The Rules of Attraction: How The Digital Marketplace Binds ...[“Reinventing The Bazaar: a natural...

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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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Digits as New Lingua FrancaStill communicating, but we’ve come along way since the cave, baby!!

E-Mail

Blogs

52 M

114 M

12 M

12 M


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Insurance Data SourcesClients, producers, claims adjusters, prospects, …

E-Mail

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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Insurance Industry InitiativesSome insurers are piloting with social networking …

E-Mail

Blogs

www.sexyinsurance.com

Northwestern Mutual Life Insurance

GeneraliAEgonING GroupUnitrin Direct


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Vacuuming Up Insurance DataDigital Marketplace (data about: people,

places, events, physical artifacts,…)

Core dataContextual data


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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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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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Digital Marketplace Attributes

Death of distanceBirth of immediacyEmergence of richnessTriggering of transparency


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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

The Rules of Attraction: How The Digital Marketplace Binds ...[“Reinventing The Bazaar: a natural...

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