Stoeckli et al. (2016) - Digitalization in the Insurance Industry

Series on Research in Information Systems Management and Business Innovation / Volume 6, 2016

Emanuel Stoeckli, Falk Uebernickel, Walter Brenner

T H E M E S A N D D E C I S I O N S T H A T M A T T E R : I N S I G H T S F R O M A M U L T I P L E - C A S E S T U D Y I N G E R M A N Y A N D S W I T Z E R L A N D

Digitalization in the InsuranceIndustry

Emanuel Stoeckli, Falk Uebernickel, Walter Brenner

T H E M E S A N D D E C I S I O N S T H A T M A T T E R : I N S I G H T S F R O M A M U L T I P L E - C A S E S T U D Y I N G E R M A N Y A N D S W I T Z E R L A N D

Digitalization in the InsuranceIndustry

D I G I T A L I Z A T I O N I N T H E I N S U R A N C E I N D U S T R Y 3

At a Glance

Today, digitalization is already far progressed

and both digitized and purely digital products

and services are omnipresent. Myriad promising

opportunities are arising and corporates of

many industries are challenged to transform

their strategies, operations and IT for successful

exploitation. Although the insurance industry

is said to lack behind 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 and

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.

Abstract

Key words

Digitalization, Digital Transformation, Insurance

Industry, Multiple-Case Study

Our findings unveil major themes and decisions

that matter to insurance companies on strategic,

operational and socio-technical level. With

the advent of blurring industry boundaries,

insurances need to decide upon their intended

ecosystem positioning and upon the degree of

self-service they want to offer to their customers,

respectively, how self-reliant they expect their

target customers to be in the future. On the

operational level, insurances need to exploit the

newly available data, 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 insurances. This includes the

(1) employee-orientation and contextsensitivity 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.

A T A G L A N C E


T H E M E S A N D D E C I S I O N S T H A T M A T T E R

1. Positioning in the digital world of ecosystems

2. Identification of the target customer and its self-reliance

1. Striving towards data-driven core processes

2. Enabling digital customer interactions

1. Making enterprise applications employee-orientated and context-sensitive

2. Integrating Enterprise Social Software into operations

3. Managing internal and external data

4. Applying new perspectives on make-or-buy decisions

5. Enriching workplaces with smart sensors

6. Increasing flexibility and scalability of IT architectures

7. Exploiting analytics across the whole value chain

8. Digitizing, transforming and mining information and process flows

Themes & decisions that matterStrategic decisions to make

Operational processes to rethink

Socio-technical challenges to approach

At a Glance


T A B L E O F C O N T E N T S

Introduction

Conclusion

Fundamental Terms and Concepts

Why digitalization is not limited to digitization Business Engineering Model

Theoretical foundation

Digitalization in the Insurance Industry

A regular insurance arrangement

From product- to customer-orientation

From value chains to value networks

Business Strategy Level: Decisions to Make

Create or participate – what is your position in the digital world of

ecosystems?

Who is your future target customer and how self-reliant will he be?

Process Level: Operational Processes to Rethink

Data-drivenness

Digital customer interactions

Appendix

Methodology - How we collected data for this report References

Information Systems Level: Socio-Technical Challenges to Approach

Employee-orientated and context-sensitive Enterprise Applications

Integration of Enterprise Social Software into operations

Management of internal and external data

New perspectives on make-or-buy decisions

Digitally equipped workplaces

Flexibility and scalability of IT architectures

Exploiting analytics across the value chain

Digitize, transform and mine information and process flows

Table of ContentsP A G E 6

P A G E 7

P A G E 9

P A G E 1 4

P A G E 1 9

P A G E 2 9

P A G E 3 6

P A G E 3 7


IntroductionWe’re writing in the year 2016 – the manifestation

of digitalization is already far advanced in many ar-

eas of our life. Uber has changed the way we com-

mute, WhatsApp and Facebook have transformed

how communication is taking place, Airbnb has

revolutionized how people look for accommoda-

tion and Amazon has disrupted the exchange of

marketable goods.

Digitalization is disruptive and by no means limited

to the shift from analogue to digital information.

Digital enterprises have contemporary strategies,

processes, organizational structures and products

& services. They are more lean and agile compared

to the one of traditional ancestors.

In terms of today’s famous saying “everything

that can be digital, will be”, some industries are

transformed faster, some slower, but in the end all

industries are affected. No organization is immune

to the competitive and disruptive force of the digi-

talization phenomenon [FIT14].

Notwithstanding, the economic and social impor-

tance of the insurance industry seems undisputed

in a world of increasing uncertainty. However, the

role of insurance companies, besides being a pure

risk carrier, is challenged. Insurance products are

intangible and, in contrast to physical products,

must not first be digitize. Yet, insurance compa-

nies are not known for being digital leaders and

often have no clear digital business case [EY13].

The paper at hand strives to enlighten the phenom-

enon of digitalization and investigates potential

impacts on the insurance industry. The purpose is

to provide a valuable contribution to practitioners

such as executives from the insurance industry

and to support their decisions that are influenced

by digitalization. Therefore, the remainder of this

paper addresses the following two questions:

Question 1:

How is the insurance industry affected by the phe-

nomenon of digitalization?

Question 2:

What are themes and decisions that arise from

digitalization and that matter to insurance compa-

nies on strategy, process and information system

level?

We had the valuable opportunity to gain insights

from conducting a multi-case study with a broad

range of insurance employees, participation in

two ongoing innovation projects. Furthermore,

we analyzed documents and archival data from a

completed innovation project. Also, we observed

the insurance startup scene (see Appendix for

more detail). The purpose of this report is to put

the resulting insights and thoughts down to paper

in order to share our experiences.

Initially, a common understanding is created and

Question 1 is answered by first elaborating the

fundamental terms and concepts. In order to an-

swer Question 2, the Business Engineering Model

is applied. The remainder of the paper is struc-

tured based on its three dimensions “Strategy”,

“Processes” and “Technology” [OES03]. Within

these sections, insights on themes and decisions

that matter for insurance companies are report-

ed. Finally, the paper ends with a conclusion and

with details on how we collected the data for this

report.

I N T R O D U C T I O N


F U N D A M E N T A L T E R M S & C O N C E P T S

Fundamental Terms& Concepts

Digitization, Digitalization, Digital Darwinism, Dig-

ital Transformation - a plethora of related terms

are widespread. Concise and unified definitions

are scarce in industry and literature.

Literally, digitization means to convert informa-

tion from their analogue into a digital format [e.g.,

YOO10a, EY11]. Thereby, new digital capabilities

can be embraced. For example, [YOO10b] de-

scribes digital objects as being programmable,

addressable, sensible, communicable, memora-

ble, traceable, and associable. And [FIS14] em-

phasizes their tailorability and malleability leading

to potential efficiency gains and new revenue and

value-producing opportunities.

The technical process of digitizing has to be

distinguished from the sociotechnical process

of digitalization [TIL10]. The latter goes way be-

Why digitalization is not limited to digitization

yond applying digitization techniques to objects

and affects the social and institutional context.

