The current insurance models are set to evolve into “ecosystems”. The companies’ aim is to offer premium insurance cover that is customised to their clients’ requirements, particularly for vehicle and health insurance.
Traditional types of insurance are destined to disappear and be replaced with “ecosystems”, as heralded by a recent offer from Tesla. Over the last few months, the American firm has offered specific insurance that is included in the price of its connected vehicles, which are supposedly safer than normal vehicles.
Insurance companies are preparing to embrace this trend in order to adapt to the ever more connected world in which we live. They hope to offer their clients premium insurance that is both customised and dynamic, in particular for vehicle and health insurance.
Using data from connected products to innovate
Thanks to connected devices, insurance companies will be able to put forward more customised offers. This is already the case for “Progressive” and “Insure The Box”, who add sensors to their clients’ vehicles, while other companies are signing partnerships directly with manufacturers.
This “connected” insurance system can also be applied to logistics companies, to provide information about the status of their deliveries, or to the business world, by analysing data collected in invoicing and accounting apps via the cloud.
But, according to Sangeet Paul Choudary, founder and CEO of Platformation Labs, the advances will go way beyond connected and customised insurance. He claims that, where traditional insurance monetises its promise to protect clients in the event of an accident, the insurance of the future – thanks to the collection and analysis of data – will quite simply enable clients to avoid the incident in the first place.
New monetisation opportunities
Insurers – in particular car insurers – will be able to exploit the virtuous circle of their clients’ behaviour thanks to data collection and analysis. For instance, a British insurance company offers a black box that can be installed on the dashboard of young drivers’ cars in order to analyse their driving and give them tips on how to improve.
Choudary highlights the strategic importance for insurance companies to own their clients’ data, and to adopt an “ecosystem-based” approach. In the ecosystem model, the insurer collaborates with a certain number of third parties in order to analyse their clients’ data profiles, by joining forces with an external platform such as Nest, for example. In this scenario, the external platform can own the data. But the real opportunity for insurers is to possess this data themselves and create their own ecosystem instead of handing it over to a third party.
The future role of regulators
The transformation of insurance companies into “insurance ecosystems” has one inarguable advantage: thanks to their network structure, ecosystems are actually more viable. And the more of their clients’ data they collect, the more third-party collaborators they will have. Consequently, the more value the third parties add, the more advantageous the final offer will be for the client. It is likely that a small number of large ecosystems end up dominating the whole market.
While traditional insurance data is strictly regulated, the new forms of data are less so, at least for the moment. For example, data from the healthcare sector is well-protected, but data about wellbeing and fitness are in a grey area with regard to regulations. Regulators must therefore strike a balance between respecting the users’ private lives and innovating.
Contact Allianz Partners
France, Jul 27, 2017
The price of health insurance policies has gone up, which is a problem for the 29 million people in France who do not benefit from group health insurance.