Introduction
If you want to digitally transform your company or your insurance, you can reduce the risk of being overtaken in the market by many competitors. You should therefore consider using the change process in the insurance industry as a great opportunity for yourselves in the near future. One of the most important terms in this context is „self-disruption". Many insurance companies and businesses have not yet understood what disruption actually means.
With this saying, Executive Vice President Christoph Keese from Axel Springer SE provoked and challenged many months ago at the Tech Open Air in Berlin. Many manufacturers from the automotive industry had already opened up their systems to Apple and Google back then. This had the result that some internet giants could easily position themselves between the car manufacturers and customers. But what exactly does disruption mean now? Translated from English, the term means to interrupt or tear apart. There are often misunderstandings regarding the meaning of disruption.
The principle of disruption originates from Clayton M. Christensen of Harvard Business School.
What are the benefits of Watson and Alexa?
The Watson system already made headlines in 2011 on the popular US game show Jeopardy. In this show, Watson beat two super-brains. Since then, the system has been further revolutionised and used for the digital products market. The technology also opened up entirely new possibilities for the automobile insurance industry. The system can analyse and assign several billion data points within seconds. Additionally, the computer is capable of learning more and more. For the insurance industry, this means that a lot of time and work can be saved. The application possibilities of the system are limitless.
Besides the insurance industry, it can also be very helpful in research, expert support, development and teaching, and in the optimisation of products, services and processes. Watson is no longer alone. A smaller version has come onto the market, which can be seen as the system's little sister. Primarily, however, Alexa is still used in the private sector. The use of Alexa is intended not only to be fun but also useful.
Many experts assume that a
Customer expectations are constantly rising. Additionally, disruptive technologies and increasing regulation are putting car insurers under pressure. If an insurer wants to remain successful in the market, it must invest in the use of new technologies such as Watson and Alexa. All sales and communication channels must be digitally transformed. Banks began by letting FinTech drive digitalisation. Today, this system is continuing with InsurTech for the general insurance sector. But what are the benefits for insurers and their customers?
A particular characteristic of insurance transformation is the optimisation, digitisation or centralisation of recurring and redundant processes. Chatbots, equipped with artificial intelligence, are already in use in many industries. They are capable of conducting genuine informational conversations with customers via text input in a chat. This allows hundreds of thousands of insurance conversations per year to be taken over by the system through insurance transformation.
These conversations used to take place in call centres or with insurance advisors. Due to digitalisation in the insurance industry, Siri, Alexa or Cortana are now primarily used. With the help of this artificial intelligence, it is already possible today to capture most complex issues in a dialogue process. You should therefore operate your insurance with a chatbot as quickly as possible. Many customer questions can thus be handled directly day and night.
New customer incentives through a digitalisation of the insurance industry
Many insurance customers also use apps and channels in their private lives to make everyday tasks easier. They also regularly inform themselves about the latest offers on the market through these. In terms of transparency and security, customer expectations are constantly growing as a result.
A lengthy process, which often results from a consultation or involves opaque bureaucratic procedures, doesn't necessarily align with customer expectations. If you want to retain your customers for your car insurance, you'll need attractive incentives.
Prevention or claims-free periods should always be particularly rewarded. Develop your own insurance models in which you motivate your policyholders through incentives. In addition, you should also motivate your behaviour, entirely for the benefit of the customer or policyholder.
For example, this could take the form of a vehicle cleaning service or a voucher for a tyre change. You may also come up with entirely new ideas that will put your insurance company ahead of your competitors in the market. You can only win if you motivate your policyholders to cooperate, thereby building trust and strengthening a sense of togetherness.
Digitalisation of the insurance sector for a large customer base
You often deal with a lot of customer data in your insurance work on a daily basis. By digitalising the insurance sector, you can utilise a 360° view of your policyholders in the future. For this, you should use social profiling. This allows you to quickly and easily use interesting data from the different social networks of your insurers.
This will give you insight into the actions, characteristics, and brand affiliations of your insurers. This insight will be gained not only for your existing policyholders but also for prospective clients. The information will particularly relate to who your customer is and which brands they use frequently. Additionally, you will learn about an insurer's qualifications and the industry they work in.
Which digital profiles are used and with which providers is the policyholder already registered?
This gives you the opportunity to get a precise picture of every insurer. Are they a father, landlord, patient, car enthusiast, motorist, or home builder?
Social profiling allows you to better utilise and plan all upselling or cross-selling potentials. At the same time, it offers you the chance to retain your insurers more easily through perfectly tailored offers.
Digital workplaces are not location-bound
Another advantage of the digitalisation of the insurance sector is that jobs do not require a specific location. Through mobile devices, flexible access to business applications is easily made possible at any time, offline, mobile, and entirely independent of time, location, device, or operating system.
Using the Digital Workspace, your insurance company and its employees can also use a work environment that is very close to the usage habits of digital natives. This has the advantage for you that communication and collaboration become much more agile, productive, and flexible.
Digital workspaces are still very common in the insurance industry, particularly within InsurTech startups. Administrative, communication, and sales processes become much more efficient and flexible when you utilise Working 4.0. You will gain a significant advantage by using the new applications, as they are very easy to operate and allow you to access relevant information contextually at all times. This is enabled by various technologies such as Business Intelligence, Data Quality Tools, and Predictive Analytics.
Improve industry reputation
Many insurance companies are still considered very conservative today, as their business model has remained the same for many years. The insurance sector is changing rapidly due to digitalisation in the industry and the low interest rate policy of the European Central Bank.
The term disruption in the insurance industry is currently on everyone's lips. Through groundbreaking innovations and radically changed conditions, the system is calling into question much that was previously taken for granted, even in car insurance. The developments also affect insurers. After all, the digitalisation of the insurance industry has not really been implemented yet. This looked very different in other industries in recent years. Many companies have taken advantage of digitalisation to advance themselves in the market and retain customers.
For example, if you look at companies like Amazon, it quickly becomes clear that they save themselves a lot of work through data analytics systems and simplify some processes. Data analysis and digital processes are modern and appeal primarily to young customers and policyholders. The younger target group doesn't want an insurance advisor sitting next to them on the sofa. They also don't want to be fed information that is unnecessary for them. Rather, they wish for a way to get a concise, easy-to-understand answer to specific questions.
Changes to insurance, order processes, or other bureaucratic procedures should therefore also be possible digitally. Through the digitalisation of the insurance industry, it is possible that all these wishes can be fulfilled. Since many start-up companies in the insurance industry cannot survive in the market for long, it is up to the renowned insurance companies in particular to reinvent themselves. They must become more modern and adapt to the behaviour of insurers. Attitudes towards insurers must fundamentally change.
