Insurers have survived the corona pandemic comparatively well, but they cannot breathe easy. The war in Ukraine will still have a significant impact on the industry, and it could become dangerous for providers: On the one hand, there will be high insured losses, for example because Russia does not return leased aircraft to their owners. However, companies could be hit much harder by the rising inflation caused by the war, which makes all types of damage more expensive and forces them to put aside more money for damage. They could also be affected by turbulence on the capital markets. Some insurers have already had to write down government and corporate bonds in which they are invested.
Joachim Wenning, head of reinsurance company Munich Re, initially gives the all-clear. “On the insurance side, as far as the damage is concerned, I would disagree that there are subsequent reservations that have washed up,” he said at the insurance dinner Süddeutsche Zeitung at Bensberg Castle in Bergisch Gladbach. Because of a corona infection, he was online. Insurers will have to make additional reservations, i.e. increase their reserves, if the reserves are unlikely to be sufficient to pay for long-term claims, for example for accident victims, many years from now. However, if high inflation persists, property and casualty insurers could be forced to make additional reservations. First of all, they will be able to cushion the rising damage through higher premium income.
A few apps, a little robo-advice is not enough
In order to be able to master the ongoing crisis of pandemics, war and inflation that the world is currently going through, the industry has to really step on the gas when it comes to digitization. “We need to be resilient, and digitization is the tool to do that if we do it right,” said Mark Klein, Ergo’s Chief Digital Officer.
What has happened so far – a few apps, a little robo-consulting, a little online degree – is no longer enough to be able to adequately meet the customer needs of the future. These have risen sharply again since the pandemic. People buy groceries and sports equipment online, stream films and series on demand and regularly video chat with family and friends. Everything is faster, more convenient, more digital – insurers have to keep up.
“We insurers are in competition with tech companies like Google and Amazon, and we have to be measured by that,” said Ergo Manager Klein. During the pandemic, people got used to smooth digital processes and also demanded them from the insurance industry. The customer’s question: If it’s so easy for others, why can’t my insurer do it?
Employees should be relieved of standard tasks
The industry cannot rest on its laurels. It needs a permanent transformation. “If we stop taking this transformation seriously, we will fall behind,” he said. He is convinced that the industry can master the challenges. “We have the digital skills, the first lockdown showed that.”
Ergo managed within a very short time to send 11,000 employees to the home office and still remain productive. But there is still a lot of work: “We have 70 algorithms, but we need 7,000. We have 250 robots, but we need 1,000. We have 5,000 automatic calls per day, but we need 10,000,” said Klein. In this way, the insurer creates freedom for its employees, who can be relieved of standard tasks.
It definitely cannot stay the way it is, agrees Mirjam Bamberger, Head of Strategy at Axa. She gives examples from health insurance. “At the moment I make an appointment online with a doctor, enter it in my calendar, then sit with the doctor for an hour and then go to the pharmacy with a paper prescription.” That costs the patient more than two hours, it could go much faster, and private health insurers should make a contribution.