By focusing on the needs of a distinct persona — such as a customer, broker or adjuster — and serving that person’s needs through a digital insurance platform, insurers can move away from older systems. By simplifying their vision, products and systems, insurers can offer customers the value and convenience they expect. Further, insurers can recommend products and preventive measures that decrease risk, integrating this into purchasing decisions and delivering a more integrated advisory service.

Once-and-done interactions, personalized experiences

No one knows what the future holds — it’s one reason we buy insurance. But when it comes to the impact of digital transformation on the insurance industry, incumbent players have a clear sense that disruption is imminent.

The power shift from sellers to buyers is altering consumer behavior and expectations. Consumers want fingertip access to information and tools that let them analyze and purchase products through a variety of channels. Price transparency and lower barriers to entry are increasing competition and making commodities out of what used to be core value propositions.

Complex products and protracted buying processes are out. Once-and-done interactions and personalized experiences are in. New technologies are making possible business models that were once considered impractical, or completely unimagined. And rapidly maturing constructs like as-a-service and the API economy are completely changing the way many companies build, buy and use technology.

Insurers today recognize the now-familiar drivers of disruptive change, including consumerization, the data revolution, the influx of new entrants, and the overarching digital mandate. Recognizing these drivers is easy. The challenge is knowing how to react.

How should insurers evolve the way they develop and market products in the face of changing customer expectations? How can insurers channel new and innovative services as their core propositions become commoditized? What is the path forward for IT as it looks to deliver new capabilities while addressing the legacy technology estate?

Historically, insurers have looked inward to find answers. Today, the answers are more likely to be found outside the enterprise, by tapping into the experiences of other industries, monitoring the fast-growing InsurTech community, and aligning with the new digital commons. This outside-in perspective is fundamental to every aspect of strategy and planning that insurers will undertake.

Figure 1: How market forces and digital transformation are reshaping the insurance industry

Here are the shifts every insurer is facing today (also see Figure 1):

From product-centric to customer-centric. The shift in power from makers to buyers is altering both the product development process and the industry’s near-linear distribution approach. Simplicity is replacing complexity, and to accelerate new product development and enable retail-like best practices, insurers are externalizing product definition and pricing to configurable workbenches and rating engines. Wrapped with a digital front end, these platforms are transforming the quote-to-buy experience without the need to modify the core administration system. On the horizon is the ability for buyers to configure their own risk solutions, selecting from a discrete set of products and riders, aggregated and priced as a single offer.

While a few insurers remain committed solely to their distribution partners, most are equipping themselves for direct sales and omnichannel engagement. To bootstrap cultural and procedural change, many are bringing in new leaders to introduce data-driven practices around customer intelligence, direct marketing and personalization, using analytics to transcend silos.

The art, of course, lies in finding the right balance. Many insurance customers still seek some level of human interaction. Leaders are investing in platforms to enable the full spectrum of customer experiences, treating channels and partners as a continuum rather than discrete activities.

From limited insights (data capture) to rich insights (data analytics). Insurers have been collecting and managing data for years, without realizing its full potential. But they are beginning to leverage information to connect with customers more intimately, guide buying journeys and operate as quantitative organizations.

Can insurers predict the risks you’re likely to face and the services you’ll need to manage them? Not easily, today. The petabytes of customer information carriers maintain are spread across different systems, lines of business and geographies like so many scattered puzzle pieces. And there’s no way to assemble them into a full picture. To better understand and serve customers, insurers are:

• Shifting the focus of customer relationship management (CRM) and analytics from intermediaries to policyholders and prospects
• Digitizing and retaining all available data, and augmenting transactional insights with information available from partners and external providers
• Investing in robust data and analytics platforms to drive sophisticated machine learning algorithms and artificial intelligence (AI) engines
• Using digital engagement platforms to push information and insight to the edge of the enterprise — into the hands of key personas at the point of interaction and decision

Armed with these new insights and tools, insurers are now having more personalized, meaningful conversations with customers about their broader wants and needs, rather than simply completing a transaction. 

From individual insurer offerings to an ecosystem of products and services. As digital disruption has pulled apart industries and commoditized core propositions, market forces have reshaped them around new missions, underpinned by reimagined core offerings and curated collections of value-added products and services. Where the automotive industry today seeks to fulfill lifestyle, fashion, and entertainment needs, insurance is stepping up to meet customer aspirations around wellness, safety and peace of mind.

In the digital world, insurance companies are offering advice about products and preventive measures, providing education and feedback, and finding new ways to help customers understand and decrease risk. To deliver against this higher mission, insurers are looking beyond their own boundaries for innovative new products and services they can make available to customers. They’re curating entirely new partner ecosystems, consuming capabilities from adjacent industries, technology giants and the emerging InsurTech community. This more holistic and integrated approach is helping to establish deeper customer relationships that will prove to be more enduring and valuable in the long term.

The timing of this shift is crucial because a wave of new players has entered the insurance market. But ongoing customer engagement and delivery of continuous value goes a long way toward helping forward-looking insurers maintain share of mind in the marketplace, integrate advisory services into purchasing decisions, and simultaneously ward off competitive threats.

