How the insurance industry is making the leap into the digital age: a roadmap with clear strategic recommendations for action.

Times could hardly be more difficult for the global insurance industry. While premium income is stagnating, low interest rates are increasingly weighing on earnings. Added to this are competition from new rivals and cost pressure from regulation. However, all these problems are overshadowed by the biggest challenge facing the insurance industry: digitization.

What distinguishes digitization from the other challenges, however, is not only its secular dimension – but also the fact that, in addition to the often-invoked risks, it also brings enormous opportunities. This can already be studied using the example of other industries. In the automotive industry, it is already common practice for customers to obtain information online, configure their dream car and evaluate possible financing options. In the banking sector, which is the closest to the insurance industry, almost all players – regardless of size and across institution groups – are now also trying to use digitization for dialog between the bank and the customer. For example, not only major banks such as Deutsche Bank and HypoVereinsbank, but also regional institutions, savings banks, and cooperative banks are investing considerable sums in this area.

By comparison, the insurance industry is lagging behind in digitization. Insurers often associate the topic of digitization with sales and marketing issues. But the topic goes far beyond that, as it can influence claims processing or even the establishment of new business models. Even though some insurance companies have already recognized this – ERGO, for example, is giving the topic top priority as part of its new strategy program and is creating its own digital division with Digital Ventures AG – most insurers are still far from having a convincing omni-channel strategy. For example, the option of concluding a policy online is often missing, as are closed customer areas where insured persons can view their policies. The values of the cross-industry “Consileon Digital Readiness Index” match this diagnosis. This study analyzed the digitization strategies and concepts of individual companies with a view to creating a digital customer experience. The results currently show that nine automakers and three banks have “good” or even “very good” digital readiness. “good” or even “very good” results – but only for one insurance group (Allianz). Now, some insurance executives argue behind closed doors that their customers wouldn’t have it any other way. After all, 85 percent of all policies in Germany are still taken out offline. However, this interpretation fails to recognize that digitization is in the process of taking hold of the insurance industry with all its might. The best example is that more than half of all insurance customers already do their research online before signing up for a product, even though the contract is often signed offline (“Ropo effect”).

Learn more in our study One insurer – all channes. (The study is in German.)