reimagine insurance by engaging customers in the …...reimagine insurance by engaging customers in...

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

www.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

https://www.dig-in.com/news/blockchain-a-200-billion-opportunity-in-insurance

© Copyright 2019 DXC Technology Companywww.dxc.technology

dxc.technology/digitaldirections

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.

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