In an age when a handheld device can conjure up almost any product or service known to humanity, some would argue that the brick-and-mortar model of traditional, relationship-based insurance has had its day. And yet, industry watchers report, the insurance sector has been slow to respond to the cultural and technological pressures of “the digital promise.”

To find out why this is the case, and to reassure carriers hesitant to dive into the disruptive turbulence of small screens and big data, I recently met with four insurance experts who command an eclectic range of perspectives:

• Mark Breading, Partner, Strategy Meets Action
• Kelly King, CFO and Director, The WaterStreet Co.
• Parthas Srinivasa, SVP and Group CIO, Tokio Marine HCC Inc.
• Hugh Terry, Founder, The Digital Insurer

We began by agreeing on a definition of “digital promise.” Those who favor a wholesale migration to data-based activity contend that it means increased sales, improved efficiency, lower costs and more satisfied customers are just over the horizon. Insurers, they say, have no choice but to deploy analytics, dashboards, secure portals, mobile apps, predictive modeling, social media and other tools in order to head off encroachment by technology-driven, customer-oriented outsiders on the scale of Amazon.com or Walmart.

At stake, said Hugh Terry: nothing short of the hearts and minds of our customers—and the survival of thousands of businesses, large and small.

“The biggest obstacles that I see,” he noted, “are human and organizational, especially in small to medium-size companies. What will it take to make the transition complete throughout the industry? I’d say stronger leadership from management; a change in mindset to more customer-centric models; more agility in business development; and, finally, a higher tolerance for risk, balanced by the patience it takes to try something new and stick with it until the results are clear.

“After following the progress of so many other industries over the past several years, I think we can be confident that what lies ahead will be deeper engagement with customers and a clearer understanding of what they really want; better, more consistent customer experiences; and a superior ability to scale, with much lower unit costs,” Terry added.

So, aren’t most insurers eager to get on board? Research shows that many are. According to the consulting firm Strategy Meets Action, 61 percent of North American insurers have a strategic initiative to become digital insurers, while 82 percent reported launching initiatives or making investments in enterprise data and analytics in 2016. And, in the same sample, 74 percent said they were investing in core system modernization or replacement, while 63 percent said they were devoting resources to innovation and R&D activities.

Still, from the perspective of a smaller business owner of a certain age, the prospect of systemic change is daunting. What suggestions, I asked our panel, would you offer a decision-maker still teetering on the brink of the digital divide? The experts came back with seven big ideas.

1. Bow to the Inevitable

“You have to accept the fact that universal disruption is already here,” said Terry. “The insurance industry is not a special case, and the time for denial is long past.”

Mark Breading agreed: “Becoming a digital insurer is not optional. In a conservative business it can be tempting to hold back and say, ‘I’ll be a follower. I’ll just watch how the industry goes, and maybe a few years from now I’ll need to start down that path.’ But if you’re not already on the path, you’re going to be left behind. The industry has been trying to automate and digitize here and there for a long time, but now we’re talking about moving to a whole new level—not just in terms of individual areas or departments but across the whole enterprise.”

2. Don’t Mistake Digitalization for an IT Problem

According to Partha Srinivasa, “Going digital is not an IT issue, it’s a fundamental business and cultural issue. The business leader (CEO or president) needs to take ownership and drive it at the strategic level.”

Breading noted, “Of course, you’ll need buy-in from your CIO, but it has to happen in the context of a company-wide culture of innovation. There are so many ways you can foster that culture: innovation labs, incentives, tools for collaboration, outsourcing—they all have potential. But the key is the clear signal from the top saying, ‘From now on, we are going to be thinking differently. We have to move fast. We have to innovate. And, in support of all that, here specifically is what we expect from every employee.”

3. Act Now

“The speed at which the digital world actually kills companies is extreme,” said Srinivasa. “If you have a lot of catching up to do, the pressure is on. You don’t have much time. Remember cases like Borders vs. Amazon, Blockbuster vs. Netflix, or Kodak vs. Apple. Borders, Blockbuster and Kodak failed to embrace the evolution of the digital world. Almost overnight the old models went out of business, and the growth of the upstarts has been enormous. Insurance has a long history, but it’s not immune to the same forces. Now you’re competing in a world of unpredictable disruption. If you’re not equipped for it, you could be gone—if not today, then someday soon.”

4. Nail Down the Basics First

“Start with a focus on the essentials. Treat customers the way they expect to be treated when they deal with any other supplier,” advised Kelly King. “You can begin to make up for lost time by introducing mobile apps that support quick quotes and self-reported claims. After that, the table stakes include multicapable customer service after the bind, with 24/7 chat and call-center dialogue; email welcomes and easy-to-understand customer instructions; and robust self-service via a secure portal. You’ll need a speedy, flexible quote engine; paperless underwriting; third-party integration; straight-through issuance and payment processing; and some basic data analytics to support your next wave of digitalization.”

5. Take Time to Develop a Long-Term Strategy

Once you’ve closed the most urgent gaps in your offerings, said Srinivasa, channel your energy into crafting a vision. “You’re not going digital for its own sake but rather because it fits your business purpose. Your digital initiatives must fit your strategic view of how you want to grow, where you want to take the business and what you envision as the shape of the customer experience. Conditions are going to keep changing at an accelerating pace, but digitalization in some form will always be a dominant factor. You want to steer your enterprise, not allow it to be swept along by emerging disruptions.”

6. Take It One Step at a Time

“Your entry into digital doesn’t have to be a multimillion-dollar project,” said Srinivasa. “Adopt a phased approach, not an attempt to completely revamp everything. Very often, people who try to institute huge transformational programs find that it’s impossible to make a business case at that scale. Instead, you can launch a series of more modest projects that contribute to broader, more flexible objectives. Along the way, keep in mind that, as long as you have a consensus, you don’t have to convince every single one of your stakeholders. Just keep explaining the value of what you’re proposing and maintain a scorecard. By collecting and sharing metrics of success, you can gain buy-in, little by little.”

7. Look Outside the Industry

“In a disruptive climate, preemptively disrupting your own business may be your best bet,” said Terry. “To do that, you’ll want to look at what other insurance companies are doing, watch what’s going on in other industries and even attract new people from outside the industry.

“You need innovative thinkers, people who look at a mobile device and say, ‘What can we put on this thing that will attract a particular type of customer?’ If you’re recruiting, focus on the millennial marketplace, where the new customers, new products, new services and new ideas come together. Try to find people with technology backgrounds—especially mobile—and support them with inside people who know insurance.”

While some industry veterans might question the appeal of an insurance career to a Gen X’er, Breading disagreed: “With the emergence of big data and important roles for data scientists, it’s possible that insurance will begin to look more exciting, because insurers have massive amounts of structured and unstructured data and big, challenging problems to solve.”

Of course, adding millennials to your team can also facilitate your shift to a millennial customer base—one from which more and more of today’s decision-makers are drawn and one that makes up a solid 25 percent of the U.S. population, with 21 percent of its discretionary power. These digital citizens may not appreciate the modes and methods of traditional insurance, but they still buy property and live lives and acquire possessions, all of which need to be insured. From now on, the trick is going to be putting your business out there, where these customers spend their energy, their time and their money.