Insurance: Allianz fails with IT strategy – Economy

Allianz is about to undergo a massive shift in its IT strategy. According to information from SZ the insurance group gives up the project of offering its own Allianz operating system (ABS) software to other insurers. The group’s attempt to play a role as a software provider itself has failed.

ABS is software specially developed for the group. In 2018, the Group Board of Management under Oliver Bäte came up with a bold plan: Because more and more insurers have to modernize their programs, Allianz could also make its software available to third parties. That would spread the costs of the expensive development across several shoulders and put Allianz in a league with professional software providers globally.

To forestall ownership concerns, Allianz transferred the rights to the core system to a foundation and declared it public domain. In 2018, she founded Syncier, a software company with 288 employees, for the fee-based adaptation to the needs of different users.

In 2019, Allianz agreed to cooperate with Microsoft. At that time the company took over ten percent, today it still holds three percent of the Syncier shares. In the long term, Allianz wanted to sell even more shares and only keep a minority.

Switching to another software is a tricky business

But the initiative was not as well received in the insurance market as Bäte and his colleagues had hoped. Allianz does not give an exact figure, but there are likely to be no more than ten other insurers who have opted for the system. Among them is the insurance group Frankfurter Leben, which as a specialist takes over and processes the portfolios of other companies. Wiesbaden-based Athora, which is pursuing a similar business model, is said to be one of Syncier’s customers, along with a number of Austrian insurers.

The fact that there are no more is probably also due to the fact that ABS creates a very high need for adjustments in the companies, for which they have to pay. The fact that Allianz, a major competitor, controls Syncier also reduces the enthusiasm of many board members for the cooperation.

Life insurance is clearly the focus for Syncier. In this segment, many insurers use very old systems that occasionally calculate incorrectly and pay customers too much or too little. The financial regulator Bafin urgently requires changes.

But the conversion of large portfolios with hundreds of thousands of sometimes very old contracts to another software is a delicate matter. Only a few large insurers still dare to build new systems themselves. Most buy standard programs. The Munich software companies MSG, IBM and SAP are particularly active in this area, sometimes together.

With Syncier, the youngest competitor is now eliminated. An Allianz spokesman said it would remain as a company. But further he said: “Syncier will reduce the offer of software for third-party customers.” He didn’t want to give details.

Syncier has lost important advocates in the group

According to the company, the decision was preceded by a serious row between the group’s headquarters in Munich and the life insurance subsidiary in Stuttgart. The Stuttgart-based company does most of the work with Syncier’s life insurance software and the transfer of third-party portfolios.

In the meantime, Syncier has lost important advocates within the group. The Austrian Christof Mascher, 62, was responsible for IT on the board of Allianz until the end of 2020. He brought the ABS originally programmed in Austria to Allianz. Mascher is now retired, as is the long-time head of Allianz Leben, Markus Faulhaber. The current management of the life insurer under Katja de la Viña shows significantly less enthusiasm.

In any case, Allianz does not want to continue the project for new customers. Syncier can hardly close it easily: Anyone who gets involved with other software like Syncier customers expects that they will still be able to work with the program decades from now. Many life insurance policies last that long.

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