Product innovations in German life insurance
Blending into the background may not be so good in a nightclub, but that does not apply to the automation of business processes. When workflows take place in the background, it means greater efficiency and lower costs. Because, in a company, many processes run according to the same procedure all the time. So they can be performed invisibly and silently in the background.
In view of the turmoil on capital markets, the unbroken stream of new regulatory demands and the growing number of insurtechs, insurance companies are forced to work at boosting efficiency and cutting costs by automating their processes. That is the only way they will be able to compete sustainably. Largely automated processes are also the necessary condition for meeting growing demands for speed and professionalism in communications with customers.
Imagine your insurance customer sends you their new address by email. At many insurers, the email is first forwarded to the clerk responsible. He or she records the change of address and checks whether the data is correct: Does the street exist? Is the postcode correct? And so on. Only then is the new address stored in the customer database. That all costs a vast amount of time and money. Such tasks can be performed much faster and more cheaply by completely automating the process. In the insurance industry, this process automation is called background processing.
Background processing is not visible for users and cannot be influenced by them. It takes place completely in the background and no one has to intervene to initiate or perform the process. Typical tasks suitable for background processing include changing portfolio data, status enquiries, presorting of incoming mail, mass mailings of notifications, reminders or claims payments. Whereas simple business processes can run completely automatically, more complex procedures require manual intervention by the user at certain junctures. Thereafter, the workflows disappear into the background again. At the heart of an automation strategy is the sensible use of technology; in other words, audit-proof workflow management systems that work reliably and are also accepted by the people in the department.
Digital technologies have created opportunities for ever greater integration of systems across departments, lines of business or company borders. That makes it possible to exploit to the full the potential represented by the automation of business processes. Many insurers have since recognised this. For several years now they have been working on solutions to automate their core processes in full or in part. Estimates put the share of automated processes at over 40 per cent of total value added in the insurance sector. That is one of the findings of Industrialisierung der Assekuranz in einer digitalen Welt (industrialisation of insurance in a digital world), a research paper by the Insurance Institute at the University of St. Gallen. It surveyed 176 insurance companies offering health, personal accident, non-life and life insurance in Germany and Switzerland.
A high degree of automation has many advantages. Processes are streamlined and accelerated. The throughput time for standardised processes is shortened significantly. Productivity goes up. Staff can be relieved of routine tasks and can concentrate more on their core responsibilities. And another bonus is that processing quality improves. Because the automatic recording and verification of data leaves less room for errors. And not least: consistent process automation results in lower costs. According to the study mentioned above, further automation is estimated to deliver additional savings of some 14 per cent of total operating costs. This means a potential increase of around ten per cent in operating profit. And this is before the cost benefits of a smart digital strategy are taken into account. Digital technology, deployed correctly, boosts efficiency and profitability – so expanding the range of self-service offerings for consumers also belongs on the agenda.
Realistically weighing the costs and benefits of manual, labour-intensive processing against the advantages of a fully or partially automated insurance operation is not a trivial matter; it requires precise knowledge of the insurance company’s internal organisational structure and processes.
msg life specialises in the automation of business processes in the insurance industry. The software and portal solutions from msg life stand out for their exceptionally high degree of automation. With more than 35 years of market experience and over 100 implementations of complex IT systems at life insurers and pension funds, msg life has a unique combination of industry knowledge, process know-how and IT competence. Companies in more than 30 countries are successfully using the modern standard solutions from msg life.
• Cost reductions
• Processes are accelerated, streamlined and harmonised
• High processing quality
• Productivity increases
• High data quality
• Fast, professional customer communications
• More satisfied customers and employees
• Basis for successful digitisation and online strategy
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