We’ve all seen the headlines: The Future of Insurance is here. It's an Industry Transformation. The Tech Revolution. Digital Disruption. We've entered the Digital Age - nay, the Post Digital Age... The buzzwords may vary, but the message is always the same:
It’s time to go digital.
This inspirational call-to-action is as vague as it is imperative. Insurers want to future-proof their companies, but what does it actually mean to go digital in insurance?
Defining Digital Insurance
The ambiguity around digital insurance has left some insurers struggling to develop their digital road-maps. To accurately gauge the market, set goals, and build a competitive digital strategy, we need to find a common language.
While the lingo has yet to fully catch up with the technology, the following list contains some of the more widely used terms, along with their generally accepted definitions in the industry today.
12 Common Digital Insurance Terms
1) Characterized by electronic technology that uses, transmits, reads, or otherwise relates to data that is expressed or coded in the form of numerical digits - usually binary (a series of ones and zeros)
2) Characterized by computerized technology
3) Colloquially used to describe modern devices, processes, methods, and practices that prioritize the use of technology, computers, and/or automation
Digital usually refers to computerized technology, distinct from manual or mechanical processes.
2. Digital Engagement
1) The process of interacting with policyholders through digital means, with the goal of creating a positive, efficient, seamless customer experience
2) Interactions between insurers and consumers that take place through digital channels
3) Can also refer to a blended approach, using both digital and non-digital engagement channels
Digital engagement means customers have the opportunity to access, interact, and communicate with their insurance providers via web, social media, email, text, live chat, apps, and other digital channels.
3. Digital Insurance
1) An insurance business model that relies heavily upon digital technology for internal and customer-facing operations
2) An insurance-specific digital product or service
3) Characterized by insurance-related technology
Digital insurance refers to a business, process, or product that uses digital technology for most or all elements.
4. Digital Insurance Company
1) An insurance company that relies heavily upon digital technology for internal and customer-facing operations
2) See Digital Insurance
A digital insurance company takes a “digital-first” approach - strongly emphasizing digital technology - to business operations and customer interactions.
5. Digital Insurance Provider
1) See Digital Insurance Company
2) See Digital Insurer
3) A company that provides insurance-specific technology
A digital insurance provider is a company in which products, services, and processes rely heavily upon digital technology.
6. Digital Insurer
1) See Digital Insurance Company
2) See Digital Insurance Provider
3) An individual insurance professional or organization that relies heavily upon digital technology for internal and customer-facing operations
A digital insurer is a company – or an insurance professional within a digital insurance company - with products, services, and operations that rely heavily upon digital technology.
A combination of the words "insurance" and "technology," with several different applications:
1) Insurance-related technology
2) A company that provides digital solutions to the insurance industry
3) An insurance company that uses digital technology in most or all operations
4) The subcategory within the insurance industry that includes all insurtech companies and products
5) Alternative spellings include insuretech, InsureTech, and InsurTech
Insurtech is a blanket term that can refer to any or all insurance-related digital products, solutions, and companies.
8. Legacy Core Systems
1) Older, outdated computer systems and applications, likely adopted many years ago
2) Older computer systems and applications that are incompatible with modern digital technology
Legacy core systems are older network servers, databases, and other out-dated computer systems that are still integral to many important business operations. They're typically expensive, time-consuming, and labor-intensive to upgrade or replace, and pose compatibility problems with modern technology. For insurance companies, reliance upon these legacy core systems is often a major obstacle in the adoption of new digital solutions.
1) Characterized by being new, present-day, recent, relevant, or contemporary
2) In contrast with an older, outdated, or antiquated counterpart
3) A relative term, often lacking an exact date reference or time-frame
In the context of digital insurance, modern is used to distinguish companies, products, processes, and individuals that use current technology, as opposed to those that still rely upon older technology.
10. Modern Customer Experience
1) An efficient, user-friendly experience, from the perspective of the policyholder
2) Usually includes digital technology
The modern customer experience refers to insurer-insured interactions that are designed to be pleasant and efficient for the policyholders, usually involving digital communication channels and processes.
11. Next Generation of Policyholders
1) Younger consumers – those in their 20s and 30s - with a preference for digital interactions and solutions
2) Often refers to Millennial and Gen Z generations
3) Future customers who are almost old enough to require their own insurance policies
3) Can also include Baby Boomers whose current digital preferences mirror those of their younger counterparts
4) See Modern Customer Experience
The next generation of policyholders refers to younger customers, as well as future customers on the cusp of adulthood. These groups strongly prefer brands that incorporate digital solutions into their business operations.
12. Traditional Insurance Company
1) An insurance company that relies heavily on manual processes, older technology, or legacy systems
2) An insurance company that continues to use manual and analog processes, despite newer digital alternatives
Traditional insurance companies are those organizations that continue to use decades-old processes and technology. They either actively resist new technologies, or are simply unable to progress due to budgetary restrictions or other limitations.
As the more digitally inclined carriers outpace those that lag behind in technology adoption, the boundary separating digital and traditional insurance companies will become clearer. Luckily, there's still time to get on the right side of that line, and you don't need to make your entire digital shift all at once.
To position your company for success in the new market, start with a step-by-step strategy that progressively incorporates each new digital solution, one at a time. Determine which technologies will make the biggest impact on your company and policyholders, with minimal disruption to your current operations and budget. Make sure the solutions you choose can integrate with your current setup, with enough flexibility to adapt to the next step in your digital plan.
For ideas on how to start your digital journey, check out the blog, 3 Simple Steps All Insurers Can Take Right Now to Start Going Digital.