What is 'digital'? Gaining clarity is one key to a successful strategy

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The insurance industry is preoccupied with becoming “digital.” But does it know what that really means?

Within the industry, the meaning of the term “digital” is wide open to interpretation, according to Aite Group’s senior life and annuity analyst Samantha Chow. As she explains in her recent research note, The Meaning of Digital in Insurance: A Total Transformation Strategy, no one she polled—various types of insurers, third-party providers, consumers or even her own family members—gave Chow the same definition, regardless of their age.

“Given this lack of consensus,” she says, “it’s no wonder insurers are struggling to transform successfully.”

To help insurers better define their digital goals and strategies—and use the term more consistently as an important part of that—Chow suggests they do the following when developing a digital game plan:

1. Set the business objectives for going “digital.”
For some insurers, the chief goal is to boost efficiency by automating operations. For others it’s offering customer channel-less experiences. Still others may seek to speed product launches by streamlining marketing approvals.

Says Chow: “As each of these digital scenarios clearly requires a unique set of processes and technologies it’s critical to identify your desired outcomes in detail.”

2. Engage the entire organization in defining digitalization goals.
Many insurance company employees are still used to working with their own spreadsheets, which they create and control. But that mindset runs counter to establishing a truly digital organization, where everyone’s actions impact everyone else.

Adding a chat-bot to the company’s first notice of loss, for example, will route information previously gathered by the call center directly to the claims department. This not only requires a new claims workflow, but also affects other departments, such as marketing, since it’s their job to ensure that customers understand and welcome the new process.

“Every business process you intend to digitize needs representatives related to that process at the table when you’re establishing desired outcomes,” Chow notes. “Choose representatives deeply familiar with the existing day-to-day processes to ensure an appropriate understanding of the functional impact of proposed changes.”

3. Get perspectives from a wide-range of customers.
When it comes to digital interactions with its customers, it’s important for an insurer to understand their expectations. But it’s a mistake for the insurer to limit its research to its current set of customers. The real gaps in its transformational strategy can only be uncovered by also soliciting feedback from those prospective customers it would like to reach.

To garner the needed insights, Chow recommends partnering with consumer research companies and specialized analyst firms with expertise in the market segments in which the insurer participates. Another, often overlooked source are the insurer’s own employees, whose insights as consumers can provide some of the most cost-effective research available.

“In short,” Chow says, “successfully defining ‘digital' requires IT to work holistically with representatives across every business unit and function [and] obtain a comprehensive picture of what [the insurer’s] current and potential customers want.

“Remember that becoming ‘digital’ isn’t about simply automating existing processes,” she adds. It’s about determining the right processes and then automating them to ensure you gain desired outcomes.”

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