For all cases – how insurance companies get fit for the future
Meeting customers in person is still paramount for insurance companies. But here in the Region Hannover, the industry with some of its big players has gone through an amazing transformation. Issues such as artificial intelligence, digitalisation and data security or climate-friendly facilities will play a crucial role in the future of the industry.
With around 25,000 employees, the insurance industry accounts for around five percent of the total workforce in the Region Hannover. It is not just the statistics that count but also the global significance of the companies involved. One of these global players is the Talanx Group based in Hannover, Germany’s third-largest insurance group is also one of the largest in Europe, with brands including Hannover Rück SE and HDI, among others. The latter was also the eponym for the arena of the football club Hannover 96 from 2013 to mid-2022. HDI (liability association of the German Industry) is one of the city’s traditional companies and has been based here since 1903. Hannover Rück SE, founded in 1966, is the third-largest reinsurer in the world with a premium volume of more than 28 billion Euro.
VHV, VGH and Concordia are other mainstays
Hannover is also the headquarters for VHV (Vereinigte Hannoversche Versicherung, VGH (Versicherungsgruppe Hannover), Concordia Versicherungsgruppe, Mecklenburgische Versicherungsgruppe and Wertgarantie Technische Versicherung in Hannover. That means concentrated know-how for the insurance industry is pooled here in the region. And it is exactly this know-how that is currently being used to deal effectively with the huge challenges facing the industry. Some of the key elements include sales channels, artificial intelligence, digitalisation, cyber security and reforming retirement provision. A look in the boardrooms of the insurance companies based here is all it takes to gain an impression of developments. But let’s take one thing at a time.
Trust was and still is the key criterion when someone takes out an insurance policy.
When asked how customers would prefer to take out insurance, 39.5 percent answered: “with an insurance agent I trust”. 36.1 percent opted for the answer “an insurance company website”, followed by 29.5 percent for “directly with the insurance company” by phone, e-mail or chat (study by PwC Deutschland and Versicherungsforen Leipzig, 2021). The survey clearly showed that customers would like to see digital signatures, WhatsApp chats, customer portals and video telephony remaining in place even after the pandemic.
What artificial intelligence already does
Customer service with chat bots, using apps and online has already been expanded to the maximum extent. It is fascinating to see how the insurance industry makes increasing use of artificial intelligence. It opens up new prospects, from rapid help in case of damage via 24/7 service functions through to better, innovative insurance offers. These areas clearly need less manpower. Artificial intelligence also helps with damage assessment and handling, fraud detection and consulting. For example, the new telematics tariff offered by Tesla in Texas/USA shows drivers which insurance premium applies to their current driving style in real time on the screen. Careful drivers can reputedly save up to 60 percent. SV Sparkassenversicherung already gives its customers the option of regulating minor damage themselves, with assistance from artificial intelligence.
Like all others in the industry, VHV (Vereinigte Hannoversche Versicherung) and VGH (Versicherungsgruppe Hannover) are well aware that data availability is an increasingly important competition factor. More data in better quality brings greater knowledge of the business segment. Data Analytics help to develop pinpointed services and products from large quantities of data. After all, the customer base is highly diversified in terms of expectations and needs. Private car owners need swift claims handling when the need arises, while insurance guarantees play an important role in the construction industry, for example. Here VHV as a construction insurer has worked with R+V to create a digital solution with the Trustlog guarantee portal. On the other hand, the VWV website offers fully automated risk assessment when applying for a term life insurance. Ideally, the customer receives a policy immediately at the end of the process.
It transpires that process optimisation and change have to be anchored in the corporate culture and lived accordingly. The key is to tie digitalisation in firmly with the strategic goal of focusing on customers and sales partners. When planned and implemented properly, digitalisation safeguards the future of the company, creates jobs and strengthens a company in the face of competition. The industry is naturally making great investment in data security and availability. And in new insurance offers, for consumers also want adequate insurance against data loss.
Changes in retirement provision
Insurance and retirement insurance products will be sold increasingly through bank staff. The industry is in agreement on this. While private retirement provision plays an increasingly important role with statutory pensions scarcely able to provide more than a basic income, the guaranteed interest on life insurance has been cut by law to 0.25 percent, compared to the previous maximum rate of 0.9 percent. No insurer may exceed this when calculating new products. This presents new challenges for the industry.
Wanted: qualified women
Other buzzwords currently keeping insurers busy consist in promoting women and diversity. The industry is already seeing great demand for the best qualified women. It had been a man’s world for far too long. Many may also be surprised at the diversity of jobs available with insurance companies in order to cover the many tasks with expert efficiency. These include actuaries, risk managers, computer scientists, engineers, visual designers, back- and front-end engineers, rehabilitation and health managers, content and social media managers, insurance lawyers, product managers, insurance medical officers, data scientists, geologists, portfolio managers and even meteorologists (m/f/d, of course). The fact that meteorologists are on the list clearly indicates the growing role played by climate and weather.
Repair beats replacement
This includes climate-neutral capital investments, responsible resources management and mandatory implication of ecological criteria (office buildings) and social criteria (diversity) by 2025, together with aspects of good company management. Insurers help their commercial and industrial customers to become more sustainable. This is also reflected in their own portfolios: insurers advocate concepts for sharing or put a greater emphasis on repairing a defective item instead of replacing it. The companies will be increasingly integrating these criteria in their claims management procedures by 2025.
House of Insurance: number one go-to-point
All of this depends on qualified young talent for the industry here in the Region Hannover. A key role is played by the central initial and further training facilities, including the Sparkassenakademie (academy of the savings banks), the Berufsakademie für Bankwirtschaft (academy of the banking industry), the Bildungswerk der Versicherungswirtschaft (training institute of the insurance industry) and the interdisciplinary Kompetenzzentrum Versicherungswissenschaften (centre of excellence in insurance sciences). The Institute of Risk and Insurance at Leibniz University is a good address in this respect. It is part of the “House of Insurance”, offering contact with the Institute of Actuarial and Financial Mathematics, the Chair of Civil Law, Insurance Law and International Private Law and, in particular, with the insurance companies based in Hannover. The result is a lively exchange of interdisciplinary, practical insurance research, which is exactly what can safeguard Hannover as a place for the insurance industry in future.
Header picture: BalanceFormCreative/stockAdobe.com
