No Match Found
The latest phase of the health crisis has driven even faster digitalisation of the global economy in recent months, prompting a widespread transformation of business models. Despite some initial reluctance, many insurance policyholders switched to new digital consumption methods as a result, giving rise to fresh expectations. The insurance industry is now fully aware that their digital capabilities will drive their future growth. Platformisation has thus become the goal of insurance players seeking to emulate the business model of digital champions. For most, however, the task has proven difficult, requiring a multitude of structural changes.
The platform and ecosystem age is in full swing, bringing with it a new value creation model.Now more than ever, the future of insurance seems to hinge on whether industry players can transform to stay relevant and seize the new opportunities offered by these models.
Many companies in today’s digital age have successfully adopted this external growth model. Alibaba, Airbnb and Ping An, for example, offer hundreds of products and services in partnership with companies in related or adjacent industries, harnessing the technical capabilities of their platforms.
A number of insurance companies have already started building their own ecosystems or are in the process of doing so, developing new products and services in partnership with players in adjacent industries (mobility, health, travel). The insurance industry is already on board, but many players are behind on their platform plans. 90% of insurance players said that including platformisation in their strategy was of high or even critical importance. However, 45% still feel that their organisations have not yet reached maturity on these issues and only 36% have a strategy in place to leverage this business model.
Despite the risks and doubts that remain among some insurance players, there is no longer any doubt that digital platforms and ecosystems are more than just a passing fad. It enables insurance companies to stay relevant when faced with new policyholder expectations such as customisation, contextualisation and on-demand consumption, which have become the new norm. To successfully leverage these digital networks, insurance companies need to redefine their differentiation advantage in order to remain relevant not only to their customers but also to their partners.
Transitioning a business to a platform model involves many challenges that companies need to be ready to face : the choice of technology given legacy IT constraints, the implementation of a multidisciplinary, platform-centric organisation, and proper management of the new roles and skills required.companies that started their transformations early on are already reaping the first benefits. These firms are positioning themselves as the market leaders of tomorrow by forming numerous strategic partnerships, and are on the brink of outpacing competitors still on the fence. The next five years will therefore be crucial for companies that still doubt the model because, after that, they may not be able to afford the investments required to catch up.
This publication is the fruit of long reflection carried out during the Finance Innovation competitiveness cluster’s “Innovation Papers” initiative, led by PwC in the wider insurance ecosystem.
It aims to summarise the findings of over a dozen of interviews and three workshops that took place between April and July 2021 involving roughly 40 participants, mainly executives from insurance companies, mutual insurance companies, health insurance providers (M45), brokers, reinsurers, service providers and insurtech companies.
The figures used in the study are taken from a quantitative survey of 20 of these participants.