Designing a Digital Insurance Ecosystem

Designing a Digital Insurance Ecosystem

Insurance carriers that invest in open ecosystems and best-in-class components will experience improved customer satisfaction, lower costs and leapfrog the competition.

The insurance industry experienced several years of digital transformation in a few months. The days of monolithic legacy systems, built and maintained in-house for decades, are coming to an end as the market rewards dynamic carriers that leverage application programming interfaces (APIs), microservices and web services to build ecosystems that offer the right experience, to the right people, on the right platform.

What is a digital ecosystem?

A digital ecosystem describes a loose network of connected applications and technologies that act cohesively to meet business objectives. Inspired by ecosystems found in nature, digital ecosystems are characterized by principles of openness, flexibility and self-organization. APIs, web services and microservices often work together to form the framework of a digital ecosystem.

Uber, for example, maintains an ecosystem of over 2,200 microservices. This architecture enables greater flexibility and autonomy, allowing teams to innovate rapidly and swap out specific services without compromising the entire system.

Unlike open ecosystems, closed systems (also known as “walled garden” systems) are typically built and maintained in-house. An example of a closed system is Apple’s iOS operating system, where apps can only be downloaded from Apple’s App Store.

The insurance industry’s next big frontier

According to research firm Novarica, the trend toward digital ecosystems in insurance is powerful, with more than 65% of insurers having deployed APIs/microservices as of Q4 2019. A couple of years ago, insurtech Lemonade made headlines by launching its public API, allowing anyone to offer Lemonade policies through different apps or websites. According to research from Accenture, 84% of insurance executives say ecosystems are important to their strategy. Ecosystems are the insurance industry’s next big frontier for disruption.

For insurers, a digital ecosystem can encompass the entire customer journey, from quote to claim. This frequently involves touchpoints with several applications such as CRMs, policy administration systems, broker portals and third-party data service providers. This barely scratches the surface. For insurers, however, there remains an understandable hesitancy toward adopting open ecosystems.

While carriers acknowledge the importance of adopting innovative new technologies, many find themselves tied to closed systems that struggle to “talk” to new applications. This may result in missed opportunities, declining market share and unhappy customers while rewarding competitors that offer greater flexibility. What monolithic legacy systems do provide, however, is control: governance, security, predictability and change management. These are important concerns in an industry known for its heavy regulation.

For many CIOs, managing a cornucopia of different technologies within a digital ecosystem can seem a tough pill to swallow given security and governance concerns. However, with rapidly evolving customer expectations and a drastic increase in the overall rate of change, greater flexibility is now a must.

A recent survey of European insurers conducted by DXC Technology found that 22% of insurers were already part of an ecosystem providing additional services to their customers, and a further 46% had plans of joining an ecosystem soon. The evidence is clear that the industry is shifting toward greater openness and agility, and insurers must be prepared to commit to the new paradigm.

See also: Big Opportunities in Insurance Ecosystems

Three ways insurance ecosystems drive competitive advantage

1. Optimize Customer Experience

Traditionally, customers had greater loyalty to particular brands, and there were relatively few touchpoints in advance of sales and renewals. Today, customer relationships are more fluid as pricing and plan comparisons have become more transparent, and the customer journey frequently involves several touchpoints across different channels both before and after a policy is sold.

Digital ecosystems enable insurers to optimize the customer experience by increasing the number of touchpoints with customers and by providing new services. Lemonade’s open API is one example, but there are many other opportunities that insurers are seizing to meet modern expectations and grab growth opportunities:

  • Chatbots and conversational marketing technologies
  • Life insurance applications for managing personal health
  • Virtual healthcare delivery
  • Partnerships with other businesses to earn digital loyalty points
  • Connected smart home and vehicle-safety solutions
  • Extensions to manufacturers’ warranties as part of an integrated e-commerce experience
  • Advice and estimates provided to customers using voice technology

Insurers that are late to develop their ecosystems will likely lose market share to competitors and disruptors that deliver engaging new experiences.

2. “Componentization” of insurance ecosystems boosts agility and innovation

Open ecosystems that combine discrete components enable insurers to reduce costs and improve agility and system reliability while supporting innovation.

Flexibility is enabled by modularity: the ability to continuously swap out components based on evolving business needs. Similarly, if a single service goes down, it can be replaced without jeopardizing other components.

“Componentization” also forces IT planners to clearly define the roles of different components. This clarifies ownership and makes it easier to identify bottlenecks and efficiencies, improving the quality of services and reducing the overall IT spending.

