Product innovations in German life insurance
Digital networking is one of today’s most powerful trends – for consumers, but above all for businesses. And of course that applies to the insurance industry too. While the fintech scene disrupts the business models of the financial services sector, insurgent insurtechs are bringing new digital ideas to the insurance market. So insurance companies are driving their own digital strategies all the faster. Cloud computing plays an important role as a vital component of a digitisation strategy.
In cloud computing, apps, services and data are no longer installed on a local computer, but are provided as a service, via either a private or a public cloud. Whereas private clouds run over a company’s own servers or data centres, public clouds are hosted by external providers. Users no longer buy IT in the form of software or servers – they simply rent it.
Cloud-based IT has long been widespread: accounting to Cloud Monitor 2020, a recent study carried out by Bitkom Research on behalf of KPMG, three out of four companies were already using cloud-based computing services in 2019. ‘Cloud computing has become the linchpin technology for digitisation and the extraordinary challenges that the Covid-19 crisis brought about really spelled out the benefits of cloud computing’, says Peter Heidkamp, Head of Technology at KPMG. The majority of German insurers have already started to gradually migrate elements of their IT infrastructure and applications to the cloud and now prefer to procure new infrastructure services and applications from the cloud. What insurance companies find particularly interesting is the Internet of services, above all software as a service (SaaS): SaaS licensing models give users access to software via the Internet – they pay a fee to cover use and operation, which in some cases saves on acquisition and operating expenses.
Besides flexibility and time to market, economic aspects are factors of crucial importance to the SaaS model. Nowadays, insurers have to constantly adapt their products and services to comply with new regulatory requirements. On top of that, interest rates hardly yield any returns, insurers face more and more cost pressure and competition is becoming tougher. That is why insurers are bound to cut costs! SaaS offerings can help with that, because they have enormous potential, especially in terms of cost reduction and control, productivity and reaction times. The use of SaaS can substantially reduce the cost of IT. There is no need for expensive purchases and investment in hardware and software.
Savings are only offset by the variable costs for the effective use of services. Usage-based remuneration in the form of, for example, an annual price per policy (PpP) agreement provides a range of advantages for both the SaaS provider and for insurance companies. Costs are only incurred for the contracts that are actually managed in the system. Usage-based (and indirectly profit-sharing) remuneration is an innovative, fair and exceptionally collaborative alternative to the remuneration models that are currently to be found in the market. Additionally, as the fixed costs per contract are known, the SaaS user enjoys outstanding planning reliability over a long period of time. Small and medium-sized insurance companies can profit too as they can participate in complex systems in line with their requirements and without the need for large, risky investments.
And that’s not all: maintenance and administration work is no longer required, which enables companies to focus even more sharply on their core business and services that make them stand out from the competition. Furthermore, SaaS offers great flexibility, since every service can be provided separately and tailored precisely to the client’s requirements.
Looking at customer relationship management (CRM), there is again a clear trend towards cloud computing: According to a study by the analysts at MUUUH! Consulting in 2018, seven out of ten companies currently use CRM solutions in the cloud or plan to do so in the foreseeable future. The advantage is that depending on their access rights, employees, brokers and clients can all retrieve data quickly in the office, on the road or at home – and across all national borders.
Among the most important criteria when deciding for or against cloud solutions are data protection, data security, standardisation and storage location. Because in the financial and insurance industries many countries have strict rules about where customer data can be stored and who can have access to it. So security solutions for the cloud have to meet additional requirements, above and beyond those that apply to conventional solutions. Insurance companies should therefore only choose cloud solutions and software architectures that meet their standards and specifications in terms of security, compliance, risk management and data integration.
The complete solution msg.Insurance Suite is your entry point to the cloud: This holistic management platform for insurers and pension funds consistently exploits the advantages of cloud computing and offers the highest quality and security standards at the same time. It is a technologically sophisticated system that covers all insurance operations across all business lines and automates all the necessary business processes.
msg.Insurance Suite and its many add-on modules are the benchmark when it comes to standardising processes and making them accessible online, expanding digital customer contact and customer service, and ensuring better integration and compatibility between new and existing technologies. The solution maps all core processes from product development, sales and policy management through to payment processing, loss provisioning and payments. It is made up of various components, which come largely pre-assembled and can be combined depending on the client’s requirements. This reduces the time to market significantly. Transactions are not only available to the back office, but also to brokers and consumers by means of online portals or apps. Our system is already being used successfully by many insurance companies: by using the solution together, our customers profit from economies of scale and from central developments in the form of regular release updates.
msg.Insurance Suite can be run as a cloud solution in a high-performance data centre, either as individual elements or an entire platform. In accordance with the SaaS model, every functional unit available on the platform can be provided separately as a service. Services that are not of relevance to the competition such as the administration of Riester subsidies can be procured from the cloud as managed services. This allows insurance companies to focus on competing and dedicate more resources that are currently tied down in administration to strategic and innovative projects.
The distribution of service tasks is tailored to the requirements and the strategic orientation of the insurance company. For example, msg life can operate and administrate the entire system whilst the insurance company takes control of product development and customer service. Alternatively, insurance companies can access the product models mapped in msg.Insurance Suite and use the access to the cloud services to test innovative product models at no financial risk and with no extensive integration work.
Security and data protection have the utmost priority. Operations run according to established processes in line with the applicable data protection policy and which meet all international security and quality standards. In accordance with the SaaS model, every functional unit available on the platform can be provided separately as a service. Regular software updates also ensure compliance with all regulatory and legal requirements and guarantee that the latest system release is used. With load balancing, the required computing capacity is adapted to the current level of demand. A flexible cost structure, high service quality, less work for your own IT function, strict security criteria and compatibility with existing systems – why not discover msg.Insurance Suite for yourself and boost the productivity and efficiency of your insurance operations.
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