Digital strategy is critical for insurers struggling to remain competitive in a connected world, but how do those tactics morph from idea to reality?
Three elements differentiate today’s digital strategies from those of the past, explains Donald Light, director of Celent’s P&C insurance practice for the Americas, in the analyst firm’s recent webinar “Insurance Digital Strategies: Cheaper, Smarter, Faster, Better.” In his discussion, Light emphasizes the importance of digital strategy and the necessity for insurers to adjust theirs in the wake of new technologies.
The first of these elements is data, “especially data that’s in machine-readable and machine-storable form,” says Light. The second is information in any format, including text, video, and sound. The third element is experience. “[This] involves continuing interaction, first with other people or intelligent agent systems.”
In terms of goals, insurers should first focus on cutting cost through reducing expenses and increasing productivity. For example, Light explains, an insurer may aim to experience zero growth in expenses year-over-year.
Businesses should also strive to be smarter in their pricing, underwriting, and claims decisions, says Light, which may involve a key goal of pricing risks more accurately than their key competitors. “We’re operating in a pretty complex world with a lot of factors,” he cautions, emphasizing the importance of consistency in making exact decisions.
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The third and fourth critical goals, he continues, involve boosting efficiency by cutting down on cycle times and improving the customer experience by making processes more engaging and satisfying.
Carriers should note that while none of the aforementioned goals is entirely digital in nature, all involve a balance between the digital and physical worlds. The achievement of each requires “digital enablers,” the technical and economic trends that make digital strategies possible. Insurers will find that the tactics behind digital success today are largely different from those of the future.
The enablers of today’s digital achievements include the digitization of data and information, growth of analytics and rules, and development of mobility-driven user experiences. As user interfaces change and become more engaging, customers find older ones increasingly unacceptable. Companies that neglect to update their interfaces will find themselves at a disadvantage in the marketplace, Light cautions.
Moving forward, the Internet of Things will emerge as a primary digital enabler of the future. Accompanying IoT will be the “natural best friend,” a product of technology that uses machine learning, and access to large data stores, to provide companionship. Light references the movie Her, the story of a man who develops a relationship with the voice on his smartphone, as a relevant example.
Although it may seem that society is already connected 24/7, it has yet to achieve the ubiquitous connectivity that will enable future digital transformation. Devices such as sleep monitors will ensure users are connected every minute of the day. “People will accept this as a natural part of how they live their life,” says Light. These monitoring devices will provide instant access to data for companies formulating digital strategies.
With the digital enablers of the future, insurers will be better able to achieve smarter and less expensive goals such as more accurate pricing, better underwriting for small business and worker compensation carriers, and improved claims strategies. These digital means will help them fulfill goals that straddle the physical and virtual worlds.
Kelly Sheridan is an associate editor for Insurance & Technology. Prior to joining InformationWeek Financial Services, she was a staff writer for InformationWeek and InformationWeek Education. Kelly has also written for trade publication Promo Marketing and a number of … View Full Bio