ANZ insurers are positioned to take advantage of ecosystem-driven business models, but there’s a transformation gap that must be addressed.
The ANZ insurance industry is undergoing swift change. Soon, insurers will operate not as traditional standalone risk operators but as providers of interconnected service offerings in an ecosystem-led environment.
In this new landscape, consumers will increasingly choose their insurance providers based on the brand, service channel and ecosystem partners they prefer, all of which will vary depending on their buying journey. Recent Economist research highlights this trend, with 56% of insurers in the study pursuing diversification, adjacent-industry opportunities and new industry standards across processes, services, products and technologies.
Rampant data sharing
The force behind the new insurance service offerings and business models is the new generation of customers willing to share data in exchange for better value from insurers. The opportunity to add value with services across a product portfolio will drive a new style of business model—one that is driven not by products but by experience- and intelligence-powered offerings.
Industry boundaries are also blurring. Other business categories are now looking to bundle insurance to boost adoption of their digital products and services. Insurers are also looking beyond their own borders, exploring complementary services such as repairs, aggregators and rental services, all of which have the power to increase process efficiencies.
The Consumer Data Right regulatory framework, which is being widely adopted in banking and energy sectors, is also coming to insurance by the end of 2023. This consumer data portability mechanism will open the door for easier and more efficient data sharing among third parties, which will drive new value and collaborations.
Insurtechs and other insurance competitors are also looking for new ways to collaborate than compete. Insurtechs are leading the way, with innovative capabilities that can help all insurers evolve toward newer models of operation and success. These new approaches also streamline and standardise product options to make customer onboarding and claims processes simpler than ever before.
As customer behaviour changes and market competition grows, there is a greater need than ever for insurers to differentiate their brand. Agility and efficiency will be key to winning in this more complex market. But ANZ insurers are ahead of other industries when it comes to exploring new revenue opportunities.
Value comes through modernisation
Insurers have made deep investments in digital technologies that position them to take advantage of ecosystem-driven business models—including artificial intelligence, blockchain, cloud computing and Internet of Things. However, we see a looming transformation gap that must be addressed. Big questions remain for insurers to find the optimal ecosystem business strategy, the right technology enablers, the right knowledge and enough time to put those technologies into action.
The foundation of the next ecosystem-driven phase for insurance is data. This will require insurers to invest in customer journey analytics to understand customer needs and their lifetime value across their insurance and non-insurance journeys.
The open banking era is the open insurance era is the open data era. As data becomes more transparent, insurers that provide value to customers through transparency will create truly differentiated customer experiences and product propositions.
To learn more, visit the Australian Modern Business section of our website.
The views and opinions expressed in this report are those of Cognizant and do not necessarily reflect the view and policies of Economist Impact. Data presented is from an Economist Impact executive survey, commissioned by Cognizant, conducted in early 2022.
