Four years ago we looked at how business-to-business-to-consumer (B2B2C) insurance could transform the insurance distribution landscape in our report, Insurance Inside, the new era of B2B2C Insurance, and how insurers should prepare themselves for the forthcoming race to become a leading B2B2C insurance partner.
Although the success of the B2B2C insurance model is obvious, the race is still on. The model has never been as important than it is today for many insurers, reinsurers, brokers, and InsurTechs. At the same time, the B2B2C insurance market is evolving rapidly, in particular its entry into digital. Digital is making B2B2C insurance models more feasible and easier to deploy and it will be a key growth driver of the market.
Even though the current COVID-19 pandemic is a set-back to B2B2C insurance in some industries, in the long term it could potentially accelerate the business model.
This new chapter in the development of B2B2C insurance, called B2B2C 2.0, expands its potential. To unlock it requires building new differentiating capabilities across four areas – from innovation management to technology, from analytics to service offering. The four areas are:
1. Improved agility and innovation management
The first differentiating capability is improved innovation. While innovation has always been a vital component in the strategies of B2B2C insurers, in particular with regard to the capture of new partners and protecting existing partnerships from value erosion, the level and scale of innovation required in the B2B2C 2.0 world is of a step-change.
To achieve the level of agility required, insurers will need to move to a new innovation model to quickly create and deploy new business designs and new markets, as well as transform existing ones.
The model also requires a new appetite for risk. The insurer should be willing to place a number of bets in order to try out unproven ideas and concepts – new propositions, new risk cover, and so on. They will also need to develop the capability to deliver new products to the market in a much shorter time than previously.
Several new digital B2B2C players, such as Zhong An, Cover Genius, Moonshot, have produced business models that rely on the combination of their strong innovation capabilities and their ability to deploy new products very rapidly, including for some of them at international scale.
For example, Zhong An invests in research and development on a very large scale. Over the past few years it has launched more than 300 products for more than 300 partners across five ecosystems (consumer finance, health, lifestyle consumption, travel, automotive).
2. Plug and play technological platform
The second differentiating capability is the ability to integrate with the partner’s ecosystems. This has always been an important success factor for B2B2C insurance. But the bar has moved. Today, API-based “insurance as a service” is rapidly becoming the new standard for the industry.
This requires B2B2C firms to invest in technological platforms that support open, flexible, and fast integration. Many are already doing so and developing plug and play solutions – not only insurers but also brokers, managing general agents, and InsurTechs.
3. Artificial intelligence (AI), advanced analytics and data management
The third differentiating capability is the systematic exploitation of the customer data made available through B2B2C partnerships.
The difficulty is that partners do not necessarily wish to make all of their data available to the B2B2C player. The challenge, therefore, is not a matter of “smart” analytics, though this is necessary too, but one of the shaping of the agreement to be made with the partner. The analytics need to be designed to pick up and interpret the signals derived from anonymized data; the agreement needs to facilitate this. This requires answering several questions. What data is the partner willing to share and how? What will be required of the agreement in order to comply with the data protection regulation?
The use of improved AI and advanced analytics provides numerous benefits both for the partner as well as for the insurer through the entire customer lifecycle. It can produce a win-win outcome. The benefits range from increased revenue to cost reduction, from improvements to customer experience to risk mitigation and fraud management.
4. Service offering and management – “from insured to protected”
The fourth differentiating capability is the ability to offer and orchestrate a portfolio of adjacent services. This is critical not only for differentiating the value proposition provided to end customers, but also for creating additional “stickiness” with partners. Each ecosystem can be linked directly to relevant service propositions, with the objective of offering customers overall peace of mind throughout their experience.
The coordination, orchestration and delivery of these services to the end client needs to be managed in the most efficient manner possible. Potentially, this can include leveraging third party providers.
The next wave of B2B2C insurance
B2B2C 2.0 is a challenging and highly competitive area of business. Insurers will need all four of the digital differentiating capabilities above. Those that develop these capabilities early on will create a distinct advantage, increasing their agility in the market, strengthening their integration with partners, deepening their analytics capabilities, and providing improved stickiness.
While the global and regional carriers continue to leverage their commercial and business relationships with B2B2C partners, the new-age InsurTechs are a serious threat to their leadership position. With the growing competition, B2B2C insurance can account for a significant share of total insurance business.