Three major shifts can undermine digital strategies that ignore economic realities. Digital: -
Destroys- Digital destroys economic rent creating more value for customers than insurers.
Drives- Digital drives "Winner Takes All" leading to big winners and losers at top and bottom of a steep power curve
Rewards- Digital rewards First Movers and Fast Followers; fleetest of companies enjoy more than double the Three-Year Revenue Growth rate of insurers playing it safe
Insurer strategies that ignore these economic realities face failure. Partnering with the right insurtechs is one means of being fast to market and effective to avoid the potential failure of economic downsides.
Many of us learned a set of core economic principles years ago and saw the power of their application early and often in our careers. (For more on the changing economics of digital competition, see the infographic below.) This built intuition—which often clashes with the new economic realities of digital competition. Consider these three: