Changes in the market, profitable growth and the corporate portfolio’s focus peratinn tomorrow’s factors of success – a company’s strategy always forms the basis for its success.
Insurance companies dealing with tomorrow’s factors of success as part of their strategy process always need to deal with the question what they want to do differently than their competitors. In many cases it is all about innovative products or services, process innovations or even completely new business models.
Together with our clients we develop innovative and sustainable business models. We analyse and optimise cost structures. We are the right partner for the development of forward-looking strategies – offering programs for increasing efficiency or initiatives for growth.
The customer’s growing acceptance of digital channels requires a rapid development of the insurer’s business model. Nowadays, customers do already expect an extensive digital insurance product, starting with consultation when contracting, up to changes in their customer and contract data or a notification of claim. However, most companies are lacking a suitable cross-functional digitalisation strategy.
Insurers have to have a precise knowledge of their customer’s needs. Therefore insurers must consider these requirements as the core element of their digitalisation strategy in order to operate successfully on a narrowing insurance market.
We help our clients to develop and successfully implement suitable digitalisation strategies. Starting with the analysis of the customer’s needs, to the development of digital products and services, the expansion of necessary multi-channel abilities, the automation of processes and handling Big Data as well as predictive analysis methods and tools.
As different as our clients are, as different are their requirements for corporate steering and controlling. At the same time every insurer’s management board expects “its” reports at the right place at the right time, edited and visualised in a way that all relevant statements are intuitively understandable.
We help our customers to outline those key performance indicators (KPIs) which are significant for their individual business model through driver models and to define the essential KPIs which are critical for success. We are able to simultaneously reduce formerly overloaded reports significantly while increasing their validity by far. If desired, we additionally support the system-related provision of the necessary data and reports.
Accordingly, we ensure the reach of business key figures as prerequisites for profitable growth and cost-reduction programs. At the same time, we provide the insurer’s management board with a consistent transparency of corporate success.
The realisation of synergies after a merger (post merger integration) or the separation of structures (carve out) challenge insurance companies on an organisational as well as a structural level. It is particularly important to secure the running business and to realise synergies and first targets at an early stage.
Many studies have shown that only a few companies actually achieve their postulated targets in growth and added value. In fact, half of all transactions lead to value destruction and a decrease in profitability.
In consequence, the selection of a consultant who is well-experienced in this topic and who is capable of structuring complex integration processes effectively is key to the realisation of desired synergies.
Pre Merger Integration
The phase of the merger initiation (Pre merger integration) is fundamental. During this phase it is essential to identify the right “takeover object” and to agree on realistic targets.
Only with a sound strategy and a profound knowledge about the insurance business´ success factors it is possible to evaluate realistically whether a business acquisition is profitable.
In this case the involved parties need to conduct intensive negotiations before the actual signing of the contract.
Post Merger Integration
After the conclusion of contract the second phase, the actual integration of both companies, kicks off.
During this phase it is important to determine a joint vision, a strategy and an appropriate business model with the “new” company´s executives.
The merging of the different corporate cultures is crucial for success. Speaking from experience, the integration will not succeed without the consolidation of culture.
An experienced project management team has to fulfil the task of implementing the process of integration as fast as possible, safe and constantly transparent for the clients.
Many structural and personnel decisions are required in order to give the organisation the necessary stability and to realize desired synergies.
For our clients we identified adequate takeover targets and as one of a few consultancies in Germany we successfully advised large integration and IT-integration projects within the insurance sector.
Besides a rapid integration, the short-term exploitation of synergies as well as the sustainable ensuring of agreed increases in value were of high importance for our clients.
The German insurance industry is currently facing several challenges. Volatile stock markets, permanently low interest rates, a stricter regulation of sales, increasing equity requirements (Solvency II), the market entry of new competitors from outside the industry and a changing customer behaviour represent just a few of the current challenges.
In this environment it is important to constantly improve the own cost position in order to stay competitive in the long run. In consequence, the development and implementation of programs to reduce costs and to increase efficiency became a key topic on the agenda of every insurance company´s management board.