The target group of 20- to 30-year-olds lacked loyalty values. Therefore, they do not find it difficult to switch insurance providers if they believe it will offer them benefits. It is therefore all the more important to strengthen loyalty to individual target groups.
Taking out insurance through Alexa
Many insurance companies are using the Alexa system to make it easier for customers to take out insurance. With Amazon Echo, a practical system is available to make the processing of insurance more interesting. In today's world, you can speak to many experts from the startup scene about current trends and you will receive the answer that Insure-Tech is fully on-trend.
This means that the traditional insurance business is managed. The new technology allows more and more target groups to use technology like Alexa to conduct business or take out insurance at high speed over the internet or via their smartphone.
Many startup insurers are trying to take advantage of such opportunities and are consequently reinventing themselves entirely. However, established insurers have also become aware of the possibility and are beginning to rethink their existing systems.
One of the insurance companies using Amazon's digital voice assistant is Deutsche Familienversicherung. The Chairman of the Board, Dr. Stefan M. Knoll, believes it is important for his company to be an innovation leader. It was the first insurance company in Germany to offer a fully digital application via Amazon Echo. According to statistics, well over 28 million people were already using a digital voice assistant on their smartphone in April 2016.
Around 59% of all smartphone users were already controlling their smartphones via voice commands a year ago. Today, the number of voice control users is significantly higher. Older people also use the system, as they often find it very difficult to press the small buttons on their smartphones. Voice input is much easier and faster than typing. Voice assistants such as Alexa or Watson are currently finding their way into more and more living rooms. They have become an important part of everyday life.
Amazon Echo offers insurance companies and policyholders the advantage of going beyond mere policy issuance. They also include contract administration and ongoing maintenance.
How can insurers meet their digital challenge?
Most insurance companies already have a significant online presence, which is gratefully received by customers. This is because insured individuals also use the internet daily to communicate or handle their business. Many insured people are particularly active on social networks. Large insurance companies are also investing in apps to simplify communication and interaction with their policyholders.
Field service teams have long been equipped with mobile devices to enable them to work more flexibly and on the go. Technologies such as telematics are also gaining importance in the European market. They serve to realign prices and products. However, many policyholders still lack the welcome initiative of a cross-departmental and cross-functional approach. These systems are not based on current customer analyses and tend to be reactive.
Another drawback is that they very rarely transcend the traditional boundaries between individual communication and sales channels. But that is precisely the point. This is essential if we are to take account of changing customer behaviour in the digital age. A Bain study conducted with 2,500 policyholders in Germany revealed that around 60 per cent of respondents would like to use internet-based channels in future for communicating and interacting with their insurance company. In customer segments where great importance is attached to good customer service, the number of interested parties and policyholders is growing.
Many customers expect a comprehensive offering in the digital sector from their provider. A digitisation of the insurance industry is a must-have for customers. They want to be able to use it for advice, for concluding a contract, or in the event of a claim. The Brain study further revealed that customers no longer want to differentiate between offline and online channels. An online business model is therefore no longer a vehicle for addressing price-sensitive customers, but rather an integral, as simple as possible method of an insurance company's range of services.
In the digital age, the term convenience is becoming increasingly important for this reason.
How can the digitalisation of the insurance industry change business?
Surveys show that around 60% of all German citizens regard the internet as a key channel for communicating with and conducting business with their insurance provider. For this reason, a transformation of the insurance industry is absolutely essential in order to keep pace with rapid technological developments. It has already been 14 years since Boris Becker supported the internet pioneer in its advertising campaign. The phrase „I’m in“ is legendary today. It demonstrated just how quickly it is possible to make the internet available to people so that they can use it without restriction. Fourteen years later, two out of three German citizens use the internet regularly. Among the under-40s, the figure is even over 90 per cent. The proportion of internet users worldwide stands at 30 per cent. This means that around two billion people use the World Wide Web.
The trend is still on the rise. The pace of digitalisation steadily increased with the hype around smartphones and tablets. This is mainly because these end devices made it easier to access the internet anytime, anywhere, 24/7. In just 3 years, the number of smartphone users in Germany quintupled. That's a total of around 30 million users. LTE further improved the mobile communications standard for internet users. The fourth generation provides download speeds of up to 300 megabits per second. This opens up a completely new form of internet usage for all users. But that's just the beginning. Between 2012 and 2015, the number of servers delivered per year doubled to around 1.9 million. At the same time, the amount of data that needs to be processed is naturally increasing. Between 2012 and 2015, the amount of data tripled by around 7.9 zettabytes.
A zettabyte is a trillion gigabytes. This unit of measurement is considered a common measure for such large numbers. These facts should make it clear to you that digitalisation in the insurance industry is absolutely necessary. It almost forces many companies and insurers to adapt and further develop their previous business model. Otherwise, you may find yourself facing a veritable tsunami, as happened in the video rental or music industries.
Insured persons are increasingly using the internet.
A transformation of insurance is particularly important, as many customers are now at home in the digital world. They easily order electronic devices or books online, book their holidays, download films or music, and do their banking. However, policyholders only notice limited change in the area of insurance. To this day, very few providers offer their customers a digital service.
A low contact frequency is noticeable, particularly with long-term products such as life insurance. With the upheaval of markets and their interactions, such as in the car insurance sector, the harbingers of the desired digitalisation of the entire industry can no longer be stopped.
A survey of around 2,500 private customers of leading German insurance providers in 2012 had already confirmed this trend. Around 60 per cent of German citizens see the internet as the most important channel for interacting with their insurance provider. It makes no difference whether this involves taking out a policy, seeking advice or making a claim. Policyholders simply expect their provider to offer a straightforward yet comprehensive digital service. This expectation goes far beyond the current website structure.
Many customers use their own smartphones to access their insurance via simplified mobile websites or apps, as well as online chats and communities. Customers want both personal advice and 24-hour access. The survey also shows that it would be very misleading to rely solely on digital channels in the coming years. Many customers need both: personal advice or support and access available at all times via all key digital channels. Around 72% of those surveyed would prefer personal advice. When viewed through the lens of customer needs, a supposed contradiction automatically resolves itself.
The fundamental need therefore remains unchanged in the 21st century. Most people in Germany still want insurance to be able to minimise their personal risk. At the same time, they want to be optimally covered and provide for future stages of their lives. For this, they need convenient access to a secure and trustworthy partner. Most respondents stated that they are satisfied with their internet provider and that loyalty was one of the most important criteria for them when choosing a provider. Further criteria include fairness and security.
However, many customers also value competent advice and having their personal wishes taken into account. They expect providers, as well as their insurance company, to be able to meet their individual needs. Furthermore, customers also wish for good value for money, empathetic customer service, and transparent products. This demonstrates that digital channels are an effective means of increasing customer loyalty. Digitalisation within the insurance sector can direct insurers' perception towards their needs being met at all times. Another good example is pricing.
