Digital Insurance: Digitalization of the portfolio business

Digital Insurance: Digitalization of the portfolio business

Digitalization programs are often associated with the exploration of new business models. For many insurers, the digitization of their portfolio business is just as important. This balancing act of exploration and volume transformation is very challenging for any insurer. It's reason enough to address these challenges in a blog article.

Digital interactions in focus

A good starting point for digitalization initiatives is taking a closer look at key customer or partner interactions. Platform economists sometimes call these interactions "Minimum Viable Interactions."
One of the digital success formulas is that the more beneficial the digital interaction is for a customer, the higher their satisfaction and the "Net Promoter Score" (NPS), which is part of digital growth DNA.

But what are "viable" interactions?

For, a Viable Interaction is the processing of the order, whereas for Uber it is the actual mobility service. But for the insurer?
In addition to consulting and closing processes, it is also very worthwhile to take an in-depth look at benefit and claims processes.
It is not uncommon for these processes to be far less digital for the customer than their consulting and new business journeys. Nevertheless, such processes are very basic, because the actual "consumption" of the insurance product takes place when there's a benefit case or during the benefit phase.

For this reason, it is also particularly important that one makes interactions in downstream processes as customer and partner-centric as possible: efficiency, true omnichannel capability, and transactional self-service capabilities are important criteria. However, the combined provision of data from offline and online systems through solely an omnichannel approach poses major challenges to an insurer's often very heterogeneous enterprise architecture.

Process digitization means above all process simplification

A 1:1 digitalization of existing processes is not recommended in many cases. There are a high number of variants, a limited central control capability as well as unnecessary manual interventions. As a result, waiting loops are frequently encountered in practice.

Existing processes should therefore be simplified, automated, and reduced in their variants even before they are digitized. For this, the following basic procedures have proven effective:

  1. End-to-end consideration of the process, i.e. no isolated optimization of individual process steps (value-driven optimization)
  2. Consistent adoption of the user perspective and expectations (user experience)
  3. Scaling the available data within the company to optimize processes and the user experience (data-driven processes)

For all analytics, the human factor must not be ignored.
The above-mentioned benefit case is often overlaid with human emotions such as shock, anger, worry or even grief. Empathy, which can be explorable and learned via user experience, must therefore also be evident in process optimization and customer interfaces.

Digital interoperability as a prerequisite

Another important fundamental issue is "digital interoperability." This capability is not limited to technical issues such as cloud services or digital interfaces (APIs). Rather, it needs to be understood more comprehensively. It's a matter of the insurer's ability to execute digital interactions with customers, partners, and suppliers:

  • In partner networks, offer services and process interfaces such as quotation services
  • Consume digital services or SaaS products as part of the digital supply chain, such as SaaS-based inventory platform providers or digital claims service providers
  • Vertical integration of insurance products and processes into non-industry ecosystems, such as healthcare or retail

Digital interoperability also requires a digital operating model. This includes, among other things, an agile organizational structure, the management of the service relationship in consumer and provider ecosystems, and the implementation and control of regulatory requirements within the company's own organization.

For example, not only the GDPR, but also explicitly the European insurance regulator EIOPA require interoperability, portability, and protection of insurance-related data.
The Supervisory Requirements for IT in Insurance Undertakings and the Federal Office for Information Security's baseline security impose additional basic requirements on the digital operating model.
During implementation, these specifications must be integrated into the enterprise architecture, operational processes, and provider management. A very heterogeneous, non-standardized IT landscape makes this step more difficult.

Outlook: digital interoperability leads to digital business models

An important aspect of digital interoperability is that it is a key prerequisite for ecosystem and platform-based business models. This is not just about using IT or cloud platforms, but rather the ability of an insurer to offer its end customers completely new types of products and services by orchestrating services from other ecosystems. For example, if a health insurer combines the health history of an insured person with digital and individualized prevention programs, a real transformation from a health insurance company to a healthcare service provider can occur. Better health through digital prevention assistants: a great added value for many customers

Customer interactions, processes, digital interoperability, and ecosystems are therefore four core topics that shape digitization initiatives. Regulatory requirements represent important guard rails in this regard.

Do you have any questions or comments? Then please leave us a comment.

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