digital Resources in the Time of COVID-19
- Electronic Chat with Robert Hartwig on COVID-19 and Insurance
- Celent Study: Most Small Businesses Still Unclear on Importance of Cyber Insurance
- The January/February 2020 ITA Pro is here!
- Deloitte: New C-Suite Roles Mean More Opportunities for Women
- Electronic Chat with Pankaj Parashar
- Electronic Chat with Tara Kelly
- Electronic Chat with Chuck Wilson
- ITA, InsNerds Collaborate to Enhance ITA LIVE 2020 Content and Coverage
- How SMBs Can Compete in Digital Ecosystems in the 2020s
- 4 Ways Insurance Can Prepare for New Data Privacy Laws
- Brewer Lane Ventures Launches and Hires Insurtech Vet Martha Notaras as Managing Partner
- 2020 GIA Cohort Launches on January 14
- The November/December 2019 ITA Pro is here!
- Electronic Chat with Joshua Snead
- Electronic Chat with Wendy Aarons-Corman
- Simplifying the Move to a Third-party Print Provider
- Take a Business-Driven Approach to Continuous Improvement for Core Systems and Processes
- Electronic Chat with Ron Glozman
- Guidewire’s Data Guru Mike Byam on How Insurers are Using Internal and Third-Party Data
- Electronic Chat with Russ Bostick
- Electronic Chat with Rock Schindler
- Electronic Chat with John Siegman
- Electronic Chat with Martin Burlingame
- Insurtech Landscape 2019: Top 5 Takeaways
- Grinnell Mutual Tackles Massive Transformation -- in Stride
- A Candid Conversation with Paul Mang
- SageSure Insurance Managers Improved Competitiveness by Consolidating Payments to a Single Digital Platform
- Digital Does Matter in Insurance-- And Insurers are Missing the Mark
- The 22nd-Century Insurer: Taking a Cloud-First IT Approach
- The September/October 2019 issue of ITA PRO magazine is now available in digital format here:
- ITA Pro Magazine May/June 2019
- Spotlight on the 2019 IASA Conference
- ValueMomentum Selects Erie as Site of Regional Development Center
- Capgemini and Majesco Become Alliance Partners
- Electronic Chat with Dr. Dan Shoham
- Electronic Chat with Todd Greenbaum
- Martha Notaras: The “Outsider” with an Amazing Inside View
- Electronic Chat with Larissa Tosch
- Martha Notaras Will Join ITA LIVE 2019 as a Keynote Speaker
- Five Things to Consider When Evaluating Your Cyber Risk
- ITA Pro Magazine, January/February 2019
- Synergy Between Insurers' IT and Analytics Teams Key to Operationalizing Insights, Says Novarica
- Major Ransomware Attack Could Hit U.S. with $89B In Economic Damages
- ITA Announces 1st of Three Keynote Speakers at ITA LIVE 2019
- Electronic Chat with Jeroen Morrenhof
- Legacy Systems Are Dead. Really? Don't Count On It.
- Now Accepting Nominations for the 2019 ITA Bridge Awards
- It's time to register for ITA LIVE!
- Registration is Now Open for ITA LIVE 2019!
- What to Expect from a Digital Experience Platform Implementation
- ITA Pro Magazine September Edition is Now Available
- It's National IT Professionals Day
- Save the Date for ITA-LIVE 2019
- OneShield Software and UrbanStat Work Together to Improve Real-Time Analytics and Risk Decision-Making
- ITA LIVE 2019 - SAVE THE DATE!
- Insurance Technology Association Announces New Editor-in-Chief
- August 2018 Edition ITA Pro Magazine is Now Available
- Enterprise Architecture in an Agile World
- Top 10 Tips for Securing Your Mobile Devices and Sensitive Client Data
- Industry Insight: 4 Global Insurance Trends in Digital, Data, Content Services and Security
- Diving Deeper into Prioritizing Your Strategic Digital investments
- Why Content Rules
- How Mass Personalization Will Open the Small Business Benefits Market
- At Year End 2017, Will Your Organization Be Protected from Cyber Risks?
- Do Insurance Bots Dream of Mitigating Risk?
