Accenture estimates that digital opportunities will expand insurers’ worldwide revenue potential by up to $375 billion within the next five years. Those carriers that become "living businesses" will reap most of the resulting revenue growth.

The disruption that insurers face is causing costs to rise while suppressing growth and profitability. But it is also creating a wealth of opportunities for those that are able to respond effectively by becoming living businesses. Accenture calculates that these opportunities will expand insurers’ worldwide revenue potential by as much as $375 billion within the next five years.

We speak to Michael Costonis, Accenture’s Global Insurance Lead, to find out more about how insurers can position themselves for this digital windfall.

Q: Most insurers have been somewhat slow to embrace the imperative of digital transformation, perhaps because their core businesses have been largely unaffected by disruption. Why should the living business concept be on their radar?

As Accenture’s Disruptibility Index shows, insurers are vulnerable to disruption. With slow but steady growth, adequate return on equity, and a dearth of credible digital competitors, insurers haven’t felt as pressured to change their businesses as organizations in the retail, personal transport or media industries. In the absence of consensus on what the industry will look like in years to come, it’s hard to build a business case for transformation—especially when so many investments in digitization have yielded lackluster results.

Though the threat of disruption does not feel immediate for many carriers, they should not ignore how new technologies, business models, and customer behaviors are creating exciting opportunities for them to increase their revenue and seize market share. Most of the opportunities will be accessible only to insurers that can nimbly adapt their business and operating models to maximize their relevance and innovate effectively. We call them "living businesses."

Q: What does it mean for an insurance carrier to be a living business?

Living businesses are agile, flexible organizations with fluid business and operating models and an obsession with maximizing their relevance. They will have a deep and constantly growing understanding of their customers, and a corresponding commitment to understanding the evolution of risk.

Living business insurers will recognize the potency of ecosystems, relish change and value innovation, and have the energy to keep pace with their customers no matter how their needs evolve. They will be able to deliver meaningful, personalized propositions at the times that matter.

To be accepted by customers as relevant, trusted and important in their lives, insurance organizations need more than just good customer data, IT and marketing. They need to develop a personality that is appealing and authentic. They need to engage with customers and commercial clients as a trusted, relevant and empathetic ally as they navigate the uncertainties of their lives and businesses.

Living businesses are agile, flexible organizations with fluid business and operating models and an obsession with maximizing their relevance.

Q: Can you break down the new digital opportunities that beckon for those carriers that transform into living businesses?

The pace-setters that become living businesses will gain a powerful competitive advantage over those that choose to wait and see how the industry will unfold. This will enable them to capture customers from less responsive competitors. We calculate this opportunity to be worth some $198 billion worldwide between now and 2022.

We have also identified significant opportunities for living businesses to launch new products and services, increase the reach of those they are already selling, and explore innovative revenue sources. Together, these are likely to expand the global insurance market by $177 billion over the next five years. The total that is accessible to living businesses is therefore $375 billion.

Q: How can insurers realize the vision of becoming a living insurer?

Living businesses balance the need to nurture their existing operations and explore new sources of revenue. This process, which we call "pivoting to the new", entails investing in the transformation of the core business to reduce costs and drive growth, thereby freeing locked value.

The funds generated in this way are used to launch innovative ventures that offer the prospect of new revenue streams. As the most promising initiatives become apparent, the organization prudently shifts the focus of its effort and investment from the core to "the new," scaling its innovative ventures to the point where they become significant, sustainable income producers.

While the focus of most discussions about the future of insurance is on new technologies, capabilities and offerings, insurers that neglect their core business will find it hard to transform into living businesses. The first stage of this journey has to be the digitization and optimization of the legacy; only once that has been achieved can the organization plan and execute its migration to new business and operating models.

Learn more about how to transform to a Living Business.



​Senior Managing Director – Global Insurance Practice Leader​

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