So that policyholders can quickly find their way around the different tariffs, they should be able to make a quick visit to an online platform, the so-called aggregator. However, if customers or policyholders receive an expensive tariff despite their research, as it was offered on the internet, they feel unfairly treated. Rather, the internet offers the customer the option that consultation is no longer tied to a specific location. Online chats and video conferences are becoming increasingly important in today's world. This gives every policyholder the opportunity to manage their insurance matters, even on weekends, in the evenings after work, or on holiday.
The boundaries between the offline and online worlds are open.
Many examples of this can be found in the changing customer behaviour. Many people no longer differentiate between an offline and online world. They expect a cross-channel offering at all times. This results in the analogue and digital channels merging into an omnichannel experience. Many companies from other industries have already adapted to this. They have long since opened up the barriers between individual sales channels to enable a uniform and cross-channel service and shopping experience.
Such changes have a positive effect on the behaviour of customers or policyholders. However, they also shape consumer expectations. This makes insurance all the more important for all latecomers in the industry. They must act now so that the train doesn't pass them by. In today's digital age, consumers want to decide for themselves, entirely independently of the offer, how, where and when they want to make contact with a company or insurer, and when not.
In the insurance sector, this applies to virtually the entire population. This is borne out by recent analyses and the Brain survey. The exception here are 28% German citizens who remain very conservative and live mainly in rural areas. This insurance group, which is mostly made up of older people, generally has an average household income. They are regarded as hybrid customers and want it to remain possible to contact their insurer offline as well as online. This applies equally to younger people living in cities and to older policyholders with a high income. The Brain study classifies around a quarter of policyholders as belonging to the ‘independent’ group, who have a high affinity for online services.
This target group is especially interesting because they have higher income and wealth. However, it is precisely this target group that places great value on transparency, security, speed, fair prices, and the ability to quickly manage their online business after work. The transformation of insurance should aim to circumvent traditional sales channels. Most customers will use the new technology to communicate with their insurance provider. They can also exchange experiences online with other policyholders.
Many people seek dialogue with others, thereby having a significant influence on the design of services and offerings. After all, insurance employees also have access to such dialogues and can therefore filter out what customers want from their provider and what could be improved.
A transformation of insurance can ensure that insurance moves further forward in the market. Thanks to the internet, consumer confidence has increased. It even culminates in a growing willingness to switch.
It makes no difference whether this is an energy provider or car insurance. Insured individuals expect a new provider not only to offer a good, comprehensive range of services but also to be easy to use. The usability factor (convenience) must be considered in the disruption of the insurance industry. This point is an important decision-making criterion when choosing a new insurance policy. Many mobile applications point in the right direction. If insured individuals use a smartphone or tablet to handle their online business, they must already be able to cope with a small screen.
This makes it all the more important that the insured person doesn't have to open too many sub-pages to reach their goal. Endless texts should be avoided when building a website, as they only tire out the customer or insurer and overwhelm them with a flood of information.
It is much better to ensure that the text is streamlined to the essentials for the insurer during the transformation of insurance. This will contribute to the popularity of your company and can further strengthen loyalty. If an insurer can handle a claim using an app in a very short time, they will consider this very positively. The tedious postal route and the completion of numerous forms will be saved. Furthermore, the waiting time for a response will be reduced, as the digitalisation of the insurance industry makes faster processing of enquiries possible.
Your insurer should therefore conduct all interactions with insurance providers with a particular focus on user-friendliness. When considering the disruption in the insurance industry, think carefully about how your company can significantly simplify the process. The easier it is for a customer or insurer to handle a request, the greater the chance that this customer will share their positive experience online. More and more people are using social networks to share both positive and negative experiences with others. They use these information and dialogue platforms to exchange ideas and, at the same time, acquire important information.
User numbers on Facebook alone are still increasing daily, with over a billion members counted to date. Many Facebook users love the "Like" button, thereby showing their friends what they like or dislike. For insurance companies to gain more traction, it is therefore very important to go with the flow and regularly inform interested parties and members about news and current offers. This allows many customer needs to be met.
Through an automated evaluation process, it is possible to quickly identify the strengths and weaknesses of an offer. However, the importance of social networks does not end with marketing. Market research can also only make a small contribution and additionally causes a lot of work. Rather, it is relevant to research through surveys and social networks where the desires of potential and existing customers lie. Those who adapt to customer wishes can look forward to increased sales in the long run. The influence of social networks should not be underestimated.
The desire for disruption in the insurance industry
The advance of digital platforms also increases many people's desire for more individualisation. The power of customers has an impact on the development of services and products for many companies. The advance of digital platforms also increases the desire for services and offerings to become more individual.
This desire was initially only strongly demanded for consumer goods. Instead of offering a limited range on the shelves of retail shops, the opportunity was taken to offer an unlimited variety of goods via the internet or online shops. Nowadays, an increasing number of people are also using the advantage of being able to obtain information and a good overview of various policies. For insurance products, customers want tailor-made offers.
Success through disruption in the insurance industry
Due to the growing desire for individualisation and the power of customers, as well as the ease of handling transactions and local or time-independent access, a transformation in the insurance industry is particularly important. However, many companies still hesitate to change their existing systems and implement digitalisation. Other companies are in step with the times and seize the opportunity to outpace their competitors.
Assurant Solutions offered its customers in the English market the advantage of providing a new form of insurance that has simplified the insurance business. It is therefore possible to book insurance or make changes with just a few mouse clicks on a tablet or mobile phone without any hassle.
To pique customers' interest, Assurant Solutions is leveraging digital media. This includes, among other things, the distribution of online video campaigns featuring comic characters. The effectiveness of such online campaigns has already been demonstrated by US provider Progressive. The company used a fictional character named Flo to engage with policyholders and spark conversation.
At the same time, it was possible to spread news more easily. Floh now has more than five million Facebook fans. The character is also actively represented on Twitter. Around 19 million followers follow this portal. Digital platforms can therefore be used quickly and easily for consultations. This was also demonstrated in the past by ASB Bank from New Zealand. With the help of a digital branch via Facebook, visitors can use almost the same services as in the branch around the corner.
Individual consultations can be held via video chat. Meanwhile, Bank of America has also added the function of video chat to its offerings. This allows a company to offer customers advice at any time, without them having to make the arduous trip to a branch. For many financial service providers, concluding contracts online is now a standard feature.
More and more insurers in Germany are making it easier for customers to take out contracts through their banking apps. The pioneer of this system is the Royal Bank of Scotland. They have long offered a broad product range through digital channels, thus relieving the burden on their branches and satisfying customers' need for time-independent and location-independent transactions.