Digital technologies are harnessed for various

transformations leading to process, product and

business model innovation [FIS14]. In fact, digital

transformation is described as a combination of

changes to strategy, business model, processes

and culture by embracing new technologies.

Deriving from that, the paper at hand concep-

tualizes digitalization as a set of continuous,

interdependent and both, sequential and parallel

transformations of strategy, business models,

processes and cultures on different levels (e.g.,

customer, employee, company, industry) and en-

abled by digital technology. Thereby, is useful to

differentiate between digitalization as a process

(synonym of digital transformation) and digitaliza-

tion as an outcome.


Transformations can be triggered by a variety of

innovations and changes in technology, condi-

tions, industries, markets, customer behavior or

even values. The traditional Business Engineering

Model [OES03] is a well-proven model that de-

composes and structures the transformation of

enterprises into manageable but interdependent

steps.

Thus, we take up the corresponding core cate-

gories “Business Strategy”, “Process” and “Infor-

mation System” as a lens for the selective coding

[COR90] of our insights. Similarly, they serves as

a structure of the sections for the remainder of

this report.

Theoretical foundation

F I G U R E 1 : Business Engineering Model Core [OES03]

B U S I N E S S S T R A T E G Y

P R O C E S S

I N F O R M A T I O N S Y S T E M



D I G I T A L I Z A T I O N I N T H E I N S U R A N C E I N D U S T R Y

Digitalization in the Insurance Industry

The core of an insurance arrangement consists of

a risk transfer [TRO75]. To put it simply, a customer

transfers a risk of loss to an insurance. In return,

the insurance evaluates the risk and charges a

corresponding amount of money. Although simpli-

fied, it perfectly shows that digitalization may af-

fects several levels of an insurance arrangement.

Based on the previous elaboration of digitalization in general, we now focus on digitalization in the insurance industry. We do this by looking at the phenomenon of digitalization through the lens of an archetypal insurance arrangement which is anchored in a risk transfer.


First, digitalization affects the underlying, e.g.,

imagine physical objects of a property insurance.

The underlying risk of objects that get enriched

with sensors and connectivity is changing. Also,

new opportunities to continuously assess the un-

derlying risk arise. In particular, vehicles, houses,

offices or factories embrace digital capabilities.

Namely, they become programmable, addressa-

ble, sensible, communicable, memorable, tracea-

ble, and associable [YOO10b]. A global economic

impact of $11.1 trillion per year in 2025 is estimat-

ed for such smart connected products [MCK15].

Autonomous cars are a good illustration of how

digitalization alters the underlying risk. Today,

most accidents are caused by humans. Thus, the

number of accidents of autonomous cars might

decrease. But yet, potential cyber attacks may

arise and lead to new risks [PET15].

A drive recorder can track the driving behavior

of insured customers. Today, most data arising

from connected products is not even used by the

manufacturer itself. According to McKinsey only

one percentage of the data arising from an oil rig

with 30,000 sensors is examined [MCK15]. Thus,

much of the potential for optimization and predic-

tion remains unexploited. Moreover, digital health

technology enables the monitoring of people’s

nutrition, exercises and corresponding progress-

es. According to [PWC14], 21% of consumers in

the US already own wearable technology prod-

ucts. On the one hand, these devices may be used

for self-improvement and self-monitoring. On the

other side, new opportunities of risk assessment

arise for insurances. At the same time, financial

incentives for customers to increase vitality may

affect the risk of obesity.

A regular insurance arrangement

A R E G U L A R I N S U R A N C E

A R R A N G E M E N T

E X A M P L E S T H A T I L L U S T R A T E T H E

I M P A C T O N T H E R I S K A S S E S S M E N T


Underlying Costumer Insurance


Second, digitalization affects the customer. Stud-

ies show that 37 percentage of the daily commu-

nication in Germany is nowadays digital [ESC14].

Also, today’s consumers own 2.5 Internet-ready

devices in average [ESC14]. In this way, almost

half the decision-relevant shopping information

comes from digital sources [ESC14]. Among oth-

ers, this includes digital word-of-mouth recom-

mendations. However, all states of the customer

journey are affected by the digitalization. In the

insurance industry a significant part of customer

interactions is said to be digital by 2020 [MAA15,

IBM14].

People strive for certainty, safety, protection,

and security rather than for insurance products.

They aim at protecting something that is dear to

them. In term, digitalization affects what is dear to

people. For example, before the advent of music

services such as Apple iTunes and Spotify, peo-

ple valued collections of disks. Both, how people

affiliate with an insured underlying and with their

insurance is affected.

For more and more people, owning feels like a

burden. Access is described as the new owner-

ship [PWC15]. For example, people rent cars and

buy corresponding insurances when needed.

Moreover, the relationship to health is changing

with the rise of health trackers [PWC14]. Both

illustrates the impact on the relationship to the

insured underlying.

But the relationship to the insurance is affected

as well. With the growing connectedness and

empowerment, information access and transpar-

ency gain in importance [IBM14]. Future insurance

customers are more actively informed and expect

business on multiple integrated channels. But the

expectations of the customers are said to be two-

fold [IBM14]. Customers seek for expert advice

but at the same time aim for convenience and

innovation. Also, the willingness of customers to

switch their insurance if their needs are not met

increases – their loyalty decreases [IBM14].

C U S T O M E R S B U Y C E R T A I N T Y

R A T H E R T H A N I N S U R A N C E

P R O D U C T S




Guided by the logic of product-centricity (e.g.,

[MUE81] and [RIE90]), insurances have applied a

clear distinction between the insurance as core

product and additional services (e.g., [HAL00]).

Currently, there is a pervasive shift going on from

product- to customer-orientation [MCK15b], which

is said to be a necessary condition for 21st-cen-

tury firms to succeed in the market [SHA06]. In

other words, it is necessary to have a superior

ability to understand, attract, and retain valuable

customers in order to outperform competitors in

a competitive market [DAY98].

Having an understanding of the customers is

not limited to retail customers but also includes

agents, brokers and corporate clients, which

again are also transformed by the digitalization

[MCK15b]. Due to the fact that only 30 percent-

ages of customers are reporting on a positive

customer experience with insurance companies

[CAP13], there is much room for improvement in

the digital era.

From product- to customer-orientation





Insurance value chains typically consist of steps

such as marketing, product development, under-

writing, sales & distribution, policy administration

& customer relationship, and claims management

(e.g., [MCK15b], [POR85]).

This kind of representation of activities in a chain

has proven to be a useful mechanism in the phys-

ical world of manufacturing. Nowadays, consid-

ering the activities from a network perspective is

often more suitable for organizations where both,

the product and supply and demand chain is dig-

itized [PEP06]. With the widespread adoption of

digital technologies, value chains are continuous-

ly dissolved and industry boundaries disappear

[FIT14].

Thinking in terms of value networks also alters

the way we think about value and value creation.