As an expert in this topic we develop individual and – at the same time – sustainable programs to reduce costs and increase efficiency, together with our client.
These programs are based on our profound knowledge about control mechanisms and dependencies within the profit and loss accounts of the respective insurance company as well as “best-in-class”-principles of high-performance processes and organisations.
We consider all relevant fields of action, define the “right“ aspiration level (for the client’s company itself, towards the market and towards relevant competitors), develop and conceptualise all required measures and implement these systematically according to the predetermined targets.
We gained extensive experience in terms of such programs and always consider fast successes as well as constant transparency as essential values for the management. At the same time, we know that it is essential to the long-term success of the program to meet our client´s employees on their ground.
All in all this makes us a competent partner for our clients in the thematic field of cost reduction and efficiency improvements.
The well-known saying “insurance policies are being sold and not bought” is still valid, even though there is a growing number of insurance customers who are willing to purchase their insurance policy online. The consultation in person is usually still preferred but an increasing number of customers inform themselves on the internet before actually talking to an intermediary.
The bureaucratic conditions of the insurance sales changed in the last couple of years, due to a stricter regulation in sales and higher demands on customer and product information. With MIFID II, IMD II, PRIIPS the EU´s qualitative demands on the sales departments are increasing and the prerequisites for a medium- and long-term shift towardsa fee-based sales and advisory model have been set. These tendencies are being strengthened by the German consumer protection policy and its alterations concerning the commercial law (§34 GewO).
More demanding and better informed customers, new technological possibilities and especially the current market situation with low revenues from capital markets, with tendencies to market saturation in the composite business and the regulative requirements of the LVRG, intensified the demands on a successful sales management – at the same time, multiple new possibilities arise.
Facing the described development we help our clients to
· adapt their existing sales strategies to the current and future market situation and the associated conditions,
· organise their sales tasks correctly and efficiently,
· set suited control impulses through the sales management and finally
· allocate the sales resources correctly and adjust the incentive systems,
to transform the opportunities into successes for ranking among th
The property and casualty business is significantly important for German insurers. To date, this business still represents the largest source of profits within the insurance market.
The development of earnings in certain insurance segments illustrates that the motor-vehicle insurance and the homeowner’s comprehensive insurance have been facing huge losses for the last couple of years. This trend remains unchanged, even though there have been first successes of remedial activities, especially in the market of motor-vehicle insurance. Nevertheless, only a few insurers have profitable portfolios – and just a few realise a profitable growth.
The significant operational losses result from price competition among insurers and used to be compensated by:
– cross-subsidisation from other branches
– non-insurance earnings (capital investment performance) and
– the reversal of consisting reserves
Depending on the portfolio composition or the importance of the respective insurer´s property insurance business the equalisation of results becomes increasingly difficult, especially in context of the current economic situation.
Due to the importance of the property and casualty business and increasing challenges, the insurers initiated several optimisation programs with emphasis on cost reduction within single stages of the value chain. Approaches to price adjustments and portfolio restructuring are increasing lately.
A question which is currently discussed everywhere is: “How do tomorrow´s insurance products look like and how can we sell them successfully?”
It is undisputable that the customer, the “actual“ needs and the communication behavior (see also digitalisation) will influence the necessary redesign of insurance products and services considerably in the future.
“Mass customisation” is a concept widely known in the manufacturing industry and could be a possible answer for insurance companies. Through “mass customisation” it is possible for the customer to individually compile an insurance product from a modular building block system. However, many insurers currently lack the necessary requirements, e.g. IT-capabilities, for offering such modular products..
At the same time, disruptive innovators as well as established companies from outside the sector are trying to enter the from their perspective highly lucrative insurance market. Usually, disruptive innovators offer cutout-like solutions easier, more comfortable or cheaper than the actual insurance company. On the other hand, established companies from outside the sector mainly focus on an exclusive access to the customer.
