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The Rise of the Digital Era for Insurers

Appian Contributor
January 16, 2017

The digital era has arrived for insurers.

Digital is transforming insurer products and services, breaking down barriers for new entrants, and impacting customer engagement. With changing customer experience expectations and digital transformation projects on the rise, how should insurers move forward with their customer-centric digital initiatives?

Drivers of The Digital Era

In the not so distant past, insurers were shielded from digital disruption by an older demographic, underwriting expertise, and regulatory barriers. But this is about to change. Forrester Research's State of Digital Insurance highlights three drivers of change:

    • Customer-driven disruption. Consumers have embraced digital touchpoints for a range of insurance activities. Where incumbents haven't responded with better digital experiences, a host of insurance upstarts stand ready to take over.

    • New digital technologies. Digital is changing more than just insurer sales and service. This is starting to impact the entire insurance value chain.

    • Digital maturity inflection point. Insurers have ranked behind other industries in terms of digital maturity. But, there are now big differences within the industry based on product line, distribution model, and executive commitment to digital business transformation.

Focus on Driving Business Value

With insurance digital leaders now outperforming the laggards, it is clear that digital is important. What is not as clear is how to best capture the value that digital promises. A recent cross-industry survey of C-level executives found:

    • 86% see digital transformation will play a key role in their market, yet...

    • 40% do not have a clear strategy in place for digital transformation.

What then is the key to a winning strategy?

First, according to McKinsey, businesses mustfocus on how digital transformation drives business value. Recognizing that digital can reshape every aspect of the modern enterprise, McKinsey warns that businesses that take a limited view of digital transformation are vulnerable to new entrants and agile incumbents that can translate digital to "better, cheaper, more customized products, faster service, and an improved customer experience." McKinsey counsels that companies should fully embrace digital transformation, but do so in a manner and degree that maximizes their unique business value.

For insurers, the customer has become a center of unique strategic value.

In their 2017 Insurer IT Spending and Priorities Research, advisory services firm SMA reveals that improving Customer Experience is the #1 strategic initiative. Further, insurer digital initiatives are increasingly addressing the entire customer lifecycle.

A customer-centric perspective has become critical.

"For carriers with the resolve to see their business through the eyes of the customer, each interaction becomes a way to live up to their brand promise; functions come together in new ways across customer journeys; and technology and digital become accelerators." -- McKinsey & Company, The Growth Engine: Superior Customer Experience in Insurance

The Connected Digital Insurer

How can insurers achieve customer-centricity? To improve customer experience, insurers need to leverage digital to improve customer-facing applications, integrate with back-end systems, and connect disparate customer data stored in product-specific data silos. All while continuing their "in-flight" operations.

The average IT department can get caught in the slow lane when it comes to driving meaningful digital advances for the business. Insurers are constrained in their digital efforts by the need to continue uninterrupted the day-to-day operations dependent on discrete legacy systems like policy administration, billing, and claims systems.

To be fair, the complex responsibility of balancing budgets while maintaining the growing demands of a legacy portfolio can be a significant burden. However, turning to pure-play, independent, or disconnected digital initiatives to improve customer experience is not the answer.

What is the right path forward?

Insurers can take advantage of an innovative digital overlay approach to provide context for customer interactions by digitally connecting across the enterprise, and the customer journey.

The Appian low-code Digital Transformation Platformô can help ensure that contextual information about the customer is always available at the precise moment in time it is required. Exposing this contextual information to users on a role-relevant basis via any channel provides the baseline to provide a consistent, overwhelmingly positive experience. Data about the customer, combined with the actions relevant to the customer, puts the customer in context to the enterprise.

Take the Next Step

When it comes to customer experience, the experts conclude that digital will be critical to success. But the path forward is not without risk. Digital transformation initiatives promise results, yet McKinsey experts estimate that 70% of transformation programs fail.

Whatever the challenges, all agree transformation is a necessity for the digital insurer.

"Undertaking a digital transformation is undoubtedly challenging, especially since insurers have to carry it out while managing their everyday business operations effectively as well. But the question is not 'Do we have the appetite to undertake a digital transformation?' but 'Can we afford not to?'" --McKinsey & Company, Making Digital Strategy a Reality in Insurance

Appian can help you to manage your risk and set a path to successful transformation. We have commissioned an eBook from SMA that outlines the Top 5 Steps to Improve the Insurance Customer Experience - check it out here! You can explore insurer trends, priorities, and initiatives for 2017 and beyond, and get a view of proven practices for improving customer experience, including the role an innovative digital platform can play in successful transformation.

Deb Miller

Director of Industry Marketing