Industrial insurers told to focus on process with insurtech: GVNW

Insurtech is being hailed by many in the insurance market as the magic solution, allowing insurers to use big data and the internet of things to design amazing new products and distribution streams that will finally drag the sector kicking and screaming into the digital age. Insurance products will become highly personalised, reactive to customer habits and lifestyles, and pricing will reflect the actual risk of the individual and their property usage rather than the masses. Some suggest insurance may even become sexy. Exactly how insurtech is applied to the arcane and mysterious world of commercial and corporate insurance is nowhere near as clear. Its application to standardised commercial coverage for small to medium-sized enterprises is conceivable and already happening, to an extent. But how insurtech will revolutionise the complex and very personal world of corporate and multinational insurance is nowhere near as clear currently, apart from its potentially radical impact on the actual process itself, argue German risk managers. Leading committee members of the German risk and insurance management community – GVNW – gathered last week for its annual Cyber and Financial Lines Conference in Cologne. Commercial Risk Europeasked the committee exactly how insurtech could and should be applied to improve the world of the corporate risk and insurance manager. GVNW president Alexander Mahnke was very clear that he wants to see the insurers invest their insurtech euros into vastly improving the way the process actually works, rather than wacky new products. “In theory, there should be no room for insurtech to revolutionise this market because the model is supposed to be working. It will only be applicable if there is a blank space in the insurance model. But I am not seeing that currently,” said Mr Mahnke. “It is great that companies such as Allianz and Zurich are looking closely at the potential offered by insurtech, investing and incubating. But the application of technology to this part of the market is much simpler than that. It is about the cost ratio and how to finally bring it down. The big question for the corporate insurance market is whether it is going to deliver value in the long term at a lower cost,” continued the GVNW president. Christian Böhm, managing director (insurance) at global technology group Freudenberg, agreed that insurtech does not need to bring anything particularly groundbreaking to this market, but actually more everyday stuff that really bothers customers. “Anything that brings the cost of this market down for insurers and therefore brings down the price of insurance for insurance managers is a good thing, and this is where the investment is needed. Administration in basic areas such as policy issuance and invoicing also needs to be vastly improved,” he said. Reiner Siebert, newly appointed co-CEO of GVNW and former insurance manager with Lufthansa, said that complexity is as important as cost. “IT is not necessarily the answer in itself. We are looking to insurers to bring down complexity as well cost. The big insurers that have been built through acquisitions over the years are running five parallel systems, and they are proud of this! This all adds complexity and cost, and needs to be addressed,” he said. Mr Mahnke agreed with his fellow committee members about the need to focus on process and administration and even address the long-awaited matter of standardisation, before trying to be too clever with insurtech. “How is it possible that I have 50 different policies with four insurers and have to manage the interfaces with each one differently and have to tell them what to do? There should be technical standards to overcome that. All efforts to do that to date have failed because the insurers say they cannot cooperate because of antitrust rules,” said Mr Mahnke. “This needs to be tackled soon, because the insurers need to preserve their value for the longer term. But having said that, to be fair, we do not receive the same kind of blank pushback that we used to from the big insurers, as they are accepting that it needs to be improved and they are making some progress,” he added. Mathieas Kohl, risk manager with Drägerwerk, an engineering group based in Lübeck, made a very interesting suggestion, rather tongue in cheek, that insurers would be well advised to at least consider. “The application of insurtech for the insurers could be quite dramatic if they applied it in a consistent manner and all at once. It seems currently they either do not want to, or do not have the resources, to make the big step forward. It would be really interesting to see an insurer tell shareholders that they would miss a dividend for a year because the money is being invested in a new IT system once and for all!” he said.

Industrial insurers told to focus on process with insurtech: GVNW

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