Today, value is often co-created by a combination

of multiple players in the network, e.g., suppliers,

partners, allies and also customers [PEP06]. This

is also in line with the shift from product-centric-

ity towards customer-centricity. As more intense

customer-centricity gets as farther the disruption

will go towards an ecosystem that can be charac-

terized as everyone-to-everyone (E2E) economy

[IBM14].

This paradigm shift also manifests itself in digital

business strategies, which have a scope that is

more trans-functional and go beyond firm and in-

dustry boundaries by considering whole dynamic

ecosystems [BHA13]. Still, digital strategy and not

technology drives digital transformation [GER15].

From value chains to value networks

MarketingUnderwriting

& RiskManagement

Policy Admin& Customer

Relations

Product Development

Sales & Distribution

ClaimsManagement

F I G U R E 2 : An illustrative Insurance Value Chain


B U S I N E S S S T R A T E G Y L E V E L : D E C I S I O N S T O M A K E

Business Strategy Level: Decisions to Make

Our interviews highlighted the relevance to find

and define unique selling points in today’s digital

world. The shift from simple value chains to dy-

namic value networks and ecosystems was found

to be recognized. However, insurance companies

need to figure out what role they strive to play in

the future. For example, one participant raised

the rhetorical question if the insurance industry is

even entitled to create its own ecosystem or if this

remains limited to large multinationals with high

engagement products and services. In this case

and as illustrated in the executive statement on

the left, all other players would have to join exist-

ing ecosystems.

The more firms and industries become digital and rely on information, communication, and connectivity, the more the digital business strategy becomes the business strategy [BHA13]. At the same time, being digital mature presupposes having a digital strategy that goes beyond implementing technologies [GER15]. But what strategic decisions have to be made? Within this section, we present two strategic decisions to make based on the study’s findings.

0 1 Create or participate – what is your position in the digital world of ecosystems?

Speed and frequency of market entrants


E X E C U T I V E S T A T E M E N T

”How can we enter existing ecosystems, how are those ecosystems

linked together and which is the leading ecosystem? Does an insurance

company has their own footprint and is entitled to have an own ecosys-

tem? Or are they by definition only a part of an ecosystem? Of course,

Google and Facebook can create their own ecosystems, because they

have a billion users but what about insurances?”

The advent of new market entrants was underlined

to be nothing new. Although the insurance indus-

try is known for its high degree of vertical and

horizontal integration, it has gone through many

waves of transformation, e.g., the deregulation in

the end of the last century omitted the price and

policy standardization. Hence, many players en-

tered the value chains of insurance companies. In

the beginning, it started with facility management

and it continued with damage inspections and

car experts – many examples were mentioned.

Thus, the phenomenon is not new per se, but the

majority of interviewees perceives the speed and

frequency as new threat.

Cross-selling as part of a service

E.g., Ping An

Providing the whole value chain

E.g., Traditional Insruers

Offering services in joint ecosystems

E.g., Allianz & Panasonic

Partnering withadjacententrants

E.g., Aggregators

Owning a complete ecosystem that includes insurance

E.g., Rakuten

Competing directly by offering pure insurance

E.g., Google in future?

Ecosystem that includes insurance

Insurance Industry

Power ofadjacent entrant

F I G U R E 3 : Choosing a position in the value network (further developed from [NID15])


Urge of choosing a target position


New players are entering the market across the

whole value chain, thus, insurances gain the

ability to outsource almost every part of the val-

ue creation and to collaborate in a co-creation

relationship with partners. At the same time, this

opportunity leads to one of two major strategic

decisions: choosing a target position in the digital

world of ecosystems.

On the one hand, ecosystems differ in the degree

of openness, and, on the other side, the power

and level of control exerted by its participants

varies [SKI15]. Each company has to decide where

to give up sovereignty and power and where not.

Partnering with the right organizations in the right

ways is said to be key to success [IBM14].

Figure 3 provides a two dimensional matrix to

assess possible partners when choosing a tar-

get position. Besides the x-axis for the power of

the adjacent entrant, it is crucial to consider the

degree to which the ecosystem spreads across

industries. The first step after moving away from

a narrow bundle of insurance products might be a

cross-selling of financial services, e.g., as Ping An1

does. An example for an even more complimenta-

ry service is the partnership between Panasonic

and Allianz2, which offers users of Panasonic de-

vices access to the home protection services of

Allianz. As soon as water leaks or a broken glass is

detected, both, the user and Allianz get informed.

This enables them to react as quickly as possi-

ble, e.g., in case of burglary. This is by no means

limited to the area of smart homes and property

& casualty insurance, but is also applied in life or

health insurance.


”It is simply the quantity and the diversity of market entrants that

are around - this causes us again and again to question what we do

ourselves, what part we can outsource and what new players perhaps

make the value chain, as is, obsolete. So it needs a constant checking

and questioning - the frequency of players which appear is higher than

in the past but it is nothing.”


Illustrative example of a market entrant that creates a whole ecosystem


The Japanese Rakuten Group3 is a good example

of a new market entrant that creates a whole

ecosystem, which results in taking an extreme

position on both axes of Figure 3. They pursue a

one-of-a-kind business model that connects one

player of each industry to the Rakuten service

ecosystem. Through a common membership da-

tabase and an established reward system, the so-

called Rakuten Super Points, synergies are build-

ing the foundation for convenient online shopping

and service experiences. This kind of market

entrant is described as worst case scenario be-

cause they have the ability to leverage detailed

consumer insights and grow with a multi-product

ecosystem [NID15].

E-Money

E-CommerceDigital Goods

Portal & M

edia

Trav

el

Telekom

Securities

Life Insurance

Ban

king

Cre

dit

Cra

rd

Customer Flow

R A K U T E N

M E M B E R S H I P

I D D A T A B A S E

F I G U R E 4 : Rakuten Ecosystem (Adapted from http://bit.ly/1AMCg61)



The common denominator among a vast body of

literature is the view that contemporary hybrid

customers do expect multiple integrated inter-

action channels depending on their stage in the

customer journey [e.g., HAN15, KPM15, SWI14 and

BAI14]. Nevertheless, interviewees mentioned the

Moreover, depending on the type of insurance,

customers might be more or less self-reliant. In

case of simple and standardized insurance prod-

ucts such as car insurances, the customer may

prefer to complete the contract by themsevles. On

the other hand, there might be a need for expert

advisory services for corporate customers. One

interviewee mentioned the example of opening a

new bakery: identifying all relevant risks associat-

ed with the business requires experience. There-

fore, nowadays experts visit the sites and conduct

analyses of the individual customer situation.

As illustrated in the quote on the left, the chosen

target customer has a strong influence on digital

transformation decisions. Some products might

need to be simplified, others might have to be

transformed to services with advisory.

In this regard, it is about catching the moment

of truth to offer advisory services when needed.

One interviewee stated that “you have to know

when you need to push”. The transformation of all

activities - product development, pricing, sales &

marketing - is affected by the strategic decision

of the future target customer and the assumption

of how much assistance is needed.

prevalence of hybrid ROPO customers, which fa-

vor to research online and purchase offline. While

studies forecast a shift towards digital channels

[MAA15], the majority of customers are said to be

not willing to give up traditional channels [BAI14].

