With consumers expecting their service providers to deliver more tailored products providing better experiences at more cost-effective rates, insurers are under pressure to adapt their business models to ones better suited to this new environment. Given its mainstream appeal and success in driving adoption of mobile apps, the marketplace model has emerged as such an enabler, writes SilverBridge’s Nelson Camara.
While end-users understand how marketplaces work (think the Apple App Store and Google Play), it provides insurers with an opportunity to create an enabling platform for future growth. For example, in the music industry EVAmore has emerged as a convenient way for people to book musicians for their events. Previously, the process involved either knowing someone in the industry or having to go through agents which typically charge premium rates.
However, EVAmore adopted a marketplace model that lets customers create free listings including time, location, budget, and music genres required, with artists able to search for and ‘pitch’ to play at the gigs. The marketplace platform manages all the back-end payment and messaging between customer and artist to remove the cumbersome traditional way of making bookings.
With the marketplace model presenting insurers with opportunities to better engage with customers and meet future demand, decision-makers need to carefully asses how best to integrate it into its existing operations.
Most insurers already offer a unique suite of products. Typically, these are developed in-house and are nuanced to meet customer demographic requirements. However, no insurer can be the best at every solution or even cater for every possible client requirement.
Whether through lack of resources or just difficulties in keeping up with continually evolving trends, insurers are realising that they need to rethink how they approach meeting customer requirements in the modern world. This requires the organisation to take a step back and focus on how it will meet customer needs to create a more enabling experience, reduce cost of development, and minimise churn.
Going to market
The marketplace model provides insurers with an exciting new option to enhance their existing business models. In this dynamic, an insurer will provide customers with access to third parties that have the best products in each segment as the means to complement their own solutions. Think about it as a one-stop shop where a customer can go for the best insurance experience at the lowest costs and able to select an offering tailored to their specific needs.
So, just like with a mobile app store, the end-users get continuous access to the best products and services in the market. For the insurer, it is an effective way to reduce churn while at the same time build a reputation as a solution provider that empowers its customers with the best possible products.
The marketplace model is poised to positively impact the insurance market. We expect to see movements in the industry that will result in many of the incumbents partnering with emerging insurtechs. These will be mutually beneficial agreements focused on delivering more value to customers.