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

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

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

Insurers lack a complete understanding of digital, and, at best they believe that they are meeting expectations for the digital experience. While 75% of insurers surveyed said their digital customer experiences meet customers' expectations, only 9% feel that they are exceeding those expectations, and only 14% are confident that they have mastered digital to a point where it differentiates them from their competitors.

Another challenge for insures is that metrics are a relatively low priority, ranking last among critical considerations in enabling a digital business. In order to sustain continued investment in digital transformation, insurers must be able to measure and prove the value of their strategies. 

Many insurers have enlisted third-party solution providers and partners to help them advance at least some components of their digital strategy. Our study found, however, that as digital transformation pervades all areas of the business, insurers are looking at these providers as strategic partners rather than as implementers of point solutions. Nearly nine out of 10 insurers surveyed (88%) use a third-party solution provider for at least one component of their digital transformation, including such processes as web/user experience design, implementation of front-end and back-end applications, and digital strategy, but only 28% reported being "very satisfied" with their digital vendors. 

Related: 4 keys to redefining your digital business approach

(Photo: Shutterstock)

Digital transformation is a complex process and there is considerable uncertainty among insurance leaders as to how to move forward. Insurers need to take iterative steps to implement the culture, processes and technology needed for digital transformations in order for the business to compete in the modern marketplace.

Guiding principles include:

1.  Advocate digital transformation and the customer experience at the executive level. Digital transformation is about more than digital tools and channels; it is the enterprise-wide reorganization of the firm and its people, processes, technology, data, offerings and services for the digital era. It can only succeed as a company-wide initiative, with strong support and effective communication from company leaders. Cultural change and education are highlights — not afterthoughts — in a good digital transformation plan. 

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

3. Be willing to take risks and learn from mistakes. As digital touchpoints continue to evolve, companies will need to take risks and develop processes to keep up. In a digitally mature company, not every change should require traditional approvals; new functionalities should be tried, evaluated, and then tried again with needed modifications.  Some insurers have established digital innovation teams that are given free rein to explore new ways of delighting the customer. 

 4. Create or join ecosystems with partners whose capabilities complement your own. Even the most digitally mature insurers will identify gaps in their capabilities as technology continues to evolve. As carriers move from a passive to an active role in their customers' lives, they will need to develop fluid offerings that address a broader range of needs and wants. Insurers can increase their agility by bundling services with partners that enjoy credibility with customers, interact more frequently, and are more adept at providing engaging customer experiences. 

Our research indicates a high degree of awareness among insurers as to the importance of the customer experience and the need for digital transformation to meet changing customer expectations.  To attract, win and retain customers in this environment, insurers will need to integrate their organizational structure, company culture, business technology and partner ecosystem and align it in the service of customers. Third-party providers can help, but only the formation of a true digital ecosystem will enable insurers to play a more active and engaged role in their customers' lives. 

John Cusano is Accenture's senior managing director for insurance.

Related: 6 steps to going digital successfully for insurance carriers

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