At Global IQX, we built a componentized platform from the ground up. Our platform enables carriers in the group and voluntary benefits business to select specific components that fit within their digital strategies while integrating with their existing CRM, PAS and other applications. Whether insurers decide to build upon IQX or another platform, the principles of flexibility and componentization must reign supreme.

In the context of digital ecosystems, CIOs and CTOs are curators. Their role is to constantly evaluate and select best-in-class components for each function of the ecosystem within an established governance model. In the digital ecosystem economy, there is also a greater emphasis on maintaining and scaling partnerships with external vendors and data-service providers to remain at the forefront of innovation.

3. Securing Data Dominance

Big data analytics is changing the game in the insurance industry. More data is produced than ever before, providing ample opportunities for insurers. For example, auto insurers are now leveraging the four terabytes of data produced by connected cars each day to provide more personalized experiences to their customers. Similarly, life and health insurers are leveraging connected data from wearables that track thousands of data points such as an insured’s heart rate and sleep patterns.

To achieve data dominance, insurers must build and scale big data ecosystems. These can include analytics platforms, data visualization platforms, business intelligence platforms, artificial intelligence tools and Internet of Things (IoT) technology such as wearables and smart home devices. Global IQX, for example, includes the option for employees to connect their FitBits during enrolment to receive applicable discounts.

Most carriers already have vast amounts of data. New technologies can be leveraged to better visualize data sets and to suggest optimal benefits plan design based on past success factors. When data-protection and privacy laws pose challenges to personalization, artificial intelligence tools can be used to produce synthetic data that does not expose customer information.

Carriers that can most effectively leverage big data will be able to deliver more personalized customer experiences, increase customer retention, cut costs and produce more accurate quotes, faster.

Insurance ecosystems: Seize the opportunity for differentiation

Ecosystems might be the single greatest opportunity for insurers to differentiate themselves in a period of rapid digital transformation. Indeed, according to 2019 research from Accenture, only 5% of insurers can be considered “ecosystem masters.”

See also: Ecosystem-Based Business Models

While the benefits are clear, it is not always easy to develop and scale a digital ecosystem business model. There will be organizational, cultural and technical challenges along the way. Once you establish the foundational platform and define parameters you’ll have the opportunity to improve your service offerings, increase customer loyalty and drive growth in a competitive landscape.

About the Author

Mike de Waal is president and founder of Global IQX (, a leading software provider of web-based sales and service solutions to employee benefits insurers.


#MOI2022 INSURY AWARDS went to…

#MOI2022 INSURY AWARDS went to…

An zwei aufeinanderfolgenden Tagen standen für mehr als 700 zukunftsorientierte Managerinnen und Manager, Broker, Investoren und Startups im Rampenlicht: der bereits 8. “#MOI – The Magic of Innovation Day” bereitete die Bühne für Knowledge Transfer und den Rahmen für die “Insury Awards” für die besten Insurtechs und Healthtechs und Talents (U35) aus etablierten Versicherungsunternehmen mit dem Motto „People First, Technology Second” im Palais Eschenbach und im Digital Live Stream.

Am 28. und 29. September fand in Wien und mit Digital Live Streaming als Hybrid Event die größte internationale Versicherungsveranstaltung statt.

Die 7 besten Versicherungsprojekte wurden von 7 motivierten jungen Talenten (U35) vorgestellt, wo sie beim Wettbewerb „pitch like a startup, even if you aren`t“ mitgemacht haben.

Die GewinnerInnen sind:  

1. Platz    Jörn Welle / AXA / Deutschland

2. Platz Clarissa Nucerito / BALOISE / Schweiz

3. Platz Barbora Dörflinger /UNIQA/Österreich                          

Weiters wurden 5 Healthtech Startups (MOVEVO/Österreich, Instahelp/Österreich, MediMe / Israel, DANUBIA/Austria, MiiCare/England) eingeladen, die neuesten Technologien für die Versicherungsbranche vorzustellen.

Jedes Startup hatte die Möglichkeit, in einer 5-minütigen Pitch ihr Geschäftsmodell vorzustellen. Entsprechend dem Publikumsvoting wurden die Gewinner vorgestellt:

1. Platz          InstaHelp / Österreich

2. Platz          Movevo / Österreich

3. Platz          Danube / Österreich

Ein anderes Highlight des Tages war die Insurtech Pitching Session, wo junge Unternehmen (risk on mind/Österreich, COBER.Io /Spanien, Parametrix / Deutschland, UMAI / Isreal, Wechsellgott / Deutschland) ihre neue Geschäftsmodelle vorgestellt haben.

