Martin Hinz, Co-CEO of our holding company ConVista, recently gave an interview for a leading Austrian IT magazine, Computerwelt. Thereby, Martin Hinz laid out his views on how digitalization was affecting the insurance industry, what Journey Analytics can achieve and how a core transformation of IT-systems catapults companies into the future.
Let us start at the beginning – from your point of view, how has digitalization changed the insurance industry and the software business in the last few years?
From my perspective, it has affected three areas. Exciting developments are taking place in the field of customer engagement and in the improvement of the customer experience. Digitalization takes customer communication and customer experience to the next level. The second area is related to the digital transformation of the IT-systems in companies, the core transformation. Many companies use so-called legacy applications that were developed 20 years ago and that are coming to the end of their life cycle. Nowadays companies require systems that are more flexible, but have lower operation and maintenance costs. The third area affected concerns the development of new products and ideas. An example is the “pay-as-you-drive”- vehicle insurance based on real driver data. Home insurance providers, who use the Internet of Things, are adopting a similar approach using sensors in apartments. There is a lot of room for trends. The volume is manageable, but more and more companies are getting into line. Another development is that consumers are becoming more savvy, they are researching more and are, therefore, in a position to act more independently.
This brings us to the topic customer journey – how do insurance companies face this challenge?
Yes, nowadays the market is more competitive, people are better informed and ready to challenge or even change their provider. So one idea for the future is the improvement of the customer journey using analytics. You know, in the last 20 years as a software service provider, we have been focused on designing processes more efficiently for the insurance companies. It was about optimizing the application and claims processing and also about finding the fastest way to the annual financial statement. At present, it is about a customer-focused approach. That is, about positive customer experiences, which bind them to the company. It doesn’t matter whether or not the customer is communicating with the sales representative, calling the service center, receiving a bill or using the website. Journey Analytics is the toolkit that scrutinizes all touch points of the customer journey. A tool for measuring the improvement in customer experiences. One example: many customers start a process on the internet and after a while get stuck and contact the call center, which connects them with the personal sales employee. The customer is dissatisfied because he originally wanted to process his request online. That’s exactly what Journey Analytics look at. Thanks to the analysis of the data – this is always about big data solutions – it becomes clear at which point in the system the customer failed. It goes as far as identifying the fact that the customer was in the process of canceling his insurance, so at that point maybe we can actively get involved in the process and offer a solution.
In which way will the GDPR influence or even impede big data applications such as Journey Analytics?
Data protection has always been a topic and, of course, companies have to respect the regulations. In the case of Journey Analytics, the type of the cloud solution needs to be taken into account. But Journey Analytics only works with anonymized data – because the insurer wants to identify general behavior patterns. That means, data security is ensured. However, these processes are not trivial. The most important thing is that identities cannot be traced back to original data.
For the “pay-as-you-drive”-products it’s probably more complicated.
Obviously in this area caution should be exercised. If, for instance, the system identifies a customer who wants to cancel a product and the sales representative gets in touch with him and asks him why he/she wants to cancel. Of course, customers are sensitive, especially when they notice that their actions are being tracked and monitored. Our consultants are trained on such topics and communicate regularly with our customers. The aim is, as always, to improve customer satisfaction and customer retention.
How high is the risk that established insurers are displaced by Insurtechs?
These companies usually rely on the digital channels, they make valid offers and work exclusively with apps and websites. Established insurers, however, provide personal advice and have a strong brand. Loyalty to the established companies and to the personal sales consultants is high – also in Austria. We know that. In addition, insurance companies are often complex products and very consulting-intensive – think of health insurance, insurance for small businesses or private protection bundle products. You need people for this.
ConVista mainly serves the insurance industry?
We have many years’ experience in the industry. We are specialists on the technical and system levels and in the methods employed. But of course, our software programs and IT-systems also reach other industries. Journey Analytics constitute a nice added value for our customers. It is very easy to set up first use cases, even with the current systems for call centers, CRM, the sales force. Together with the customer, we define relevant targets, process the data by means of a cloud solution and, after three months, it is already possible to count, measure, balance and identify the first starting points for improvements.
Are new skills necessary in the companies for these new applications in order to understand and interpret the results?
Companies need to know what they want to analyze. But, in general, insurers are perfectly familiar with data analysis, they have always had very experienced mathematicians.
If you consider the three areas mentioned, which one is in your focus?
The predominant part of our business is the core transformation and the renewal of old system environments. They are the big projects in terms of turnover – because they last many years, are very consulting-intensive and require specialized know-how for software and SAP-products. On top of all that, the renewal of the core systems makes new products, implementing Journey Analytics, using first jet bots and mobile applications, possible. The systems in the background greatly influence the customer’s contact and, affects therefore, the positive customer experience, which is the focus of our work these days.
Interview: Alexander Wolschann