Too little revolution
At the moment, the insurance industry is doing well. However, there is a lack of growth because insurers are still hesitant in taking the opportunities offered by digitalization and data science.
Although insurance companies are profitable and solvent, they are not growing
The industry has recognized the importance of digitalization, but has so far hardly developed any innovative business models
Data science can give companies a major competitive edge
“We are currently going through a period of change similar in magnitude to the Industrial Revolution,” claimed Giovanni Giuliani, Chief Strategy, Innovation and Business Development Officer of Zurich Insurance Group. Like other insurers, the company has recognized that digitalization will shake up the industry. The bad news, however, is that this insight has so far not led to insurers developing innovative approaches—neither in their product range, nor in their processes, nor in their technology.
That is the result of our Insurance Digital Pulse Check 2019, for which we surveyed more than 100 experts and managers from the insurance industry and 5,000 end customers in Germany, Austria, the United Kingdom, Italy and Switzerland. Indeed, there are initial digital projects and initiatives in the industry, but they are usually so unambitious that customers hardly even notice. And there is an almost complete lack of digitally-driven quantum leaps.
The insurance industry’s problem can be summarized in three words: lack of growth.
In order to remain relevant in the future, insurers only have one option: they have to grow. This is only possible by using the opportunities of digitalization to make their products better, to strengthen customer loyalty and to save costs. For the European Insurance Study 2019, we took a closer look at data science and measured its potential for more growth. There are many different ways it could be used. Here is just one example: if algorithms will in future be able to calculate with great accuracy a customer’s lifetime value and their probability of churn, then entirely new opportunities for customer retention as well as cross-selling and upselling will be the result.
“Today, insurers can still be successful without a digital concept. In the future, however, digital offers, artificial intelligence and data science will be crucial success factors.”
Dr. Jan Hendrick Sohl, Partner
Well, why not just acquire an innovative start-up? Actually, that’s not always such a good idea.
So what has to be done? We are constantly in touch with practitioners on this issue, for example at the DKM, the leading trade fair for the finance and insurance industry. It probably seems a fast and tempting solution to purchase an InsurTech company to gain digital innovations. Wolfgang Essing, Senior Partner at zeb and insurance expert, however, observes that this often goes wrong in practice. “Again and again, I see insurers buying into start-ups, only to find out: they don’t really fit in with us. And why is that? Because the insurance company didn’t deal with the simple question of what their customers want.” Read the whole interview with Wolfgang Essing here.