Paper-controlled processes and mountains of files are on the hit list of industrial insurers. Everyone is talking about digitization. But what happens if insurance products are mapped in IT systems? We talked to business analyst Karoline Büdel about the challenges.
mgm-Redaktion: What are the requirements for digitizing an insurance product? And what is the task of the business analysis in such a project?
Karoline Büdel: From the insurer's point of view, the wording and underwriting model of the product must be fixed. As a business analyst, I accompany the process of bringing the product into digital form on this basis. This includes the design of a suitable data model, but also the meaningful arrangement of fields in online forms. In the ideal case, the insurer knows exactly what will be standardized. Practical experience shows, however, that many questions only arise during implementation. For this reason, we recommend that those who later build the software be involved in digitization projects as early as possible.
If the machine is to evaluate cases, clear rules must be defined.
mgm editorial team: Why is standardization so important?
Karoline Büdel: Standards are decisive for being able to execute processes mechanically. There must be certain rules according to which the system makes decisions. For commercial insurance, this requires a rethink. Previously, underwriters looked at each case individually and assessed risks manually. There was a lot of experience and gut feeling involved. However, if the machine is now to evaluate cases, clear rules must be defined. It must be established where the sales partners are deliberately left room for manoeuvre and where non-negotiable targets remain. One of my tasks in the context of business analysis is to sound out and specify these rules together with the customer. For me this is one of the most exciting aspects of my work.
mgm-Redaktion: Which approach is promising to define these rules together with the customer?
Karoline Büdel: You have to ask the right questions. Our contacts at the insurers have an incredibly extensive knowledge of all conceivable insurance cases. This knowledge must now be transformed into structures that can be mapped in software. A good starting point, for example, is to look at parallels between cases and to query boundaries. If, for example, the equity ratio of a D&O insurance policy is too low, the insurer automatically depends on an insolvency exclusion above a certain limit. Exactly such clearly defined limits, from which a clause is automatically added, can be mapped very well in the IT systems.
mgm-Redaktion: What changes are there for the underwriter?
Karoline Büdel: You have to differentiate... Basically we are dealing with two types of systems: Some projects deal with the digitization of complex products. The focus here is not so much on automation as on making work easier for underwriters. The system supports you, for example, in document generation and premium posting. On the other hand, there is the automation of the distribution of standard products. Here the underwriters are usually very grateful that they are relieved of repetitive standard tasks and have more time for the exciting cases.
The limits of what is feasible are increasingly shifting in the direction of more complex risks.
mgm-Redaktion: Will digitalization soon lead to the automation of processes even with more complex risks?
Karoline Büdel: Yes, the trend is clearly in this direction. For example, we are already dealing with cases in which complex risk assessments are automated by scoring. The basis for this is provided by current Big Data systems. Nevertheless, in the long term there will continue to be complex risks where fully automated assessment is not possible. But the limits of what is feasible are clearly shifting more and more in the direction of more complex risks.
mgm-Redaktion: What is important for a good cooperation between insurer and IT service provider?
Karoline Büdel: Of course there must be openness from both sides. As a service provider, we try to implement the ideas of our customers as accurately as possible. In many cases, however, these ideas are only really put to the test during implementation. Every detail must be right. All cases and exceptions must be clearly defined. If there are gaps, new solutions have to be developed together. This is a demanding process that ultimately leads to a better understanding of the insurance products concerned in the digital context. Basically, the idea that everything can remain as it is - only digitized and automated to the maximum - is an illusion. Most customers also know this very well and this is - if not the - central challenge of digitisation in industrial insurance: you have to be prepared for change.