Therefore, the key question is: Who is your target

customer and how self-reliant will he be in the

future?

0 2 Who is your future target customer and how self-reliant will he be?



”The greatest potential of digitalization depends on how the customer

will develop. If more future customers want to independently take over

the value creation via digital services themselves – from offer calcu-

lation via contract signing & mutations to claim report & settlement -

then, the greatest potential lies in the interaction with the direct clients.

Otherwise, the biggest potential lies in the support of the agents in

order to enable them to work more effective and efficient by providing

them with digital services and integrated systems.”


P R O C E S S L E V E L : O P E R A T I O N A L P R O C E S S E S T O O P E R A T I O N A L P R O C E S S E S T O R E T H I N K

Process Level: Operational Processes to Rethink We now present an overview of insights about ongoing transformation efforts mapped onto the steps of a typical insurance value chain. In a deep dive, the increasing data-drivenness of processes and digitization of customer interactions are elaborated.


P R O C E S S L E V E L : O P E R A T I O N A L P R O C E S S E S T O D I G I T I Z E

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User acquisition & lead manage-

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Behaviour-based (e.g., pay-how-

you-drive)

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Usage-based (e.g., pay-as-you-

drive, pay-per-mile)

Policy management (e.g., life cycle

management, cloud-based SaaS)

Rewards-based

Digital invoicing and payment

Properties and Products (e.g.,

Smart Sensors, IoT)

Digital signing and identification

Health and Life (e.g., Vitality, Nutrition)

Digital transactions, smart contracts, blockchain

Car (e.g., OBDII, Mobile)

Recording and tracing conver-sations

Real-Time dataNew tools and techniques

Advanced data science

Aggregated across sectors

Cooperations (e.g., across sectors)

Aggregated across health services

All-in-one Allround-Care

Aggregated across employee

benefit services

P2P Insurance

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F I G U R E 5 : An overview on insights about areas of transformation mapped on the insurance value chain steps

Adjus

ting

exis

ting

risks

Covering

new risks

Developing

novel business

models

Harnessing digital

marketing

opportunities

Distrib

uting

directly

Act

ing

as

nov

el d

igit

al

bro

ker

Man

agin

g m

ultip

le

chan

nels

Providing

customer

portals

Having digital conversations

Improving policy administration

Harnessing data

analytics

Managing

claims digitally

Imroving claim

s

handling

Using new tools& techniques

Exploiting data for underwriting

and risk assessmentOffering

risk-adjusted

pricing

Fulf

illin

g ne

w

cust

omer

ne

eds

Marketing

ClaimsProduct Developm

ent

Underw

riti

ng &

Risk

Man

agem

ent

Sales &Distribution

Relatio

nship

Cu

stom

er

Insurance Digitalization

Effort

Data-drivenness


Core processes such as product development,

underwriting, pricing, risk management and

claims management become data-driven and

interrelated disciplines. The new premise for the

development of products is the ability to under-

stand customer needs.


Our interviewees expect future customers to de-

mand more situational insurance products with

consciously chosen periods of coverage, e.g.,

buying risk term insurances when entering the

plane, adding an additional driver for one hour

when needed or simply insuring the smartphone

or table within two minutes. Customers expect

simplicity and convenience as no one is interested

in an insurance product per se but in security and

certainty. Why not coupling an insurance directly

to a bike lock and guarantee security without hav-

ing to buy an insurance separately?

Neither, customers like terms and conditions,

nor they like painful administration in order to get

money. “Why don’t we aim at being the fastest

insurance that pays out reimbursements within a

few hours?”, added one interviewee in regard to

customer needs. Last but not least, products that

adapt over lifetime are scarce and often limited to

pension insurances. It might be fruitful to further

investigate areas in which customers want insur-

ances to adapt over lifetime. To sum up, having

the ability to understand the customer becomes

crucial to build future insurance products and

services.

Autonomous Cars, Smart Home devices such as a

fridge that re-orders food or simply privately used

drones - beside all risks that are insurable since

many years, there are also new risks that occur

with new products. In some cases the question

arises weather the risk is already covered by a

traditional insurance, e.g., are threats emanated

from privately used drones insured with the liabili-

ty insurance or does it need a special insurance?4.

While online gaming platforms exist for quite

some time, there seems to be an increasing num-

ber of players who buy virtual properties and vir-

tual equipment online. Due to the emotional and

financial commitment, a need to insure the loss of

virtual equipment and currencies seems to arise.

Whether this is a need of only a few people or not,

is debatable but at least a large Chinese insurance

company, called PICC, created a Virtual Product

Insurance5. However, digitalization creates room

for new products based on new customer needs.

Beside virtual gaming currencies, this might also

be an issue with other virtual currencies such as

Bitcoin. Furthermore, cyber risks have already

been identified as critical business risks by many

insurance companies, e.g., Zurich Insurance6 in-

sures corporate companies against data loss and

cyber-attacks. This is also a good example for a

new insurance product based on a new need that

arises in today’s digital and mobile world.

With the increased availability of data and ad-

vanced data science new products can be offered

and existing products become affordable to a

new type of customer, e.g., MeteoProject7 offers

weather risk solutions such as an automated crop

insurance program for farmers.

N E W C U S T O M E R N E E D S

C Y B E R - P H Y S I C A L P R O D U C T S A N D

N E W I N N O V A T I O N S

N E W V I R T U A L P R O D U C T S



Drive recorders attached to the CAN-Bus of cars

are used to offer incentives to customers to share

their risk behavior. While some insurances have

pay-as-you-drive offers with usage-based re-

wards, others even offer a pay-per-mile pricing8.

Besides the traditional insurance companies like

AXA9, also new competitors enter the market, e.g.,

“drive like a girl” from the UK. Smart Home offers

range from connected doors with connected

doorbell, access and surveillance to connected

thermostats and smoke detectors. In the area of

life insurances, Aviva10 utilizes online and social

network profiles to calculate costs. In regard to

health insurances, Generali collaborates with

Discovery11 from New Zealand to offer a product

that is promoted as follows: “Know your health -

Improve your health - Enjoy the rewards”.

To sum up, there is an increasing number of insur-

ances that utilize behavioral data to offer elastic

pricing models that consider the individualized

risk profile. The more fine-grained the calculation,

the more we shift towards real-time pricing – im-

possible without having the right data and the

right people to make sense of this data.

There is an ongoing shift away from human and,

in case of machines, rule-based processing of

claims. The more data about the risk is tracked,

the more possibilities arise to monitor risks in

real-time. In this context, one participant of the

interview study added that the first notice of loss

(FNOL) is shifting and the insurance might become

aware of a latent risk before the customer knows.

Therefore, predictive prevention becomes an im-

portant cornerstone. On the other side, the new

data science technology can also be harnessed

for fraud detection and automated verification or

urgency detection.