Digitalisation of insurance in the health insurance sector
In the insurance sector, there are also pioneers who offer simple help in the form of apps for remembering appointments, submitting invoices, and providing information on precautionary measures. The digitalisation service for the insurance industry should, of course, not end after the contract has been concluded. Rather, technology can be used to speed up the processing of car damage claims. Previously, it was only possible to process damage through a step-by-step recording.
The new system makes this process easier for customers, and they also receive tips on where they can have vehicle damage repaired near the accident site. Faster data transfer results in a direct report to head office. This is precisely the kind of system that car insurance customers want from their provider. Some providers are already making use of such services.
If you look at the services offered by health insurance providers, you'll notice that as a customer, you receive a complete package of services. Reminders for your next preventative medical check-up and the simple submission of invoices are just some of the benefits available to customers. Large health insurance companies like Hanse Merkur or Allianz rely on a system where private patients can submit all their invoices without any problems using a QR code. Over 38,000 doctors are already connected to this system.
There is a reason why the examples listed worked so well. The digitalisation of the insurance industry brings many advantages not only for customers but also for insurance companies. Due to the high frequency of contact, it was not previously possible to engage more with market growth and digitalisation. The digital offering, in terms of simplicity, is much more in line with users' expectations. However, speed and access that is independent of time and location are also important points. Especially when you look at the current growth market, for example in private pension provision, the development is very dangerous for some companies. Due to the persistent low-interest rate phase, banks in particular can score points with flexible and simple investment of amounts for retirement provision and interim availability, even in the event of unforeseen circumstances.
The withdrawal and deposit of larger amounts can be handled easily from home. Online, users can get an overview of their current financial situation at any time. Car insurance companies must also take advantage of this benefit.
Implementing technological possibilities
A disruption in the insurance industry will lead to a complete change in a company's strategy. Ultimately, however, customers will be offered an organisation that can draw on a cross-channel offering, while operations can also be made more efficient. Based on modern IT and a willingness to adapt, any company can be more efficiently restructured. Due to the strong increasing technological progress and the changing customer behaviour in recent years, the disruption in the insurance industry is increasingly becoming a major topic for many motor insurance companies.
The main focus when making the switch should be on customer wishes. In the digital age, the customer counts above all as a consumer. The future success of an insurer will depend on the extent to which it can successfully implement the transformation of insurance.
Existing customer needs must be met as quickly as possible so that they can identify more quickly with car insurance. As with all businesses, the customer is the driving force for car insurance. Loyal customers are a good guarantee for the successful future of an insurance company. Only satisfied customers recommend their insurance to acquaintances and friends. On average, satisfied customers use 3.2 products. Critically minded customers, on the other hand, only use 1.9 of the insurance company's offers. If you look at contract durations, you will notice that the contract duration is significantly higher at 9.4 years when customers are satisfied. Customer satisfaction can primarily be achieved by having an understanding of customer wishes.
Broadly speaking, many customer integrations should be consistently included in one's own range of services. Customers should always be divided into the following categories for analysis: place of residence, independence, small customers, city dwellers, modern or established service providers. After all, the behaviour pattern of an insured person differs not only by educational level, place of residence and lifestyle, but also by their specific needs. While the rural population places more value on communication, transparency, quick processing and a fair price are far more important to the younger population.
Another important point to consider regarding disruption in the insurance industry is that, in the digital age, the customer no longer expects a difference between channels. They assume that call centre employees possess the same competence and expertise as an employee in a local branch. They also want to be able to carry out the same transactions online as they would during a visit to a local insurance office. This presents you, as a car insurer, with a small problem. You must face the challenge posed by the digitalisation of the insurance industry. Through a new omni-channel capability, you can offer your customers this service.
Many pioneers in the USA and also in Germany have already begun digitising the insurance sector. They have developed an integrated customer platform, thereby creating a crucial prerequisite for making customers happy and satisfied. The advantage of these platforms is that there are no longer any differences between online or offline access. They consistently rely on an integrated form of application. Their system has emerged from cross-functional change that has taken many years. Thus, these companies can gain a small advantage for the future when it comes to competition in the market.
Digitalisation in the insurance industry primarily serves to gain a competitive edge in the market. Those who do not embrace digitalisation now will be left behind within the industry in the future. It is not without reason that many banks have been working on their transformation for years. They are therefore already a considerable way ahead of most providers in the insurance sector. A good pioneer is the British company Lloyds TSB. The bank has now largely synchronised its online and offline offerings. The company has expanded its own digital range of services to such an extent that account holders themselves can decide whether they still want to use a local bank branch at all.
The bank already offers an online service that covers up to 80% of all its products and services. Lloyds has taken great care to ensure that the platform is easy to use. After all, even beginners and older people need to be able to get to grips with it. As a result, the bank has managed to rise to the top of the rankings amongst direct banks. Another example of disruption in the insurance sector is the Spanish bank Bankinter. This is a direct bank that enables all customers to communicate with staff via a wide variety of channels through an online centre. The online centres are a reorganisation of the former call centres. In addition to emails and telephone calls, the range of services also includes chats, video calls and joint navigation on the company’s own website. As in a call centre, many staff members have access to all customer data. This has the advantage that customers can be assisted much more effectively and quickly should a problem arise. As a result, they are far more sales-oriented and modern than traditional call centres.
The advantages of this transformation of insurance at a glance
In the two aforementioned cases from the banking sector, the companies opted early on to create the prerequisites for omni-channel capability for the transition.
What advantages do they have as a result?
– All customer data is available across all channels simultaneously. Changes are displayed immediately.
The consulting, information, and product offerings are cross-channel. All customers can therefore decide for themselves where and when they want to visit a branch and when they want to make contact with staff.
– The external presentation is also available across all channels. New and existing customers will quickly find their way around it.
– Improving one's own sales network
Omnichannel capability presents a significant challenge for you as an insurance company, especially when working with numerous external sales partners. This challenge is a crucial step towards the transformation of insurance. Customers will no longer need to choose between different communication channels and the brand; instead, they can use all channels as access points. Many insurance companies have good potential for further development. Others are still equipped with an outdated online presence.
This will certainly not be able to meet modern consulting and transaction needs. It should therefore be in your interest as a car insurer to put an end to this situation. Only in this way can you ensure that long-term customers also turn away from your insurance company.
One of the largest insurance companies, Allianz, provides its local agencies with all the content and tools necessary for the digitalisation of the insurance sector. Everything needed for an online presence and social media will be made available for implementation. Around 1,000 insurance representatives are active on Facebook. A very useful measure could be the provision of tablet computers. These tablets are equipped with consultancy software. This makes it easier for employees to prepare more thoroughly for sales and marketing. At the same time, employees gain access to customer data to obtain information about customers and to input new data into the system if necessary.
