Digitalization in the Insurance Industry. Themes and Decisions That Matter: Insights from a Multiple-Case Study in Germany and Switzerland

Abstract

Today, digitalization is already far progressed. Both, digitized and purely digital products and services are omnipresent. A myriad of promising opportunities are arising and corporates in many industries are challenged to transform their strategies, operations and IT for successful exploitation. Although the insurance industry is said to lag behind other sectors in terms of digitalization, insurance products and services are per se virtual. Hence, digitalization is starting beyond pure product digitization, affecting the whole insurance value chain. However, the ubiquitous and ambiguous nature of digitalization makes it hard to grasp the phenomenon as a such. This has led to a plethora of buzzwords. Therefore, the purpose of the paper at hand is to shed light on what the phenomenon of digitalization means for insurance companies. Primary data collection for this report is twofold. First, our insights are grounded in a multiple-case study with a broad range of insurance employees from four DACH companies. Second, we have collected publicly available digitalization efforts related and specific to the insurance industry. Thereby our focus was on new market entrants, i.e., startups. However, we also considered digitalization efforts of forward-looking traditional insurers that were mentioned in our interviews. In total, we collected 192 digitalization efforts. Our findings unveil major themes and decisions that matter to insurance companies at a strategic, operational and socio-technical level. With the blurring industry boundaries, insurances need to decide on their intended ecosystem positioning and on the degree of self-service they want to offer to their customers. The latter requires an assessment of how self-reliant they expect their target customers to be in future. On the operational level, insurances need to exploit the newly available data, both internal and external, to improve their processes along the entire value chain. Also, a major theme is to streamline digital customer interactions. Furthermore, our insights reveal eight socio-technical challenges that need to be approached by insurers. This includes the (1) employee-orientation and context sensitivity of enterprise applications, (2) the integration of social software into operations, (3) the management of both, internal and external data, (4) the application of new perspectives on make-or-buy decisions, (5) the enrichment of workplaces with sensor technology, (6) the need to increase flexibility and scalability of IT architectures, (7) the exploitation of analytics and (8) the digitization, transformation and mining of information and process flows. With this contribution, the report at hand provides valuable input for practitioners to reflect on their endeavors to tackle the digital transformation. Furthermore, the themes and decisions suggested in this report can serve as a basis to explore and assess digitalization efforts.