A good example for data with a high degree of

standardization is the International Classification

of Diseases (ICD)12, which is used to exchange in-

formation about signs and symptoms, abnormal

findings, complaints, social circumstances, and

external causes of injury or diseases across in-

dustries. It has been states, not only as illustrative

example of a facilitating factor for data exchange,

validation and analytics, but also as an approach,

which could be applied to other types of insuranc-

es. In contrast, three participants opposed that

the more standardized an insurance product get,

the more fungible and marketable it becomes.

This worsens the ability to differ from competi-

tors and limits the opportunities of the product

development.


“So far, we have insured customer segments, not the customer”

H A R N E S S I N G C U S T O M E R D A T A C L A I M S

S T A N D A R D I Z A T I O N

Digital Customer Interactions

We will now focus on the shift from offline to on-

line distribution, followed by pointing out insights

about direct and indirect insurance distribution.



F I G U R E 6 : Digital transformation of advisory services

Our interview study indicates that insurances

are aware of the widely discussed omni-channel

trend that describes how customers are offered

to choose from multiple integrated channels [e.g.,

HAN15, KPM15, SWI14 and BAI14]. As elaborated

in the previous section, much depends on the

strategic decision about their target customer.

There is a spectrum of possible approaches to

move towards a digitally transformed distribution

and advisory of insurances (see Figure 6). The

most digital way to sell insurances is probably

by embracing a completely digital interaction

between the customer and the insurance. Selling

insurances online, e.g., as a situational and flexi-

ble insurance product, is by no means limited to

property and casualty insurances. For example,

Sure13 offers a term life insurance that can be

bought together with the flight ticket or via smart-

phone when entering an airplane and that will last

from take-off to landing.

M O V I N G F R O M O F F L I N E T O O N L I N E D I S T R I B U T I O N


“If even the asset management takes already place online; then why

shouldn’t it be possible to offer more complex insurance products such

as a life insurance and savings online?”



A more conservative approach was mentioned

as well - enhancing the advisory processes with

digital devices such as mobile or tablet solutions.

There was no ultimate opinion about this approach,

it seems to strongly depend on the strategic

decision about the target customer and their self-

reliance. Nevertheless, especially for corporate

customers it seems fruitful to investigate new

forms of advisory processes. Also, there are quite

a few market entrants that offer mobile and tablet

solutions for the point-of-sale of insurances,

e.g., USU-POS. Arising questions, that have to be

answered in balance with the strategic decisions

made before, are: “Does it need an individualized

insurance advisory service for digital natives or

are products self-explanatory in the future?” and

“Which role have robo-advisors?”.

Distribution partners have always been a key

stakeholder of insurance companies because

both, direct distribution and indirect distribu-

tion via intermediary, are commonly pursued in

parallel. Coined by incomplete and asymmetric

information in the insurance market, most of

the policies today are still sold via intermediary

[SWI14]. Consequently, brokers are not a new

phenomenon - it has been underlined several

times that also new market entrants such as all-

in-one insurances managers, price comparison

platforms, Insurance-as-a-Service providers or

P2P startups are technically just brokers as well.

But on the one hand, the frequency, in which such

novel and digital brokers enter the market has in-

creased and on the other side, customers of those

novel brokers are most often retail customers.

Corporate customers are also target of novel dig-

ital brokers, e.g., by a company called embroker14,

but most of those customers have already been

insured by intermediaries. In contrast, retail cus-

tomers were mostly insured by the in-house sales

force and agents of the insurance company.

F R O M T R A D I T I O N A L T O N O V E L D I G I T A L B R O K E R S

E X E C U T I V E S T A T E M E N T A B O U T N O V E L B R O K E R S

”Actually, it is not a new phenomenon, because it is simply a broker.

For us, whether it is a broker A or broker B, doesn’t really matter. But

customers that go to these brokers are not the typical broker custom-

ers but rather these are retail customers and 80 percentage of retail

customers are insured by our own sales force.”



While insurance companies struggling to create

the prerequisites to digitalize their processes, all-

in-one insurance managers such as Knip, GetSafe,

Treefin, Clark or FinanceFox enter the market and

offer digital processes combined with the promise

to aggregate all insurance contracts. Additionally,

they provide advice in selecting insurances. One

interviewee claimed that in the background,

most processes are still done manually, e.g., by

scanning documents (see quote below).

With the increased market power of price

comparison platforms such as Check24,

Comparis or finanzchef24, they started to

demand certain formats of electronic exchange.

Insurances differentiate mainly by means of

product management, pricing and risk appetite.

The design and focus of comparison platforms

has a great influence on how insurances can

differentiate. One participant stated that in the

long run, the more powerful price comparison

platforms become, the less possibilities remain to

differentiate with product development as long as

they prioritize the price.

As a third novel digital broker, Insurance-as-

a-Service providers such as Schutzklick15 or

kasko.io16 were mentioned. While aiming at

bringing insurances to the point-of-demand, they

offer a variety of integrations into ecommerce

systems. Hence, it takes only a few minutes for a

marketplace and shop provider to integrate those

Insurance-as-a-Service plugins into their system

in order to offer insurances on the products they

sell. Those market entrants must take no risk and

earn broker commissions. At the same time they

sell white-labeling options and become experts in

selling insurances online because they are able to

pursue A/B split-tests with different visualization

templates for different products and shops.

It was argued that the need to increase efficiencies

will lead to a consolidation in this market in the

long term. But the remaining all-in-one insurance

managers, together with price comparison

platforms, increase and push the demand for

digital information and processes.

A L L - I N - O N E I N S U R A N C E M A N A G E R S

C O M P A R I S O N P L A T F O R M S I N S U R A N C E - A S - A - S E R V I C E

E X E C U T I V E S T A T E M E N T A B O U T

I N S U R A N C E M A N A G E R S

”they promote and push the digitalization per se. They offer electronic

processes, e.g., Knip via digital app, but how do they operate? They

manually scan documents in the background and provide them digitally

to the customer. And that’s something they cannot afford for a long

time. This is why many will not survive. They have to become efficient

and demand.”



Picking up the peer-to-peer model leads to

another type of novel insurance broker. In line

with the sharing economy trend and well-known

from applications such as file-sharing or music

streaming, peer-to-peer approaches are also

applied to insurances by market entrants such

as Friendsurance, insPeer, or Lemonade. Yet, risk

pooling is one of the key insurance concepts. In

traditional business models, insurance companies

pool risks and withhold premiums even if no claim

occurs. In contrast, the social model of the P2P

insurance-brokers allows friends to share one

part of their risk for simple property coverages

with each other [IBM14]. Everything that exceeds a

certain limit is covered by the traditional insurance.

In our interview study, this type of broker was not

considered to be hazardous - risk pooling was

said to be the very nature of insurances.

While the foregoing brokers offered typical

insurance products online, Bought-by-Many17

aggregates long-tail insurance needs of potential

customers, develops policies and negotiates

discounts with insurances, e.g., they offer pet

insurance for rescue dogs or health insurance for

cyclists. Like all other brokers, they earn money

through commissions.