From build to consume. The role of insurance IT is evolving, from stalwart builder and steward of long-term retained assets to agile integrator and aggregator of internal and external innovation. Faced with the need to simultaneously deliver new digital capabilities while tackling legacy debt, IT is repositioning itself at the intersection of business, technology and partners. It is reskilling, retooling and reorganizing to combine the embedded value of its existing assets with the transformational impact of outside-in innovation consumed from the API and as-a-service economy.

InsurTechs present an opportunity to accelerate this transition and to inject a fresh dose of innovation at the same time — for example, incorporating internet of things (IoT) smart monitoring to protect homes as part of connected home insurance, or using facial recognition to help set life insurance rates. Originally conceived to reinvent the insurance industry, more often now these technology-driven firms seek partnerships with established firms. Organizations that shift from an in-house IT mentality to an outside-in consumption model are perfectly positioned to partner and integrate with these innovation sources.

Since no insurer can afford to start over from scratch, insurers are progressively decomposing their existing monolithic systems and moving toward components and services that can be reassembled into a loosely coupled, consumption-based IT platform. Rationalization and divestiture of capital-intensive data centers and physical infrastructure in favor of virtualized clouds and software-defined computing, storage and networks are increasing business agility and freeing up capital for investment in areas the business deems strategically differentiating.

Digital insurance strategic business platform

Systems of record have been the cornerstones of insurance companies for decades, providing the operational backbone and data repositories that underpin the end-to-end value chain. While the need for these capabilities remains, they’re no longer the entire story. Customer experience, actionable insights and ecosystem services have taken the spotlight, so at the heart of every insurer’s digital strategy is the notion of a digital insurance strategic business platform. 

The Digital Insurance reference model in Figure 2 represents a fully realized strategic business platform for insurers.

Figure 2. Today’s digital insurance solutions embrace and extend legacy insurance components with new capabilities and features that are consumed rather than built

This model supports a vision for the industry that is secure, scalable, extensible, data-driven, agile and omnichannel. Each of the four major elements speaks to the digital imperatives of business and IT:

Persona-based insurance applications. Application development in a customer-centric world begins with two questions: “What functions, information, insight and services do the key personas require?” and “How do they want to interact and engage?” The answers vary both contextually and over time, requiring insurers to continually package and deliver personalized systems of engagement, tailored to the needs of each persona and deployable across traditional and digital channels. Regardless of how or where they’re sourced, the capabilities, information and services must be rendered seamlessly (no more swivel-chair integration) and enhanced on an evergreen basis.

Digital insurance platform. A new digital commons is providing the tools, technologies and architectural styles IT needs to excel in its new role as integrator and aggregator. At the heart is a new integration fabric built around an insurance-specific resource model and a corresponding set of reference APIs. Hypermedia-based, discoverable and aligned to the RESTful style, these APIs enable consistent and dynamic conversational interactions across a heterogeneous set of systems and API service providers. The basic processes of requesting a quote or reporting a claim can morph and adapt to the diversity one finds in most insurance back offices and their newly curated partner ecosystems.

Digitally enabled core services. Whereas specialized task workers may find their role fully supported by the scope of a single system, today’s digital personas draw from an increasingly broad array of value-chain components, systems of analysis and ecosystem platforms and services. That which was previously rendered through a tightly coupled user interface is now exposed through discoverable, RESTful APIs. Fully encapsulated, self-describing and readily accessible over HTTPS, these digitally enabled core services represent an ever-expanding set of capabilities that IT can consume and integrate on behalf of the business.

Platform operations. Frequently deployed in the cloud for maximum agility and ease of integration, these platforms take full advantage of rapidly industrializing approaches to IT service management and operations. Automation, orchestration and embedded intelligence provide the foundation for self-service provisioning, continuous integration, root cause intervention and advanced security monitoring.

In all things, simplify

With one foot in the old world and one in the new, many insurers feel stuck, unsure how to wholly remove themselves from the past. Many have embraced a dual agenda as a way to move toward the new digital state, recognizing they can optimize existing systems while they move toward an open platform of components and services.

There is no one-size-fits-all plan, but there is an overarching theme. As insurers consider where they want to compete and whom they want to serve, the first order of business is simplification. As people contemplating an epic journey know, they can’t take everything with them. Step one is to determine which assets aren’t needed, which can be handed over to partners for ongoing stewardship, and which are strategic to future success.

Having streamlined the business and IT landscape, the next step is to embrace other forms of simplification: Offerings that are simple to understand and easy to buy, intuitive user experiences, and convenient self-service capabilities are the hallmarks of any digital initiative.

Business process services offer another route to simplification. Life insurers are saddled with outdated policy administration systems (sometimes dozens) that need to be maintained for products that are no longer sold but need to be administered on a run-off basis. Moving people, processes and technologies to a business process service outside the company enables the insurer to reduce costs, improve agility, and free up embedded capital to fund its digital initiatives.

