INSURERS: GO ALL-IN ON ECO S Y S TEMS ACHIEVE COMPETITIVE AGILITYMichael Lyman Senior Managing Director Accenture Strategy, North America Lead and Global Insurance Lead Michael Lyman is senior managing director for North America, as well as the Insurance industry within Accenture Strategy. In this role, he focuses on business strategy development and implementation. Michael has more than 30 years of experience working with C-suite executives on major disruptive trends and transformational issues. During that time, he has led several industry research projects and has acted as a commentator on trends transforming the Insurance industry. Michael is based in Chicago. Ravi Malhotra Managing Director Accenture Strategy, Insurance Ravi Malhotra has spent most of his career helping leading insurance and other financial services companies develop and execute strategies to be more competitive. He has extensive experience with growth strategy development, business and operating model design, transformation strategy and strategic cost reduction. Ravi is based in Chicago. Daniele Presutti Senior Managing Director Insurance Lead for Europe, Africa and Latin America Daniele Presutti is a senior managing director for Accenture, the Insurance lead for Europe, Africa and Latin America, the global Life Insurance lead, and the Client Service Group lead for Insurance in Italy, Central Europe and Greece. He also has extensive experience in developing and implementing transformational business and IT strategies. Daniele is based in Milan. While disruption is rocking all industries, among the most vulnerable is insurance. Accenture analyzed 20 industries and found that although insurance is currently experiencing a low level of disruption, it is the fourth most susceptible to future disruption. 1Disruption is putting immense value at stake. It has been estimated that by 2022, carriers that are slow to respond to changes by agile, hyper-relevant competitorswe call them “living businesses”could suffer market share erosion worth as much as US$198 billion. 2These living businesses adapt and innovate constantlyat speed and scaleto increase their relevance to todays consumers who want it all. 2 | Insurers: Go All-in on EcosystemsMore than half of insurance executives say their companies are already starting to experience disruption from competitors that have partners in other industries. Figure 1: The strategies for disruption differ among potential ecosystem players More than half of insurance executives (51 percent) say their companies are already starting to experience some form of disruption from competitors that have partners in other industries. 3These disruptors are targeting the most valuable parts of the value chain. Insurance incumbents see the highest levels of disruption in the products and services offered (60 percent) and the way customers are serviced (57 percent). 4Strategies for managing disruption vary among the different players targeting the insurance market. For instance, the value chain focus, risk tolerance and level of investment are different among incumbents vs. private equity vs. technology companies (see Figure 1). Ecosystems are a major cause of this wave of industry disruption. Rather than becoming victims of it, insurance companies can join or design and execute their own ecosystems to ensure they are the disruptors, rather than the disrupted. Many have recognized this opportunity and are capturing value while tackling disruption head-on. For example, the South African health insurer Discovery has made great strides in its bid to realize the full potential of its shared-value business model. By partnering with leading carriers around the world, each of which incorporates its Vitality platform into its business model, Discovery is confident that by 2023 its ecosystem can help improve the health of 100 million people globally. 5 Insurance incumbents Private equity / venture capital firms Technology disruptors Appetite for risk Very low High Very high Industry focus Insurance Insurance and other sectors Cross-industry Strategic goals Improving the existing value chain, with a focus on cost and customer experience Disrupting the end-to-end value chain, to create the next “unicorn” Reinventing the highest- value aspects of the value chain with a cross-industry approach Most insurance executives (84 percent) say ecosystems are important to their strategy and more than half (54 percent) are actively seeking ecosystemsthe highest of all the industries Accenture Strategy surveyed. 6Yet many insurers, by their own admission, dont have what it takes to lead an ecosystem. So whats an insurer to do: Play it safe by conducting business as usual, or go all-in to seize the ecosystem opportunity? 3 | Insurers: Go All-in on Ecosystems