Insurance-as-a-service: Capitalising on customer centricity and connected partnerships

Insurance as we know it is evolving . Among insurance incumbents and industry challengers there is an increasing shift towards offering preventive services, risk advisory, and meeting the increasingly complex needs of customers in new and ingenious ways. Changes within the insurance sector are currently happening at an unprecedented rate and to a large extent, driven by several megatrends.

This does not mean that the days of influencing the insurance market by selling products to reactively support customers are over. However, there is a tendency among consumers to look for opportunities and partners who will help them achieve their goals anywhere, anytime – and in a more personal, seamless, immediate and value-focused way. This is far from the often impersonal, time-consuming, and confusing customer experience some insurers leave us with today.

Insurance needs to be re-designed to enable a different customer experience, vision, and promise, that more effectively meets the customers’ needs.

The future of insurance is ‘as-a-service’

The megatrends shaping the future of the insurance industry include increased life expectancy, environmental, social, governance focus among consumers, and changes in ways of working. There are also more specific industry trends having an impact: increased utilisation of new technology, more innovative partnerships, ecosystem thinking, and open insurance movements. Industry challengers are already capitalising on these trends and incumbents must reconsider how to meet their customers’ needs and expectations, otherwise run the risk of losing additional market shares and missing future opportunities.

Customer centricity remains of utmost importance. However, the concept of insurance as-a-service caters for a more holistic view on how insurers leverage multiple customer journeys to provide integrated, immediate, and more personalized value to customers. For example, during the entire value journey of buying and owning a house, customers face multiple touchpoints with online portals, brokers, mortgage institutions, banks, lawyers, and renovation companies. If you can map and understand how potential customers flow throughout these adjacent customer journeys, you’ll be able to tailor your offerings to fit your customers’ needs more seamlessly. This would allow opportunities to be seized in non-traditional markets.

We can already see this in action. Gjensidige Forsikring in Norway delivers insurance-as-a-service through its ‘mobility platform’, which provides value to Gjensidige customers seeking to buy, finance, maintain, insure, and sell a car. As a result, Gjensidige has a relation to every second car driving on Norwegian roads.

The value of partnerships

A typical first step for insurers in their pursuit of delivering insurance-as-a-service would be to leverage innovative and non-traditional partnerships, where new customer value offerings and ecosystems are explored. Innovative partnerships are also a vehicle to deliver insurance as- a-service on a small scale and serve as a steppingstone to explore a given ecosystem.

Indeed, insurers are increasingly seeing potential in collaborating with non-traditional partners, however, value-generating partnerships don’t occur by coincidence. Our experience suggests that a best practice partnership model must be in place to generate value via partnerships. This model addresses four themes and aims to encourage you to reflect upon fundamental questions like:

1. What does our selection process involve? Who should we partner with and why? How can the partner support our business goals? What criteria should we select the partner upon, and how do we continue to increase value throughout the partnership?
2. How do we manage the partnership, and what necessary tools need to be in place to extract synergies?
3. What will a shared ecosystem look like? How are we to distribute our value proposition via the partner? What ecosystems will we tap into, and are there any communalities within the ecosystem that we can leverage further?
4. How will we assess value? What will each partner provide to the partnership? What are the pains and gains for our partner?

The model can provide guidance on appropriate partnership engagement models to ensure maximum value.

What does it take to deliver insurance-as-a-service?

You cannot dive in headfirst to a large core-transformation and deliver insurance-as-a-service before products and business processes are addressed appropriately. To initiate the journey of delivering insurance as-a-service, you must identify and explore value and opportunities for the business, as well as your customers’ needs and expectations. You should have a clear strategy on how to position yourself within relevant ecosystems and supporting platforms.

As mentioned, customer centricity is key. An effective method to make sure that you are in the right place at the right time with the right offer for the customer, is to ask yourself questions like: Which journeys constitute opportunities for us as an insurer and our offerings? This approach applies for the entire process from purchasing insurance to filing a claim.

Delivering insurance-as-a-service puts additional demands on your organisation’s technology, data management, and internal teams. Successful insurers have, in many cases, invested heavily in modern systems to become more responsive in terms of pursuing strategic goals, meeting regulatory requirements, and meeting new customer needs.

Data is the real asset. Effective data management is a prerequisite for you to be in the right place, at the right time, with the right offer for customers. Strong and sound data practices will enable you to focus less on data mining and reporting, and more on extracting valuable insights.

Lastly, it is important to consider your organisation’s capabilities. Aim for organizational agility where relevant capabilities are developed, nurtured, diversified, and activated appropriately.

Think big, start small, scale fast

There is no way around it. You need to know your customers even better than before to give them more personal and convenient offerings via traditional and untraditional means. Think through the customer journeys you want to create or support, and focus on targeting a segment and practice. Once this is achieved, start scaling to build on learnings and insights to further build critical mass across ecosystems and platforms. That’s the difference between selling products and selling a service. The future does not need insurance companies – but we do need insurance.