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Broadening insurance horizons: How do we get better at forming cross-industry partnerships?

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19 February 2020
Jamie Macgregor

Many of you would have spotted the headlines from last year about Google entering the US banking industry, the launch of Apple’s venture with Goldman Sachs (which is now estimated to have lent out a staggering US$10 billion), Facebook’s encroachment into the world of digital currencies with Libra (albeit with a pretty rocky start), and earlier this month with ICE’s offer for eBay. It doesn’t really matter where you look, industry spanning partnerships underpinned by digital platforms are all the rage.

The insurance industry is no stranger to this phenomenon either. Yet, despite hearing an increased number of inspirational stories about cross-industry partnerships from across the insurance industry (such as those shared in our own research around ecosystems in healthcare, disaggregating the life value chain and insurance partnership success criteria) and also at DIA by Munich Re, Zhong An, and AXA, partnering with firms who fall outside of the conventional industry boundaries continues to feel, well, a little awkward for many insurers.

What’s your typical rationale for engaging in partnerships: It's to do things…
(Ranked on a 1 to 5 scale from least to most important; normalized)

Source: Celent. Survey of Chief Innovation Officers and Innovation Leaders in Financial Services, N=38.

Unlike a decade ago when partnerships were often seen as a vehicle to reduce cost through outsourcing or to off-load non-core competencies, today it feels like some insurers are using them more as a strategic vehicle to rethink the proposition and market-entry in a very fresh way. It enables them to access skills and customer relationships that they otherwise would not have access to or would find pretty tough to assemble themselves. Simply doing the same things cheaper or seeking to lock-out a competitor are no longer the prime motivations for entering a partnership. This change in perspective is a positive step in the right direction.

However, sometimes our internal DNA is often set-up to fight against us. Cultural misalignment, access to the right internal skills, either too weak or too rigid governance, and the complexity of navigating the regulatory intricacies resulting from new ideas are often cited as a major impediment to change.

What typical challenges do you face when engaging in partnerships?
(Ranked on a 1 to 5 scale from least to most important; normalized)

Source: Celent.Survey of Chief Innovation Officers and Innovation Leaders in Financial Services, N=38.

So, what can we do to encourage cross-industry partnerships?

Being aware of the opportunities and how we need to change to become better partners ourselves is part of it. Preparing yourself is likely to require flexing new organizational muscles (especially in knowing when and how best to partner for success), a wider mix of open technical solutions (to make connectivity simpler and faster), and, most importantly, the right attitude (geared towards a view that “everything is possible” as opposed to “we can’t do that because…”).

How important is each of the following capabilities in your firm’s partnership strategy?
(Ranked on a 1 to 5 scale from least to most important; normalized; dark blue = technology capabilities, light blue = expertise)

Source: Celent. Survey of Chief Innovation Officers and Innovation Leaders in Financial Services, N=38.

It should come as no surprise that the two top two capabilities being pursued by innovation leads across the industry are: (1) developing environments to make better use of open-APIs; and (2) hiring the right people and cultivating skills to ensure new partnerships can be formed in a way that works for all.

Pretty interesting – the willingness to partner is clearly there. So, as you head off into the office today, why not reflect on just how ready your organization to compete in this emerging new financial services ecosystem, and whether there are things you can take back to help improve your firm’s chances of partnering success?

Interested in attending DIA Amsterdam, 23-25 June 2020?

Celent is proud to support Digital Insurance Agenda's Amsterdam event again this year, scheduled for 23-25 June, where insurance innovation and partnerships across Europe and beyond are celebrated. This blog was written by Celent using our primary research in support of this year's event.

I’m pleased to share that Celent clients and friends can register here for a €200 discount using the code DIA200CELENT.

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