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Benefits of digital business platforms for the insurance industry


With legacy systems impeding innovation, leading carriers are looking to industry platforms to reduce cost, enhance flexibility and improve customer engagement.

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With the advent of the internet, the proverbial town square is now rivaled by online digital platforms. Early platforms tended to serve single, primarily business-oriented purposes. eBay, for example, was founded in 1995 as AuctionWeb, a platform to enable consumer-to-consumer selling via online auctions.¹

Later iterations of platforms often included multiple benefits. Apple’s iTunes started as a music player and library, then incorporated an app store where developers promoted and sold apps to end users. This created a value exchange between platform contributors and users.²

Today, platforms are a game-changer, with adopters of platform business and operating models gaining a decisive edge over competitors. According to the IBM Institute for Business Value (IBV) Global C-suite Study, companies operating business platform models can achieve market valuations as high as eight times their revenues.³

The insurance industry has been hesitant in platform adoption, just as it has with adoption of prior new technologies. While other leading industries have been significantly increasing the proportion of their investment capital allocated to platform business models (for example, petroleum with 50 percent, travel 27 percent and banking 18 percent), insurers increased platform investment by a mere 7 percent.

While only 36 percent of insurers derive revenue from insurance platforms today, they expect this to change in the near future.

More than 80 percent of insurers overall – and 99 percent of outperforming insurers in particular – expect at least 3 percent of their revenues to come from insurance platforms within the next three years. More than half of outperforming insurers expect the figure to be more than 10 percent.

This report covers the four roles insurers can play in a platform, as well as the top five reasons non-adopters don’t participate in insurance platforms. And we’ll also explore platform benefits that can improve both sides of your balance sheet.

¹ Definition of “eBay.” Wikipedia. https://en.wikipedia.org/wiki/EBay. Accessed on August 3, 2018.

² Van Alstyne, Marshall, Geoffrey Parker, Sangeet Paul Choudary. “Pipelines, platforms and the new rules of strategy.” Harvard Business Review. April 2016. https://hbr.org/2016/04/pipelines-platforms-and-the-new-rules-of-strategy

³ “Insurance: Incumbents Strike Back.” IBM Institute for Business Value. February 2018. http://ibm.biz/csuiteins

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Meet the authors:

Holger Münch

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, Senior Managing Consultant, IBM Global Business Services;
Noel Garry, IBM Insurance Platforms Leader; Christian Bieck, Global Insurance Leader, IBM Institute for Business Value

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