People tend to be sceptical about changes and innovations, especially if the change is rapid, disruptive and difficult for them to understand. You want to read more? Click here: https://www.insurancebusinessmag.com/us/news/breaking-news/

Also difficult to understand is the Casino Online Suisse. Whereas it used to be railways or cars, it is now online shops and digital payment systems that, despite great scepticism at the beginning, have ultimately led to far-reaching changes in consumer behaviour. The pressure for faster change is becoming ever stronger, driven by new technological possibilities and the relentless drive of consumers for convenience and personalized offers. The winners of this development are the customers. Offers are more strongly oriented to real needs and are tailored to suit the living environment. Customers get everything from a single source – including insurance services, which thus become part of these interacting and cooperating ecosystems.

Insurers need to reline their playing field

This development creates new growth potential – also for insurers. They can position themselves as risk partners within these life worlds by insuring products, services, supplies or guarantees. In some cases, these services – deeply integrated into ecosystems and supply worlds – will disappear completely behind the customer’s line of sight. With Airbnb, both parties – host and guest – are automatically insured when renting or leasing.

But growth opportunities are also created beyond traditional risk coverage. Digital services will make a significant contribution to revenue growth in the future, especially in data and technology-driven environments. For example, the ‘Health and Fitness’ lifestyle in the German market shows that the greatest potential lies in digital or digitally supported services. Accenture studies of the DACH market assume a cumulative sales growth of 23 billion euros for the entire living world until 2027 in Germany alone. With a predicted growth of EUR 8.5 billion and an annual growth rate of almost 8%, offerings related to nutrition, telemedicine and fitness tracking are the strongest drivers. Classical health insurance – also part of this life world – will grow by only 1.7% per year in the same period. Although the effect of COVID-19 will delay the growth of this lifeworld as a whole, similar or even greater dynamics can be expected from 2022 onwards (current post-Covid forecast for Germany: 3.4% annual growth between 2022 and 2027. Source: Accenture simulation model Lifeworlds DACH).

Significant growth potential also lies in the living environments around ‘cyber security’ (B2B) and ‘securing digital life’ (B2C). For ‘Cyber Security’, Accenture expects growth in Germany to reach a total of 13 billion euros by 2027. With a growth rate of more than 7% per year and a cumulative revenue growth of approx. 2.7 billion euros, the Security-as-a-Service cluster is the main driver here. For the life world ‘Securing digital life’, the forecast for the absolute sales volume in 2027 is over 11 billion euros. The main driver here is the Secure Data Storage cluster with growth rates of over 5% per year. COVID-19 is also slowing down development here, but growth rates of between 4% and 5% per year are again expected for both lifeworlds from 2022.

Beautiful new service worlds

In the future, if insurers focus more on the consideration of entire life worlds instead of the pure insurance product, they will be able to profit from larger customer numbers and interaction rates. The frequency of contact increases with the relevance of the overall offering and services for the end customer. In order to benefit from this development from an insurer’s perspective, a stronger focus on precisely those services is necessary. Insurers can basically distinguish between two types: Services related to insurance and services not related to insurance.

The insurance-related services include assistance services, such as motor vehicle or home protection letters, transport and mobility services in the event of a claim, but also the first smart home emergency service packages (e.g. smart home offer). They support customers in the event of a claim – immediately and around the clock. Insurance-related services also include prevention services, already relatively widespread in the ‘Life & Home’ and ‘Cyber Security’ environments. Medical prevention services or the reward of a healthy lifestyle (e.g. Generali Vitality) are also part of prevention services in a broader sense. The third category is mitigation or remedial services to limit the damage. Established examples are cyber-post-breach networks or the organization of substitute deliveries in the case of transport failures. Overall, insurance-related services and services are characterised by the fact that they are deeply embedded in the insurance business model – both legally and financially. In this way they contribute both to improved premium growth and to a long-term improvement in the claims result.

Non-insurance-related services, on the other hand, have no direct or indirect influence on the underwriting result itself – they generate revenue streams in excess of the insurance premiums. They include parking or refuelling services (mobility), the operation of transaction platforms for used cars or smart home devices, for example, and convenience services such as reservations or purchasing services. The monetization of existing assets can also play a very important role. With Syncier, for example, Allianz offers an insurance platform as a service and thus becomes a technology company in this context. Another example is the integration of advertising and affiliate partnerships into existing websites of insurance companies or insurance brokers. These types of services often fit neither the regulatory framework nor the financial objectives of a traditional insurance company. The enormous growth potential of these non-insurance services can be seen in the market development outlined above in the area of ‘health and fitness’. In order to maintain their chances of exploiting these potentials, insurers will have to deal with new service-based monetization and business models and the creation of suitable legal and regulatory conditions in the medium and long term. This is especially true if they want to position themselves in selected life worlds as orchestrators or platform operators in the long term (…but more on this in my next blog post).

The insurance industry is undergoing change. Minimizing risks is deeply rooted in the industry’s DNA. However, seizing the opportunities is the order of the day.

If you have any questions about the topics presented here, are interested in our studies and detailed elaborations on more than 25 living worlds in the DACH region or would like to talk to us about new offers and services in general, please contact us. We would be pleased to be at your disposal for a discussion.