Future Insurance Transformation: Fit For The Digital Future

The insurance industry moves between regulatory requirements, digitization, new competitors, and changing customer behavior. This balancing act between regulation and digital innovation confronts insurance companies with the critical question: make or buy?

In insurance companies, the digital transformation should make processes more efficient, reduce costs, and offer customers modern services and excellent customer experiences. In addition to these challenges, there are numerous regulatory requirements. In addition, corporate and IT architectures are changing massively and how they are operated. The regulation-compliant operation of the infrastructure and the development of your software solutions are becoming more and more expensive. These are important reasons to modernize or make the IT infrastructure more flexible and say goodbye to outdated architecture paradigms. The path to the future leads to current technologies such as cloud computing, artificial intelligence, robotic process automation (RPA), and other modern IT solutions.

Make Or Buy: Insurers Must Respond To The Pressure To Modernize

Insurance companies are already digital businesses and are under pressure to modernize. Without using information technology, software, and largely digitized and customer-centric processes, the business model can no longer be mapped cost-efficiently and competitively. The IT system world has become a critical value-added factor.

The pressure to modernize has arisen in recent years because the in-house systems are getting on years. The employees who look after the systems often reach retirement age, and in times of demographic change and the resulting “war for talent,” it is difficult or costly to get recruits. The legacy systems are also challenging to maintain and expand due to the technical framework. This means that new legal or individual requirements are challenging to implement. The integration into the architectural landscape is becoming more complex and expensive. Decentralized systems are also often more economical to operate. In addition, there is growing competitive pressure from new InsureTech start-ups, which can adapt their digital appearance and corresponding processes more quickly to customer requirements. These companies have an advantage here due to their freedom from technical legacies.

The replacement of legacy systems and the implementation of modern architecture is a risky process involving high investments. To minimize risks, insurance companies are faced with whether and to what extent standard software and service providers can be used. The decision for or against the use of standard software and service providers is a strategic one and will shape the company for years to come. This is particularly true for core systems such as inventory management or benefit and claims processing.

The question “Make or buy?” is therefore central to the different orientations of the IT organization. Professional analysis is a basis for individual decision-making. In general, it can be stated that standard software is now a natural alternative in all areas of an insurance company, which IT and project managers should seriously consider when it comes to modernizing systems. Depending on the provider and corporate strategy, synergy effects can also be used, and a new IT platform can be successfully implemented for the entire insurance operation. Cost reduction potentials can be realized, and business processes can be adapted flexibly. Related implementation projects are also straightforward to control.

Information Security: The Trend Towards Outsourcing IT Security To Specialist Providers

In addition to automated and customer-centric processes, the trend towards digitization and ecosystems also means that these are becoming dependent on computer systems. The dark side of this development is that data leaks, breaches, and cyberattacks keep occurring. In this way, millions of user data can be withdrawn, and entire IT systems and thus the insurance company can be paralyzed simultaneously. The insurance industry must protect itself and customer data. This means protecting your own IT systems and ensuring the customers themselves against cyber attacks. To enable comprehensive security, large IT companies and startups have adopted cyber security. They provide solutions for prevention, detection as well as response.

Insurance companies can prevent cybercrime by cooperating with specialized IT companies and start-ups that use modern technologies such as artificial intelligence, machine learning, biometrics, and cyber risk management platforms. This means that cyberattacks, criminal activities by users or employees, and security gaps in login and payment processes can be uncovered more quickly. If the insurance industry invests in start-ups, it can bring new solutions onto the market that protect insured persons from cyberattacks in the private and commercial sectors. The main advantage of acquiring young companies is that solutions can be developed more freely and adapted to individual requirements.

The larger the insurance companies’ partner networks and value chains, the more critical to have adequate protection mechanisms against cyber threats. The insurance industry needs the solutions that make your IT as resilient as possible, anytime, anywhere. Security concepts should be precisely tailored to business needs to build strong defenses against cyberattacks before they happen. With a focused 360-degree analysis and threat intelligence set up for typical insurance industry threat scenarios, insurance organizations need cyber resilience across their entire ecosystem. The defense should be tested within the framework of stress and penetration tests using realistic attack simulations. This allows companies to understand and imagine how information can be externalized in detail and used by parties who want to harm them. Security is often seen as the biggest obstacle to a cloud-first strategy, but security can support it.

Cyber ​​Prevention Management And Awareness: First Secure, Then Insure

Parallel to the increasing digitization of the value chains, the headlines about successful cyberattacks on organizations is also increasing. In addition to a loss of reputation, there is a risk of severe or existence-threatening financial losses. Especially in the event of the loss of sensitive customer data, high liability risks for the company and those responsible. The dilemma is that even the best cyber prevention cannot offer 100% security since no company knows all the security gaps in its infrastructure in advance and can therefore protect it 100%.

Overall, organs expose themselves to considerable liability risks if they completely ignore cyber threats and do not initiate the process of risk analysis and protection through suitable insurance solutions. In the context of content design, which requires the involvement of specialists, the liability risks are relatively low. Damage from uninsured cyber attacks can – if there is no knowing breach of duty – be insured under D&O insurance.

However, inevitably, insurance alone is not enough. Before a company thinks about taking out a cyber policy, it should ensure that appropriate technical solutions are implemented, that there are enough technical experts, that employees are sensitized, and that structured information security processes exist. Because insurance can protect against cyber threats, it is useless if your own IT landscape is as open to attackers as a barn door. Therefore, long-term investments in preventive measures are usually cheaper than taking out insurance if there are gaps in IT security. Quite apart from the time and organizational effort that arises in the event of an insurance claim.

Service Provider Control: Professionalize Outsourcing Management In The Organization

The service provider control is developing into a critical control point in the company. Especially in areas that are particularly critical to security, outsourcing services to third parties requires a high degree of trust in them. The basis of faith must therefore be continuously checked. It is the task of outsourcing management to establish uniform outsourcing and thus risk management. This is not only of central importance about the risks to be controlled but should also lead to increased efficiency in outsourcing management, which is of essential importance given the economic pressure that insurance companies are under in the current market situation.

Companies that outsource structures with various service providers, Set up subcontractors and dependencies, and control them accordingly, can make strategic adjustments agilely and securely to react to market changes and secure competitive advantages. A professional service provider and outsourcing control are to be set up accordingly in addition to the investment and project control in the outsourcing organization. This is the only way to ensure that the supervisory regulations are observed, and that specific interests are enforced against service providers.

A professional service provider and outsourcing control are to be set up accordingly in addition to the investment and project control in the outsourcing organization. This is the only way to ensure that the supervisory regulations are observed, and that specific interests are enforced against service providers. A professional service provider and outsourcing control are to be set up accordingly in addition to the investment and project control in the outsourcing organization. This is the only way to ensure that the supervisory regulations are observed, and that specific interests are enforced against service providers.