#insurtech #insurance #op-ed #digitalization #Sapiens

The path to the Next Generation Insurer

The future is digital - this is now also undisputed in the insurance industry. There are certainly still different opinions when it comes to defining how far digitization should go, but in principle, some of the characteristics of the Next Generation Insurer can be identified.

End-to-end processes

Perhaps the decisive difference to the "traditional insurer" is the end-to-end automation of business processes. This means that a contract can be concluded in real time without manual intervention in the process. The insurance company does not care whether an end customer or an intermediary triggers the purchase process. Underwriting is automated or is AI-supported for complex products. Within milliseconds, customers and sales partners receive all contract and consumer protection-relevant information in portals. The user accounts are created as part of the purchase process if they do not already exist.
The end-to-end automation naturally also extends to all services and the claims processes. Contract changes can be carried out by customers, sales partners or clerks at the push of a button to file a claim or close a request. Even in the event of a claim, immediate settlement is becoming increasingly possible through the use of AI in claims evaluation.

APIs the new gold

End-to-end automation requires that different systems can communicate with each other via high-performance interfaces. Therefore, a further characteristic of the Next Generation Insurer is the reliance on APIs to enable seamless interfaces with an ever-growing ecosystem of partners. Not only must different systems within the insurance company be able to exchange data in real time, but many external systems must also be seamlessly connected. The trend is to consume more and more specialized services via APIs instead of building up in-house technological capabilities. Especially the rapid development in the area of machine learning and AI forces insurers to break up value chains. What sounds difficult is not perceptible to the user, and on the contrary, leads to a better customer experience.

Cloud hosting

Not to be underestimated for customer satisfaction is the speed of response. How long does it take for the website to deliver a quote or confirm receipt of the complete claim documents? In reality, it often takes far too long, so that customers move on to the next digital offer. There are many variables that influence digital performance and cloud hosting as another feature is just one of them. But scalability and availability can be much better ensured with a cloud infrastructure. Even if few insurers see the relevance for their business today, it can be assumed that IoT applications will lead to a veritable flood of data in the future. Forerunners include the telematics tariffs in car insurance.

Customer focus

Customer centricity is logically the next essential feature, because the starting point of end-to-end digitization is always the customer. BPM or workflow modeling takes a back seat to user experience design, which plays a key role in ensuring that customers use an insurer's digital offerings and develop a preference for the brand. In this respect, the gap to the Next Generation Insurer is particularly clear. Insurtechs like nexible or freeyou make the market leaders look a bit ‘out-dated’ with their intuitive usability and ‘look and feel’.

What’s next for the insurer?

Let us assume for a moment that the goal of the Next Generation Insurer is described clearly enough. So what does the path to the goal look like? As a Greenfield Insurer, it is may look easy to rely on modern principles and technologies. The situation is much more difficult for established houses, because in the past, processes were not thought of in terms of the customer. And this is precisely where the digital transformation must start.
It's not about the new financial software, nor about the new inventory management system, or about the new CRM solution. The best indicator of digitization is the ability to address key customer issues automatically or through self-service.

The special position of distribution

It is in the DNA of insurers to give distribution a special position. Whereas in the past, the "boots on the ground", i.e. the number of insurance agents, were a decisive factor for sales success, in digitization the number of ‘policy closing’ computers with complete dark policies is an important criterion. The reason for this is obvious: in order to build such lines, a complete breakthrough must be made through the system landscape, which is characterized in most cases by old applications and proprietary interfaces. If we then succeed in channelling an ever greater proportion of new business through these routes, regardless of the sales channel, then we are on the right digitalization path and can now tackle it division by division. Insurance companies should resognise the need to work digitally with its distribution channels.
After the closing processes, which already require a rudimentary customer account, come the service processes. If not only clerks, but also customers or sales partners can update master data and make contract changes, the next step is to turn to claims processes.

Focus on frontend

Focusing on the front-end is often considered the fastest path to good results. Of course, it can be argued that complete digitization cannot be achieved without modernizing the core systems as well to be modern and to be able to support the front end. But the decisive progress must be made in the front-end. This is where methods and products are available today that enable a digital experience, even when legacy systems are integrated, and can thus be the pacemaker for a fundamental technical renewal.

If the breakthrough is successful and modern front-ends enable a good customer experience, the replacement of old applications is much less problematic, since the typical mistake of mapping old business processes in new systems can no longer happen.
The mindshift for the successful path to the Next Generation Insurer described above is not only of concern to insurers. Many established providers of insurance software are also only now seeing the need to offer digital portal solutions and open interfaces. Not surprisingly, the market is currently being redistributed and previously unknown companies are becoming an innovative force. Beneficiaries of the development to the Next Generation Insurer are the customers, who can finally access insurance protection and provision via digital platforms with the integration of personalized sales.

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Ingolf Putzbach
#management Ingolf has been one of the two CEOs of sum.cumo since July 2016. His job is to keep developing the company as an attractive employer of digital virtuosos while also advancing its position as a digital trailblazer for insurance companies and lotteries. Prior to sum.cumo, Ingolf was a founder and partner at Arkwright Consulting and the Germany CEO of Halogen AG. Ingolf cherishes the great enterprising spirit here and says “that every minute at sum.cumo is a pleasure for him.” Innovation, sustainability and individual freedom are important to Ingolf both at work and at home, shaping his actions in every way. Ingolf’s words have appeared in many media outlets, including [Versicherungsjournal](https://www.versicherungsjournal.de/vertrieb-und-marketing/wie-kann-man-als-makler-heute-digital-verkaufen-135254.php), [Intelligent Insurer](https://www.intelligentinsurer.com/contributed-article/purely-digital-insurers-and-their-service-providers-increase-the-attractiveness-of-germany-s-insurance-market) and [Finanzportal Joonko](https://www.sumcumo.com/ist-das-neue-vergleichsportal-joonko-check24jaeger-oder-maklerschreck) and [Zeitschrift für Versicherungswesen](https://www.sumcumo.com/unternehmen/interview-zeitschrift-fuer-versicherungswesen). Furthermore, Ingolf’s commentary on “Guidewire mania” appeared in the magazine [Versicherungswesen 22 (2018)](https://www.sumcumo.com/blog/content/de/zfv-putzbach-guidewire-mania.pdf). All articles by Ingolf