How digital the finance function in the insurance industry is today and where it will be in three years

In many business entities and industries, the finance function is undergoing a fundamental transformation. This also applies to the insurance industry, where there is still significant potential in digitalisation and automation. For our benchmarking study "Automation of closing processes in the insurance branch", we examined the extent to which work is already being carried out digitally in accounting, the actuarial office and risk management of German insurance. To what extent are the potentials to be realised over the next three years, and where have digitalisation and automation already created the necessary freedom today so that employees can focus on data analyses and decision-making-relevant information for the business?

Why do insurance companies rely on automation? Our survey shows that most companies expect to see process quality improvements and more efficient closing processes. For example, automation should prevent errors that can result from manual activities. Greater efficiency should primarily result from shorter process lead times, standardised handovers and better analysis and reporting opportunities.

In our survey, it is clear that the insurance industry sees even more digitalisation potential. Today, 46 percent of respondents say that the level of digitalisation in the business entity is still at a maximum of 40 percent. Over the next three years, 54 percent of respondents want to have exceeded the 40 percent threshold. The greatest digitalisation advances are expected in accounting. Currently, 65 percent of respondents say that 40 percent of their processes are digitalised. In three years, more than half of the insurers surveyed want to have already digitalised 60 percent of their processes.

While solutions such as SAS or Python are currently being relied on by all business entities surveyed, other digital tools are barely being used. For example, artificial intelligence (AI) is rarely used. Even simple robotic process automation (RPA) is only used in just over half of the business entities surveyed - not to mention powerful digital process automation (DPA) solutions. This also shows the digital potential that can still be leveraged in the financial functions of the insurance industry. Business entities are aware of this because they say they want to make more use of AI and RPA in the next [few years].

The benchmark study shows that comprehensive modernisation and a shift to greater automation are necessary to ensure both compliance and cost assurance as requirements and complexity continue to increase. The survey also shows that semi-automated isolated solutions have been implemented in the financial sectors of insurance divisions, but there is no optimised end-to-end automation nor a cross-divisional orchestration of financial processes. For example, many reports are still manually created to a large extent.

For the survey, we surveyed specialists and managers of insurance companies in Germany. The business entities include large insurance groups, partly with stock exchange listings, numerous medium-sized insurance groups, small companies and special ones which represent the surveyed companies, measured by the posted contributions for their own account, 72 percent of the German damage/accident insurance market, 59 percent of the German life insurance market, and 36 percent of the private health insurance market in Germany.