In my first blog, I argued that in order to deliver the type of experience that today’s customers want, insurers will have to change radically the way they do things. Becoming a digital insurer, in other words, requires transformation.

To deepen our understanding of the kind of transformation needed, I thought it would be useful to explore some of the avenues that leading companies, among them insurers, are exploring to deliver the type of experience Generation D wants.

One could argue that everything begins with analytics. Business is, after all, about customers, and the digital world generates huge amounts of data about them. It’s not surprising then that analyzing that data is a major focus area in business today. It’s all about making customer segmentation much more rigorous, and linking it to actual or predicted behavior rather than static demographic categories. It’s about moving from establishing what to offer to identifying who to focus on.

Accenture is using artificial intelligence to help clients understand which of their customers to focus on based on their profitability, revenue potential and cost to serve, as well as data based on geographical and historical contexts. Once one understands who the targeted customers are and how much they are worth, it becomes much easier to decide on how much to invest in them.

Aside from big data and the analytics to make sense of it, another important area of focus for insurers should be mobility and social media. I’m talking about these two in the same breath because one of the defining trends of the current business environment is the take-up of mobile devices like smartphones and tablets. Consumers thus have the tools to maintain contact with peers and service providers wherever they are, and that in turn has driven more interaction online. Insurers need to find ways of understanding what is being said on these channels, responding appropriately and then using that information to refine the experience they deliver.

An Accenture study on customer-driven innovation indicates that 80 percent of customers is ready to change insurance providers to gain better service, and that 82 percent is willing to share personal data with insurance companies make sure they get it. (A reality check: on average, most insurance companies only interact with their customers twice a year, so creating a truly interactive relationship that wins the customer’s heart will require a radical rethink of the entire business model.)
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Enabling all of this will require massive, scalable amounts of computing power—something that is making cloud computing an increasingly attractive model. By effectively teaming with large and sophisticated cloud providers, insurers can gain the technological flexibility and power they will need without huge capital investment and, perhaps even more compelling, without the need to make decisions about technology. Paradoxically, the more important technology becomes, the more cogent are the arguments to turn the nuts and bolts over to a specialist, just as we long ago did with electricity and water!

Next time, a closer look at some of the features of the emerging competitive landscape.

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