Both developments lead to an increasing price and competition pressure, which will put a permanent high pressure on the product management to find new, better solutions.
We help our clients to anticipate the resulting developments at an early stage and to develop suitable solutions. Be it in the field of “mass customisation”, the establishment of necessary (value adding) partnerships with companies from inside or outside the sector and/or the development and implementation of innovative product concepts with a focus on the customer’s needs.
Profitability improvement projects in the property insurer´s retail business are usually interdepartmental projects that require a close collaboration of actuarial and IT services, product, sales and operation management.
Although the product management is usually accountable, it is important to balance all interests and to coordinate the particular department´s sub measures.
Our consulting services start here: We support our clients to determine the potential of relevant divisions, to identify the significant drivers of increases in earnings and to develop a starting point for profitability improvement projects including successful planning and implementation.
Currently most insurers focus on cost reduction and an increase in efficiency. Pricing is a systemic factor in creating value, but is often ignored.
In consequence, the insurance business’ price management is just partly capable of contributing to the highly required increase in value. Its weaknesses range from a too distinctive sales orientation over the extensive decoupling of the pricing and the corporate strategy to an insufficient analytical basis and a lacking consequence in implementation.
Although the concrete problems differ from insurer to insurer, there is always the same solution: A consistent management approach which increases the company’s value is required.
Based on our profound and specific understanding of pricing mechanisms within the respective insurance sectors and the corporate strategy of our clients we determine the “right” product prices together with our clients. Furthermore, we analyse the behaviour of competitors and insurance customers and investigate the product perception. The product´s price-demand function thereby always marks the starting point. Subsequently, we combine the determined prices with the remaining elements of the marketing mix and support their implementation and control.
Only a price management integrated in this form enables the respective insurance company to utilise the potentials of the value driver price systematically and comprehensively.
Competitive advantage by industrialisation projects
The managers responsible for insurance operations are moving in a severe field of tension: On the one hand, they are required to decrease costs in order to reduce their capacity cover. On the other hand, they are forced by the market to satisfy the customer´s raised demands in quality and service. Hence, they have to invest in an increase in customer satisfaction.
Accordingly, the classic image as well as the correlated demands of modern operations are changing. It is still the basic target to keep administration “factory-like” efficient and cost-effective. At this point, the classical questions primarily focus on organisational or procedural topics and focus on the core processes application, contract and regulation, e.g. in terms of the optimal arrangement of processes, segmentation logics, routing concepts and control models.
Yet an increasingly important question is: “How do I maximise the service benefits of both the customer and distribution partner at the contact points?” Based on our profound technical understanding and our knowledge of the customer expectations, we help you to:
– Consequently manage your customer´s experience along their individual customer journey,
– Shape your communication with the customer in an omni-channel-approach modernly and target-oriented and at the same time
– Make the „right“ strategic decision for the transformation to your digital future.
As an expert in development and optimisation of operations and claims management models, we know all the challenges and possibilities it takes to position the company with its (value adding) services as a „real” USP and a sales argument for the customers and distribution partners to gain a significant advantage over your competitors.
Slim (lean) processes as a significant success factor
Insurance companies that offer their products and services efficiently and flexibly have a considerable advantage over their competitors.
Therefore, we optimise the client’s processes end-to-end (customer-to-customer) along the whole value chain.
By means of lean management we especially support our clients to
– Avoid waste,
– Make processes more efficient,
– Leverage existing automation and digitisation opportunities,
– Optimise processes based on agreed targets and guidelines,
– Reduce costs and throughput times and
– Increase the quality of processes, products and services.
At the same time and through the establishment of a continuous improvement process, we ensure the permanent achievement of top performances by the organisation and their employees, once reached.
In an intensive, competitive environment with highly quality- and price-conscious customers the optimisation of the claims function is constantly playing a key role.
As is well known, two possible directions of impact exist. On the one hand the reduction of internal costs for claims handling, on the other hand the reduction of external claim expenses which can result in up to 80% of the total costs.
