Research and advisory firm Celent annually surveys CIOs about pressures and priorities for the coming year. For 2014, those conversations revolved around the definition and implementation of digital strategies. So where do today’s insurers stand?
“Some companies and CIOs have really embraced the term ‘digital,’ some have not,” said Donald Light, director of Celent’s Americas P&C Insurance Practice, at the L&T Infotech Insurance Leadership Forum held this Wednesday at New York’s Waldorf Astoria hotel.
Celent discovered that digital has several meanings across the industry. Insurers use the term to describe everything from the act of going paperless, to the use of mobile apps, to disruptive technologies such as connected homes and cars. Some large P&C insurers claimed that digital is not part of C-level conversations; others said it is mentioned in daily discussions.
Light explained various benefits of digitization, such as how it allows insurers to acquire, manipulate and analyze the increasing amount of data they will be able to access in coming years. “If you digitize that information and start feeding it into scores, that makes a big difference,” he said. That ability doesn’t exist for non-digital insurers.
Digitization can enhance mobile capabilities, said Light, and provide policyholders with proof of insurance, weather updates and risk management advice in the event of a natural disaster. He alludes to an insurer that mobilized their adjusters during Superstorm Sandy to address 17,000 claims. “They were able to execute very well and provide a high level of customer service,” he said, as evidenced by the insurer’s 0.4% complaint ratio.
Most insurers are at the start of a digital continuum, Light explained. The process starts with the least-advanced stage of an entirely paper-based strategy. Insurers then move towards digital adoption, which involves implementing core systems of record and automated rating. The next step, basic digital, involves sales websites, digital marketing and electronic messaging among partners.
There are three enablers of digital strategy that must exist before plans can be effectively formulated and executed. The first of these is the continued migration of data and information into digital form.
“Forever, putting data in systems was all structured,” said Light. “This divide between structured and unstructured data is really changing.”
Insurers seeking to boost their digital strategy will also need to invest in analytical capabilities and increase their focus on mobile apps and devices to appeal to the modern consumer base. User’s expectations have radically changed, and mobile provides more options for how they communicate with their insurers.
“The companies that are out in front and using digital will be more profitable,” Light said. Those not in the forefront will be hurting, he concludes.