What's arguably the most successful and powerful growth strategyin insurance both personal and commercial?

It's clarity. And now, digital technology is making theclarification strategy more powerful and relevant than everbefore.

Driving some of the most disruptive changes in the insuranceindustry during the past few decades, clarity has been shown to bea winning strategy, in such examples as auto insurers publishingcompetitor rates for quick comparison and catastrophe bondscreating a more transparent market for reinsurance. The combinationof clear product offerings and purchasing experience is the winningstrategy.

Why? Insurance is the most common financial product customersbuy, yet few people fully understand the details of the productsthey are getting. However, with the advent of digital technology,access to big data and advances in real-time predictive analytics,the opportunities for insurers to clarify their product offeringsand purchase experience even more dramatically are exploding.

Consider tech-savvy Oscar, the money-losing health insurance start-up thatwent from 45,000 to 150,000 insured lives in the past year with anestimated $750 million in premium volume. After an initial strategythat led to losses, Oscar pivoted to a new approach attracting $400million in financing from conservative mutual fund Fidelity.Although by no means assured, Oscar's path to profitability has nowbecome plausible.

But it's Oscar's consumer appeal that is most remarkable.According to Prophet's BrandRelevance Index (BRI) based on input from 10,000 U.S. consumersabout what matters to them across 400 plus brands those familiarwith Oscar experienced it as being far better at addressingpreferences and needs than any of the major insurance incumbents. Afurther analysis of the results show that companies with higher BRIscores are far more likely to have greater revenue growth and muchhigher levels of profitability.

How did Oscar successfully clarify the process of buying healthinsurance? Take one look at the company's website and you'llunderstand the consumer appeal that's reflected in the BRIfindings.

Clarity strategies for commercial insurance

Commercial is starting to catch on. For example, a carrier isexploring ways to offer real-time risk assessment and pricing tovehicle fleet owners.

The insurance industry is clearly facing a grand tsunami ofdisruption brought on by the rising expectations of its ever moredigitally savvy brokers, agents and clients powered by massive dataand more sophisticated predictive modeling. But here's the rub:Incumbents across almost all industries are notoriously slow inresponding to disruptive change.

Related: Is insurers' shift to customer experience enough ofa tech transformation?

Let's be clear. To keep up, insurance incumbents must improvethe trust-based customer experience, develop a new marketingparadigm and create a digitally fluent organization.

Traditional strategies for creating a competitive customerexperience are no longer enough. The very best disruptors acrossthe board, such as Republic Wireless, have not only a clear customerexperience and product offerings, but also explain the rationalebehind them. And Republic has engaged with social networks toimprove service and enhance innovation. In the BRI data, Oscar alsosubstantially outperformed incumbents in terms of trust.Recognizing the increasing business risk of ignoring a laggingcustomer experience, one legacy insurer has begun using the NetPromoter Score customer loyalty index as a factor in determiningexecutive bonuses.

A new marketing paradigm is emerging as well. The BRI dataindicates that in terms of marketing Oscar and other newcomers aresignificantly outperforming incumbents. Consumers view Oscar'scontent as more interesting, are far more likely to engage with thecompany's social media, and recognize that content distribution issuperior via the website and apps. In other words, Oscar'smarketing efforts are more similar to a media company's such asComcast than those of a traditional insurer.

Comcast has strong distribution via the cable network andstreaming platforms, creates content with its NBC UniversalStudios, and is intensely focused on engagement with a relentlesscommitment to subscriber renewals and programming that earns loyalviewers.

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Insurance companies need to change their focus from prodcutsto customer experiences (Photo: Shutterstock)

Shifting transformation perspective

Some insurers are getting the message and finally attempting todevelop digital competency. According to the digital research firmAltimeterGroup, organizations undergo six stages of digitaltransformation. Insurers as a group tend to be in the early tomiddle stages of this process, having already formed dedicatedteams focused on digital or having advanced a step further bymaking significant financial investments in digital initiatives.But reaching the end stage requires convergence across functions tocreate coherent and integrated products and experiences whilebecoming continuously innovative and adaptive.

But the biggest obstacle to transformation is a shift inperspective. First, companies need to change their primary focusfrom products to customer experiences. Besides Oscar, Uber andGoogle are examples of creating better experiences in getting frompoint A to point B — Uber through its app experience and Googlewith self-driving vehicles — leaving transportation companies andautomotive manufacturers scrambling to catch up.

Secondly, as a result of this shift, is to approach thedevelopment of products and services differently. Going forward notonly do companies need to create new product offers, they must alsocreate the predictive algorithms needed for recommending relevantsolutions during the experience. Accomplishing the second steprequires a more formalized development process and putting in placenew competencies that most companies lack.

Digital is disrupting many industries from aircraft engines tobanking. Like other industries in which customers face complexdecisions, insurance is ripe for the transformational impact ofdigital. The promising news is that insurance, given its deepexperience working with data to create predictive models andclarification strategies, is far better prepared than most sectorsto embrace to opportunities of digital. The challenge is to embracemore relevant ways of developing the trust-based relationships thatare now proven to drive revenue and profits.

Related: Insurance, data analytics and internal operations:untapped opportunities

Tom Agan is a partner at Prophet, aglobal brand, digital and growth consultancy. Opinions expressedare his own.