Why is digital important to insurance? Before addressing this question, we must define "digital." It means, rethinking the relationships between information, people, and processes given new and evolving capabilities. It means, designing user experiences and workflows across channels, leveraging existing and new data sources and analytics, along with the unique capabilities of mobile to streamline processes and improved experiences. Who wants digital? Gen Xers, millennials, and Gen Zers — and perhaps some baby boomers as well. The younger generational cohorts have come to expect digital interactions for all aspects of their lives; this includes paying bills, dating, selecting cars, managing their investments, picking jobs, being involved in politics, and staying in touch with friends. Social media has had a huge impact on how we interact with one another. Insurers understand this shift toward digital. They do not want to become irrelevant, especially since both the buyers of their products and the agents selling them are increasingly coming from these younger generational cohorts. Investment dollars are being redirected to drive enhancement of digital capabilities. The most common projects include expanding portal capabilities for self-service, extending reach to alternative platforms such as voice and mobile, and adding on collaborative and omni-channel capabilities. Novarica estimates that approximately 20% of insurers' 2019 IT budgets are devoted to digital strategies and capabilities. Digital investment is often difficult to quantify precisely, since core system enhancements and analytics investments are frequently required (and necessary) in order to prioritize, enable, and manage digital capabilities. More than 25% of insurers are planning replacements or major enhancements to their portal, CCM/ECM, and workflow systems in order to support their digital strategies. The slideshow above illustrates the capabilities included in these initiatives.

The road ahead

Digital investments are typically focused on improving portal capabilities, implementing content management systems, and improving workflows. Agent and consumer portals have been available for many years, but they continue to be an area of investment for carriers. Insurers are continuing the expansion of self-service capabilities, implementation of responsive design concepts, as well as a refresh of the Web design to improve user experience. Many carriers have A/B testing in place to validate changes and make improvements on a continual basis. Outside expertise is often engaged to obtain a fresh look at Web pages. Content must now be managed across print, email, Web pages and social media. It also must be updated more frequently. Carriers are making a significant investment to place content management in the hands of marketing or communication departments and to remove any IT bottlenecks for content publication. Content is also being delivered based on consumer preferences and is being individualized to target or customer situations. Digital capabilities have changed dramatically over the last decade and continue to evolve rapidly. Insurers should continue to re-imagine and re-conceptualize their service capabilities based on agent and consumer preferences and the benefits that digitization promises. With the workforce slated to be 50% Millennial and Gen Z in 2020 and more than 95 % by 2030, the call for digital capabilities will only increase. Insurance carriers must digitize to stay relevant and to align their cost structures to the industry. IASA Member Mitch Wein ([email protected]) is senior vice president of Research and Consulting at Novarica. This piece published first in the Spring 2019 issue of "The Interpreter," which is produced by IASA, and is reproduced here with permission from IASA, a nonprofit, education association that strives to enhance the knowledge of insurance professionals, and participants from similar organizations closely allied with the insurance industry by facilitating the exchange of ideas and information. IASA 2019 is June 2-5 at the Phoenix Convention Center. See also:

• Will insurance claims go digital in 2019?
• Redesigning the digital customer experience
• Looking at the insurance world through digital transformation glasses