According to a recent Bain study, 80% of millennials are open to switching from traditional carriers to newer entrants. Millennials are ready to use technology to reach these equally tech-adept upstarts. About 50% of millennials are already using mobile devices for insurance research and interacting with their insurer. Many traditional carriers are not giving the millennials what they want, therefore the wavering loyalty.
One way to keep millennials and others from jumping ship is for traditional carriers to offer them a “digital ecosystem” of products and services of value.
So, what are digital ecosystems? A digital ecosystem is a set of interconnected digital services that allow users to satisfy a set of interrelated needs in one integrated experience. Consumer digital ecosystems currently emerging are concentrated on needs such as travel, healthcare, or housing.
One of the most common examples is planning a vacation online. Today the norm is to book your air, hotel and car rental from different vendors within a single website in one integrated experience. Providers such as Orbitz, Kayak, and Trip Advisor offer this convenience. This is a proven B2C model that has been well tested and has altered how individuals shop online.
Admittedly, planning a vacation is more exciting than shopping for insurance or an auto loan, but why not create the same buying experience for insurance using the same proven B2C model?
We recently worked with an insurer to develop a digital ecosystem comprised of insurance and financial services products. This organization is offering insurance products to its customers as part of a broader set of financial products.
This insurer is partnering with over 50+ financial institutions, banks and credit unions that are selling auto loans and mortgage loans. Insurance products like job loss insurance, disability insurance, and life insurance are also sold as interconnected products. These are embedded in the financial product providing the consumers with one integrated experience.
The technology challenges in offering such an integrated customer experience appear to be daunting at first glance and have raised some questions. Each of the financial institutions has its unique data format, resulting in the following challenges that need to be addressed:
All of these challenges needed to be addressed before a digital ecosystem could be implemented that offered all products from all channel partners.
The first requirement is time.
Except for new insurers, most carriers have investments in core legacy systems. While many organizations are in the process of replacing or planning for the replacement of these core systems, they are still required to develop a digital ecosystem.
Insurers can no longer allow their legacy systems to be an obstacle for entering a new market or launching a new distribution strategy. The technology exists today that enables insurers to leverage their legacy systems in a matter of weeks to develop cloud-based solutions – such as a digital ecosystem.
The second requirement is microservices.
So how were the challenges overcome in our example? Microservices were used that included:
The result was our customer now has a digital ecosystem in production to offer a combination of insurance and banking products based on their customers’ requirements.
Modern technology has also provided the insurer with the ability to rapidly onboard credit unions and agencies while providing an enhanced insight and control over the insurance products sold. The insurer can now create and offer special products for insuring customers who obtained loans from financial institutions, offering protection to both the bank and the customer.
In the words of Hugh Terry, Founder of the Digital Insurer, “Insurance ecosystem models are digital business models that initially engage with a customer on a need other than insurance and then through the strength of the relationship are able to provide insurance products appropriate to the needs of that customer.”
For insurers to successfully build these digital ecosystems, it will be necessary for them to take a hard look at their traditional roles and business models and evaluate opportunities to partner with players in other industries.
Interested in learning how mondCloud APIs can help your organization develop insurance ecosystems? Click on the link below to receive more information.