Although CosmosDirekt has already distributed

insurances electronically and directly in the

1980ties, most insurances didn’t. However,

the majority of interviewees expressed the

importance of not losing the direct access to the

customer. There was a general agreement on the

threat that results from the increasing power of

novel brokers. Nevertheless, insurances have

created online distribution channels such as

smile.direct, ZurichConnect or Allianz24.

P E E R - T O - P E E R I N S U R A N C E A G G R E G A T I N G C U S T O M E R N E E D S

D I R E C T V E R S U S I N D I R E C T

I N T E R A C T I O N S


”It is crucial that we don’t lose the direct access to the customer. Other-

wise, we will also lose the possibility to offer services that set us apart,

because whenever there is some form of aggregator or comparison

platform in between, it’s all about the price”



Retail Customer Portal

E.g., myCSS, my.Allianz

Employee Portal

E.g., Swiss Life myWorld, CollectiveHealth, SimplyInsured

Corporate Customer Portal

E.g., my.Allianz

All-in-one Insurance Portal

E.g., Knip, GetSafe, Clark

All-in-one Finance Portal

E.g., Ping An, Moneymeets

Attempts to create customer portals across industries

E.g., Swisscom DocSafe (CH), E-Post Office (CH), E-Post-Scan (DE)

All-in-one FinancePortal

E.g., Ping An, Moneymeets

Retail

Corporate for theirEmployees

Corporate

Company-specific Across InsuranceCompanies

Across Financial Service Providers

Across All Sectors

F I G U R E 7 : Overview of customer portal approaches

Interactions between insurances and their

customers are rare, especially in life insurance

agreements, the customer often has only two

touch points with the insurance company. Also

in case of property and casualty customers,

interactions are often limited to claims and policy

adjustments. As a result of the digitalization, those

interactions are frequently offered via customer

portals as central platform. In both, the interview

study and in our market observations, we found

a great number of insurances start offering such

platforms, e.g., my.Allianz or myCSS.

C U S T O M E R R E L A T I O N S H I P



To date, customer portals of insurances are often

limited to company-specific services. Besides

these insurance-specific portals, various all-in-

one insurance managers enter the retail market

and gain in importance (see Figure 7). As a

consequence, they gain the ability to take over the

first point of contact (FPOC), which gives them more

power in regard to customer-facing processes

such as policy administration and claims handling.

From a customer’s point-of-view, products and

services are aggregated across insurances and

offered in a single portal. Moreover, there exist

customer portals that aggregate products and

services across financial, health or employee

benefit services.

And there are even attempts to create portals that

aggregate services across sectors. One example

are digital platforms that aim at providing a smooth

transition from paper-based letters to digital

mailboxes by scanning documents and providing

customers with the opportunity to select channels

on a central platform. For example, to choose to

receive policy updates digitally and invoices via

post. While this simplifies a lot for insurances and

customers, it outsources the customer interaction

in a time in which customer-orientation becomes

increasingly relevant.


”For many years we always assumed that we must build such portals by

ourselves, and that we need to care about the whole authentication and

identification – today, there are providers who offer exactly this, e.g., the

Swiss Post or Swisscom do work on such portals.”


I N F O R M A T I O N S Y S T E M S L E V E L : S O C I O - T E C H N I C A L C H A L L E N G E S T O A P P R O A C H

Information Systems Level: Socio-Technical Challenges to Approach Subsequently, we report on eight socio-technical themes that insurances need to consider in a digital world in order to successfully harness information systems for enabling business. While the presented dimensions are not exhaustive, we aim at providing food for thought to challenge and rethink digitalization efforts.

In our interview study, it was often stated that

an increasing degree of automation reduces the

number of simple and repetitive tasks. Rather than

using one particular application that supports a

certain process, employees need to choose from

a set of enterprise software that has to adapt to

the fast changing needs. Affected by the private

use of mobile solutions and IT provisioning via app

stores, employees expect IT departments to tie in

with user-centered solutions and move forward

with consumer based IT services [BAL15]. At the

same time, the line between corporate and private

devices, applications, and services is blurring and

trends such as Bring-Your-Own-Device (BYOD)

are evolving [JAR13]. However, in on-site observa-

tions and in-depth interviews we found that many

employees have a low awareness of the available

set of enterprise applications and services. While

a plethora of tools have been introduced over

the years, there seems to be a lack of awareness

and integration into the workflow of employees.

Furthermore, and in contrast to consumer appli-

cations, enterprise applications often don’t meet

employees’ needs. Often, its utilization is reduced

to the mandatory processes.

0 1 Employee-oriented and situational enterprise applications



For example, we were told a HR performance

management process that is supported by a

longstanding enterprise application. Interviewees

stated that the incomprehensible enterprise ap-

plication led them to reduce its use to the man-

datory number of times a year. On the other hand,

employees started to use their own informal

approaches such as using Evernote or Microsoft

OneNote to capture notes within their workflow

and to transfer these notes once a year. This is

just an illustrative example but the phenomenon

that digital users increasingly develop their own

processes and process configurations is also

discussed in research [BRE14]. [GUM07] argues

that the traditional value chain virtually stops,

when the customer has bought something but the

product has usually no value in itself. If it remains

unsold, the supplier does not recover its cost and

if it is unused, the customer’s money is wasted.

The same may be applicable to enterprise appli-

cations, which only embrace their full potential if

employees use it. Firms have to figure out how a

set of enterprise applications and services can

be provided in an employee-oriented way. The

goal should be to provide employees with the

right application and service, considering their

context and need. Therefore, it might be fruitful to

investigate how and in what situations employees

use or don’t use certain enterprise applications

and services. This can be harnessed to better

integrate applications and services into the work-

flow of employees and to provide employees with

recommendations based on their current context

and needs.


”Document management, collaboration platform, confluence wiki […]

everything is done a bit but nothing really good that it would be actually

used.”

”We have a plenty of channels and platforms – social network, intranet,

SharePoint, wiki, file sharing, email, chat clients – but no one can find

what he or she needs”



Cooperative information systems aim at flexibly

supporting processes at many points along the

spectrum from highly specified to unspecified

processes [BER00]. We argue that if more and

more highly specified processes are automated,

then, the support of more unspecified processes

becomes more relevant. As stated by [BER00],

such information systems mostly aim at providing

context to the employees. One way of providing

context is to make communication visible. Using

enterprise social networks leads to an increased

degree of message transparency and network

translucence, which again results in an enhanced

ith the advent of the digitalization, the volume of

data doubles every 18 months [IDC12]. Moreover,

application programming interface (API) ecosys-

tems unlock latent value as an increasing num-

ber of external data is available [PET14]. Besides

individual data providers, aggregators provide a

growing number of public API’s, e.g., the listing of

the Programmable Web18 already contains 14’630

public APIs on 14 February 2016. In addition to

publicly available API’s, more and more data bro-

kers and data aggregators appear, e.g., Human

API19 offers an integration of health data from a

diverse set of sources such as genetic data from

23andMe20 or activity data from Withings21. This

comes with the drawback that the more depend-

encies exist the more complex it becomes for an

enterprise to manage them [PET14]. Opposed to

awareness of who knows what and whom [LEO14].

