What obstacles will insurers of the future have to consider?

InsurTech 2.0

The digital change in the insurance industry poses great challenges for insurers, which usually cannot be implemented in a timely manner due to scarce resources. This has opened up new marketing opportunities. The focus here is on integrated insurance.

What about cybersecurity with new digital marketing technologies? How do you answer questions about interface security, data protection compliance, GDPR, risk management or identity?

We asked Mr. Alexander Hornung, co-founder and CTO of hepster, and Torsten Wunderlich, director of IT software development at hepster, about this.

Authentication and authorization are essential for integrated insurance. How can access to customer data via APIs be processed securely and in compliance with data protection regulations?

Torsten Wunderlich: In principle, all APIs, whether offered by us as an insurance company, InsurTechs or other service providers, must operate in accordance with current industry standards and in compliance with data protection. This ensures that all customer data is handled securely. In addition, this also avoids sensitive fines and ensures a clear structure.

To what extent does such an offer change the insurance protection offered by insurance companies?

Alexander Hornung, co-founder and CTO of hepster, © hepster.com

Alexander Horning: The key word for insurance companies that want to continue to go digital is flexibility. Out-of-the-box insurance packages are outdated and often don’t match the product in question. Therefore, the design of the insurance offer must be based on needs. At the same time, based on a modular principle, so to speak, also modular and standardized. In addition, it will become the norm that insurance products are tailored to the respective risk, as a “1-click solution” without media interruptions and oriented towards the touchpoints of the respective partner company, e.g. an online shop. .

The terms of the contract play an important role here. More specifically, the insurance should be set up in such a way that flexible terms can be guaranteed, whether in the form of underwriting models, situational terms or fixed term models. Insurance premium payment methods are usually processed through the ecosystem of the respective partner. It is important to comply with IT security accordingly.

Another important point is the holistic customer experience: data must be exchanged in real time with the partner and the insurance company’s booking system via the API interface. This is the only way that the correct product can be displayed at the respective touchpoint and real-time insurance protection can be provided for the partner’s customers. The holistic customer experience also means that all risks and perils of the insurance contract are tailored to the partner’s products and services and thus to the consumer behavior of the customer.

So should online shops deal with IT, data protection and security independently?

Torsten Wunderlich, Head of IT Software Development at hepster, © hepster.com

Torsten Wunderlich: Yes, because online stores generally have to take care of their own security and that of their customers’ data. And all this regardless of whether, as in the case of implicit insurance, the insurance is integrated. The API interface is used to exchange data between the respective online shop and us as the insurance company. However, we only process the data that is necessary for the respective insurance contract. You can think of it like this: A customer buys their bike online, including insurance coverage. Thanks to the APIs, the necessary data such as the purchase price of the bicycle, the frame number and the name of the customer are sent to us during the purchase process. Data sovereignty always rests with the respective online store or company.

How do insurance companies manage risk management (IT compliance) with integrated insurance?

Alexander Horning: This is an incredibly complex topic. After all, extensive order and data processing regulations must be observed, keyword GDPR. As already mentioned, the secure transmission of customer data via APIs and other interfaces is crucial. Regulations for cloud services will also play an increasingly important role: here, customer data in the insurance sector must not leave the European area, both for insurance companies and for partner companies.

Another hot spot is unlicensed insurance intermediaries. These are subject to all the requirements of the Insurance Supervision Act (VAG). This means that insurance companies and their partners must also strictly adhere to compliance, IT security, etc. Business Continuity Management (BCM) is also subject to special requirements. Finally, the most important point is the provision of services: when buying an insurance product, customers also expect adequate insurance coverage. As a result, the IT infrastructure must ensure that the service is provided to the customer of a business or cooperation partner of integrated insurance solutions.

Why should insurance companies and online stores/companies focus on integrated insurance right now?

Torsten Wunderlich: As we face upheaval within the industry. As in many other areas, the needs of tomorrow’s customers are changing: companies and online stores in particular must prepare for this. Ultimately, these processes of transformation and change will be decisive for long-term, sustainable business success. Processes, like customer requirements, are increasingly digital. The decisive factors are no longer loyalty or personal advice, but the price-performance ratio, favorable offers and simple and fast feasibility.

Not least due to the pandemic, it became clear how important it is to be able to implement existing processes digitally. Many experts also believe that we are not talking about the latest pandemic here. Therefore, it is of great importance to position oneself in the future in such a way that one can continue to exist as a company even in difficult economic times thanks to the right precautions. For the insurance industry, this means: Digital insurance solutions are the be all and end all for a successful future.

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