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How Insurer Aon Tackled its “Innovator’s Dilemma”

Deborah Adeyanju

When insurer Aon decided it needed to change, the move was at the same time a bold gambit, and driven by fear. Specifically, the company feared trends in demand for commercial motor vehicle insurance meant it would risk losing ground in some of its traditional markets.

The 41-year old multinational knows a thing or two about risk. It provides commercial risk insurance, advisory, and reinsurance services to clients in more than 100 countries. When it came to contemplating change, its actions weren’t driven by gut feelings, but instead borne out by cold hard facts.

First, is the fact that technological innovation, think anti-collision features, has driven down accident rates. Second, is the ongoing shift in industry demand from personal insurance lines to a greater share for commercial coverage.

While Aon’s customer base is B2B, that shift could still have negative implications for its future profitability, including shrinking the size of its potential risk pool. Overshadowing all this was the potential threat of disintermediation from new entrants, including the tech giants.

Gabriele Ratti, Deputy Manager and Head of Mobility Solutions, is frank in describing Aon’s motivation, “We were scared we could lose market share. But we saw an opportunity to position ourselves in a different way, which is as a mobility integrator with a strong focus on insurance.”

So what did it decide to do? Aon used the data it was seeing to jumpstart a transformation of its business model. Says Ratti, “we saw a huge opportunity” from the convergence of digital, the spreading move away from ownership to usership, and “the fact that cars are parked 92% of the total time.”

The opportunity Aon saw was to recast itself as a mobility integrator, and to create an ecosystem, or as Ratti puts it, a “micro-community” around itself. It would leverage its insurance and risk expertise, but go beyond that with a subscription offering accessed through a modular platform that the company expects to scale over time.

It’s one thing to correctly identify an opportunity, though. It’s another to successfully act on it. For a company of its size and scale, and with the level of success Aon has, complacency and inertia could easily have stopped it from moving forward. Aon addressed this by “throwing a bomb in a sea.”

It put together a dedicated team to act as “a sort of startup inside the multi-national.” That cross-functional team was charged with working collaboratively to develop its new offering. The offering would be rooted in Aon’s longstanding competitive advantage, risk management, but also allow it to extend its reach deeper into its existing markets and further, to new ones.

Aon’s subscription offering is built around the concept of mobility-as-a-service. From its new platform, subscribers will be able to access all the vehicle-related services they might need, — from insurance to in-car monitoring technology that assists with navigation, communication, and diagnostics, to car-sharing — within their micro-community.

While the offering is still in development, Ratti envisions “a unique one-stop shop for cab sharing, rent a car, taxi, parking fuel for electric vehicles, the recharge of the vehicles.” Everything naturally includes billing based on consumption and payment features too.

True to the subscription ethos, Aon is launching its new offering in phases. It’s already completed phase one, is working on phase two, and expects the final phase to launch next year.

What has the company learned along the way? Ratti offers up a few rules of the road:

#1. For transformation to work, everyone has to buy into the opportunity.

#2. The opportunity has to be concrete, in line with the company’s vision, and backed up by numbers.

#3. Your idea will come up against competing company priorities and projects. Be prepared to defend it, if you want it to succeed.

But “the last most important thing of all,” Ratti says, “is people.” People will determine transformation’s ultimate success or failure. You could say that about subscriptions too.

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