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The future of several service industries may be headed towards ecosystems. Or so, a McKinsey study would make one believe. As per their research, as many as 12 large ecosystems yielding 30% of global revenues could become a reality in the next 5 years.


In Part 1 of this article, examples of ecosystems in insurance were presented along with few compelling reasons for heightened industry-wide interest to initiate or join ecosystems. In this concluding part, pathways to ecosystems with enabling and inhibiting factors are discussed.

Not all carriers need to build ecosystems. There would be ample room for those that thrive as leaders in low-cost underwriting, efficient policy administration and flawless claims experience. They compete on price and as part of ecosystems, might serve as suppliers of white label products, where customer acquisition and experience would be controlled by dominant players.

It is a widely considered view that generalist mid-sized carriers would be hit particularly hard, if they lack agility in adapting to new market realities. They would either get acquired by ecosystem leaders or struggle to maintain growth and margins. We already see examples of leaders from adjacent markets active in M&A. In Asia, Navi’s acquisition of DHFL GI and PayTm’s acquisition of Raheja QBE insurance are two recent examples.

Senior leaders are cognizant of this threat and many are indeed actively preparing to tackle the challenge. Two thirds say they expect ecosystems will help their organization grow revenue by 11-25% in the next 2 years.  However, as focus detracts and bias tends towards incremental operational improvements, it can spawn missed opportunities. The path forward requires new business models to match dynamic ecosystem demands and reshape customer perceptions. Products correspondingly need redesign to allow bundling and unbundling. The GAFA challengers with their insurance plays are signs of a coming shakeup. 


The choice of business model depends on the role carriers play in the ecosystem. They can opt to be producers or bundlers or owners. Producers provide white label products to fit into many ecosystems. Bundlers have more complete knowledge of customers and operate as omni-channel businesses with integrated value chains. Owners use relationship and data insights to match customer needs with offerings sourced from third party providers with plug-and-play products.

A successful example of an owner is Bayer subsidiary, The Climate Corp, which grew its digital agriculture platform by 20X to more than 95 million paid subscription acres in 4 years. In the process, it curated services from close to 65 partners on satellite imaging, soil assessment and drone mapping.

Some of the enabling factors for success stories have been:

  • Differentiated Value (From trusted brands, superior customer experience)
  • Optimized Operating Models (From revamped partnership processes in Procurement, QA and Legal)
  • Open Systems (From sharing and scaling via APIs)
  • Curation Strengths (From a range of domains and partners).

While these factors are important to the success of an ecosystem, a foundational element is trust. Trust can make or break an ecosystem. A trust incident involving one player can erode substantial value.

Ecosystems enable rapid digital business growth using non-linear models that embrace network effects. In the coming years, the industry is expected to witness consolidation. A small number of very big players and several niche specialists will come to dot the landscape.  As ecosystems proliferate, attendant benefits of new risk categories, exposures and insurance opportunities will begin to emerge. Insurance companies will be key to these networks due to their risk expertise and ability to work with regulators, data protection and privacy issues.

Those in insurance ecosystems can prepare to reap high returns by putting their digital houses in order so their propositions can seamlessly bundle with complementary offerings and by carefully choosing partners with shared goals.

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