The Ecosystem Revolution: The Rules of a New Insurance Model

We have already explained on other occasions what a Liquid Ecosystem stands for: a business model that involves different partners collaborating with an insurance company in order to solve a specific need of its customers through one or more services. It is, in essence, a space where different players coexist, connecting and interacting to offer more complete, personalized, and relevant services to the consumer, in an absolutely fluid and integrated way.

A concrete example of this phenomenon is the light, green and shared mobility services found in the city of Lisbon. When a user chooses to use one of these facilities, he is not just renting a bike or a scooter for a short period. They are also automatically subscribing to one or more insurance policies - personal accident and civil liability - to prevent eventualities, and paying for part of the electric power consumed during the ride. All this, through a simple click on an app, which demonstrates how everything happens (and most so) in a fluid and integrated way.

For us at NTT DATA there are four major ecosystems that are related to each other and that offer opportunities for insurance entities:

• Smart Mobility: Covering green and electric mobility solutions, but also anything that may involve the activities people perform outside their homes or work spaces and the way they decide to move between them.

• Healthy Living: Including activities related to new ways of living, saving, healthy living, and the integration of technology into people's daily lives, which, in turn, can contribute precisely to a more balanced life and well-being, not only physically but also financially.

• Home Safe Home: Framing everything that has to do with the space where we spend most time, our home.

• Business Shield: Involving all the business and employee protection solutions that are adjusted to the context and competitive environment of each industry.

In all these "spaces", insurers have the opportunity to position themselves at the center of thematic ecosystems, to coordinate the contribution of different entities to meet the present needs of consumers and society in general.

How Can the Ecosystems Revolutionize the Insurance Industry?

In an extremely competitive market such as insurance, the value of the experience makes all the difference in a process of buying or subscribing to a service. We're talking about the way needs assured, regardless of the provider. Liquid ecosystems allow insurers to address challenges, concrete needs, many of them trends, by coordinating the efforts of different entities, in favor of a concrete service that is simple to obtain and easy to use.  On the other hand, these ecosystems are also an opportunity for insurers to team up with insurtechs, technology-based companies and startups, to keep up with the trends emerging from our daily lives in society. In essence, through these liquid ecosystems, insurers can focus more on the experience and benefit offered to the customer and less on the product, which sells and may not even be the protagonist of the system.

Moreover, the ecosystems' applications in mobility matters are several. Besides the example already shared, related to green and light mobility, which we already find in cities like Lisbon, the liquid ecosystems related to mobility can, among many other things, facilitate the purchase of electric vehicles, with more competitive prices and agreed between partners, can reward drivers for conscious driving, through the integration of insurance systems with GPS services, among others.

Liquid Ecosystems are undoubtedly a trend in insurance and a part of the future of this activity, which is changing like so many other dimensions of our life. In the specific case of insurance, the exploitation of liquid ecosystems will represent a reorientation of the activity towards services, less focused on the isolated sale of products, and more directed towards complete, integrated services tailored to the needs of the end customer. It will also mean that insurers will adopt a data-driven culture that promotes the use of and access to data at all points in the value chain to deliver a customer-centric experience that will also allow them to plan and make strategic decisions based on information gathered in real time.

Then, What Priorities Should Insurers Have When Planning these Ecosystems?

The priorities are, in the first instance, the identification of the concrete need that is to be solved and then the experience that is to be offered to customers. This reflection must be made precisely by the insurers, who, placing themselves at the center of the ecosystems, assume themselves as the conductor coordinating an orchestra of partners, to jointly offer a service that is simple to understand, subscribe to and use.