The Digital Insurer: Putting It All Together
With the digital revolution going on all around us, the insurance industry is starting to recognize that true opportunity lies in proactive rather than reactive approaches to product design, risk management, customer relationships, and business models. The concept of the Digital Insurer offers guidance on what specific capabilities must be addressed in order to move a company toward that proactive model.
As the name suggests, the Digital Insurer embraces current and future technologies in order to fortify its market position and create opportunities. But a chief characteristic of today’s technology is its interconnectedness, allowing data from thousands of different sources to be correlated, analyzed, and leveraged to refine a company’s market strategy. Insurers mired in legacy technology, particularly in their core systems, find it difficult to make those connections, because of both the capabilities of their existing systems and the timeline involved in modernizing those systems. Piecemeal system replacement may seem like the most practical approach for many insurers, but the risk they run is that each project has its own scope that does not always extend to holistic integration with the company’s other systems, technology roadmap, or overall business processes.
The Digital Insurer can overcome that segmentation by establishing a unified digital strategy that guides technology initiatives across the organization and focuses on a consistent customer experience. That strategy touches everything from how a company presents itself and makes itself available via mobile, web, and social media to higher-level discussions like how branding and communication can be tailored to specific customer groups and various media. There are too many moving parts here for an insurer to be able to coordinate them without an overarching vision and a specific plan on how to achieve it.
As an example, data management alone mandates a big-picture view. The market is becoming aware of the real possibilities of big data, not only to optimize the existing analytic capabilities of point solutions but also to be able to draw conclusions from the data from all of a company’s systems, third-party sources, and unstructured data that has never been captured before, much less utilized (e.g. the data on exercise habits that wearables can provide). The insights from that vast array of data allow an insurer to make more accurate predictions of risk, which in turn opens new possibilities for the relationship with the insured. An ounce of prevention is worth a pound of cure, after all. A relatively simple cross-reference between claims history in a given location and publicly available meteorological data like water table measurements and rainfall predictions could identify which homeowners policyholders are most at risk of basement flooding at specific times of the year. Which insurance company will make a more memorable impression, one with an easy-to-navigate claims process for basement repairs, or one that reaches out to their customer six months in advance to start a conversation with them about strategies to prevent flooding? How much gain could there be when the neighbors realize that because of that insurer’s tailored, proactive communication one person on their block was spared a flooded basement?
The good news is that many of these tools are available today, and the insurance industry has the unique opportunity of learning from other industries that have already started using them. Innovation, for the Digital Insurer, can be in the creative application of widespread technologies, like predictive analytics solutions with graphic databases and fuzzy search functionality, and those still proving their applicability, like telematics, wearables, and drones. With a clear vision for how to embrace these technologies as well as those still nascent, insurers can move from their disjointed current environments toward the harmonized technical environment of the Digital Insurer.