Independence, allowing data to flow in both directions, is a particularly important point for insurance companies. This enables independent work and avoids sources of error through duplicate processing of data records. Timely work is only possible if all data is shared and all information can be accessed at any location at any time. Only in this way is it possible for cases to be processed more quickly and for the customer to be looked after perfectly. Many insurers are already experimenting with apps. Good examples of this include John Hancock and Generali France, for instance.
A great many mobile tools are used to provide field agents with insights into the investment portfolio. This allows agents to gain a good understanding of the customer right away. Information about customer development can also be helpful when processing orders and contracts. Deutsche Vermögensberatung, on the other hand, is very focused on using iPads. At DVAG, over 10,000 financial advisors are already using the computers to advise customers. Some employees have complete access to the company's customer database, including wealth planning, proposal planning, and other information. This allows them to impress capital investors with an interactive and multimedia presentation. Support from independent sales channels is also very useful when doing business with corporate clients. In this case, however, it is not necessarily insurance companies, but rather independent providers who benefit. Some platforms, such as ProspX or InEX24 from Germany, assist brokers in their daily work. They ensure a good selection of suitable providers and products. The system is also very useful for industrial insurers.
Development has several disadvantages alongside its many advantages. One advantage is that all important brokers can be specifically reached via a platform and informed about news. For this, however, the industry must accept that the transparency of products increases and pressure in the area of pricing rises. Other insurers, such as car insurance, have only advantages in contrast. They can bring more leeway into daily business operations. The use of digital platforms automatically leads to increased customer loyalty. If an insurer has developed a specific offer, it can be seamlessly integrated into the company's intranet. This offers added value for everyone involved.
All employees can get an up-to-date overview of the insurance status at any time, either from home or from their own workplace. This relieves the central departments that actually need to provide this information. The examples show how important it is to consider all sales channels for the digitalisation of the insurance industry. If an insurer forgoes collaboration and support from existing partners, they quickly run the risk of them turning to other providers. Other providers will certainly be aware of customer demands and adapt their online presence accordingly.
Core operational activities must be adapted
Through the transformation of insurance, this affects not only sales and customer interfaces, but the entire company. The hoped-for efficiency gains can be achieved by adapting core operational activities, such as claims settlement, reporting, or premium calculation.
Customers' benefits are evident in the automated reporting of accident damage or the submission of invoices using the app. The simpler the process and operation of an app, the greater its appeal to customers will be.
The customer has the choice of whether they wish to use their claim via the app on a tablet or smartphone. This ensures that they can dispense with the often lengthy postal correspondence or phone calls. The effect can be further enhanced in all car repair shops, doctor's practices, hospitals, and many other areas. The goal should be a completely digital process. A welcome side effect is that resources are optimally conserved by the new system, as a flood of paper is no longer required. At the same time, this saves storage space for files and employees for document management. All work steps can be digitised nowadays. This applies from the reporting of an accident to the settlement of the claim. A plausibility check can already take place during data entry. This allows errors to be detected more quickly or avoided in advance.
The complete process can therefore take place in a kind of dark processing. However, you should be very careful here. From your customers' perspective, the efficiency gain on their part is not so important. Rather, they desire an acceleration and simplification of the process. Therefore, you will not find an ultimate solution for the digitalisation of the insurance industry for its core activities straight away that satisfies both parties. Rather, for each point, you should decide individually which technology you want to use that meets your and your customers' requirements.
For the event of a claim, mobile applications are beneficial for car insurance. This makes it easier to locate the vehicle and, in this context, also offer assistance from nearby workshops. Your customers will thank you for the quick help with their loyalty. Mobile applications, on the other hand, play a minor role for long-term products such as life insurance. In this area, it is far more important to offer all customers comprehensive dialogue and advisory services. Customers enjoy a great advantage through quick and easy access to their current account balance or contributions made so far through all possible channels.
Transparency in product and pricing.
If you only relate the impact of disruption in the insurance industry to savings and efficiency gains, then you are only seeing one side of the coin. Much more important is the intelligent processing and use of available data for the further development of operational business. The impact can be described particularly well in car insurance. Here, the actual driving habits of a customer are recorded. This enables insurers to calculate individual premiums for policyholders.
British insurers AA and Direct Line have been using so-called smart boxes for some time. These record driving behaviour, speeds and the types of roads most frequently used in vehicles. Policyholders can monitor the data online themselves. The advantage for them is that premiums can be adjusted at any time. This debate about telematics tariffs among policyholders is likely to be fuelled by the eCall emergency call system and the fitting of the relevant devices in new cars. A telematics solution can be an optimal solution for all car insurance companies to adjust premiums and offer customers a perfect online service.
The disruption in the insurance sector continues to provide the advantage of further developing fleet insurance rates. The pioneers in the market can benefit doubly from this. They can propel themselves to the forefront of the market with a new form of solutions and simultaneously sharpen drivers' driving behaviour and risk awareness.
Many drivers are not even aware of how fast they are travelling. Regular analyses can be helpful in improving one's own driving behaviour and avoiding accidents in the future. The large amount of data stored from the vehicles provides a good basis for later follow-up business. Many companies find the system anything but bothersome.
Rather, they will be able to rejoice that they have to pay significantly lower premiums. Additionally, no employees will be absent due to accidents, as they are encouraged to drive cautiously. They drive much more carefully and also more fuel-efficiently. Some comprehensive insights into customer behaviour can also be gained. However, this information can be used not only within the car insurance industry.
Social media also offers a wide field that reveals much more about consumer dislikes and preferences. Naturally, the information is handled in accordance with data protection. Some banks, such as TD Bank, use special software for this purpose. This gives them an overview of current trending topics on social networks at all times. At the same time, the bank can tailor its communication accordingly. The Garanti Bank from Turkey goes even further. In this case, the Facebook team ensures that publicly accessible data and information are processed so that they can be used for product development.
Ultimately, it's only a matter of time before insurance companies also start to profit from the looseness and openness of customers on social networks.
Continuation: Part 19: Recognising and utilising all possibilities
Recognise and seize all opportunities
The digitalisation of insurance offers companies the opportunity to further develop their existing systems. However, they can also build an entirely new platform for their customers or simply continue with their company's status quo.
This option provides insurance for customer loyalty but doesn't advance it further. In this case, the insurance is foreseeably not competitive. Building a new platform, on the other hand, costs a lot of time and effort.
The high investment is always associated with a small risk. For this reason, most companies decide to use and improve their existing system. By implementing a service-oriented architecture, or SOA for short, many doors open up for the insurance industry. They offer software developers the opportunity to improve the system's previous shortcomings. Additionally, they can build entirely new applications to make existing customer data freely available to all parties involved in the process. When implementing disruption in the insurance industry, priorities must be set correctly. This is particularly important when the IT department and operational managers collaborate.
