Developing cyber policies and tariff packages on the horizon.

The insurance industry is on the cusp of a significant transformation, according to a recent study. Insurers are making substantial investments in digital processes and IT infrastructure, a trend that accelerated during the Corona pandemic, as noted by Sopra-Steria consultant Nils Stölken.

One-third of decision-makers in the insurance industry anticipate a significant change in the product landscape by 2023. This shift is driven by the need for insurers to abandon their departmental thinking and adopt a more comprehensive approach, as suggested by Stölken.

The new products require a comprehensive opening of data boundaries, often referred to as API orientation. This shift towards data-driven tariffs and bundle products necessitates adaptation by insurers, not just technologically but also in their business processes.

An example of untapped potential is the possibility of automated offers for rental car users. Using geodata, these offers could determine when a vehicle crosses a national border, add the required insurance protection, and calculate the foreign risk on a kilometer-by-kilometer basis. This would eliminate the need for unpleasant sales conversations from rental car companies and allow customers to spontaneously decide on route changes.

In the private customer business, insurers are offering data-based insurance policies. For instance, telematics rates in car insurance allow policyholders to influence their premium through their driving behavior. This trend is also visible in the corporate customer business, where data-based business models offer insurers the opportunity to use data for new tariffs, such as calculating contributions based on machine data that reflect actual usage.

Forty-nine percent of surveyed insurers rely on theme- and bundle-insurance. They either buy specific specialized components to offer a comprehensive solution for all key areas or supply insurance components to other providers for resale. This approach allows insurers to adapt to the changing market and meet customer needs more effectively.

New providers, some from other industries like Tesla Insurance and Amazon Insurance Accelerator, are entering the market and contributing to the competition. This influx of new players is pushing traditional insurers to innovate and adapt to stay competitive.

An example of an insurer supplying insurance components is the legal protection provider NRV, which sells the legal protection component to motor and private liability insurers, among others.

The article suggests the possibility of moving away from annual premiums towards dynamic billing in the insurance industry. Contributions could be adjusted based on production quantities or data that influence the risk of damage. The premium would automatically increase as soon as the temperature or speed exceed certain threshold values. This shift towards individual risk-based tariffs would move away from fixed annual premiums towards dynamic billing.

In conclusion, the insurance sector is undergoing a significant transformation, driven by digitalisation, data-driven tariffs, and the entry of new providers. Insurers must adapt to these changes to remain competitive and meet the evolving needs of their customers.