Accenture estimates that digital opportunities will expand insurers’ worldwide revenue potential by up to $375 billion within the next five years. Those carriers that become "living businesses" will reap most of the resulting revenue growth.
The disruption that insurers face is causing costs to rise while suppressing growth and profitability. But it is also creating a wealth of opportunities for those that are able to respond effectively by becoming living businesses. Accenture calculates that these opportunities will expand insurers’ worldwide revenue potential by as much as $375 billion within the next five years.
We speak to Michael Costonis, Accenture’s Global Insurance Lead, to find out more about how insurers can position themselves for this digital windfall.
Most insurers have been somewhat slow to embrace the imperative of digital transformation, perhaps because their core businesses have been largely unaffected by disruption. Why should the living business concept be on their radar?
Michael Costonis: As Accenture’s Disruptibility Index shows, insurers are vulnerable to disruption. With slow but steady growth, adequate return on equity, and a dearth of credible digital competitors, insurers haven’t felt as pressured to change their businesses as organizations in the retail, personal transport or media industries. In the absence of consensus on what the industry will look like in years to come, it’s hard to build a business case for transformation—especially when so many investments in digitization have yielded lackluster results.
Though the threat of disruption does not feel immediate for many carriers, they should not ignore how new technologies, business models, and customer behaviors are creating exciting opportunities for them to increase their revenue and seize market share. Most of the opportunities will be accessible only to insurers that can nimbly adapt their business and operating models to maximize their relevance and innovate effectively. We call them "living businesses."
What does it mean for an insurance carrier to be a living business?
MC: Living businesses are agile, flexible organizations with fluid business and operating models and an obsession with maximizing their relevance. They will have a deep and constantly growing understanding of their customers, and a corresponding commitment to understanding the evolution of risk.
Living business insurers will recognize the potency of ecosystems, relish change and value innovation, and have the energy to keep pace with their customers no matter how their needs evolve. They will be able to deliver meaningful, personalized propositions at the times that matter.
To be accepted by customers as relevant, trusted and important in their lives, insurance organizations need more than just good customer data, IT and marketing. They need to develop a personality that is appealing and authentic. They need to engage with customers and commercial clients as a trusted, relevant and empathetic ally as they navigate the uncertainties of their lives and businesses.