Ecosystems and partnerships: the future for insurers

21/01/21

Operating within an ecosystem

Insurers today face major challenges: competition is high just like customer demands, there are few opportunities to expand and interest rates are low. As a result, the current operating model of insurers is under pressure. Insurers should therefore look for a more sustainable model. More intensive cooperation with external partners and even operating within an ecosystem could offer a solution. 'By doing so, insurers give themselves the opportunity to create a competitive advantage. However, this does not happen automatically and requires a solid adaptation of the existing operating model', says Matthijs Kortenhorst, partner at PwC and Insurance Consulting Leader.

Open insurance en risk management

'Insurers see partnerships and ecosystems more than ever as part of their changing business model. Various Dutch insurers are taking steps to bring about an ecosystem strategy', says Kortenhorst. This new model is also referred to as 'open insurance', but achieving it will not be easy. As an example, Kortenhorst mentions the enormous bulk of data that will be exchanged between parties. 'Suppose something goes wrong somewhere in the chain, who is responsible and does any party have final responsibility?'

Such partnerships give rise to all kinds of compliance and risk issues. All parties involved must think carefully about the risks involved in a cooperative venture and exclude as many of these as possible by making clear agreements.

BXT: Business, eXperience, Technology

The impact of such a transformation is great. To properly manage this change in practice, a clear and workable method is needed. 'For our analysis, we developed an operational framework structured along the Business, eXperience and Technology (BXT) axis.' When a complex transformation project is viewed from these three angles, a solution emerges that puts the customer first and is therefore ultimately the most sustainable. 'The advantage of the BXT method is that it addresses as many risks as possible – precisely by highlighting the problem from different angles and really focusing on customer demand', says Kortenhorst.

Factors for a sustainable ecosystem

'If the right partners are not selected for the cooperative venture, things can easily go wrong. From a business perspective, it is important right from the start to find partners who match the standards and values of the ecosystem with complementary products and services', says Kortenhorst. When all parties agree on the basics, a clear and distinctive proposition can be developed. 'Without this common approach, the sustainability of such an ecosystem would be very limited.'

Kortenhorst goes on to explain that the customer experience is more important than ever. 'Are, for example, the apps of insurers sufficiently user-friendly and of the same quality as those of Google, Apple and Amazon, and do these apps entice end-users to consult them on a regular basis?' Kortenhorst also mentions the importance of a good technological basis. 'What's the operational technology like? Is it possible to work well with current technology or does most of the old legacy need to be cleared up first? And finally, is the organisation capable of implementing changes in this technological architecture quickly and flexibly?'