Both costs have in common that they are significantly determined by the development of processes of the respective insurance company. In consequence, the optimisation of the current claims business model became a permanent task for composite insurers.
Thereby, the insurer needs to consider certain correlations: If a customer, for instance, expects a quick, non-bureaucratic and bindingly case-closing regulation, the insurer has to ensure a high productivity, high cost-efficiency and low claim costs at the same time.
The challenges of the insurance companies become obvious. The processes have to be tailored to the customer’s needs and expectations; in addition, it is important to improve the processes´ efficiency and to reduce the claim costs significantly.
We have extensive experiences and a profound knowledge of the claims function and know every necessary control lever for an optimisation of the claims management. Currently we support selected insurers to sustainably reduce their claims handling costs, to optimise the customer satisfaction in case of a claim and the achievement of long-term competitive advantages using the claims function.
Insurance companies have to utilize their IT to create values and to improve their performance. It is all about increasing the effectiveness and the efficiency of the IT significantly. IT should no longer be a “bottleneck“ when implementing strategically necessary initiatives of the company.
The first step is to synchronise the IT-strategy with corporate targets to ensure that corporate objectives are supported. The main question is whether an insurance company can achieve competitive advantages through their IT (for example as a part of digitalisation projects).
Furthermore, an IT organisation including suited IT governance structures is designed, especially in interaction with the departments as “customers“ of IT-services within the insurance company. In doing so, binding committees, roles and responsibilities as well as escalation processes have to be defined and coordinated.
Finally, the exciting question “make or buy” has to be answered. IT sourcing options have to be evaluated based on individual capabilities and cost structures and the best option for the respective insurance company has to be selected. IT outsourcing is therefore never an “IT-only” project. Pronounced management abilities, strategic farsightedness and a capable organisation are in high demand, not just by the provider, also by the customer.
We support our clients in all of the above mentioned activities: Be it the definition of a suited IT strategy, the development of a capable IT organisation, the design of associated IT governance or a market evaluation and the negotiations with possible IT outsourcing providers until the end of the transition.
After decades of stability the German insurance industry faces dramatic changes of the business environment. At the same time, insurers have to deal with permanently altered capital market conditions, increasing regulations, a massive change in the customer’s behaviour and new, disruptive competitors.
In consequence, the pressure of change on the industry is high. In our conversations with the industry´s decision-makers, we often heard that they struggle with the successful implementation of changes, especially when it comes to change projects.
One reason for this is the long-term orientation of the industry since many customers bind themselves for a long time to a specific company, once the contract is concluded. Furthermore, the industry lives from hedging risks, not deliberately taking them; but that is exactly what is necessary to manage changes successfully.
We help our customers to become more capable of change, making them more competitive. Exemplary topics are the (re-)discovery of the customer, tomorrow´s distribution, configuration of innovations, the handling of digitalisation or the required capabilities of the insurance industry´s management.
The German insurers are already implementing many projects and programs. Not a few of these important projects seem to fail or being terminated without the desired results.
Consequently, it is decisive for the insurance company´s success to choose the right project idea, coordinate the IT, departments and external consultants efficiently within the project and implement the project successfully.
However, in practice, a lacking project management is often a reason for targets being achieved too late or not at all. This leads to additional costs and in the worst case to competitive disadvantages.
For a successful project and program management it is therefore important to focus on the essentials: On the one hand it is important to put those project and program managers in charge who are experienced with the respective problem; on the other hand they have to be provided with the right tools and methods.
Concerning the protection of our clients’ projects and programs we undertake project and program management services for them, including office functions.
Therefore, we provide our clients with experienced project and/ or program managers to ensure that the agreed project targets are being achieved “in time”, “in quality” and “in budget”.
We thereby introduce classical or agile project management methods, depending on our client´s wishes.
The project controlling and reporting is taking place in the project office using field-tested tools, so that our clients have transparency over the current project status and progress all the time and can intervene if necessary.