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Digital ecosystems: Why they matter to insurance companies

The strategy to build broader digital ecosystems around their core products is gaining traction.
Published on Feb 22, 2023
Digital Ecosystems

As many industries worldwide transform their operations to become more digital, the strategy to build broader digital ecosystems around their core products is gaining traction. Digital ecosystems are various sets of services offered in a single integrated experience. These sets of services are often potentially insurance-adjacent or affiliated value-added services, which help to increase the frequency of touch with the end customer.

Depending on the set of services integrated, digital ecosystems can enable companies to diversify their business, retain customers, attract new customers and create a more holistic customer experience. Increasingly, many companies in the insurance industry, such as AXA XL, are building their own digital ecosystems with third-party firms and startup partners to offer their customers innovative solutions beyond their insurance needs.

Why digital ecosystems matter to insurance companies

Most insureds across both personal and commercial lines usually engage with their insurance carrier only once a year during renewal unless they need to file a claim. Therein lies an opportunity for insurance companies to build their own digital ecosystems or participate in existing ones to engage with their customers more frequently during the year by offering additional insurance-affiliated products or services from partners. The facilitation of solving customer needs beyond insurance can enable insurance companies to build deeper trust with their customers and bolster customer retention over time.

In 2020, AXA XL – the P&C and specialty division of AXA Group – launched its own construction ecosystem to help its commercial insureds reduce business risk, improve business results and solve customer issues. During the early months of the COVID-19 pandemic, many construction firms sought to monitor their job sites to ensure social distancing to protect their workers’ safety. AXA XL’s digital ecosystem partners offered its construction clients solutions to address that problem.

“We are seeing increased interest from our contractor customers in adopting technologies that enhance performance and productivity and reduce jobsite risks,” noted AXA XL’s Vice President and Head of Construction Innovation, Rose Hall.

Since its launch in 2020, AXA XL’s construction ecosystem now comprises more than 40 third-party technology solutions vetted by AXA XL’s innovation leaders. Fast-growing startups like Zendrive, WINT and Newmetrix (formerly SmartVid.io) were among the startups selected to join AXA XL’s construction ecosystem. Hall explained, “Our customers want more from us than just paying their claims – they want us to be their partner in risk. We aspire to be the innovative insurer for the innovative contractor by helping our customers protect their risk with more than just insurance.”

Opportunity ahead

There is a great opportunity to meet the needs of increasingly digitally-minded consumers via digital ecosystems. Providing more expansive value via ecosystem partners can yield both incremental new customers and better policyholder retention, especially where joint solutions with partners are offered.

Avanta Ventures’ portfolio company, Car IQ, enables commercial vehicle drivers to pay for expenses on the road, like maintenance or gas, without using a corporate credit card. For example, a commercial truck driver can pull up to a Shell gas station, fill up the tank, and leave the gas station without touching the gas pump’s credit card machine. Car IQ’s technology facilitates payment, and its in-vehicle software also validates that the fuel went into the truck’s tank, combatting fraud. This same technology may someday allow truck drivers to pay for commercial auto insurance on their in-dash screens, leveraging mileage, route and driving behavior data that Car IQ can access.

Also, many auto customers will begin to drive connected and electric vehicles, especially as many governments around the globe prohibit the sale of new cars with internal combustion engines by 2035. Many of these new cars are built with sensors, which enable a vast amount of data to be collected, such as the number of miles driven, the number of harsh braking events a driver makes and other variables. An Avanta Ventures’ portfolio company, Motorq, secured partnerships with multiple OEMs to collect connected-car data and provide timely insights to insurance companies. This data, ultimately, can enable insurance companies to price auto policies based on real-time driver behavior rather than using traditional factors like a driver’s credit score.

We’re looking forward to continuing to offer a well-curated partner ecosystem of adjacent products and services for the customers of today and the future.

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We remain eager to explore new opportunities, partnerships and collaborations with promising start-ups. If you have an idea or proposal that aligns with our mission, we encourage you to reach out to us.

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