From Underwriter to IT Service Provider – Alexander Stolte’s digitization column
Which risks do you insure at what price? And which risks should you give a wide berth? These are the key questions in underwriting. In the remit of digitizing industrial insurance the point is whether software can answer these questions. I am firmly convinced that it can – in the SME segment. That was the main reason for my decision to switch from underwriting toward IT as a service provision.
I did have points of contact with software projects in my time as an underwriter. In those days my task was to define the requirements of insurance software systems that served mainly administrative purposes. Colleagues were to collect contract data and to draw up offer or policy documents. From an in-house insurance viewpoint that makes sense, but I now know that it is too little for digitizing the business. The problem is that systems of that kind often only support individual process steps. The result is isolated solutions and a limitation to in-house process elements. As a rule the underwriting decision has already been made when a system of this kind goes into action.
The real treasures of digitization do not lie on the beaten track.
So the main focus of the system specification is on the description of the “happy path”, whereas the real treasures of digitization do not lie on the beaten track. One of the opportunities that digitization opens up is that an insurance company can enable sales partners and customers to access its products via platforms. Rather than mapping the sales or underwriting process one to one it makes sense to consider whether processes can be accelerated or qualitatively improved by adjusting a process step sequence or by integrating external data sources. For that, insurers must focus more on the wayside and check which new paths can be taken.
It is then not enough to look at what the system is to do. Another important question is what is it not to do. Where are its limits, especially in terms of process details? If a formula is defined that in some cases leads to a result, it must also be clear when no result is to be achieved – and how the system from the process viewpoint is to continue with this lack of a result. The entire business processing chain must be considered. From looking at a single path the focus must now be on the entire network.
This broader focused approach to the question did not concern me as an underwriter to any great extent. With the change of perspective a new world has opened up for me – a world I find challenging but also very exciting. Digitization is definitely more complex than expected.
About the author:
Alexander Stolte spent over 20 years as an underwriter assessing risks in transportation insurance. He is now taking the digitization of industrial insurance forward as an IT and consulting service provider. In his column he deals with the experience he has gained from this change of perspective.
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