Reimagine insurance by engaging customers in the digital age
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As digital disruption has reshaped industries and commoditized core propositions, the insurance industry must reimagine how it engages with customers and how it curates, consumes and integrates an ecosystem of information and services. To satisfy today’s consumer, insurers must offer simple products that are easy to buy. They must transform business processes and seek an ecosystem of partners, including nimble InsurTechs offering fresh approaches. Analytics and emerging technologies such as blockchain will play a key role in automating business processes, adding self-service capabilities and enabling the economies and insights of a global, quantitative organization.
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.
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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.
The travel industry vividly shows the rise of consumer power. Complex company processes and
paper forms for planning a vacation have been replaced by streamlined, web-based processes
that put consumers in control, with all the information and tools at hand to make and change
their itinerary as needed.
That customer-centric focus is the future of insurance and everyone knows it. Because this
common vision is not a differentiator, the key to success lies in defining the journey and
prioritizing the right set of actions. Speed and quality of execution will distinguish winners from
losers, and those that can effectively leverage outside-in innovation have a leg up.
What digital transformation means for insurers
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.
By 2019, 35% of insurers will deploy cognitive systems and/or cognitive robotic process automation for intelligent decision making, increased automation, and improved operational efficiencies to deliver contextual, personalized, and value-centric customer experience.Source: IDC FutureScape: Worldwide Financial Services 2018 Predictions (Doc #US41796017 / Oct 31, 2017)
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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
Figure 1. How market forces and digital transformation are reshaping the insurance industry
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• 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.
New paradigms are emerging for how the insurance industry can learn who its
customers are, what they hold most dear, and what they will pay to protect.
Data science and user research are enabling businesses to understand why their
customers do what they do. Industries like insurance are already tapping into mobile
and internet of things (IoT) data for quantitative behavioral learning. They are also
increasingly adopting digital tools for qualitative research into the customer experience
through on-the-go diaries, photos and videos that consumers share about their
perceptions of their world.
New methodological hybrids such as quantitative semiotics are also emerging.
Quantitative semiotics uses cutting-edge machine learning and computer vision
techniques to elicit cultural meaning from vast quantities of unstructured data.
Semiotics is a classic qualitative technique that enables researchers to get inside
customers’ heads and deeply understand how customers make sense of the world. Like
all qualitative techniques, its main drawback is the time it takes to collect and process
even small amounts of data (by hand).
By contrast, the limitation of quantitative research has always been that it stops short
of explaining why consumers behave and think as they do, no matter how precisely
it tells companies what, where, when and how they do it. Emerging digital toolsets
and blended research methods that make the most of both sides of the research coin
enable insurance industry decision makers to develop insightful customer user types
and segments that reflect consumers’ changing preferences and behaviors, and to do it
faster than ever before.
Leading Edge Forum (LEF) is DXC Technology’s independent cross-industry think tank.
LEF Perspective
Know your insurance customer better
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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.
As insurers begin to take advantage of partner services
in the cloud and what has been called the API economy
— a cloud-based ecosystem of provider services — they
face information security challenges on a different
order of magnitude than traditional hacking. Blockchain
— distributed ledger technology that ensures secure
transactions between parties — is poised to play a crucial
role in making safe this new world of integration in which
automated transactions are executed across coordinated
multiparty interactions.
However, the security aspect of blockchain is just the
foundation of its greater promise: to inject huge efficiencies
into business processing. That’s because the automated
transactions it can enable will occur in real time on a
massive scale, replacing thousands of manual processes
that are labor-intensive, slow and subject to human error.
Insurers have traditionally been involved in multiparty
transactions of various kinds, for example in commercial
insurance underwriting, reinsurance and claims processing.
Blockchain can introduce tremendous new efficiencies into
these processes and also power others, such as:
• Title insurance transactions
• Smart contracts for insurance processing
• Peer-to-peer insurance
• Microinsurance
• Internet-of-things self-insurance
The potential impact of blockchain will depend on the
degree of adoption across the industry. Boston Consulting
Group estimates that the technology could help the
property and casualty industry reduce its combined
operating ratio by 5 to 13 percentage points and generate
$200 billion more in technical margin from its current
gross written premiums.1 Insurance leaders will pilot small
blockchain initiatives and expand them in areas where they
can achieve the greatest efficiencies.
The promise of blockchain
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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.
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
Figure 2. Today’s digital insurance solutions embrace and extend legacy insurance components with new capabilities and features that are consumed rather than built
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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.
Insurance industry: What are the top three ways you are applying your Big Data and Analytics initiatives within your organization?
1. To understand and target customers
2. To avoid risk
3. To support sales and marketing activities
Source: IDC Customer Insights and Analysis 2017 IT and Communications Survey — Risk Management in Financial Services Findings (Doc # US43315817 / Dec 2017)
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A hypothetical
Consider a property and casualty (P&C) 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.
With this one project, our P&C 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.
Progressive decomposition
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.
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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 OmniChannel Digital
Insurance 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.
How DXC and its partners can helpIn 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
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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 clients, prospects and partners around digital disruption
and the future of the insurance industry.
Phil Ratcliff is vice president and general manager,
Insurance, at DXC Technology. He is responsible for defining
and implementing insurance go-to-market strategies and
plans, managing the global industry P&L, and leading the
development and commercialization of DXC’s portfolio of
insurance offerings. Prior to this role, Phil was vice president
and general manager of CSC’s Global Insurance business,
responsible for end-to-end business performance including
strategy, sales, development and delivery.
Brian Bacsu, global chief technologist for Insurance, Digital Insurance Platform Engineering and Operations, DXC Technology
Caitlin McDonald, PhD, digital anthropologist, Leading Edge Forum
Faisal Siddiqi, innovation chief technologist, Insurance practice and Technology Office, and Distinguished Engineer, DXC
Technology
About the authors
Contributors
1. “Blockchain: A $200 billion opportunity in insurance?,” Digital Insurance, June 26, 2018, https://www.dig-in.com/news/blockchain-a-200-billion-opportunity-in-insurance
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As the world’s leading independent, end-to-end IT services company, DXC Technology (NYSE: DXC) leads digital transformations for clients by modernizing and integrating their mainstream IT, and by deploying digital solutions at scale to produce better business outcomes. The company’s technology independence, global talent, and extensive partner network enable 6,000 private and public-sector clients in 70 countries to thrive on change. DXC is a recognized leader in corporate responsibility. For more information, visit dxc.technology and explore THRIVE, DXC’s digital destination for changemakers and innovators.