Ecosystem services, IoT data and how to make it work!
The IoT is increasingly relevant to the insurance industry, as it allows access to more customer data than ever before. In order to explore possibilities in the IoT and connected home space, Zurich (Germany) created a special innovation unit. Since insurers traditionally have monolithic, closed legacy systems, they usually cannot consume external data sources for pricing or underwriting easily. This makes creating or connecting to ecosystems in a cost-effective manner almost impossible.
The aim was to deliver a “smart home” insurance, but Zurich quickly realised they needed to engage other companies, as their expertise in the area did not cover the entire value chain. First, they reached out to Devolo, a manufacturer of smart home IoT sensors. Secondly, they decided to bring in ROLAND, an assistance provider in Germany, with the network to go out and investigate issues highlighted by the IoT sensors.
Since Zurich did not want to re-allocate limited internal IT resources on short notice, they turned to KASKO, with the request to help them launch a live product within the space of a month. In order to meet a quick go-to-market, the decision was made not to include IoT data in the pricing model from day one, but instead to collect enough data to create a new model in the future. From here KASKO was able to spin out a “smart home” specific customer journey (it was distributed via an agent portal, but all Zurich branding was included so it could be B2C-ready).
KASKO’s ability to generate and capture all relevant data and metadata and to automatically generate reports, allowed the data to be shared effectively with all parties for them to perform their duty in the value chain and ecosystem. Furthermore, real-time SMS-messages to policyholders were set up alongside flexible payment providers to create a customer-friendly experience.
The key to ecosystems is to get started quickly. What is needed is:
- Speed: Most ecosystems are not actually open for everyone but consist of an alliance of selected partners. If an insurer is the first insurer to be able to engage with a potential partner, it has a much bigger chance of locking them down (no matter the size of the brand)
- Flexibility: Being able to slice and dice services (coverage, exclusions, duration, commission, pricing etc.) to fit the contextual need of the customer is key. And when building an ecosystem, it’s important to understand that the customer might be your ecosystem partner and you have to cater to their need of strengthening their offering to inject trust rather than maximise commission revenue by “selling” to the end-consumer
- Connectedness: Long-term using APIs to offer your services and consume others is crucial. Anyone serious about ecosystem participation needs to be ready for this. In the short-term flexibility with data-exchange models are crucial though as some potentially important partners might be behind the curve.
If you are looking for ways to effectively participate in or orchestrate ecosystems, KASKO can share its experience or introduce you to insurers who have managed to get started successfully. If your current IT cannot easily form the backbone of such an ecosystem-play, our powerful and modular platform might also be the solution for you.
Are you facing challenges around digitalisation, new product innovation or reaching new distribution channels? Are IT resources limited or tied up in other projects?