Part two of a fascinating discussion with Andre’ Symes, Co-CEO, Genasys
When starting to explore insurance industry ecosystems, it is firstly important to realise that ecosystems also overlap.
Looking at some of the ecosystems that Genasys has built, especially for motor insurance, it is clear that people in your ecosystem will have additional ecosystem
partners. This makes it very important to understand what additional aspects can be brought into your business because the value isn’t always just directly related to what you can bring and what revenue you can generate from this, or how you can improve your customers’ value. There is also power in the network effect. Having ecosystem partners feeding off each other, you don’t always have to be the central nucleus, and you can become a symbiotic partner in the ecosystem, sharing in the benefits of the ecosystem.
It’s also good to understand that the power of the network effect is really, really important. The starting point is therefore whether they take an open API approach? Can you connect? If they don’t have an API, you’re just going to waste your time. However, not all API’s are the same. A lot of people will stick an API sticker on the tin saying we have API enablement. Well, is that dynamic? Is it hard coded? Are we going to incur technical debt or future legacy that we’re going to have to reengineer ourselves out of, because every time we want to bring someone in and out of this ecosystem, we have to then create new code, or create a new Nokia cable? Partners have to adopt universal standards to make this integration easy.
CHANGE BECOMES SIMPLE
The whole point of the ecosystem is that you can couple and decouple partners very quickly. If you can’t do that quickly, then you’re just creating more legacy and, when the next disruptor comes, you’re going to be stuck. People love this ecosystem idea, but when we start doing the cost analysis of ecosystems, we also need to make sure that it is financially viable. The one advantage we always talk about is monolithic systems being super expensive and heavy. But you know, once they are built, you could bring down their run costs. In an ecosystem you have 10 or 12 people all trying to generate revenue off the same customer.
Those that are not incremental add-ons can add up quite quickly. So we just need to make sure everybody understands that everybody has to make money, everybody has to have a slice of the revenue. But it can’t be disproportional, because that creates an imbalance in the ecosystem and you will de-stabilise it. Making sure that everybody is financially aligned is very important. We can’t have everybody saying they want 1% of the gross premium on this particular policy because then you’re going to end up leaving the brokers, the UMA, and insurer with nothing, making it unviable for them. It probably won’t even make it past their business case representation to the board when they want to do this.
VIABLE FOR ALL
Ecosystem partners need to understand that we all need to come to the party when it comes to the financial viability of this flexibility in the ecosystem. Having said that though, there is also a case to be made whether you pay a slight premium for the ecosystem, because that buys you the flexibility not to have to do big re-platforms in the future. So you are kind of buying freedom upfront. But again, you can also maintain this equilibrium of cost in the ecosystem.
Because, if a vendor or a partner in this ecosystem becomes a bit greedy, well, guess what, you just decouple them and you plug someone else in. As we know, there are hundreds of InsurTech’s, insurance companies themselves or b2b service providers. You can change them if you need to. So you do have that ability in the SAAS world. To couple and decouple quickly, which means that you do protect yourself a bit from the long term financial commitments that you need to make.
We then also need to make sure that the people in our ecosystem partners, whether tech or service providers or carriers have a culture fit. If there isn’t a culture fit it might again de-stabilise our ecosystem. You need to do good due diligence on all of the partners to ensure a good fit for your customer. Are they a good fit for you and everyone else in the value chain? With the right partners, we have options.
PICTURE MR POTATO HEAD
If you have a good core platform or backbone that you can build your ecosystem on, like the blank Mr. Potato Head, you can couple and decouple various bits of this
ecosystem to create unique offerings with each one, or with the same partners. If you have 200 ecosystem partners in a core and you can connect into all of those, the variations that you can create, creates IP on its own. So, using a little bit of this ear, and a little bit of that nose, you create a unique offering. Now, bringing it back to insurance, this is just an example of an ecosystem partnership that we’ve created in the motor space. Effectively, as an example, you could have Autotrader, where you can buy your motor insurance directly off Autotrader, talking to the embedded insurance concept. This is done by an API talking to the core system.
Now we know that the policy has been initiated and we can create a customer record in your CRM so that you can start tracking this customer a bit more to your preference. During the quoting journey you can use a further provider to really drive down the number of questions asked, someone that augments the data from multiple data sources, which means that you drive down equations, and you can quote a customer in less than 60 seconds, enhancing the customer experience. You can also understand your risk a bit more, by linking up a rating engine that can then pump out the cost of their premium, or auto-adjust it, depending on how those rates change over time, with a further link to someone that does your payment connection. Then someone for claims and fraud, telematics data to assist with assessment, and so on. The opportunities for partnering are endless.
All of this can happen in seconds, all because of API’s and ecosystem partners. So that’s just how you can change someone’s life in a real way. With ecosystems. That’s why we find it so exciting.
So please, let’s not be dinosaurs. Let’s not get hit by an asteroid. We often joke about the insurance industry being a bit like the dinosaurs, but we can change that. Let’s open up and create better ecosystems to enhance our customers. Just adopt the outlook that accepts we don’t know what is going to happen tomorrow, then have an open mind about being able to plug and play as we go along.Lastly, have a vision and create your insurance art by getting some experts in to help you paint the ecosystem and the journey that you want in the insurance space.