For those of you who are regulars at InsTech London events, you already know how persistent and boring I am on the subject of ecosystems. This excellent article from MITSloan Review provides an excellent analysis of what they are, what they are not and why they matter.
For insurance they will be front and central to the way we deliver our products and services in the future. They will provide the best business opportunity for a generation to those who get it and can play a part and an immense threat to those who do not.
What's the opportunity?
- access to massive portfolios of risks through the ecosystem co-relationships and the consequent economies of scale
- moves insurance away from being a grudge purchase to being something that wrapped into a wider set of products and services
- provides a data set that is far richer and more dynamic than the annual restricted data exchange process we use today
- facilitates the move towards the provision of risk services and away from simple risk transfer giving the potential to change the basis of engagement
What's the threat?
- provides an opportunity for other suppliers in the same ecosystems to move partly or wholly into our patch
- nearly all other verticals are more digitally evolved than insurance and so are far better equipped to compete in an ecosystem driven world
- you have to be philosophically and technologically capable of getting your head around "playing nicely" with outsiders and right now we can't.
- it provides a natural advantage to those who can play globally and at scale.
As John F Kennedy said a generation ago "We stand today on the edge of a new frontier ...... a frontier of unknown opportunities and perils - a frontier of unfulfilled hopes and threats.
Ecosystems are "networks of shifting, semipermanent relationships, linked by flows of data, services, and money. The relationships combine aspects of competition and collaboration, often involving complementarity between different products and capabilities (for instance, smartphones and apps). Finally, in ecosystems, players coevolve as they redefine their capabilities and relations to others over time".