New digital insurers and old players: Interview with Sebastian Pitzler, Managing Director of InsurLab Germany

Mr. Pitzler, the goal of InsurLab Germany is to bring together InsurTech startups and the traditional insurance industry. What exactly does this mean?

Digitalization offers many new opportunities, both in customer communication as well as in process optimization and claims settlement. Technologies, such as blockchain, artificial intelligence and the Internet of Things, are playing an increasingly important role in this process, yet traditional insurers depend on external support in these matters. This is where InsurTechs come into play: companies with creative, tech-savvy people who develop innovative solutions while looking for partners to jointly create marketable products. We help our members keep an eye on the InsurTech scene and find suitable startups to meet their needs and bring them together to develop specific project ideas.

How does this actually work?

We have developed different types of offers that enable our member companies and the InsurTech companies to exchange information and work on use cases and projects. In addition to the individual match-making and our accelerator program in which select startups are intensely supported by our member companies for six months, we also work on bringing InsurTechs and the digitalization departments of our member companies together. Moreover, we hold networking events, pitch sessions, hackathons and workshops that foster potential collaborations.

What are the biggest challenges in the insurance market – regardless of the type of company?

There are different challenges: from regulatory issues and the sluggishness of the internal IT system environment, to the implementation of the GDPR and the identification of relevant trends. The GDPR, for example, currently makes it quite a bit more complicated for insurance companies and startups to establish themselves in the digital world. However, I still think the greatest challenge is correctly assessing the developing trends. Ultimately, industries are never disrupted by players within their internal ecosystem, but from the outside. Companies such as Amazon, after all, are rumored to already be waiting in the wings. For established insurers and InsurTechs this means that they need to nimbly design and develop customer interfaces and processes that can comfortably handle the new habits and demands of their customers in terms of usability and user experience, in order to be on par with the digital powerhouses.

Which benefits do digital insurers offer their customers? And what advantages do the “old” players still have compared to their competition?

The new digital insurers are fast and offer intuitively useable, always available customer interfaces, as well as very flexible products with short termination periods and easily understood components. Established insurers already have what young digital insurers still need to develop: an existing customer base and large sales teams. How difficult it is to win new customers should not be underestimated. In addition, insurance companies must build a large amount of trust, which brands such as AXA, Gothaer or Roland already have. Digital insurance companies still have to earn this type of trust. Furthermore, many customers still place great value on personal contact.

So, personal consultations continue to play a large role. What can InsurTech startups do in response?

They are already responding. They work with chatbots or even personal chat functions – some with video. Customers can therefore often get responses to their most urgent questions 24/7. But this does not replace the personal consultant who sits down with the customers, offers professional information and also asks them how their kids are doing. Customers who value these personal relationships will likely not be convinced by digital options alone.

Customers have changed thanks to ongoing digitalization. Is the image of insurance as a service also changing?

Generally speaking, digital customers do not simply want to buy a product with a function, but rather a type of life companion, whose added value goes beyond its main task, which here would be financial security. More and more weight is put on the term “service provider”. In times of self-measurement and optimization, this can be easily explained by using “smart wearables” as an example: Health insurances could offer price-reduced fitness bands if they are permitted to evaluate customer data in exchange, under defined framework conditions, and then they could grant their customers certain benefits for regular physical exercise or fitness coach-type support.

In what way could established and new companies mutually benefit from each other?

The collaboration of established insurance companies and startups is a clear win-win situation. Startups get a new reference customer, are able to use relevant data, run tests and scale up their business based on this collaboration. Insurers benefit form new technologies and product innovations that they can offer to their customers. In addition, they receive insights into the agile work processes of startups and their methods and experimentation-approach to product development.

And how does the collaboration between established and new, digital-only insurers work?

This type of collaboration is a bit trickier, but still quite interesting. After all, both sides have their strengths: while established companies can learn from digital insurers about the customer interfaces of the future, young companies have a chance to benefit from their established competitors’ decades of experience and thus avoid this or that error in judgment. But, both players are active in the same market, and they do not want to let the other see too much of what they are doing. So-called B2B or B2B2C collaboration models, however, could open new business opportunities to both sides even in this configuration.

What will the insurance market look like in ten years’ time?

Future insurances will be part of larger, digital ecosystems that envelop a person’s entire life. For example, when renting a car, the customer will be taking out accident and car insurance simultaneously. Insurances will become a type of invisible safety net in every life situation. I also assume that the market will consolidate further, as was the case with mobile phone providers or software solutions. Insurance companies should therefore start working on joint projects with other market players and learn to use new technologies to improve themselves and their relationships with customers.

Sebastian Pitzler

Sebastian Pitzler, 36, received his Executive MBA in Innovation and Business Creation from TUM School of Management (Technical University of Munich). He worked for the insurance company Ergo Versicherung since 2001 in various positions at the interface between IT and the insurance specialist department. In recent years, he has specialized in strategy, innovation and digitalization, and, as the head of Ergo Digital Labs, has been responsible for establishing and expanding the innovation lab on the startup scene in Berlin since 2015. Since the spring of 2018, Pitzler has been Managing Director of the InsurLab Germany e.V. − a platform for connecting insurance companies and InsurTech startups in Germany and part of the de:hub initiative.

Author: Editorial team Future. Customer.
Image: © Worawut – AdobeStock