Insurers must embrace digitization or risk marginalization, warned Bill Pieroni, CEO of ACORD in his keynote at the ACORD 2016 conference in Boca Raton, Fla. “Digitization is the glue that holds the value chain together. Without that you can’t address consumerization,” he said. “Without digitizing the value chain, how will you truly reflect what consumers want? How will you ever use data and analytics to drive it?” Big data, cloud computing, social business and mobility are causing digital disruption across many industries. Social media and mobile technologies have shifted the balance of power and influence to the consumer. To learn more:

It is Time for Insurers to Enter the Digital Age

While retailers and cable companies moved their businesses online years ago, many insurers, struggling with legacy technology and outmoded organizational structures, are playing catch up. The Harvard Business Review proceeds with “a shift to digital would improve performance across three areas:

1. The ability to mine the digital data consumers leave behind on the internet, social media, driving apps and even health-monitoring wearables could help carriers to better target customers, price and underwrite policies more accurately, and manage claims more effectively.
2. The simple digitization of existing insurance processes (allowing quotes to go straight through processing, for example, and rapid product configuration) could yield strong improvement to operating profit margins.
3. Increased digital marketing could improve opportunity to connect with existing customers, allowing firms to better upsell, cross sell and retain valuable customers.

Based on our experience, a thoughtful digitization program can deliver up to 65 percent in cost reduction, a 90 percent reduction in turnaround time on key insurance processes, and improve conversion rates by more than 20 percent.

The Transition

Four factors are crucial to the success of any effort to reimagine and digitize the transition process:

• Operational excellence – involving efficiency and price competition;
• Customer intimacy – leveraging real knowledge to anticipate customer needs;
• Product leadership – innovative approaches to developing new products
• Disruptive innovation – embrace an ethos of continuous change

Insurance Innovation Reporter continues, “Digitization plays an important role in at least three of these, which means that for most insurance segments, digitization is imperative. “By and large, mainstream carriers ignoring this will find that they will shrink or be absorbed,” Pieroni predicted.”

Other insurers have digitized claims, and they offer apps that allow people who’ve been in an accident to file claims via their phones directly from the scene of the accident, often eliminating the need for an appraiser. Taking mobile one step further, USAA is piloting voice-activation software that could turn customers’ phones into virtual clerks, drastically cutting the costs of customer service.

Harvesting digital data has enormous potential in a world where people leave vast amounts of information behind from the websites they visit, the words they search, and the social media posts they make. Numerous carriers are already mining data on social media to provide their agents with real time information about their policyholders’ life events (moves, job changes, new babies) for sales, and similarly using digital data to curb fraudulent claims.