Henrik Naujoks: How Insurers Can Seize the Digital Opportunity

Digitalization can benefit insurers and customers alike, if companies take it seriously and invest in it. Henrik Naujoks, who leads Bain's Financial Service practice in Europe, the Middle East and Africa, shares four things insurance companies can do to seize this immense opportunity.

Read the Bain Brief: Digitalization in Insurance

Read the transcript below.

HENRIK NAUJOKS: The insurance industry has embarked on a massive transformation. And digital is a real game changer with benefits for the customers, as well as for the insurers, especially for those who take this on seriously and forcefully.

Bain and Google joined forces to identify the key technologies that will impact the insurance industry within the next five years. We screened all the technologies, and we identified seven technology clusters, ranging from productivity cloud solutions, to ad solutions, to advanced analytics, connected devices, up to virtual reality. We identified use cases along the insurance value chain, more than 100 in P&C alone. And we quantified the impact. The results are staggering.

For a prototypical German insurer, we see premiums may rise up to 20, 25%. We see claims payout being reduced by up to 19%. And we see the administrative expenses—like, for example, policy administration with savings up to 70%.

Now, today's insurers are mostly focusing with the digital investments on productivity, as well as on digitizing the customer interface. And this is all good. But if we see the financial impact, especially of advanced analytics, machine learning, often in combination with connected devices, the areas of claims and underwriting will gain in importance.

Now, what are the imperatives coming out of that? First of all, start with the customer lens. The customer is the focal point of digitization. The second is broaden your digital horizons. Think about the whole value chain. Think about all the technologies and prioritize accordingly to your strategy. The third is launch and iterate. Change will never be as slow as it is now, and you have to adopt agile ways of working. And the fourth—very basic—establish a digital culture, because digitalization is much more than a technological change.

Read the Bain Brief: Digitalization in Insurance