Ecosystem Insurance: Embedding Protection into the Core

Insurance is no longer confined to the boundaries of traditional policies and premiums. It’s evolving beyond its conventional borders, breaking free from the inefficiencies that have long plagued the industry. In today’s fast-paced, tech-driven world, sticking to the status quo simply won't cut it. The old model—where insurers spend vast resources trying to outshine competitors in a crowded marketplace—has become obsolete. The future of insurance is all about seamless integration into our everyday lives, transforming the customer journey from a fragmented, inefficient process into a smooth, intuitive experience. (see my "The Invisible Insurer" series, in 3 parts)

Technology is obliterating the gaps between the user's actual needs for prevention and protection and the right insurance offerings at the right time. Imagine insurance that’s there when you need it, where you need it—woven into the fabric of your daily activities and business operations.

This is the driving force behind the rise of ecosystems – dynamic networks of interconnected businesses collaborating to provide a unified customer journey.

Fig. 1:  Estimated Ecosystem Revenue Pools

Join the Conversation: Ecosystems in Action

An ecosystem is a living, breathing entity, a network of meaningful interactions between producers and consumers. To survive and thrive in this environment, insurers need to be part of the ongoing conversation. What does this look like in practice? Let’s break it down:

1. Smart Mobility: The transportation landscape is evolving rapidly, with innovations like autonomous vehicles, ride-sharing, and micro-mobility solutions. Insurers are partnering with tech giants and startups alike to pioneer new models of usage-based, on-demand coverage. For instance, Allianz and Munich Re are investing in autonomous vehicle technology, recognizing the need to shape coverage for a driverless future. Another incumbent Aon is partnering with micro-mobility providers, offering integrated insurance solutions for a new generation of vehicles.
2. Connected Homes: Our homes become smarter and more connected, equipped with devices and sensors that monitor everything from security to energy efficiency. By leveraging IoT sensors, real-time data and supplier network partnerships, insurers can offer proactive, personalized coverage that adapts to each household's unique needs. On paper, Ikea's partnership with iptiQ and Swiss Re to launch digital home insurance services, seamlessly integrating protection into everyday home management, is a prime example. The results over time remain to be seen.
3. Healthy Living: Consumers are more health-conscious than ever, seeking advice and support on living healthier lives. Wearables, health tracking apps, telemedicine and virtual health platforms are generating a treasure trove of data that can be leveraged to incentivize healthy behaviors, improve access to care and offer personalized coverage. Insurers are stepping up, offering platforms like AIA's Vitality, which integrates fitness tracking, health assessments, and insurance into one holistic service. Also picture fitness clubs and wellness apps that come with built-in health or accident insurance.
4. SME Business Protection: Small businesses are the backbone of the economy, yet they often struggle to access affordable, tailored insurance solutions. Ecosystems are changing this. Platforms like Shopify and QuickBooks for example are integrating insurance offerings directly into their platforms. This allows SMEs to purchase customized coverage for everything from professional liability to cyberattacks – all within the tools they already use to run their businesses.
5. B2B Marketplaces: In the interconnected world of B2B commerce, businesses need agile and responsive coverage that adapts to their evolving risks. By integrating with supply chain management platforms and Industry 4.0 solutions, insurers can offer real-time, data-driven coverage that adapts to various business risks. From parametric insurance for shipping delays to smart contract-enabled trade credit, the possibilities are endless.

Tech-enabled ecosystems are created and developed to solve these living concerns and business problems. Insurers need to leverage technology to create or partake in these ecosystems. The use of technologies like Cloud, AI, RPA, IoT, 5G, Cybersecurity or Blockchain (or DLT) is and will be instrumental to enable the ecosystem insurance and manage the data required to deliver the insurance promise.

Your Ecosystem Command Center

For ecosystem insurance to be truly effective and efficient, it must be enabled at the core.

To truly capitalize on the power of ecosystems, insurers need a robust core – the technological and strategic foundation that enables them to become active players in this new landscape.

This core acts as the command center, allowing insurers to either lead their own ecosystems or participate in an external ecosystem.

Leading and orchestrating their own ecosystem means building a flexible platform from the ground up, defining the rules, inviting partners, and managing the entire experience. This requires:

• Core Platform Configuration: Setting up the infrastructure to onboard partners, configure the various “parties” involved, manage relationships, and define the rules of engagement within the ecosystem
• Seamless Communication: Enabling real-time data exchange and communication between all parties through APIs and integrated systems
• Agile Adaptability: Building in the flexibility to adapt to changing market dynamics, incorporate new partners, and launch innovative products and services

Participating and integrating into existing ecosystems require insurers to prepare their core systems for seamlessly joining forces with established players, bringing valuable offerings to the table, and adapting to the existing dynamics:

• Product & Pricing Agility: Configuring offerings to meet the specific needs of the ecosystem and its customers, with flexible pricing models and tailored coverage options
• API-First Approach: Developing robust APIs that enable seamless communication and data exchange with the ecosystem's core platform
• Real-time Responsiveness: Ensuring systems can react to events and triggers within the ecosystem, providing instant quotes, automated underwriting, and streamlined claims processing

The Core Advantage

Those who can efficiently configure their core systems to enable ecosystem integration, whether as leaders or participants, will be the ones who build a competitive advantage, unlocking a wealth of benefits:

• Unlocking New Markets: Accessing previously untapped customer segments through strategic partnerships and ecosystem integration.
• Data-Driven Insights: Leveraging real-time data from across the ecosystem to personalize risk assessments, optimize pricing, and develop innovative products.
• Proactive Risk Management: Shifting from a reactive to a proactive approach, using data and technology to mitigate risks before they escalate into claims.
• Enhanced Customer Experience: Delivering frictionless, embedded insurance experiences that seamlessly integrate into the customer's digital life.

The Future is Embedded… into the Core

The insurance industry is at a crossroads. The old ways of doing business are no longer sustainable.

To thrive in the ecosystem age, insurers must embrace a new paradigm – one where protection is embedded into the core of their operations and seamlessly integrated into the fabric of our digital lives.

The future belongs to those who can adapt, innovate, and collaborate to deliver the seamless, invisible, and indispensable protection that today's consumer demands. This promising future is enabled by ecosystem thinking and powered by a new generation of core platforms.

The future of insurance is embedded, certainly, but it starts at the core. The question is, are you ready to take the leap?

To project yourself into the embedded future, staying relevant in different ecosystems, read my "The Invisible Insurer series" in 3 parts:

#1 Unveiling the Invisible Insurer: The Silent Guardian of the Digital Age

#2 Unveiling the Invisible Insurer: Orchestrating Seamless Protection in the Digital Age

#3 Fast Forward: Conversations with my AI Life Companion