Big tech companies with relevant consumer data have been eyeing the insurance industry for the past few years and looking at how they can use their insights into customer behavior to reinvent the sector and undercut carriers on prices. Understandably, incumbent carrier leaders are concerned about the threat of disruption via commoditization.

Executive Summary

As some carriers worry about the threat of disruption to their industry due to big tech, Tara Kelly, founder, president and CEO of SPLICE Software, writes that carriers should focus on aligning their business strategy with consumer values. She says this means collecting more data, staying agile and efficient, and maintaining a clear vision to serve customers who are increasingly seeking value both in terms of price and ethics.

But here’s a thought: What if commoditization has run its course? A simple way to trace the rise of commoditization is to observe the trajectory of Walmart from regional to national to global retail player. When products or services from rival sellers are distinguished only by their price, they’ve been commoditized. Countless retailers learned this lesson the hard way from Walmart’s dominating presence.

Some industry analysts wonder if insurance is headed for a similar fate. Competition is as fierce as ever, and in a global commodity scale, there is access to a larger community of buyers than ever before. But how we bring our products and services to the market matters because people shop both on price and their values now. A January 2021 survey conducted by brand measurement company Vrity found that more than half—55 percent—of survey respondents reported paying more attention to brand values today than they did one year ago. Price is still a driver, but it has peaked as the primary driver, and carriers who can offer a good price and alignment with consumer values and needs can position themselves to win in a transformed economy.

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