Insurance CIO Outlook

How Insurers Can Break Through with Ecosystems

Ecosystems, when done well, can become a virtuous circle—the very opposite of the downward spiral now besetting much of the insurance industry.

By Henrik Naujoks, Darci Darnell and Harshveer Singh

Published on January 18, 2018
min read


This article originally appeared on Insurance CIO Outlook. Insurance is a low-touch business. Most consumers purchase an insurance product only every three to six years. In developed markets, just half of customers have had any contact with their insurers for any reason in the past 12 months. It’s hard for insurers to differentiate themselves under such circumstances. Because customers don’t discern much difference between insurers, companies end up competing largely on price, and that can lead to a downward spiral of cost-cutting, profit erosion, and customer churn. In a word, commoditization. But some leading insurers have figured out how to break out of this destructive cycle. In what may look like a paradox, these companies are winning in insurance by offering their customers services beyond insurance. They’re building sites and apps that offer their customers a constellation of non-insurance services known as an ecosystem. With ecosystem services, insurers aim to help their customers live safer, healthier, and more productive lives. These offerings include security sensors for customers’ homes, safe-driving monitors for their cars, and fitness club discounts and doctor locator services for their well-being. While insurance-led ecosystems are still relatively new, customers are already big fans. In major markets around the world, more than 80 percent of insurance customers are interested in, or open to, ecosystem services, according to Bain & Company’s survey of 172,000 property and casualty and life insurance customers in 20 countries (Customer Behavior and Loyalty in Insurance: Global Edition 2017). Among customers interested in ecosystem services, a majority in all markets are open to having their insurers provide those services. Read the full article at Insurance CIO Outlook. Henrik Naujoks is a partner in Bain & Company’s Zurich office and leads the firm’s Financial Services practice in Europe, the Middle East and Africa. Harshveer Singh and Darci Darnell are Financial Services partners based, respectively, in Singapore and Chicago.

This article originally appeared on Insurance CIO Outlook.

Insurance is a low-touch business. Most consumers purchase an insurance product only every three to six years. In developed markets, just half of customers have had any contact with their insurers for any reason in the past 12 months. It’s hard for insurers to differentiate themselves under such circumstances.

Because customers don’t discern much difference between insurers, companies end up competing largely on price, and that can lead to a downward spiral of cost-cutting, profit erosion, and customer churn. In a word, commoditization.

But some leading insurers have figured out how to break out of this destructive cycle. In what may look like a paradox, these companies are winning in insurance by offering their customers services beyond insurance. They’re building sites and apps that offer their customers a constellation of non-insurance services known as an ecosystem.

With ecosystem services, insurers aim to help their customers live safer, healthier, and more productive lives. These offerings include security sensors for customers’ homes, safe-driving monitors for their cars, and fitness club discounts and doctor locator services for their well-being.

While insurance-led ecosystems are still relatively new, customers are already big fans. In major markets around the world, more than 80 percent of insurance customers are interested in, or open to, ecosystem services, according to Bain & Company’s survey of 172,000 property and casualty and life insurance customers in 20 countries (Customer Behavior and Loyalty in Insurance: Global Edition 2017). Among customers interested in ecosystem services, a majority in all markets are open to having their insurers provide those services.

Read the full article at Insurance CIO Outlook.

Henrik Naujoks is a partner in Bain & Company’s Zurich office and leads the firm’s Financial Services practice in Europe, the Middle East and Africa. Harshveer Singh and Darci Darnell are Financial Services partners based, respectively, in Singapore and Chicago.