Melanie Hoppen |

Personalized insurances - are insurance companies ready?

Only paying for services that are actually used or receive discounts on health insurance if you pay attention to your health and fitness - rates on a "pay per use" basis or individual policies are being discussed intensively in the insurance industry. Two questions are posed here: is what's technically possible also legal? And do the customers even want this? At least there are answers to this now.

Are insured people in Germany already prepared to exchange their data for discounts on insurances? For example, to take out a lower rate for car insurance based on their distance traveled and way of driving? To receive a bonus for their life or health insurance if they were active? The trade association Bitkom pursued this question in a survey.

The result can be seen through an extensive interest in individualized policies: three of ten Germans (29 percent) would like to use offers where they provide their insurance company with personal data about their behavior. The portion of young people (between 18 and 29 years of age) is even significantly higher with 41 percent.

Those surveyed see advantages to these models. Every second person (48 percent) indicated that personalized insurances are fairer. And every third person (37 percent) believes that they will profit personally from these policies. It is no surprise that over 30 percent of those interviewed desire political efforts to make the usage of such rates easier.

The customers also see risks

Despite all the advantages, the insured parties also see risks in individualized rates. After all, every tenth person interviewed fears that they may no longer be able to take out any insurance again. And almost half (45 percent) of those interviewed assume that such rates will altogehter lead to higher premiums.

It will not be possible without AI and digitalization

Referring to the results of the survey, Bitkom President Achim Berg said: "Insurance companies should increase investments to also use the available data and to be able to make their customers offers that they want."

Well-intentioned advice. There are a few regulatory obstacles that must first be overcome before such highly personalized rates are even possible in the first place.

But even if these obstacles were overcome immediately, the consumers would have to wait some time for corresponding offers. Because not every insurance company is even technologically prepared for this step. Telematics rates in car insurance require the analysis of data recorded by sensors while driving. Health and life insurance rates would have to consider fitness data from the insured individuals. Gigantic quantities of data that must be processed and analyzed in real-time. And even if there is a cooperation with Insurtechs or third parties, the interface problems would have to be solved for the information to also end up in the core systems from the insurance companies.

AI systems are predestined for processing and analyzing the expected quantities of data, but this is precisely where a strategy is frequently missing in companies.

The demand on the customer side is obviously there. Now it is time to place topics such as AI, interface problems and data streaming at the top of the agenda before others do it.


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