Competitiveness Through Innovation: Digital Insurance Ecosystems

The insurance sector is in the midst of systematic change. In 2020, the industry sped through several years worth of digital transformation in a matter of months. In this article, we take a closer look at why digital ecosystems are a significant part of the insurance market, and how companies are utilizing tech to improve their products.
5 min read
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By Peter Rakowsky
Global Innovation Manager
Competitiveness Through Innovation: Digital Insurance Ecosystems

The industry, which until recently was comprised solely of traditional insurance carriers, has weathered the recent shift thanks, in part, to a surge in new insurtech providers.

In today’s interconnected world, insurers must embrace software ecosystems that can seamlessly embed insurance products into the customer journey, while also addressing the immediate needs of customers.

Digital Insurance Ecosystems

Insurers and reinsurers can use digital ecosystems to customize products by combining a variety of vendors and services on one platform, offering users a holistic experience. But digital and tech transformation has brought change to the industry, altering the traditional business to consumer relationship. Consumers now have the power to choose insurance providers, digital products, and so much more from the palm of their hand.

The biggest and most successful insurance companies across the globe are ecosystem players that have grown rapidly in the past few years and now dominate the insurance industry. Allianz, AXA, Zurich, Aviva and Nippon Life Insurance have all upgraded their offerings using of big tech and data, allowing them to better tailor their products.

Ecosystem Enablement

An insurer’s organizational structure must be sound, and although balancing value-sharing models can be complex, a successful ecosystem requires a win-win situation for all players.

Consider Pulse, Prudential Malaysia’s AI-powered app. The app hopes to make healthcare more personalized and accessible by showcasing how insurers can combine different services from startups into one seamless experience, which it believes can benefit all parties.

In addition to serving as an all-in-one application for personal-health management, Pulse uses data from the Malaysian Ministry of Health to predict a locality’s risk of a dengue outbreak in the next 30 days. It can now do so with 80% accuracy.

Ecosystem Value Generation

Insurers need to incorporate technological excellence into their strategies to ensure value for customers and their business. Insurers can use ecosystems to understand customer behaviors in greater detail while analyzing customer data as the company scales.

If an insurance company combines outcome data from claims with activity data from elsewhere in its ecosystem, they can assess the effectiveness of smart-home devices for homeowners insurance, health interventions, or safe-driving apps to reduce damages. These insights can then be merged into value-sharing models with partners.

But insurance ecosystems can also create added value if they focus their marketing efforts on desirable customer segments. Once these customers enter the ecosystem, stand-alone or individual services and products can retain customer transactions by referring them to more solutions within the insurance company’s ecosystem. This could be through incentives for healthy behaviors, which will attract healthy customers, or by offering travel incentives.

As the ecosystem matures, insurers need to focus on building tighter operational integration between their core services. Insurers can move into other use cases through make-buy-partner approaches created from customer feedback and analytics generated from different data sources and systems.

How Digital Ecosystems Revive Insurance

Insurance companies that operate with a fully built-out ecosystem of services and technologies can launch new digital-to-consumer products in an easy and cost-effective manner, continually expanding their distribution channels.

But how do digital ecosystems keep insurers competitive?

Working as a Unit

Insurers, policyholders, and the insurance industry as a whole benefit from efficient interconnected ecosystems because they reap the benefits of services and products that solve their problems and lower costs. Technology plays a vital role in achieving this.

According to a recent study by Celent, insurers are making ecosystem transformations a top priority in 2021. Celent expects insurers to increase spending to ensure an enhanced customer experience.

Insurance ecosystems offer value in terms of customer experience innovation in the front office, as well as operating efficiencies in the back office. The insurance ecosystem will only expand further as more insurtech companies enter the market.


A one-size-fits-all approach is no longer viable in the world of insurance. Customers increasingly demand more personalized buying and service experiences. Insurers can carry customer data across channels — social media, website, mobile messaging, telephone, and chat — to give prospective and current customers a personalized experience for their preferences and needs.


By using digital ecosystems, insurers can leverage existing capabilities to create flexible, personalized solutions that can be customized especially for their business. This helps companies tailor their product to their existing and potential customer bases, without building a new system from scratch.

In a March 2020 article, McKinsey noted that ecosystem value generation comes from “developing or cooperating with a modular platform that allows for adaptability through application programming interface (API) coupling with partners.”

Think of open API-enabled technologies and platforms as a plug and play setup: they can be connected and integrated with other systems and communicate with them while requiring minimal configuration. With this in mind, insurers are able to deploy digital products and technologies from a number of partners within a single ecosystem.


The appeal of digital ecosystems is undeniable. They offer carriers a chance to strengthen relationships with customers and go beyond conventional products.

To advance in a rapidly advancing digitalized insurance world, carriers need to understand how they can be a part of an ecosystem before they are left behind by challengers.

In the end, ecosystems offer another way to monetize classic components within the insurance value chain: lead generation, product development, service provision, pricing and underwriting and claims management.

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