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Insurers that offer interconnected services beyond their standard products can carve a clear route to profitability. Henrik Naujoks, who leads Bain's Financial Services practice in Europe, the Middle East and Africa, states that although insurance can be a low-touch industry, ecosystem services can boost customer loyalty, increase revenues and reduce costs.
Read the Bain Brief: Ecosystems—How Insurers Can Reinvent Customer Relationships
Read the transcript below.
HENRIK NAUJOKS: Rules of competition in insurance are changing. Traditionally, we have a few cost leaders, and we have a big bulk of undifferentiated, so-called service players, which doesn't come by a surprise because insurance is a low-touch industry. It's not easy to wow customers.
Now customers are sending us a very important message. They want more from their insurers. In Bain's Global Customer Survey, with around 170,000 customers, we got a clear indication that 80% of the customers in the major markets are either welcoming or are at least open to additional services beyond insurance on the same platform.
And the best players and the most forward-thinking players are taking benefit of it by creating ecosystems. What are ecosystem? Ecosystems are related services, for example telematic-based services around the car product. This can be smoke-leakage monitoring for homes. This can be a health diagnostics and health advice.
And customers love it. You can really wow your customer because you are now providing positive outcomes, much more interactions. You can attract new customers, and price sensitivity goes down.
Ecosystem winners will be those who identify innovative and personalized services, implement them in an excellent way, scale them quickly and carve out clear routes to profitability.
Read the Bain Brief: Ecosystems—How Insurers Can Reinvent Customer Relationships