Digital disruption is not just about new technology, it is about whole industrial stacks evolving and it is the organisations that own these that will be the new leaders.
Take insurtech and vehicle insurance.
Insurance companies are already digitising aspects of the whole cycle from claim submission to repair/replacement of damaged/stolen vehicles. Some apply new platforms to digitise the whole process.
On the other hand the data is increasingly being generated by third parties rather than the claimants and insurance companies themselves.
Cars are rapidly becoming computers on wheels for other reasons: the Ford Fusion contains 74 sensors, and each year’s model records and interprets more data: time and place, the identity and posture of the driver, seat belt usage, tire pressure, sharp braking, lane changes. All this data is uploaded to the mechanic and to services such as GM’s OnStar. #
That means the OEMs will own the most detailed underwriting data, across all drivers (not just the self-selecting best), at zero incremental cost. The separate black box will disappear as the OEMs realize they can suck up all that data—and so much more—and use it to take the insurers out of the game.
The OEMs have the opportunity to think “outside the black box” and become a lateral aggressor.
To win, insurance companies need to build advantage in other layers of the stack: the analytics that interpret the data, claims adjustment, cross-selling customer service.
In the same way healthcare digital transformation could be driven more by insurance companies that create new healthcare stacks rather than healthcare organisations paralysed by the fears of managing private data across and between disparate data sources spread over different organisations.
Identify where your value chain is most susceptible to lateral attack. With their actuarial tables and even their black boxes rendered obsolete, how can traditional car insurers survive? The first (and hardest) step is to recognize the problem five years before it hits. First movers that acquire the lower-risk drivers will be able to hold onto them. In many countries, regulators will mandate that consumers have access to their own data, so insurers will not be out of the game, but rather competing on a level playing field. Even in countries where OEMs own the data, there will be major elements of the business in which they will have little interest. That suggests an ecosystem with alliances among insurer, network provider, and OEM. Players should begin to position themselves today.