What to do next falls under the art of strategy. Most insurers are aligned around a common vision of the future, so the strategy is about charting the course from here to there. Whether the focus is new business, claims, or filling the white space in between, the journey starts with an outside-in view of the target personas; the capabilities and services they require; the instantiation of a digital platform; the sourcing of requisite functions, information and insight; and partner services.

A hypothetical

Consider a property and casualty company that decides the consumer-direct model fits with its vision of the future. The steps it might take on the digital journey would include the introduction of a consumer portal and decisions regarding which capabilities and services should be provided. It would create digital-ready products with simpler underwriting rules, digital signature capabilities, and customer support provided by a chatbot or customer service representative.

Following the progressive decomposition method (see Figure 3), the new business elements of the existing core system would be exposed via RESTful APIs and integrated into a digital platform. Working with service design specialists, a compelling new user interface is generated to guide the prospect through a conversational buying experience. All this is developed using agile methods and deployed in a lean fashion, first as a minimum viable product, and subsequently improved and extended on an evergreen basis, perhaps with advanced AI-driven needs analysis or the addition of a natural language interface.

Figure 3: Progressive decomposition shows how a legacy, monolithic insurance system can be modernized by converting select features into independently operating microservices and connecting to the core through a loosely coupled API.

With this one project, our property and casualty insurer has exercised most aspects of the digital transformation journey. On the surface, the result is a new channel to market and a new way for customers to engage. Look deeper and you’ll see a wealth of experience, insights and learnings that are now the foundation for the next set of initiatives. Most importantly, you’ll see the beginnings of a culture change that will unfold over the next several years.

In the end, digital transformation relies on trusted partnerships. Insurers can no longer expect to keep up with the massive investments being made by today’s technology leaders. Neither can they amass all the skills and experience necessary to effect disruptive change at the pace business requires. Streamlining the existing landscape and embracing the digital platform lets insurance IT leaders focus resources and investments on the creation and consumption of compelling business capability.

While no company can afford to wipe the slate clean and start over, the digital insurance platform helps insurers deliver the service and experiences today’s consumers expect. Digital technology is mature and ready to be deployed at scale. Transformation lessons from other industries have been well documented. For insurers, all that remains is to decide where and how to move forward, and to get started.

How DXC and its partners can help

DXC Technology knows insurers are challenged to make changes in every part of the business. With the global insurance industry aligning around a shared vision of the future and a common set of transformational priorities, speed and quality of execution will differentiate the leaders. Our mission is to enable your digital transformation journey, providing you with a competitive edge that will ensure continued success.

DXC is investing and partnering to bring to market innovative digital insurance solutions. Our goal is to reimagine the business of insurance, emphasizing customer experience across new business, policy servicing and claims. The cornerstone of our approach is our DXC Assure Digital Platform. Built around a complete set of reference APIs for insurance, our platform allows organizations to rapidly bundle and deploy innovative digital solutions tailored to the needs of policyholders, agents, advisers, customer service representatives and adjusters.

Using our platform, we aggregate internet of things (IoT) data and machine learning to enable behavior-based underwriting and provide a foundation for continual customer engagement. Combining the power of mobility and self-service, we reduce average claims-handling times from 2 weeks to under 2 hours. In the call center, we dramatically reduce policy-servicing costs using a combination of advanced data analytics, cognitive computing and robotics.

We know that these new digital capabilities are of marginal value unless they’re integrated, end to end, with a digitally enabled set of core systems and components. That’s why we deliver a portfolio of cloud-native components, addressing product, policy, claims, billing and reinsurance for insurers in every region. Extending our platform capabilities even further, we’re curating an ecosystem of incumbent partners, InsurTechs and new insurance technologies.

We understand that to fully address the industry’s dual agenda, we must help you tackle your legacy IT footprint. DXC’s market-leading business process services capabilities allow insurers to simplify their back offices, reduce costs, improve agility, reach new markets quickly and free up embedded capital. Our application services complete the journey.

Having served the insurance industry for more than 45 years, DXC has over 15,000 employees dedicated to serving 1,900 insurance customers worldwide. Whether you’re a broker, carrier or reinsurer, whether you’re in life, wealth management, reinsurance, brokering or general insurance, and whether your business is in personal, commercial or specialty lines, we are ready to engage.

Now is the time to act. Don’t be disrupted — be the disruptor. Let us help you innovate and transform to differentiate with speed and quality. That’s DXC. That’s Digital Delivered.

Learn more at dxc.technology/insurance

About the author

Brian Wallace is vice president, Global Insurance Software Build, at DXC Technology. Brian drives the vision and strategy for DXC’s insurance software offerings. He brings notable depth and breadth of experience in insurance, digital strategy and emerging technology to this role, having previously served as DXC’s Global Insurance chief technology officer. Brian engages with customers, prospects and partners around digital disruption and the future of the insurance industry. 

Contributors

Brian Bacsu, global chief technologist for Insurance, Digital Insurance Platform Engineering and Operations, DXC Technology

Caitlin McDonald, PhD, digital anthropologist, Leading Edge Forum