Insurance companies have a clear, logical objective in pursuingdigital transformation: improving the customer experience.

Carriers are not only competing with others in the industry toprovide a differentiated customer experience — they arecompeting with retail providers and tech giants as well. Manyunderstand that in order to remain competitive, they need toconnect with consumers in a more meaningful way — when,where and how consumers want to interact.

In research commissioned by Accenture Interactive and conductedby Forrester Consulting, based on interviews with more than 100senior insurance leaders, nearly one in four (24%) respondents saidthat "improving the experience of customers" was considered the No.1 priority. 

Insurers understand that digital transformation is at the heartof the customer experience. Customers interact with their insurersthrough a wide range of channels, and often through more than onechannel in the same customer journey. As a result, many insurersare focused on improving cross-channel customer experiences (63%)and improving the online customer experience (63%). Enhancing callcenter interactions (47%), mobile (41%) and social media (40%)tools are also areas of interest to improve customerexperience. 

Insurers still have a lot of work to do before achieving digitaltransformation. At this stage, many carriers are still assessingthe digital experience and putting digital governance in place.Nearly two-thirds (62%) of respondents plan to establish newdigital governance and transformation management in the comingyear, and more than half (53%) plan to assess the impact of digitalas it relates to the customer experience. 

Related: Evolve or perish: How CIOs can meet challenges dueto digital transformation

While insurers are making strides in digital, there are somefundamental areas that need that need attention. For example,confusion remains over who should "own" digital: Ownership iscurrently primarily divided among the CEO (48%), the CIO (27%), andthe chief digital officer (8%), with no clear consensus as to whoactually should own digital. 

Insurers lack a complete understanding of digital, and, at bestthey believe that they are meeting expectations for the digitalexperience. While 75% of insurers surveyed said their digitalcustomer experiences meet customers' expectations, only 9% feelthat they are exceeding those expectations, and only 14% areconfident that they have mastered digital to a point where itdifferentiates them from their competitors.

Another challenge for insures is that metrics are a relativelylow priority, ranking last among critical considerations inenabling a digital business. In order to sustain continuedinvestment in digital transformation, insurers must be able tomeasure and prove the value of their strategies. 

Many insurers have enlisted third-party solution providers andpartners to help them advance at least some components of theirdigital strategy. Our study found, however, that as digitaltransformation pervades all areas of the business, insurers arelooking at these providers as strategic partners rather than asimplementers of point solutions. Nearly nine out of 10 insurerssurveyed (88%) use a third-party solution provider for at least onecomponent of their digital transformation, including such processesas web/user experience design, implementation of front-end andback-end applications, and digital strategy, but only 28% reportedbeing "very satisfied" with their digital vendors. 

Related: 4 keys to redefining your digital businessapproach

(Photo: Shutterstock)

Digital transformation is a complex process and there isconsiderable uncertainty among insurance leaders as to how to moveforward. Insurers need to take iterative steps to implement theculture, processes and technology needed for digitaltransformations in order for the business to compete in the modernmarketplace.

Guiding principles include:

1.  Advocate digitaltransformation and the customer experience at the executivelevel. Digital transformation is about more thandigital tools and channels; it is the enterprise-widereorganization of the firm and its people, processes, technology,data, offerings and services for the digital era. It can onlysucceed as a company-wide initiative, with strong support andeffective communication from company leaders. Cultural change andeducation are highlights — not afterthoughts — ina good digital transformation plan. 

2. Execute change within thecontext of an end vision. A clear vision of theend state is essential to making sure that everyone in theorganization is moving in the same direction. Even if that visionis a moving target, leaders always need to have goals in mind toensure that they are not making changes in isolation. 

3. Be willing to take risksand learn from mistakes. As digital touchpointscontinue to evolve, companies will need to take risks and developprocesses to keep up. In a digitally mature company, not everychange should require traditional approvals; new functionalitiesshould be tried, evaluated, and then tried again with neededmodifications.  Some insurers have established digitalinnovation teams that are given free rein to explore new ways ofdelighting the customer. 

 4. Createor join ecosystems with partners whose capabilities complement yourown. Even the most digitally mature insurers willidentify gaps in their capabilities as technology continues toevolve. As carriers move from a passive to an active role in theircustomers' lives, they will need to develop fluid offerings thataddress a broader range of needs and wants. Insurers can increasetheir agility by bundling services with partners that enjoycredibility with customers, interact more frequently, and are moreadept at providing engaging customer experiences. 

Our research indicates a high degree of awareness among insurersas to the importance of the customer experience and the need fordigital transformation to meet changing customerexpectations.  To attract, win and retain customers inthis environment, insurers will need to integrate theirorganizational structure, company culture, business technology andpartner ecosystem and align it in the service of customers.Third-party providers can help, but only the formation of a truedigital ecosystem will enable insurers to play a more active andengaged role in their customers' lives. 

John Cusano is Accenture's senior managing director forinsurance.

Related: 6 steps to going digital successfully for insurancecarriers

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