Digitalisation – a key pillar for resilience

By using technological progress consistently and continuing to digitalise our company consequently, we are improving the benefits for our customers, our position in the market – and our resilience as an insurer. An editorial by ERGO CDO Mark Klein.

The pace of change around us is accelerating. And so is the number of external shocks. This increases and strengthens our importance as an insurer for society and our fellow citizens - but at the same time, the demands on our business model are increasing as well. By using technological progress consistently and continuing to digitalise our company consequently, we are improving the benefits for our customers, our position in the market – and our resilience as an insurer.

No one can avoid the topic of ‘generative AI’

It’s traditionally the tech scenes’ kick off of the year: the Consumer Electronics Show (CES) in Las Vegas. Once again it set the tone for the digital products of tomorrow this year. The CES is where the tech elite meets to discuss the latest trends and developments. In addition to the opportunity of testing the latest technologies and products or gaining industry insights and inspiration, the CES is also regarded as an indicator of the technological leaps we have made within one year – and which technologies have made it to market maturity.

In the field of Artificial Intelligence (AI), a look at the past twelve months is enough to see this: No one could avoid the topic of "generative AI" in 2023. Whether privately or professionally: Everyone was testing and prompting, integrating and fine-tuning. At ERGO we also dedicated ourselves to the topic of "Large Language Models" in a specific project team and worked on initial solutions for use under the applicable legal and regulatory requirements. There is a reason for this.

Because, as mentioned above, we should be prepared for the fact that external shocks and their consequences are increasingly becoming the norm. In the coming years, we will see the consequences of climate change or the economic impact of geopolitical or even increasingly domestic political tensions much more frequently. To make matters worse, structural change will have a strong impact over the next five years – on all players of the insurance industry. This is because the baby boomers are retiring – and Generation Z will not fully fill the vacant positions.

Insurers are tasked with providing security

But it is precisely in these turbulent times that we as insurers are needed more than ever. Especially now, when many things that have long been taken for granted are becoming increasingly difficult and uncertain, it is our responsibility to provide security to our customers, employees, partners and stakeholders. As an insurer, we make a significant contribution to social, individual and economic stability. We are central to society.

To master this task, we must be economically strong ourselves and work consistently on our resilience and competitiveness. To do this, we must consistently and continuously digitalise our services and processes along the entire value chain.

Because, even though we are currently living in probably the most volatile times, we are also in a phase of rapid technological progress. With AI, robotics, phonebots, virtual worlds and process mining, we have unprecedented opportunities for process optimisation. We can inspire our customers with simple, innovative and customer-centric solutions. We can relieve employees of routine tasks and free them from peak workloads. And as a company, we benefit not only from greater efficiency and effectiveness – but also from ever new growth opportunities, thanks to digital business models and digital ecosystems.

Digitalisation must pursue clear goals 

But there is no easy answer which technologies should be prioritised to handle this. Each company must take a look and determine its individual requirements. What are the biggest operational challenges that need to be solved? What is the short, medium and long-term business strategy? The choice of tool depends on this, as digitalisation for the sake of digitalisation would be the wrong approach! It must have a clear value-creating advantage and a clear goal.

And it is also clear that digitalisation is not an assembly line production process where everything is delivered immediately. It takes time. And not everything will always go as planned. But those companies that are willing to learn, test and consistently embrace technological and iterative optimisation will be able to manage future risks better, faster and more effectively and thus position themselves for resilience.

Artificial intelligence is without question one of the key technologies of the 21st century and offers great opportunities for the insurance industry. Every day, there are hundreds of thousands of contact points with customers where language has to be processed. Insurance companies are therefore predestined for the use of Large Language Models and the tools based on them. However, the insurance industry is also one of the most heavily regulated sectors, which is why the use of the technology must be carefully considered and implemented.

Digitalisation must be considered holistically

Furthermore, a digital transformation is always also a cultural transformation. Employees must be actively taken along on this journey. It is about taking concerns and fears seriously, demystifying technologies and showing what the tools can do and what not. This requires a clear and continuous communication, both with the co-determination committees and with the employees. However, if implemented correctly, it not only turns colleagues into users of the technologies. They become enthusiastic ambassadors for the applications! We were able to experience this ourselves at ERGO when an initial scepticism towards robotics turned into pure joy. Robots were given their own names by the departments and their anniversaries were celebrated.

For me, digitalisation is therefore a key element for the future resilience and profitability of our industry – and our company. After all, those who consistently and continuously integrate digitalisation into their business processes will have clear advantages in the competitive market. This is not only our entrepreneurial duty in times of price increases, climbing loss ratios and ever higher costs, but also our social responsibility. 

Please note: This article was first published by Versicherungsmonitor.