Never lose sight of the shift from a product-focused to a customer-centric organisation. For many IT developers, internal considerations and personal goals still dominate. Ultimately, however, it only matters that the question of what the customer gains from the transformation is clarified. Their needs should be the top priority for every company. What promises the greatest benefit on the market always takes precedence. Such approaches do not mean, however, that all employees in an IT department will be restructured into sales supervisors in the future.
Both areas must submit to a completely new logic. They must be able to put themselves in the customers' wishes. This allows them to more easily determine if the system works and fulfils its actual purpose. In many cases, a new input mask on your own platform is suitable. For a transformation of the insurance sector, be prepared that a "good enough" solution is much easier for the customer to understand than a perfectly redesigned application.
If a system is not yet fully developed, but has been brought to market earlier than by other companies and has incurred only a few upfront costs, then minor adjustments to the system can be accepted.
For many topics there is no 'off-the-shelf' solution in IT. If new pilots are to be used, it is always better if a pre-existing and familiar system structure is in place. This allows the IT department to familiarise themselves more easily. A modular design makes it easier for employees to connect to their own systems. In the event of a fault, the pilot can be removed all the more easily.
The transformation of insurance takes time
The transformation of insurance cannot happen in a matter of days. Instead, a considerable amount of preparatory work must be done for the system to function optimally. In the future, many insurers will use internal and public company systems, as well as the programmes stored within them. However, this will, in turn, lead to the disappearance of the principle of the former IT department. In many companies today, IT still installs software on every employee's computer.
Data is stored and forwarded on every computer. In most cases, the data is collected on a main computer, which only IT staff have access to. This old procedure ensured that all customer data was protected from access by third parties. However, this is also the reason why many companies are afraid of restructuring the system. Is data protection still guaranteed even with a transformation of insurance companies?
If all security precautions against third-party access are observed, then insurance companies need not worry that the data is not adequately protected. Rather, they should take advantage of this and offer all customers and employees access to the relevant data. This access should be available anywhere and at any time. Since all software components are well connected, all employees can be sure that they are being shown an up-to-date dataset.
Any changes to a dataset will also be displayed promptly on all other computers. This avoids errors and misunderstandings. The digitisation of the insurance industry makes it possible to re-centralise the IT department.
Professional adaptation of the company to the new framework conditions
The best strategy for transforming the insurance industry fails if it doesn't work in day-to-day practice. This requires much more than just extensively training all employees on how to use new technology. With the transformation of insurance and the growing power of customers, far-reaching changes are occurring. As a result, the insurance transformation leads to a new customer-centric organisation. This organisation requires a completely new culture.
As an insurer, you cannot start planning for the transformation of insurance too early. If you want to differentiate yourself from your competitors in the market, then you should start changing your awareness today and drive forward a change management process. At the same time, a decision must be made as to who will make the new strategy possible with what resources.
In practice too, some approaches have already demonstrated their advantages. Some companies simply assign this responsibility to the back office, the CIO or COO. Other companies are more inclined to rely on the marketing management of the executive board. A third option is for the responsibility to be shared between the drivers in the back office and the actual decision-makers at the executive level. The responsibility for the new technology should be communicated to customers.
The advantage of centralisation by the CIO or COO lies in the ability to control all departments and divisions of the company centrally. The pace should be set by experienced IT professionals. The situation is somewhat different at the management level, where sales and marketing managers work hand in hand. The needs of the customers are at the forefront from the outset. IT department staff merely provide the necessary tools for implementing the transformation of insurance companies. It would also be a significant advantage if both approaches were linked. This means that the head office and the IT department are responsible for the digitalisation of the insurance industry.
Naturally, as with all important decisions, they must consult with senior management. This primarily increases the complexity of decisions and ensures that the boundaries of IT staff and the customer's perspective are not completely lost sight of. Quite independently of this possibility, the strategy of disruption is particularly crucial in the insurance industry, to the extent that an insurance company understands the important cross-functional topics. Many IT projects and so-called siloed solutions are doomed to failure from the outset if they do not drive the transformation to a customer-centric organisation quickly enough.
Continuous observation of the market
For disruption in the insurance industry, it is important to continually review the current state of market developments. Many policyholders have long relied on the complex regulation of their industry to remain largely unchanged. However, the current digitalisation of insurance is causing market barriers to fall. New providers, in particular, are competing in the market with greater speed and customer convenience. Lower prices and simple contract management are also causing customers to turn away from traditional companies.
Another point is that many providers are capitalising on customers' desire for individualisation. They therefore develop very specific solutions for particular segments. For example, the mail-order company Otto offers its own financial portals specifically for women. Some insurance companies focus on young people and create a brand specifically for a younger clientele. Aggregators are emerging as a new force in the insurance market. This has significant consequences for the insurance industry. Examples of this can be found among online providers such as Check24, Transparo or beatthatquote.
Especially for private users, it is very interesting to differentiate standard policies with the help of a single page within the individual tariffs. This way, every customer can immediately find the offer that is best tailored to their needs. When changing car insurance, one in three customers in Germany already uses an aggregator.
Comparison platforms have long proven their worth in many other business models. Some platforms are preferably used by users, to which a wide variety of aggregators are connected. Other models, however, focus entirely on the utilisation of so-called leads. These are generated on a comparison platform.
The entry of Google Compare can further increase the dynamism of the insurance market. For most policyholders, it is very important that they can observe how a search engine entry incorporates its comprehensive knowledge into the business model for the end customer. This may allow very specific requirements to be derived from the respective product providers. Of course, transparency is not limited to private customers. Recently, portals such as www.simplybusiness.co.uk from England have begun to enhance the insurance market somewhat.
Over 170,000 business owners in Great Britain have already gained a comprehensive overview of the various insurance policies through the platform. Due to the significant importance of aggregators, insurers cannot avoid continuing to engage with the digitalisation of the insurance industry. Digitalisation offers the advantage of making it easier for policyholders to compare individual tariffs and to conclude contracts online at the same time. Many policyholders desire more personalised advice and support. Some questions arise during the transformation of insurance. What will be the importance of insurance business models in the future? Portals such as iMingle focus primarily on bundling the purchasing behaviour of users.
An insurer must offer low premiums, but in return saves high acquisition costs. Some models, such as friendinsurance, are significantly more complex. It is reminiscent of the early days of the insurance business. Many like-minded people come together here to jointly cover small damages. For larger damages, they use the option and involve a third party.
These providers reward customers who opt for a higher excess with discounts of up to 50% on their premiums. However, there has been no rush to take advantage of these attractive discounts. This is mainly because this model requires a great deal of initiative on the part of the customer. It also calls for discipline and trust.