It is argued that this kind of meta-knowledge can

lead to more innovative products and services and

less knowledge duplication [LEO14]. Furthermore,

the individual performance of employees is said to

be influenced positively by social connectedness

[KUE15]. Hence, it seems fruitful to investigate

how and in what context it is beneficial to better

link and integrate enterprise social networks into

the daily workflow of employees.

this, many interviewees stated that even within

the same insurance company, data access is

strictly restricted, e.g., data exchange between

property & casualty and life insurance, is rare.

Privacy and regulation issues play an important

role thereby. Nevertheless, new opportunities to

harness a wide range of internal and external data

come also to the insurance industry. While exter-

nal data such as accident analysis and statistics

have already been used for a long time, new di-

mensions arise in all stages of the value change,

e.g., driving behavior data, health data or climate

data. Besides the insurance-specific data, it is

also worth to consider insurance-independent

external data such as LinkedIn profiles for the

talent management.

0 2 Integration of enterprise social software

0 3 Management of internal and external data



Software development and operations are more

and more industrialized, e.g., the application

deployment and application scalability is increas-

ingly commoditized through virtualization and

containerization [Kra14]. In regard to the develop-

ment, release cycles become faster and time-to-

market is reduced [MKA+13]. This goes along with

an ever growing degree of automatization estab-

lished with Continuous Integration, Continuous

Delivery or even Continuous Deployment [SWA14].

Furthermore, the gap between development

and operations is mitigated, the so-called rise

of DevOps. This results in a closer collaboration

of developers and IT system operators towards

It becomes crucial to decide which data is really

relevant. Enterprises should not strive for more

data but for the right data – shifting the focus

from data collection to data selection. At the same

time, it seems worth questioning what data to

collect independently, with cooperation partners

or to buy from data brokers. With an increasing

share of external data, especially when bought via

data broker, being aware of the quality of the data

should become the center of attention. Is there a

way to ensure data quality by self-generating and

self-repairing master data?

a common goal with little or no organizational

boundaries between [SWA14]. In the past, stand-

ard software combined with outsourcing of non-

core activities has yielded to efficiencies in the

supply chains of companies [BHA13]. Given the

increased degree of industrialization of IT and the

increased degree of pervasiveness of IT in every

business domain, it seems fruitful to rethink the

predominance of standard software ecosystems.

Which stages of the value network should be

completely outsourced to partners, which stages

should be covered by standard software and what

core activities should be developed.

0 4 New perspectives on make-or-buy decisions


”You can’t see the forest for the trees”

”How to know what is relevant? What is true?”

“What data can be deleted? Do we need an expiration date?”



Several works show how the design of workplace

environments, even beyond office buildings in

the entire neighborhood, can encourage personal

interactions between digital knowledge workers,

leading to increased productivity and creativity

[WAB14, CAP13]. While designing workspaces is

not necessarily scope to the IT, workplaces are

increasingly equipped with sensor technology,

which provides a plenty of new data. On the other

hand, harnessing this newly available data be-

comes scope of IT. For example, the startup com-

pany Locatee22 uses implicit sensor technology

and analytics to measure the utilization of desks,

meeting rooms, and breakout- and collaboration

zones. The arising opportunities are by no means

limited to optimizing workspace and reducing

fixed facility costs. Employees can be provided

with tools and services that provide information

and analyses, e.g., to help optimizing meeting

schedules and selecting the right workplace.

The majority of new employees entering the job

market are digital natives with new expectations

to their future working environment [DAV14]. It

becomes a strategic challenge to harness the dig-

itally equipped infrastructure in order to address

newly emerged needs such as mobility, seamless

experience across multiple devices, self-care,

social media and collaboration [CAP13]. The IT

as enabler is predestined to answer the question

how this data from digital workplaces and smart

connected devices can be harnessed to under-

stand how employees use available resources.

The question is, how those insights are linked to

the journey of insurance employees and providing

them with hints for future actions?

0 5 Harnessing data of digitally equipped workplaces

0 6 Flexible and scalable IT-architectures


”If we do not meet the technical prerequisites, then, we can talk on and

on about digitalization and digital interactions with customers and part-

ners, but we cannot make it. Or we indeed make it but only in the sense

of making it look like it was modern […]”

User experience

“In this regard we’re partly missing the prerequisites in terms of IT infra-

structure. But that would be the next step - how can we use these tools

across countries?”

[…]

How can existing online business models, which we already have in

certain countries, be recycled and reused in other countries as quickly

as possible to use synergies?



Today, the speed of global supply chain

orchestration is becoming an important driver of

competitive advantage [BHA13]. In our interview

study, we found that the technical prerequisites

to rapidly add and remove interfaces between

systems are often not met. But the need to

rapidly integrate with new information systems,

either internally or along the vertical value chain,

increases. If successful, rapidly scaling those

projects across the multi-national organization

becomes a tipping point. Therefore, the IT

infrastructure consisting of hardware and software

needs to create appropriate conditions by

providing flexible and scalable architectures that

allow to rapidly integrate new systems and rapidly

scale globally what has been locally prototyped.

Data collection and analysis in the form of risk

assessment is the core of insurances. Deriving

from the previous chapters, analytics plays an

increasingly crucial role across all steps of insur-

ance value chains. Thereby, a growing quantity of

data can be used to build products and services

that better meet customers needs and allow to

differentiate from competitors. Leveraging data

to increase the accuracy of risk models enables

insurances to reward customers for good behav-

ior, to offer usage-based pricing, to detect frauds

more efficiently, and much more. The results of

applying analytics might be specific to certain

domains such as risk assessment or marketing.

However, the science, tools, knowledge and corre-

sponding job profiles behind might share similari-

ties. Therefore, it seems fruitful to think about the

usefulness of providing analytics-as-a-service to

operational units in order to enable them to be in

charge of domain-specific implementations, while

ensuring to make global sense at the same time.

0 7 Exploiting analytics across the value chain



As soon as information is digital, mining infor-

mation and process flows becomes much easier.

However, many participants of the interview study

reported that paper-work is still ubiquitous today.

Hence, the first step consists of digitization of

analogue information and processes. It seems

worth mentioning that it is important to always

think one step ahead, e.g., processes should not

just be mapped one-to-one from analogue to

digital. Various digital capabilities such as pro-

grammability, communicability, traceability, and

associability [YOO10b] can be leveraged. Digital

information and process flows enable seamless

collaboration, workflow management, Business

Process Management and automatization. But

alongside with all the processes well-specified

process flow that can be captured digitally, a lot

of processes occur ad-hoc. In this context, one

participant mentioned an illustrative benchmark:

The public transportation network of minibuses

in Nairobi23 can be described as an distributed

ad-hoc network of drivers. While passengers are

transported in cheap vehicles with loud music

and sparkly disco balls, routes change at will.

