Becoming Truly Digital

Becoming truly digital is going to be a long, arduous, zigzag, stop-and-go journey for all companies involved with insurance commerce regardless of their role in the insurance ecosystem.

Insurance commerce becoming truly digital is decades away from fruition. Very few, if any, of the insurance ecosystem participants are going to succeed becoming truly digital within the next two plus decades. Truly digital insurance commerce, which encompasses all aspects of getting and keeping customers, mandates a digital integration of processes and information flows among and between all members of the insurance commerce ecosystem.

As all insurance industry professionals know full well: Insurance commerce involves activities well beyond sales to acquire customers. The insurance commerce ecosystem supporting these activities is a large and expanding portfolio of firms whose objectives are critical to keeping customers. These firms include, at a minimum, claim adjudication firms, auto body shops, property restoration firms, physical remediation firms, medical providers, outside legal firms, construction firms, police stations (providing accident reports), and fire stations (providing arson reports).

The reality is that sub-optimization of truly digital insurance commerce is, and will continue to be, a reality in the decades ahead. As examples, consider an insurance firm that becomes truly digital but continues to work with auto body shops or property restoration firms that provide hard copy reports to the insurance firm. The insurer must re-key in data into the claim administration system from the hard copy reports. Or consider that these third-party firms provide digital reports but the data must still be re-keyed into the claim administration system because of different data formats. Both are examples of sub-optimized digital solutions from whatever points of view you can name, including the claimant. Truly digital insurance commerce, not so much. (Note that we haven’t discussed the mandate to rationalize the multiplicity of core administration systems which most [all?] insurance carriers have currently.)

Truly Digital Insurance Firms and Insurance Commerce

Firms participating in the insurance commerce ecosystem need a description of what it means to become truly digital. Without descriptions of becoming truly digital, participants will flail around in the dark not knowing when to declare success.

Here are my descriptions of firms and insurance commerce being truly digital:

• A firm conducting or supporting every aspect of insurance commerce is truly digital if it consists of professionals using only digital artifacts augmented with the absolute minimal number of physical artifacts (and then only those physical artifacts required to generate digital artifacts) to create, access, store, consume, and manage data flows and processes within the firm, as well as among and between firms in the insurance ecosystem supporting the full spectrum of getting and keeping insurance customers.
• Insurance commerce is truly digital if it consists of firms participating in the insurance ecosystem conducting and supporting every aspect of insurance commerce by providing their professionals with only digital artifacts augmented with the absolute minimal number of physical artifacts (and then only those physical artifacts required to generate digital artifacts) required to create, access, store, consume, and manage data flows and processes among and between the firms in the insurance ecosystem supporting the full spectrum of getting and keeping insurance customers.

The content in this article is influenced by and excerpted from Rabkin’s recently published book, titled “From Stone Tablets to Satellites: The Continued Intimate but Awkward Relationship Between the Insurance Industry and Technology.” The book was published on June 28, 2022 by Wells Media Group.[/sidebar]

My descriptions are just that: mine. I recommend that you create your own descriptions of what being truly digital means to your company — your end-state that you want your company to achieve. Hopefully, it’s not just a package of sub-optimized solutions but instead a comprehensive, cohesive description of what it means to be truly digital to conduct insurance commerce with any of the members of your insurance industry ecosystem.

Conducting Insurance Commerce

The phrase “conducting insurance commerce” encompasses not just getting-and-keeping customers but also the plethora of initiatives to, at a minimum:

• Operate the insurance firm on a day-to-day basis inclusive of regulatory compliance and reporting, and conduct financial activities with reinsurers.
• Onboard and train employees, producers and all other insurance professionals regardless of whether they work in the home office, field office, agency or broker firm, or third-party claim firms.
• Strengthen employee, producer, customer, claimant and ecosystem firm participant satisfaction.
• Communicate and collaborate with colleagues throughout the insurance firm as well as with third-party professionals participating in the insurance ecosystem the firm conducts business.
• Collect, create, store, access, analyze and otherwise manage the data from internal and external information flows coming into and through the firm to enable, at a minimum, product development, producer productivity, target marketing, identifying new markets and supporting partnerships.

Physical and Digital Artifacts

I use the terms “physical artifacts” and “digital artifacts” in my descriptions of the firms in the insurance ecosystem’s pursuit to becoming truly digital. Generally, physical artifacts are tangible objects that you can touch while digital artifacts are intangible objects that you cannot touch.

In the visual below, I illustrate a framework encompassing four phases of a firm’s mixture of physical and digital artifacts.

The framework of four phases is a gradient describing firms who use some mixture of physical and/or digital artifacts to conduct all activities of insurance commerce.

Phase 1: Firms in this phase use all physical artifacts such as fax machines, interoffice envelopes, typewriters (aren’t they all in the Smithsonian now?), dot matrix and/or laser-jet (or other) printers, paper, pencils, and pens to conduct or support insurance commerce.

Phase 2: Firms in this phase use more physical artifacts than digital artifacts to conduct or support insurance commerce.

Phase 3: Firms in this phase use more digital artifacts than physical artifacts to conduct or support insurance commerce.

Phase 4: Firms in this phase use all digital artifacts (excluding the minimal number of physical artifacts required to generate digital artifacts) such as systems of record inclusive of broker management systems, systems of engagement, accounting solutions, office productivity software, download/upload solutions, rating solutions, imaging solutions, video solutions, and communication and collaboration solutions to conduct or support insurance commerce.

I believe that most firms in the insurance ecosystem are operating with a physical artifact/digital artifact mixture somewhere between Phase 2 and Phase 3.

I also believe that most current personal and commercial lines property/casualty insurance customers are operating in that same location between Phase 2 and Phase 3.

Steps to Becoming Truly Digital

There are many steps a firm in the insurance ecosystem needs to pursue to become truly digital.

Here are my suggestions for five of those steps, and they encompass determining:

• Which of your firm’s insurance business objectives are you going to support as completely digital processes and concomitant activities?
• What are the minimal physical artifacts your firm requires to support/enable the digital artifacts that support the chosen insurance business objectives?
• Which of your firm’s partners’ insurance business objectives do you know are currently or assume are planned to be supported by digital artifacts?
• Which of your clients’ activities — from their perspective rather than your perspective — want to conduct insurance commerce using digital artifacts?
• Which of your firms’ insurance ecosystem participants are currently or are planned to be supported by all digital artifacts?

Repeating myself or perhaps clarifying my position — every activity of conducting insurance commerce must be truly digital.

Bringing on customers digitally, adjudicating claims digitally, communicating with producers digitally are steps along the journey of a firm in the insurance ecosystem becoming truly digital. But each of these steps, even taken together, will not make any firm in the insurance ecosystem, or insurance commerce itself, become truly digital.