Regardless of success, the idea for a transformation of insurance should not be entirely pushed aside. It can contribute to strengthening on the market. For disruption in the insurance industry, it is important to always keep an eye on new technological trends. Crowd sourcing is one of the trends that affects not only the insurance industry.
Particularly the financing of start-ups with the help of specialised crowdfunding portals should broaden their perspective regarding the market in this regard. Many important developments are taking place in the environment of start-up companies. Companies must therefore pay attention in advance to how innovations are intended to change their own business model. The importance of partnerships is also very significant, so that data sets can be better analysed. Many are not yet accessible to every employee today.
Especially in view of the driving behaviour of policyholders, through special data analysis and recording, tariffs could be better designed in the future. However, when it comes to the digitalisation of insurance, companies should also deal with the consequences of technological breakthroughs.
An important question here is which parameters of car insurance are important if this idea becomes established in the future. Just as important is retaining attractive customers to protect the chosen business model. The better an insurer meets customers' needs, provides more digital offerings and personal support, the lower the risk that customers will switch to other providers. In addition, individual behaviour makes it possible to develop tailor-made offers for customers and to adapt customer interfaces for ease of use.
The company's own brand should be further strengthened so that customers can identify better with their insurer. If a customer feels comfortable and well looked after, they will certainly be able to forgive their insurer if they don't bring every innovation to market first. However, the insurer must ensure that it is always in a position to react very quickly to the advances of other insurers. Technological competence is much more important in this case than the company's competitive factor.
Implementing Disruption in the Insurance Industry
One technology is capable of primarily changing customer behaviour. For the insurer, this primarily offers an opportunity for greater profits. In addition to the previously accessible market data, the analysis will generally be based on long and intensive observation of the competition in the insurer market and its adjacent industries, as well as large technology groups.
This allows insights to be gained that can help to develop and monitor the framework and assumptions of the company's previous strategy. The insights provide a good basis for an analysis of the current state of digitalisation and the underlying IT system. At the same time, it can be used for an as-is/to-be comparison. This comparison includes all areas of the company and sales channels. With regard to customer needs and competition, each insurer must decide for themselves to what extent disruption in the insurance industry must be carried out and how far the company has already progressed.
A small disadvantage is that the analyses are somewhat success-critical, as it is particularly important that there is a shared understanding within the insurer's management team regarding the need for action in the area of digitalisation.
Some success factors for disruption in the insurance industry
In recent years, many digitalisation projects from companies have been initiated and analysed by experts. In this process, European, Asian and American insurance companies were examined. Naturally, the analysed companies all had different starting positions and set completely different priorities. One of the success factors for implementation was the cross-channel and cross-departmental strategy.
Insurances have traditionally been organised by sales channels, business lines and regions. This can lead to a form of silo thinking, which negatively affects the digitalisation of the insurance industry. Only companies that consistently involve all stakeholders from diverse areas from the outset and promote a related cultural change will succeed in transforming into digital insurers without problems. In order to quickly achieve the goal of disruption in the insurance industry, it is important that sales, marketing and operational units sit down with IT departments from the very beginning. The focus should always be on the customer's needs.
A new trend emerges in almost every month. Before an insurance company takes advantage of the current trend, it should always consider what benefit it could offer its own customers.
The better a company understands which customer wishes are particularly important, the easier it is to assess the actual value of a trend. Another important point for successfully implementing digitalisation is the portfolio approach to new technologies. With the sheer volume of innovations, many companies find it difficult to assess the prospects of success for a strategy in advance. Therefore, it is particularly important that a company's own activities should always be viewed from the customer's perspective.
With the right strategy, it's possible to transform a project so that it has a good chance in the insurer market and propels the company forward. In reality, only every second project gets off to a good start. Many projects fail during the planning stage or are not profitable for the company. Ultimately, customer added value is crucial, not the investor's objective.
Those who have their customers' needs in mind will be able to create a portfolio that is profitable for the company and offers many advantages to customers. Despite the successful implementation of digitalisation, insurers should not forget to continue to review and monitor the system. In advance, based on the milestones achieved so far, there should always be a discernible added value for the customer. This way, the planning team quickly recognises which internal projects should be pursued further and which are destined to fail.
A portfolio approach always represents successful pragmatism in the digital age. This means that it is not possible to plan in detail whether the new offering will be well received by customers. At the same time, it is also impossible to say whether all selected technologies can actually be implemented for one's own company. In view of this background, a great deal of flexibility is required, as well as the willingness to continue questioning ongoing projects and to optimise them if necessary. It is often advisable to test and analyse new changes in small branches first. Only when everything works as desired should the entire company be converted.
Another key factor in success is the development of new DNA. The digitalisation of insurance is the solution to all customer demands and needs. The fundamental change of the digital age must be understood by every employee of the company. Only in this way can it be guaranteed that he or she will implement the change in their daily work.
Therefore, it is not only important that employees are retrained accordingly, but they must also be able to live and understand the change. It is not enough to show company car insurance employees new technology that can better implement customer wishes. Rather, a trial and error mentality must be created. This requires an open information policy, through which employees gain insight into the necessity of digitalisation. This also creates a good basis for a customer-oriented DNA to emerge in the future.
Anyone who wants their insurance company to be successful should start today rather than tomorrow. This success factor might seem a bit trivial at first glance. However, in practice, it is very important to finally begin with the restructuring of the company. It's no use if the management of an insurance company meets month after month to discuss the pros and cons of digitalisation. Now is the time to put aside deliberations and begin with the actual planning of the transformation, based on developments in the market.
One of the most important tasks of top management is to make a decision on a project and then to drive it forward promptly. The considerations needed for the next steps should be made directly after a meeting of the departments involved, such as IT, for example. Given the speed of innovation in the market, a corporate strategy should never be a one-off, monolithic undertaking. Instead, it should be a living product of diverse minds, optimised and implemented step by step.
Develop a roadmap for your company
The top priority for a digital transformation strategy should always be customer expectations. Of course, short-term efficiency gains are very tempting for any company. However, digitalisation is much more about a customer-centric business strategy. You should always remind yourself and your company of this fact. You must adhere to this principle when setting future goals.
It is advisable that you document the urgent need for action within your company, from the outset to the actual goal, with the help of a target-actual comparison and a heatmap for all stakeholders. For every sales channel, every division, and every point of value creation, it is important to work out the extent to which a company has already progressed in order to achieve the defined goals as quickly as possible. A heatmap will reveal priorities and a specific order for the required implementation.
The creation of a heatmap also prevents a social media initiative from being launched prematurely. Similarly, expansion onto social networks like Facebook should not happen too soon. Rather, care should be taken to incorporate the differing considerations for social media usage, from HR to marketing. Only when the use of social networks such as Facebook is considered an important element in digitalisation by all departments, and a key measure for achieving objectives, should the presence be deliberately expanded. For now, other technologies and topics should remain the focus.
