A question I’ve been asking myself for a while is whether the insurance industry is missing a trick by overlooking platform businesses as a huge new source of business.

What the deal with platforms?

Platform businesses are rapidly taking over the world. Firms with astronomical market cap’s but almost no physical inventory are shaping the way we interact, do business and spend our leisure time at an ever-increasing rate.

For those unfamiliar with the platform businesses, Air BNB (the world’s biggest hotelier without owning a single hotel), Facebook (the world’s most media outlet without generating any original content), and Uber (the world’s biggest taxi firm) are all prime examples.

Platform businesses have been around for a while. Prior to the invention of the supermarket, for example, we bought bread from the baker, meat from the butcher, fish from the fishmonger and so on. Now, the likes of Walmart and Tesco mean we walk into a single building to get it all.

The difference with today’s global platform business is that they are leveraging technology and our online presence to do it cheaper, bigger and better than ever before. They don’t need buildings, agreements with local suppliers, and heavy investment in their own stock to bring you an enormous range of things at great prices. They’re bringing the buyers and sellers of products and services together on their virtual platforms to offer more choice, more convenience and, arguably, better deals.

Isn’t that just an aggregator?

But insurance is already doing this through insurance aggregators and price comparison sites, right?

Wrong

If insurance was a loaf of bread, an insurance aggregator would just be a store that sells lots of different types of bread. There’s no doubt for bread buyers we’re getting better choice and better prices, but how can we get people who want to buy bread to do it when they’re buying their ham, cheese and wine all in one go, at a time and a place that’s convenient to them?

Or, to put it another way, how can we get insurance buyers to arrange their coverage at the same time they’re doing or purchasing other things?

Platform businesses take many forms, but there are a few key ecosystems that insurers could consider looking at today that could open new revenue streams and make insurance something that consumers think about differently.

Social Platforms

Insurers are already using social media – my twitter feed is full of the latest PR stories from numerous multinational firms. However, there’s an opportunity for firms to make better use of these places where hundreds of millions of people, meaning potential customers, converge on a daily basis.

For example, with so much data available through social media about what people like and what they do, why not think more laterally about how insurance fits into their lives? If they know that people are attending a concert or go to the movies because they happen to have posted about it on Facebook, could they step in to offer protection against something going wrong on the trip when they’re posting or tweeting about it?

Insurers should rethink the legacy insurance business model of people worrying about possible risk, approaching an insurer, then buying coverage, and instead think more about offering the right coverage to people at the right time. Social media absolutely enables insurers to do this, which means the opportunity to access new markets is possible.

Insurers need to start thinking less about long term or annual insurance contracts, and more about moment-to-moment micro-insurance opportunities, however the opportunity appears, in order to provide protection to a whole new bunch of risks.

This opportunity can only broaden too as social media platforms embed better communication channels and introduce integrated payment options onto their platforms to buy products and services while people are there. Transactions will become seamless and all completed through a single social media channel.

Commerce platforms

The world’s biggest platform businesses in terms of revenue-generation are those where ‘traditional e-commerce’ (which might be an oxymoron!) are carried out. Amazon and eBay are platforms in the truest sense as they bring sellers and buyers of products together.

Currently, transactions here are almost exclusively limited to the trade of physical goods. Whether its books, socks or an Aston Martin, there isn’t much you can’t buy through these two behemoths. However, you can’t get your insurance there (yet)!

There’s a pair of opportunities here. Firstly, similar to the approach mentioned above regarding social platforms, insurers could make better use of purchase data to create and then offer insurance products to people at the point of sale.

If I ever got lucky enough to buy a car online, it would be hugely convenient to have an insurance policy to simply add to the shopping basket and pay for it at the same time as the car. The same premise is true for an iPad, a diamond ring, and so on; product and insurance coverages that match, seamlessly offered and available in one purchase.

Secondly, there’s the opportunity to sell independently on these platforms. If they’re good enough to sell almost everything else, why not insurance coverage as well? Insurers may have to think creatively about how and what they sell, but if a product is simple enough, such as a fixed price gadget insurance policy, offering it through a commerce platform such as Amazon, could open up new channels for revenue generation.

IoT Platforms

Although still an emerging sector, IOT platforms such as Amazon Echo or Google Home offer a new type of marketplace for insurers to explore and potentially to participate in.

Some insurance firms in the US have started to dip their toe in the proverbial water, with a small handful of providers beginning to add capability to these platforms for consumers to ask a question about their policy, and to offer other such ‘informative’ functions.

The question is whether insurers can cross the divide and sell their products on these platforms, either as a stand alone policy or ‘bundled’ when consumers purchase something else. The truth may be that this technology needs to advance a little before a truly seamless insurance purchase through an Echo-type device is possible, but it doesn’t mean that insurers shouldn’t start getting ready for that eventuality.

In the meantime there are plenty of connected home platforms to test their ideas on, and if an insurer is able to crack offering a bespoke home insurance product seamlessly through a connected home technology or platform provider (think offering smart home insurance using the data provided by HIVE), bringing a similar concept to life on Echo won’t be too far in the future.

Is that it?

Nope. These three are just examples of the kind of ecosystems that are either in existence or in the late stages of development today. There are other examples of platforms that exist or are close to it, and may present the same sort of opportunity to open up new revenue streams for insurers if they can adapt and grab it with both hands.

So… What are the keys to making platforms work for insurers?

There seem to be a few key take away points for insurers to consider when it comes to platform business and how to make the most of them.

• They should accept that participation on platforms isn’t a choice. It is, and will become even more of, a necessity to access today’s biggest and most active consumer marketplaces. Brokers moved staff into call centers when the telephone was the most convenient form of doing things. Now that the bulk of consumer traffic is through commerce or social platforms, they need to think about how to move their businesses there.
• They should shift from thinking about insurance as a long term contract to an on demand commodity that keeps people protected when they need it.
• They should absolutely be focused on leveraging purchase, activity and behavioral data by honing in on what people are doing, where they’re going and what they’re buying.  Insurers should be able to offer coverage when the need for it is at the front of the customers’ minds.
• They should rely on platforms to invest in the right technology to bring their insurance products to consumers. They’re the experts in bringing buyers and sellers together and will be investing billions in finding easier ways of doing so. Insurers should be focused on producing compelling products that will work in these economies.
• If all of the above fails to materialize, Amazon may start selling insurance themselves, and then we’re all doomed!