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The insurance industry is on the cusp of a significant transformation, as traditional players and newcomers alike embrace digital innovation. According to Nils Stölken, head of the insurance business unit at Sopra Steria, this shift will be reflected in insurance products within the next two years, following a surge in digital investments by insurers over the past 15 months.

A comprehensive opening of data boundaries, or API orientation, is essential for these new products, asserts Stölken. This approach enables seamless collaboration between insurers and partners from other sectors, such as fintech specialists, leasing companies, and banks. For instance, Allianz is collaborating with traditional insurers to protect various business sectors, including trade, crafts, education, and production, by offering tailored insurance solutions.

In the corporate customer business, data-based business models offer insurers the opportunity to use industry data for new tariffs. This shift towards dynamic pricing will gradually move away from flat annual premiums, allowing premiums to be adjusted based on production quantities or data that influences the risk of damage.

One-third of decision-makers in the insurance industry anticipate a significant change in product offerings by 2023, according to a study. Two out of three respondents believe that the IT in their own company will no longer resemble today's in 2023, as insurers must adapt technologically and in their business processes to data-driven tariffs and bundle products.

In the private customer business, insurers are already offering data-based insurance products, such as telematics tariffs in motor vehicle insurance. However, according to Stölken, insurers have not fully exploited the potential in the area of data-based insurance products.

The digital revolution in the insurance industry is also attracting new players. Companies like Tesla Insurance and Amazon Insurance Accelerator are entering the market in collaboration with traditional insurers, intensifying competition.

Innovative insurance solutions are being developed to cater to the needs of various sectors. For example, insurers could potentially offer automated insurance for rental car users, adding required coverage when a vehicle crosses a national border and calculating the foreign risk on a kilometer-by-kilometer basis. This could eliminate unpleasant sales talks by rental car companies.

Moreover, in the corporate customer business, companies would pay for their individual risk based on data-based tariffs. The premium would automatically increase as soon as temperature or speed exceeds certain thresholds. This approach could lead to spontaneous decision-making by customers, as they could decide on route changes without the need for manual premium adjustments.

Insurers must also abandon their departmental thinking, according to Stölken. Some insurers purchase specific specialized components to offer their end customers a comprehensive solution for all important areas. Others supply insurance components to other providers, who bundle them with their own policies for resale.

49% of insurers also rely on theme- and bundle-insurance solutions, either as buyers or as suppliers. This trend towards collaboration and integration is set to reshape the insurance landscape, as insurers evolve from standalone providers to suppliers of insurance components.

In conclusion, the insurance industry is undergoing a profound transformation, driven by digital innovation and a shift towards data-driven products. This transformation promises to bring about greater efficiency, personalization, and competitiveness in the industry, ultimately benefiting customers and businesses alike.