Review and Implementation
For digitisation, it is important that you correctly select, implement and evaluate your strategy before embarking on a new project. Unfortunately, many digitisation projects do not function in such a stringent manner. On the contrary, the environment can suddenly change far too quickly. Precisely because you need to act quickly, you should pay close attention to the topic of digitisation. Approach the implementation in a programmatic and holistic manner so that you can soon fulfil your customers' greatest wishes. In many companies, implementation occurs in individual projects. Insurers must pay attention to a high degree of flexibility for new extensions and the correct docking of new components at every step of digitisation.
The start of such a project requires a higher budget and necessitates the definition of specific key performance indicators for measuring success. Due to constant progress, budget planning may not be entirely financially viable. Within the digitalisation programme, it is therefore all the more important that there is flexibility in the scheduling of other projects, so that the ongoing project can advance quickly.
When measuring success, insurers should not solely focus on improving their profits. The duration of prospect engagement, an increase in customer loyalty, and a declining transaction abandonment rate can demonstrate that the project implementation is well-received by all customers. In the long or medium term, the new programme will provide a worthwhile return on investment and continue to lead to an improved competitive position.
With the help of your comprehensive digitalisation programme, you are making a significant contribution to further developing your business model. It will become an important component of your strategy and must be firmly anchored in your company. For this reason, the activity of programme management goes beyond the typical tasks of project steering. It also includes the alignment of progress, supporting and initiating the processes needed for change. When you have completed the transformation of your company, your customer will be able to decide in the future in what form they wish to contact you.
This clearly establishes a target vision for the insurance industry sooner or later, and ensures a consistent customer experience. It's also possible that your company will encounter resistance before reaching its goal. Building a support structure is therefore all the more important.
The structure encompasses all levels of your organisation and includes the specific organisation and management of the project. Often, a restructuring also results in further training of employees or the use of additional resources. This should show you how complex the implementation of the digitisation process is and what benefits it can have for the car insurance industry.
Disruption in the insurance industry through digital car insurance policies
If a customer wishes to take out a comprehensive insurance policy, they will have to use a local agency nowadays. In some cases, the customer has known their contact person for many years and has consequently built up trust with them. For years, they felt very well looked after when they had questions or requests for changes. If this customer has observed the changes of recent years, they will notice that the ambience of the branch in particular has changed.
Hardly any insurance office is not equipped with a computer. Field staff also have modern tablet PCs. All customer data is stored on these PCs so that they can be helped quickly with their concerns. Based on this example with the customer, it can be quickly explained why disruption in the insurance industry is so important. Let's get back to the customer. Since all customer data is stored on the computer, individual offers can be sent to them. The employee can also provide information at any time on how the customer can sensibly insure a new vehicle, for example.
Should specific questions arise, the employee can call in a specialist from a central office or video centre using a telephone button. This professional can provide further information. A major advantage of this system is that specialists can be consulted at any time if questions arise, such as how a customer can insure a vehicle cheaply if an au pair also intends to use the car.
Ultimately, after the consultation, the customer receives an offer that has been precisely tailored to their needs. They are handed a draft contract, which they can read and sign at their leisure. This document also appears in the customer's inbox within just a few seconds. This allows other employees to access the draft contract and help the customer if any questions arise. In the evening, the customer returns home and can use their own tablet computer to compare the proposed premium and the insurance offer with tariffs from other providers. Many aggregators are available for this purpose nowadays. But what happens if the customer consistently finds that their insurance is not the cheapest compared to other providers?
This customer will certainly opt for the more affordable online offer. They will sign and submit the contract directly online. Within a few minutes, they will receive their policy via email and the contract will be concluded. The customer can now print the policy for their own records and file it in a contract folder. Should the customer have an accident later, they can inform their insurer directly using an app.
Many online customers download the app onto their smartphone in advance for this very situation. This means that the customer always has the option to report the damage directly in the event of an accident. The sooner the accident is recorded, the more details will remain in the memory. If the accident is only reported to the insurance company a few days later, important information is usually lost.
With the help of GPS, customers benefit from additional advantages when concluding a contract online. GPS allows for precise localisation of the location. The app shows which workshops are in the immediate vicinity. Some apps are even equipped to book a hire car or exchange invoices online. This means they can be settled more quickly by the insurance company. Premium increases after an accident can also be viewed within a very short time in the event of major material damage.
Conclusion: The digitalisation of the insurance industry is unavoidable.
The changing customer behaviour and ongoing technological advancements, coupled with ever-increasing competitive pressure, are forcing many insurance companies to take action. Many companies have been weakened by the prolonged period of low interest rates, which has diminished profitability. This is preventing them from investing in new technology.
Strict regulation demands their full attention, as well as an adequate budget. For this reason, management should address the question: In which area is its own business model currently under the greatest pressure? In addition, the question arises as to which digital trends could influence its own model through risks or opportunities. Can its own company also be further expanded or improved through a customer segment-specific alternative with the help of digital channels?
Before undergoing a transformation, the executive management of an insurance company must ask themselves whether the additional effort involved in digitalisation is worthwhile for their own company. This applies particularly to the further development of their own telecommunications and information technology. The amount of investment required is an important issue for the transition. Given limited resources, priorities often have to be set. Due to generally complex structures with many companies and divisions, the transformation of insurance companies cannot always be implemented quickly. This necessitates a longer planning process. Despite all the additional effort, no insurance company should further delay the disruption in the insurance sector. The insurance industry is still viewed as very conservative by many people today.
For many years, their business system remained the same. Now, regulations, digitalisation, and the prolonged low-interest rate policy of the European Central Bank are forcing the entire industry to transform.
Disruption is a buzzword that's been making the rounds for quite some time. It's changing business models across all established industries because the altered frameworks and innovations are currently questioning everything previously considered good. The groundbreaking developments of recent years are hitting insurers particularly hard. There have been significant changes here, which have been a topic for years due to the digital transformation in other industries. The insurance industry should have undergone changes soon and shed its conservative facade. Many experts are currently dealing with this topic and have significant concerns regarding the banking and insurance sectors as a result.
For a long time, no change was really necessary here. Business had been getting better and better for years. But when you look at the industry from the inside, you realise that it has a significant backlog. Compared to Amazon's processes, insurance companies have fallen far behind.
Insurers see Amazon as a good example of how a former bookseller grew into a large company and set new standards through data analytics. It is now time for insurers to modernise, make the industry more flexible and transparent with the help of a new system. Furthermore, customer wishes should be better catered for. Very few customers these days still want an advisor on their sofa. Instead, they want to be able to make all contracts and changes related to their insurance themselves. For customer service, there should be an online chat available through which most queries can be handled.
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