How the finance function works digitally in the insurance industry

In many companies and industrial sectors, the finance function is undergoing a fundamental transformation. This also applies to the insurance industry, where there is still considerable potential for digitalisation and automation. For our benchmarking study "Automation of acquisition processes in the insurance industry", we analysed the extent to which the accounting, actuarial and Risk management departments of German insurance companies are already working digitally. To what extent should the potential be realised over the next three years and where have digitalisation and automation already created the necessary freedom so that employees can concentrate on data analyses and decision-relevant information for the business?

Why do insurance companies rely on automation? Our survey shows that most companies expect an improvement in process quality and more efficient closing processes. For example, automation is intended to avoid errors that can arise from manual activities. Efficiency gains should result primarily from shorter process throughput times, standardised handovers and better analysis and reporting options.

Our survey clearly shows that the insurance industry still sees extensive potential for further digitalisation. Today, 46 per cent of respondents state that the level of digitalisation in their company is still at a maximum of 40 per cent. In the next three years, 54 per cent of respondents want to have exceeded the 40 per cent threshold. The greatest advances in digitalisation are expected in accounting. Currently, 65 per cent of respondents state that 40 per cent of their processes are digitalised. In three years' time, more than half of the insurers surveyed want to have digitised 60 per cent of their processes.

While all companies surveyed currently rely on solutions such as SAS or Python, other digital tools are hardly ever used. For example, artificial intelligence (AI) is hardly used at all. Even simple robotic process automation (RPA) is only used in just over half of the companies surveyed - not to mention powerful digital process automation (DPA) solutions. This also shows the digital potential that can still be realised in the financial functions of the insurance industry. The companies are aware of this, as they state that they intend to make much greater use of AI and RPA in the near future.

The benchmark study shows that comprehensive modernisation and a shift towards more automation are necessary in order to ensure both compliance and costs in the face of constantly increasing requirements and greater complexity. The survey also shows that in many cases, partially automated stand-alone solutions are implemented in the financial areas of insurance companies, but that there is a lack of optimised end-to-end automation and cross-divisional orchestration of financial processes. For example, many reports are still largely created manually. For the survey, we interviewed specialists and managers from insurance companies in Germany. The companies surveyed represent 72 per cent of the German property/casualty insurance market, 59 per cent of the German life insurance market and 36 per cent of the private health insurance market in Germany, measured in terms of premiums written for own account.