Insurers short on time

Back in Autumn 2017 there was remarkable news from Germany: A new car insurer arrived in the market, offering pay-per-mile invoicing and completely digitally driven. Not only did they manage to introduce a new and innovative product, the company also implemented Guidewire InsuranceSuite™ within a record-breaking timeframe of 60 working days.

For the German insurance market this insurance company, Friday, headquartered in Berlin, was and remains pretty unique. For the majority of German insurers, it is hard to break with their core applications in COBOL. Instead of embracing new technologies some are still on the lookout for retired developers who know the programming language of the 1950s!

How is this compatible with the fact that, according to a recent study commissioned by IKOR and KPMG (“Versicherungen in der Zeitfalle”- “Insurers Short on Time”), 72% of the respondents in senior management positions say that digitalization has a “big impact” on their insurance company?

Actually, German insurers are pretty aware of the central points of digital transformation:

  • It is the key to attracting and retaining new customers, from Millennials through to Silver Surfers
  • It paves the way for modern technologies and methodologies in the organization
  • It is best done with modern IT, and through the provision of an omnichannel experience.

It is fair to say that changing core insurance applications is anything but trivial. Not only must the systems work 24/7 to a high standard, but German regulations are very challenging to satisfy. Unless a system has the ability to adapt appropriately to regulations, modern programming languages and high performance are of no use. And, in fact, in those transformation projects where we participate the question of how to bridge the expanse between German insurance and regulatory law, and customer-centric services is regularly fundamental to the entire discussion.

That said, the good news is that these transformation projects do exist, and that we are seeing German insurers move to modern core systems like Guidewire InsuranceSuite.

In my next blog I will move onto how the right sort of mindset is key for transformation and modernisation.