Die Gewinnerinnen sind:

1.Platz        Parametrix / Deutschland

2.Platz        UMAI / Israel

3.Platz        Wechselgott / Deutschland

Die Veranstaltung stand unter dem Hashtag #MOI2022 und hatte sich zum Ziel gesetzt, mithilfe neuer Technologien aufzuzeigen, wie Kunden in Zukunft besseres und schnelleres Service bekommen können. Die neuesten Technologien hierfür waren Blockchain, IoT und künstliche Intelligenz. Auf viele Fragen konnten Ideen und Impulse gezeigt werden, wie die Versicherungsbranche die digitale Transformation als Chance nutzen kann.

Eine Reihe inspirierender Keynotes aus den Welten von Capgemini, EFS, FinnoConsult, Ubimet, SparX, F-Secure/Finnland, FRISS/ Niederlande, META haben gezeigt, dass die Versicherungsbranche bereit ist, neue Wege zu gehen, neue Geschäftsmodelle auszuprobieren und die Branche für die nächste Generation vorzubereiten.

Etablierte Unternehmen wie ZÜRICH, VIG, AON, WÜSTENROT, MERKUR, ERGO, MARSH, Swiss Re, Zavarovalnica Sava, DAS haben die neuesten Lösungen präsentiert.

Global insurtech funding smashes records

Global insurtech funding smashes records

Global investment in the insurtech space smashed records last year, according to Gallagher Re’s inaugural Global InsurTech Report. Total funds invested were US$15.8 billion, the highest annual capital inflow and more than the amount invested in 2019 and 2020 combined.

There were 564 deals in 2021, another record. New records were also hit for international participation, unicorn creation, and IPOs. A record for single-deal size was set when Integrity Marketing Group raised US$1.2 billion in December, Gallagher Re reported.

In 2021, US$9.4 billion was invested in property and casualty insurtechs, with the balance of US$6.4 billion – about 40.5% of the total – invested in life and health companies. There was a spike in total funding in the fourth quarter of last year, driven by 13 “mega-round” deals. They accounted for 71% of the US$5.3 billion invested during the period, Gallagher Re said. Q4 of 2021 was also – until the first quarter of this year – the largest ever for seed, angel, and Series A funding rounds, which totalled US$635 million.

“An incredible upwards trajectory of global insurtech funding has occurred during the past nine years, after we started tracking it in 2012, culminating in the record-breaking US$15.8 billion total for 2021,” said Dr. Andrew Johnston, global head of insurtech at Gallagher Re. “By the end of 2021, an enormous $41.65 billion had been invested globally into insurtechs across 2,249 deals in 63 countries. It included 99 mega-round deals, which accounted for US$21.88 billion of the total. Therefore, more than half of all the investment (52%) deployed during this period went into only 4.4% of all insurtech deals.”

Johnston said that insurtech growth over the past decade has been “incredibly impressive” and shows no sign of slowing down, with the first quarter of this year recording US$2.2 billion worldwide.

“While ‘only’ 43% of the total global investment recorded when compared with the prior quarter [2021 Q4], 2022 Q1 saw parity between quarters in terms of total deal flow [deal count], with a very impressive 143 deals recorded,” he said.

Johnston pointed out that there were only five mega-rounds recorded in the first quarter, lower than Q4 2021.

“This may be an indication that capital invested is actually becoming democratised – a more equally distributed spread of total capital invested,” Johnston said. “This possibility is further bolstered by the fact that 2022 Q1 observed the highest-ever recorded participation of early-stage investment, with a highly impressive US$660 million invested into insurtechs globally at their earliest stages.”Johnston also said that much of the money has been invested in companies that wouldn’t necessarily have been labelled as insurtechs five years ago.

“Since almost all new ideas and entrants now have a technological angle, it becomes harder to separate the two,” he said. “If we were to look back at every single insurance-sector investment since technology was first truly yoked, and reclassified the investment data to the current broader use of the term, insurtech investment’s recent worldwide growth might look a little less impressive and stark. The vast majority of new insurance projects, ventures, and businesses will be heavily supported by tech. Technology will be the platform, enabler, and product that continues to keep our industry relevant and cost-efficient, so the label ‘insurtech’ needs redefinition.”