Digitalization in the German Insurance Industry
Interesting insights from nineteen of the largest insurance companies in Germany and how they currently evaluate their own technological capabilities.
The State Of Play
Digital transformation still remains a major challenge for the insurance industry. Changing a traditional insurance business model must happen without interrupting daily business processes.
Its not a big secret that industrial insurers will build up on their digital capabilities over the next few years. The question is: At what speed will that be accomplished and what will insurers focus on? To tell which technologies attract the highest attention for each insurance company remains rather difficult.
A new study titled State Of Play by risk consultant Marsh and industrial insurance broker Oliver Wyman from November 2017 delivers some interesting insights and sheds some light in that respect. It evaluates the current status of digitalization processes in the german insurance industry, questioning the status quo and identifying potentials. The study focuses on medium sized and large companies by discussing their possible future scenarios.
For this purpose, nineteen of the largest industrial insurance companies in Germany were interviewed as participants.
Insufficient digital capabilities
The digital transformation of a traditional insurance business model alone is not solving any of the industry’s problems. Instead, digitalization is only laying the foundation for new technologies to come.
The massive potential that is leveraged by expanding the digital transformation strategy becomes particularly clear when we look at some advancing key technologies. Although being fashionable terms at the moment, techniques such as artificial intelligence (AI), machine learning, the Internet of Things (IoT) and blockchain have undeniable traits and are the basis of numerous novel approaches.
The study reveals that many insurance companies cannot cover the necessary technological capabilities these new technologies demand by just using their internal resources, as shown in the figure below.
Insurers want to expand their technological competence
A very positive find is, however, that two out of three participants express the intention to expand their technological competence across the entire spectrum. This proves that a clear majority of insurers already recognised the potential lying in technologies like AI, IoT or blockchain.
The challenges provided by adopting these technologies could be a new beginning for insurance companies, and well worth the effort given the potential gain.
The time to act is now
The progressive digitalization of processes in the insurance industry cannot be argued away. It requires openness, cooperation, courage and speed. Innovative thinking will be quickly rewarded. Only those who act fast and vigorous are able to create the technological foundation necessary to meet the expectations demanded by the customers in the near future.
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