www.financial-insights.com
The Rules of Attraction: How The Digital Marketplace Binds Us
Together (and Why Insurers Should Care)
Barry RabkinSenior Research Analyst,Insurance ServiceFinancial Insights
LOMA Emerging Technology Conference 2008January 30 – February 1, 2008
Tampa, Florida
(c) 2008, Financial Insights, an IDC Company, All rights reserved. www.financial-insights.com
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Discussion GuideOf Media and Markets:Evolution to the Digital Marketplace
Why Is This Important ?
What Is Happening ?
How Will Insurance Industry Have To Change?When Will Insurance
Industry Have To Change?
(1)
(2) (3)
(4)
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“The message of any medium, or technology, is the change in scale or
pace or pattern it introduces into human affairs.”
Marshall McLuhan (1911 – 1980)
Of Media & Markets
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A market is a specific physical space or cyberspace where goods are bought and sold. [“Reinventing The Bazaar: a natural history of markets,” John McMillan. 2002 W.W. Norton & Company Ltd. ISBN 0-393-05021-1 ]
Of Media & Markets
Traditional & Digital Markets Defined
The digital marketplace is the economic landscape that is made up of consumer and business activities that take place on IP-enabled channels. [“The Landscape of the Digital Marketplace in 2007,”IDC#206726, May 2007. Published into these advisory services: Digital Marketplace: Media and Entertainment; Digital Marketplace: Search and Business Technologies.]
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In 2006, more than $1.9 trillion coursed through the digital marketplace.
– That equates to 14% of the U.S. GDP.More than 70% of the U.S. population uses the Internet for private or business use.By 2010, 73% of all U.S. Internet users will access the Internet using a mobile device.
Of Media & Markets
Size of the Digital Marketplace
“The Landscape of the Digital Marketplace in 2007,”IDC#206726, May 2007. Published into these advisory services: Digital Marketplace: Media and Entertainment; Digital Marketplace: Search and Business Technologies.IDC’s Internet Commerce Market Model (ICMM)
Sources:
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Emergent phenomenaDemands large scale perspectiveChanges competitive and market dynamics
Of Media & Markets
Essence of The Digital Marketplace
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Why Is This Important ?Humans have an intrinsic need to communicate.
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Why Is This Important ?
Digits as New Lingua FrancaStill communicating, but we’ve come along way since the cave, baby!!
Blogs
52 M
114 M
12 M
12 M
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Why Is This Important ?
Insurance Data SourcesClients, producers, claims adjusters, prospects, …
Blogs
X-RaysPictures of damaged property
Video of catastrophe areasTraining workshops
Company AnnouncementsField Force
Communications
Executive Networking
Marketing / Branding Initiatives
Product Development / Product Materials
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Why Is This Important ?
Insurance Industry InitiativesSome insurers are piloting with social networking …
Blogs
www.sexyinsurance.com
Northwestern Mutual Life Insurance
GeneraliAEgonING GroupUnitrin Direct
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Why Is This Important ?
Vacuuming Up Insurance DataDigital Marketplace (data about: people,
places, events, physical artifacts,…)
Core dataContextual data
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Why Is This Important ?
Sorcerer’s Apprentice DynamicWe will be able to wrap the Earth four times over with the hard-copy version of all the digital content (988 exabytes) we will have in 2010.
“The Expanding Digital Universe: A Forecast of Worldwide Information Growth Through 2010,” An IDC White Paper sponsored by EMC. March 2007
Increasing amount of unstructureddata insurers will need to manageIncreasing complexity to find data insurers needIncreasing complexity to make sense (find patterns) of all of this data to profitably operate the business.Source:
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What is Happening ?
“Technology: anything invented after you were born.”
Alan Kay,Xerox Fellow, Apple Fellow, Disney Fellow,
HP Senior Fellow(1970 - )
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What is Happening ?
The Evolving InternetCompetitive opportunities evolve as the web evolves.
Time
Web 1.0: Content
Web 2.0: Collaboration
Web 3.0: Context
Web 4.0: ConfluenceWe Are Here
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What is Happening ?
The Long Tail Is In Play !
“The Landscape of the Digital Marketplace in 2007,”IDC#206726, May 2007. Published into these advisory services: Digital Marketplace: Media and Entertainment; Digital Marketplace: Search and Business Technologies.
Depiction of both demand and supply of information-based products.
Moments of Truth sharply increaseDiversity will drive market share
But, how does “advice” come into play for complicated B2C and B2b insurance coverages?
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Recap
+
More, more, more, more, more, …
Web Enabled Devices
Web Media (channels) Web Capabilities
Data (Unstructured)
People Comfortable Using The Web
People Creating Data
Data Exposures
Ways to Access, Manage or Blend Web Data
+ +++
++
+Pressure to use real-time data
Target Market Niches
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RecapWhen the pace of change outside the insurer’s walls is faster than inside the company, … (the end is nigh)
Time
Pace of change within insurance company
Pace of change within competitors
Pace of technological
changePace of client use of new technologies
(4th dimension)
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How / When Will Insurers Have To Change ?
Key Strategic Business PrioritiesProperty/Casualty insurers (n = 451) told us in the 2008 Insurer’s Choice survey that organic growth (38%) was their most important strategic business priority for this year.
Acquiring technology to support new business strategies (21%) was their second most important strategic business priority.
Reshape BusinessModelAcquisitive Growth
Organic Growth
Competing as anEnterpriseAcquiring Technology
Other
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How / When Will Insurers Have To Change ?
Key Strategic Business PrioritiesLife/Health insurers (n = 88) also told us in the 2008 Insurer’s Choice survey that organic growth (38%) was their most important strategic business priority for this year.
Reshaping their business model to drive their company’s tactics and operations (22%) was their second most important strategic business priority.
Reshape BusinessModel Acquisitive Growth
Organic growth
Competing as anEnterpriseAcquiring Technology
Other
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Gateway
Hub
Node
How / When Will Insurers Have to Change?
Insurance Industry Perspectives
“The Landscape of the Digital Marketplace in 2007,”IDC#206726, May 2007. Published into these advisory services: Digital Marketplace: Media and Entertainment; Digital Marketplace: Search and Business Technologies.
Insurance AssociationInformation Provider
Insurer or Reinsurer
NAIC or ACORD
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How / When Will Insurers Have To Change ?
Digital Marketplace Attributes
Death of distanceBirth of immediacyEmergence of richnessTriggering of transparency
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How / When Will Insurers Have To Change ?
Business Model Elements
1. Enable faster metabolism throughout the value chain 2. Support personalization trends 3. Enable quicker and more collaborative product
development and customer service4. Provide ease of doing business for all stakeholders
throughout the value chain5. Prepare for tomorrow, today!
Insurers who successfully compete in the Digital Marketplace will have a business model with five key elements.
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Insurance companies must decide if they will reshape their marketplace or merely react to their competitors. What is your choice? When will you do it?
Market Impact
Willingness to Leverage Digital MarketplaceLow
High
High Low
Fail to React (to changes in the digital marketplace)
Match the Market
Disrupt & Reshape The Market
How / When Will Insurers Have To Change?
Reshape or React?
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Contact Information
Barry RabkinSenior Research Analyst, InsuranceFinancial Insights, an IDC company
[email protected]+1 508 988 6729