Just about every insurer is adopting digital technology to some extent.  But what makes one carrier’s approach “more digital” than another’s?  And why should anyone care?

These questions and others are examined in a new report from Celent senior analyst Craig Beattie in a new report, entitled “Hunting for Extreme Digital.”  In it, Beattie proposes a Digital Insurance Proposition Continuum along which carrier offerings can be plotted. That continuum encompasses:

  • Not Digital — Paper-based
  • Adopting Digital — Utilizing automated systems of record and/or rating
  • Basic Digital — Engaging with customers and/or agents via digital media
  • Advanced Digital — Leveraging telemetry, “robo-advisers” and/or digital partner ecosystems
  • Extreme Digital — One-touch on-boarding, zero paper and fully automated claims handling

Beattie cites one specific example of truly Extreme Digital currently in use: micro-insurance for Kenyan farmers.  This insurance can be activated when a farmer buys seeds or fertilizer at a local store.  All policy transactions are performed via the farmer’s phone, using either SMS or a phone-based payment system.  If farming conditions result in a lower-than-expected yield, the farmer is compensated automatically—without filing a claim.
While such a system is currently an extreme outlier, it can nonetheless prove useful for anticipating how Extreme Digital offerings may eventually find their way into developed countries and disrupt market there.  In particular, Beattie suggests that Extreme Digital is characterized by:

  • End-to-end digitalization, rather than just digital sales enablement
  • Eliminating redundant and unnecessary data capture events
  • Leveraging telemetry

“Insurers are investing in digital and making their offerings to customers faster, smarter, cheaper, and for many, better,” Beattie said.  “But the investment in Extreme Digital products and propositions is being made in unexpected places, signaling potential for surprise disruptions in the next five years.”

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