Although insurers are eager to create or join business ecosystems to spur growth amid industry disruption, few insurers are currently well-positioned to succeed as ecosystem partners, according to a new report from Accenture.
Based on a study of more than 1,250 business leaders, including 106 insurance executives, the ‘Insurers: Go All-In On Ecosystems’ report from Accenture Strategy found that the majority (84%) of insurance executives acknowledge that ecosystems are important to their business strategy and that more than half (54%) are actively seeking ecosystem opportunities. However, despite this enthusiasm and desire to compete in ecosystems, insurers are falling short on having the right capabilities, culture and technologies to fully exploit ecosystem opportunities.
The report identified less than 5% of insurers as “ecosystem masters” — companies with the right attributes to disrupt their industry using ecosystems and that plan to lead as many ecosystems as possible. This ranks the insurance industry second-to-last among the dozen industries analyzed in terms of the number of ecosystem masters.
The report suggests that while insurers offer several key attributes that are valuable within ecosystems — including unmatched depth and richness of data and longstanding customer relationships — they lag behind firms in other sectors in terms of their ecosystem strategy, culture, innovation and technology adoption.
“Insurers have to decide whether they want to be the disruptors or the disrupted,” said Michael Lyman, a senior managing director who leads Accenture Strategy in North America and its Insurance practice globally. “Joining or designing market-leading ecosystems will enable insurers to ride the disruption wave, instead of being swept up in it. But this requires a scrupulous self-assessment of their ecosystem capabilities to determine any organizational gaps that will prevent them from being effective ecosystem partners.”
Encouragingly, the overwhelming majority (97%) of insurers surveyed believe they have what it takes to become an attractive ecosystem partner. As a next step, forward-thinking insurers will need to develop a clear ecosystem strategy to either reinvent or completely disrupt the existing insurance value chain to improve their competitiveness. The report suggests that to be an effective ecosystem player, insurers need to carefully assess their readiness and close cultural, technological and other gaps. Choosing the right, trusted partners that can help achieve economies of skill, scale and scope will be critical, the report notes.
Insurers will also need to prioritize the security of their ecosystem partners. Accenture’s Technology Vision Insurance 2019 research found that only one-quarter (26%) of insurers know for sure that their ecosystem partners are working as diligently as the insurers themselves are to improve their security resilience. A failure to focus on security could create new risks and undermine the value of participating in ecosystems.
“Ecosystems offer an exciting new way of competing and insurers are at the beginning of their journey to develop an ecosystem strategy,” said Daniele Presutti, who leads Accenture’s Insurance practice in Europe. “While much work remains to be done to fill in the gaps between their intentions and executions, insurers recognize the challenge and see that the potential to alter the insurance value chain is significant. Embracing the concept of ‘open insurance’ through a platform-based approach will require new forms of collaboration with players from within and beyond insurance that can share data and expertise to create new services that address customer needs. Insurers should be fearless, take the offensive and embrace these platforms.”