- Conditioned to Respond
- Managing & Mobilizing Insurance Data in a Connected World
- Race to the Finish Line
- New Tools, New Opportunities in Claims
- ITA LIVE: Reaching Insurance Industry Crossroads
- Advice to Insurance IT Leaders: Keep Your Eye on the Ball
- New Date, Venue for ITA LIVE 2017
- Guidewire Makes Major Push to Small and Midtier Market by Acquiring ISCS
- Insurance Disruption is Happening Right Now
- Insurity Adds Strategic Investment Partner, General Atlantic
- Beyond Transformation: The Convergence of Finance, Risk, and Actuarial Functions
- The Rapid Evolution of Consumer Protection Regulation
- Talent Hunt: Finding, Attracting, Retaining Top People
- Insurers Flexing Their Distribution Models
- Technology Driving Disruption in Insurance
- Fear of ‘Next Bubble’ Challenges Life, Annuity Carriers
- Technology Allows Commercial Lines Insurers to Stand Out
- Single Sign-on Viewed as Biggest Tech Challenge for Agencies
- ISCS Observes 20th Anniversary; Scurto Predicts Major Changes Ahead
- Policyholders and Their First Impressions
- Progressive Making Progress on the UBI Front
- High and Dry: Insurers Search for Disaster Recovery Plans
- Insurers Sign The (Un)Dotted Line
- Reflections of a Retired Insurance CIO
- Mobile Device Management Just One Answer to BYOD Issue
- Lessons from GEICO and Progressive on Winning the Critical Buying Stage
- You Are a Target for a Cyber Attack
- Web-based Systems are the Next Evolution in Claims Technology
- Gaining a “Wow” Experience from Web Users
- Time to Shift from Business/IT Alignment to Business/IT Alliance
- Healthcare Insurers Changing to Consumer Model
- Organization is the Key for Selecting Software Vendors
- Analysts Expound on the Needs of the Mid-tier Insurance Market
- Finding the Cure for Obamacare’s Website
- New Software Solutions Benefit Insurers on the Inside and Outside
- Products, Market Impede Investment in Systems for Life Insurers
- Combatting Cyber Threats: Predict, Prevent, Persist
- The Future of Telematics Heads Beyond Insurance
- The Shame in Cyber Security Lapses
- Building Policy Administration Systems for the Future
- Insurers Look Into The Eyes of Their Policyholders
- It’s a New Dawn for the ITA
INSURANCE IT NEWS
- Agero Improves Accident Experience for Insurers, Drivers with addition of Alternative Transportation by Lyft
- Acuity Integrates with Talage’s Wheelhouse to Provide Better Digital Tools to Agents
- Quadient Announces Inspire Days Virtual Experience
- Bill Chval Named Vice President of Sales to Lead Growth at Metromile Enterprise
- Spruce Partners with Munich Re's Digital Partners to Offer Title Insurance Fueled by Automation
- Next Insurance Expands Workers' Compensation to 24 Additional States
- Industry Veteran Chuck Fillizola Joins Instec Senior Executive Team
- Majesco Announces the Launch of Majesco L&A Insurance Data & Analytics Platform
The Email Chat is a regular feature of the ITA Pro magazine and website. We send a series of questions to an insurance IT leader in search of thought-provoking responses on important issues facing the insurance industry.
ITA LIVE 2020
ITA LIVE 2020 –SAVE THE DATE!
April 5th – 7th, 2020
The Diplomat Resort
Become a member today to receive updates – www.itapro.org/MR
BLOGS AND COLUMNS
The Road Ahead for P&C Insurers: How to Understand Customers Better and Navigate the Post-COVID Insurance Market
For P&C Insurers, accelerating their digital transition and increasing their flexibility to the “new normal” are crucial steps to take... READ MORE
Insurance leaders have accepted the fact that we're never going back to pre-COVID "normal." And it's a great opportunity, says Denise Garth of Majesco... READ MORE
You have surely heard it said that small businesses are the growth engine for America. Today, the phrase has a special ring to it for benefits... READ MORE
With stagnant growth and lingering low interest rates, the life insurance industry faces a challenging future... READ MORE
Finding insurance carriers willing to write commercial lines risks has always been a challenge for producers... READ MORE
As Guidewire Software prepares for the start of Connections, its 11th annual user conference that begins on Nov. 2, Brian Desmond, chief marketing... READ MORE