- The first level is digitalization, taking existing processes and applying technology. Many insurers began this process in the late 1990s or early 2000s, and, unfortunately, many have stayed there. Insurers initially saw large efficiency benefits in moving internal processes away from paper over to digital, but those returns rapidly drop off after an insurer migrates the highest-priority processes. An example of this stage is offering PDF copies of insurance documents on a customer portal.
- The second level is to create new digital experiences, using the capabilities of digital platforms. An example is creating mobile applications for agents to improve interactions with the company, using geolocation to offer nearby preferred vendors and other options.
- Level three is offering new insurance programs that would not be possible without digital technologies. One example is a company creating a travel insurance product in partnershipl with a travel mobile application and offering that product at the time a customer purchases a flight.
- Level four is an evolution of stage three, and consists of embedding digital throughout the enterprise. An insurer thinks of all aspects of the business in terms of digital, even in departments such as compliance and daily operations. An insurer knows that it has progressed to this stage when even traditional analog functions such as the mailroom evaluate all processes with digital transformation in mind.
- At level five, an insurer has repositioned to a new competitive space inside the insurance market. We are only now beginning to see a few stage five insurers, and these insurers are often born digital. An example is new peer-to-peer insurance models that have begun to gain acceptance in recent years, like crop insurance in Africa. This insurance is paid for by a surcharge on farming inputs such as fertilizer and seeds. Claims are automatically initiated when weather stations recognize severe weather events. This is a form of protection that could only exist in a digital world.
Do You Really Have a Digital Strategy?
To develop a coherent strategy for digital insurance, an insurer must first determine its current level of digital maturity.