Erschienen in Ausgabe 4-2017Märkte & Vertrieb

282. Digitalization

Von Keith PurvisVersicherungswirtschaft

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282. Digitalization

Digitization or digitalization? Do both words mean the same thing? Not quite. Digitization refers to the conversion of elements of the world – such as objects, images, sounds and signals – into data points that encapsulate them in a numerical form. Digitalization means the use of digitization to transform traditional business models into ones that are data driven, customer-oriented, flexible and fast. Digitization is thus a prerequisite for digitalization. There follow two examples of digitalization in the insurance industry.
Lemonade Insurance Company, a US startup, provides contents insurance for those living in rented accommodation. Distribution is by smartphone and over the web. A virtual assistant, called Maya, shows customers how to apply for cover and pay premiums. A claim is made by mouse click and is paid, less any deductible, instantly. The company keeps 20% of the premium to develop its technology and pay salaries. The remaining 80% is used to pay claims, any surplus going to charities that the policyholders collectively determine. Although the business model begs many questions, it is good enough to have obtained support from respectable reinsurers.
The second example is a pilot project being carried out by a small number of insurers and reinsurers that is experimenting with the use of blockchain technology for inter-company communication. As things stand, the procedure needed to atomize risk is complex, time-consuming, sequential and labour-intensive, requiring staff at the entities involved to create and handle contracts, collect premiums and report and pay claims. Using blockchain technology, each local process can be replaced by a node, an electronic device that is capable of receiving, processing and transmitting information to every other node in a process-linked network. The result hoped for is an inter-company process that will operate automatically, instantly and be error-free. Although the project mentioned above is restricted to the retrocession process, it could open the door to ultimately achieving the digitalization of the value chain for the whole insurance market.
Digitalizing their business is an enormous challenge for insurers. Their current IT systems are often less than optimal and they may well face internal resistance from high achievers who feel understandably reluctant to feed their lifetimes‘ expertise into algorithms that are intended to replace them. There is no alternative, however. Opportunistic…