Therefore, it is a challenge for foreigners to know

which minibus to take. This can be approached by

either scheduling routes and drivers well or by re-

verse engineering the ad-hoc network. The same

applies to ad-hoc processes in enterprises. There

might exist cases where ad-hoc processes should

be prevented, but often, they are useful. Never-

theless, in a digital world a variety of alternatives

to reverse engineer exist, e.g., by exploiting logs

of enterprise software or hardware. In case of the

minibus network, passengers used a smartphone

app to track the route. Aggregations enable to

draw the big picture of the ad-hoc network, which

in turn can be provided to the passengers

0 8 Digitize, transform and mine information and process flows


“Today we still do not know if and when paper-based mail arrived and

where exactly it is currently edited (contract, request, etc.). The goal

is to have a complete digital dossier. Once the data is digital, process

mining will play an important role.”

”Where does digitalization start and where does it end? If you compare

different companies it is noticeable that each company sees different

opportunities and everyone associates other fears with digitalization.

Many equalize digitalization with apps and wearables but for me it starts

somewhere before. Digitization begins with all the boring topics such as

unstructured or weakly structured data in paper format.”


C O N C L U S I O N

ConclusionDigitalization is pervasive in all industries and with

direct impact on every part of value chains. Yet,

insurance companies are convinced that most of

their processes, beside IT operations and devel-

opment, outperform in the market [MAA15]. In or-

der to continue doing so, the ability to understand,

attract, and retain valuable customers becomes

path breaking. All steps in the value chain become

more interrelated, data-driven and the boundaries

between industries fall apart. Therefore, we sug-

gest to consider two strategic decision areas: (1)

the position in the digital world of ecosystems and

(2) the conscious choice of the target customer.

Given the strategic framing, decisions on the

operational level can be made, e.g., about which

partner to work with in order to improve da-

ta-driven core processes or responding to the

new digital brokers such as all-in-one insurance

managers and price comparison platforms, which

put themselves between the insurance and the

retail customer. Furthermore, new technologies

have the potential to further push industrialization

forward by automatizing processes [MAA15]. Yet,

the potential of industrialization is not utilized,

only 40% of processes are automatized [MAA15].

In regard to information systems, we further

propose eight themes to think about: (1) employ-

ee-orientated and context-sensitive enterprise

applications, (2) the wise integration of enterprise

social software into operations, (3) the conscious

management of internal and external data, (4)

new perspectives on make-or-buy decisions, (5)

digitally equipped workplaces, (6) the importance

of flexibility and scalability of IT architectures, (7)

the pervasive need for analytics across the value

chain and (8) the digitization, transformation and

mining of information and process flows.


A P P E N D I X

Appendix

We adopted a multiple-case study methodology

[YIN03] to develop theories for this report induc-

tively, grounded in empirical data [EIS89]. First,

we collected data by conducting explorative and

semi-structured interviews. This endeavor took

place in the period from October to December

2015. The objective was to investigate digitaliza-

tion in the insurance industry from different points

of view. Therefore, a wide range of participants (1)

with operational and strategic background and (2)

from different divisions was selected (see Table 1).

All interviews were conducted in German or Eng-

lish and lasted between 30 and 60 minutes. While

one interview was conducted via Skype, all others

were face-to-face conversations. Upon conduc-

tion, the recorded interviews were anonymized,

transcribed, and analyzed with the computer-as-

sisted qualitative data analysis software NVIVO

10.

P R I M A R Y D A T A S O U R C E : M U L T I P L E - C A S E S T U D Y

Methodology - How we collected data for this report

Company Sub-department Interviewee Interview details

Alpha Strategy Participant P1 DACH countries, October 2015, face-to-face

Strategy Participant P2 DACH countries, October 2015, face-to-face

Collaboration Participant P3 DACH countries, October 2015, face-to-face

Strategy Participant P7 DACH countries, November 2015, face-to-face

IT Management Participant P8 DACH countries, November 2015, face-to-face

IT Architecture Participant P9 DACH countries, November 2015, face-to-face

Beta Security Participant P6 DACH countries, November 2015, face-to-face

IT Management Participant P10 DACH countries, November 2015, face-to-face

Gamma Innovation Participant P4 DACH countries, October 2015, face-to-face

Delta IT Strategy Participant P5 DACH countries, November 2015, face-to-face


A P P E N D I X

Second, our research is informed by empirical

data about digitalization efforts collected

from publically available sources. A list of 192

digitalization efforts in the insurance industry was

collected from October 2015 through August 2016

and includes both, efforts from InsurTech startup

companies and from traditional insurance firms.

As [OLI11] found that around half the innovations

in the financial sector were first developed by

non-traditional institutions, we put our focus on

the former. An in-depth analysis of these efforts

consisted of three coding iterations. The first

round is concerned with labeling digitalization

efforts and resulted in 54 codes. In the second

round of coding we identified commonalities

behind each of these 54 efforts, resulting in 18

distinct themes. Finally, we mapped these themes

onto an exemplary insurance value chain (product

development, underwriting and risk assessment,

marketing, sales and distribution, customer

relationship, claims management).

Besides conducting interviews, we took into

consideration various secondary data sources.

First, empirical observations from innovation

projects at University of St. Gallen were included.

Over nine months, project teams of four graduate

students cooperated with insurance companies

(two teams from September 2014 – July 2015

and three teams from September 2015 – July

2016). While the teams pursued a user-centered

Design Thinking approach, we considered multiple

sources of evidence [YIN03], namely prototypes,

documentations and interviews with potential

users. Second, presentations and discussions at

an insurance congress in Germany in autumn 2015

have led to further insights about digitalization in

the insurance industry.

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Footnotes


I M P R I N T

Series on Research in Information Systems Management and

Business Innovation / Volume 6, 2016

© 2016 Institute of Information Management

Produced by

Institute of Information Management

Chair of Prof. Dr. Walter Brenner

University of St.Gallen (HSG)

Unterer Graben 21

CH-9000 St.Gallen

www.iwi.unisg.ch

Authors

Emanuel Stoeckli is Research Associate at University of St. Gallen.

You may contact him via phone at +41 71 224 3239 or by

e-mail at [email protected].

Dr. Falk Uebernickel is Assistant Professor for Information

Management at University of St.Gallen. You may contact him via

phone at +41 71 224 3774 or by e-mail at [email protected].

Prof. Dr. Walter Brenner is Full Professor for Information

Management at University of St.Gallen. You may contact him via

phone at +41 71 224 2409 or by e-mail at [email protected].

Contact

Institute of Information Management

University of St.Gallen (HSG)

Unterer Graben 21

CH-9000 St.Gallen

Switzerland

Tel.: +41 71 224 3807

Fax: +41 71 224 3296

Graphic Design & Layout

Paul Grabowski

www.paulgrabowski.de

This study was financially supported by

Allianz Managed Operations & Services SE

D I G I T A L V E R S I O N

Imprint

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Documents

Stoeckli et al. (2016) - Digitalization in the Insurance Industry