This article originally appeared in Best's Review (subscription required).

The digital disruption that has transformed sector after sector, from publishing to travel, has come to insurance. Upstart competitors have gained a foothold among technologically savvy customers seeking alternative, lower-cost models for simple insurance products. And Web giants such as Google are testing the waters.

Meanwhile, insurers across the world are rolling out initiatives, ranging from in-vehicle telematics to better price driver risk, to brand-building on social media websites, to mobile applications that help agents create scenarios for prospective customers. Yet in most cases, these consist of unconnected initiatives layered onto a legacy IT system and a traditional mind-set.

Success in the digital arena will require a comprehensive approach that engages customers seamlessly across all channels—both online and offline—and on their own terms. The balance of power has been shifting to customers as a result of the rapid adoption of smart mobile devices, the ubiquity of broadband and the proliferation of social media and aggregator websites.

Customers expect to use the channel convenient to the moment, whether that's a website, call center or a video chat with a broker (see Figure 1). Besides suiting customer priorities, digital technologies offer potential efficiency gains at a time when many insurance lines have come under severe cost pressure.

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