Why ecosystems are taking off in insurance

Nearly every core system vendor, and many data providers, have ecosystems. The vendors’ goals are to expand relationships with current insurer customers, win new insurer customers, and get some revenue when an insurer uses an ecosystem solution. But there is something new under the ecosystem sun: insurer-sponsored ecosystems.

A few insurers are building ecosystems for their current and prospective policyholders. The insurers’ motivations are roughly the same as the vendors’. At least one insurer’s ecosystem has a potential, additional win-win benefit with its policyholders: loss avoidance and loss mitigation.

An example of such a win-win ecosystem is AXA XL’s Construction Ecosystem. This ecosystem helps AXA XL’s construction industry policyholders to sort through a large and growing number of construction technology offerings, which are mostly startups focused on workplace safety and project data/analytics. The Construction Ecosystem’s Tech Library is a curated collection of over 35 construction technology and related offerings. Additional Construction Ecosystem offerings include:

• ThinkTank, which includes an invitation-based forum for networking and programs which enable policyholders to pilot or test certain technologies.
• Highly Protected Projects, a special type of coverage, that offers reduced premiums for certain large construction projects implementing risk-reducing technology. 

Celent recognized AXA XL’s Construction Ecosystem as the 2021 Model Insurer of the Year.

Jewelers Mutual Group, founded in 1913, offers a broad range of commercial lines products to jewelers and personal insurance products to jewelry owners. Jewelers Mutual has created the Zing® platform. This ecosystem offers jeweler policyholders and non-policyholders seven services, with two more on the way, including:

• Jewelry appraisal. 
• Access to global jewelry inventory and pricing.
• A shipping and insurance solution.

The third example of an ecosystem for policyholders comes from a familiar name, Progressive. On the website, there is no mention of an ecosystem – there is simply a menu item called Explore Products. Clicking on that takes a site visitor to five groups of over 30 products. Many of these products are insurance products from Progressive or other insurers, but several are adjacent to the insurance sector, for example:

• Home security from SimpliSafe.
• Home warranty from Cinch Home Services.

Some are less adjacent:

• Car shopping service from True Auto.
• Personal loans from Upstart.

What does all of this mean? AXA XL Construction Ecosystem and Jewelers Mutual Zing® platform are tailored to their niche markets. Progressive is about as non-niche as you can get.

• First-to-market niche ecosystems have the potential to build a moat around a policyholder group that will be difficult but not impossible for competitors to bridge. 
• Non-niche ecosystems can serve to create leads “Shopping for a car? Talk to us about auto insurance,” and possibly build some customer loyalty for lines of business with low switching costs.

This will be fun to watch.