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

Since its founding eight years ago by Silicon Valley software engineers, the Climate Corporation, based in San Francisco, has upended the U.S. crop insurance market, reducing farmers' financial risks by crossing agriculture with big data analytics.

The company collects information on weather patterns, climate trends and soil characteristics, then crunches the data down to a farmer's field in, say, Iowa. Using these insights, it offers policies against damage from weather events, and farmers can directly interact with the company through its website. In contrast to government schemes, payouts are triggered automatically without paperwork when the company's data shows that a weather event has caused damage.

With its applied big-data expertise, convenient interface for customers, innovative claims process and proven track record, the Climate Corporation would have seemed an attractive acquisition for a major insurance company. In fact, its model had been presented to insurers by the Anthemis Group, an early funder and adviser that specializes in financial services startups. Yet late last year, Monsanto acquired the Climate Corporation for $930 million.

This missed opportunity is emblematic of the digital-progress gap between insurance and many other industries such as banking, telecommunications and retailing. To be sure a few insurers, such as Progressive, Allianz, Direct Line and Axa, are starting to realize the promise of the digital transformation. Some are building out digital channels for faster, easier transactions and communications, such as mobile applications for auto and health claims processing. Others are reducing costs, error rates and rework by shifting from repeated manual data entry to electronic straight-through processing.

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