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Interview Versicherungsbote part 1: Insurers are running out of time

In an interview with Versicherungsbote.de our managing director Björn (Freter) explains why the long-established IT departments of the insurance industry often lack the technical competence for the digital age. In general, the insurance industry is still in the very early stages of digital business models, warns Björn in the first part of the new three-part interview series.

Insurance offers: Companies with a focus on digital services such as Amazon, Google and Facebook have grown enormously in recent years. Hand on heart: What is the insurance industry doing wrong?

The insurance market has seen the Internet as a threat for far too many years. Analog sales channels felt - and still feel - threatened by the success story of e-commerce. The mantra "no consulting services can be provided online" is intended to protect against change. This is certainly true - after all, nobody wants to buy clothes online, so you can't even try them on! Thus, the few digital drivers in insurance companies are kept politically small by the power of the classic distribution channels, innovative projects are sabotaged from the background or watered down to such an extent that they cannot bring about any real change.

Insurance bans: That's a tough statement. But aren't there already insurers that have successfully entered the online market?

Yes, there is. At least when it comes to selling simple products online. But that only solves part of the insurers' problem. The cost ratios are too high, customer expectations are rising, and the insurers' old system landscapes do not provide a genuine network with the customer. Long-established IT departments of insurers rarely have the technical expertise for the digital age. They are at a loss to meet the constantly changing requirements of Internet-based business models and fear for their future. So smaller solutions are sought, with the vision of somehow merging them at some point. Minimal parts of the business model are exploratively outsourced and tried out. Sounds much more modern. Then it's all part of the "digital ecosystem" - sounds much more modern. "Look - we're doing a lot of work in the digital field now, we're at the forefront"! No, you are not. You are still at the very beginning, you haven't really taken up the challenge yet and you are running out of time.

***insurance boats: What is fundamentally wrong with modernizing old systems and trying out new solutions, can't insurers catch up technologically and develop new options?

In the insurance industry, systems are considered modern even if they were manufactured more than 15 years ago. They were never made for direct, high-frequency and always available data exchange with end customers or distribution channels. They are used for internal processing of products, contracts, claims and other service tasks. Various new interfaces and external solutions are now intended to help conceal and absorb the architectural flaws. Other industries have already tried this without success.

It is time to orientate oneself on the experiences of other industries and to learn from them. The insurer should change its perspective and establish a new structural level between the customer and its internal processes that can meet the requirements. If you want to modernize your core system, you should definitely continue to do so! But let the core system also be core system and at the same time dedicate yourself to the demands that modern e-commerce places on all market participants! For this purpose, other industries have had powerful online shop systems for many years. These offer exactly the services that are needed to make customers happy, both in sales and in service. The interfaces with the core systems are reduced to a minimum, the shopping experience and the speed and quality of customer service are in the foreground.

Insurance offers: Are there such online shops for insurers? If it's that simple, why doesn't everyone use them?

In fact, there are requirements in the insurance market that cannot be met by any classic online shop. Regulatory requirements, complex products, recurring payments, contract and customer mutations as well as highly individual claims processing cannot be offered by any common product in the market. Therefore, the insurers who are trying their hand at the online market are actually all building individual online shop solutions without even knowing it. This is expensive and complex and usually doomed to failure.

We at sum.cumo have built a consistently e-commerce-based core system for property insurers - initially for those who want to get rid of the problems of old core systems on a greenfield site. These digital startups such as nexible or freeyou already have digital capabilities that other insurers do not have because of their legacy systems.

We are currently expanding the range of services offered by this system to enable traditional insurers to benefit from modern e-commerce solutions without having to convert or replace their legacy systems. Companies such as Bayerische already rely on us today when it comes to the consistent expansion of their online offering. And best of all, the traditional sales channels can also use this system landscape to their advantage and the IT team at the insurance companies continues to do a valuable job.

In the upcoming interviews, everything will revolve around the topic of "e-commerce in the insurance market", take a look at Part 2 and Part 3 of the interview series.