By Robert Rosenberger, Business Transformation Analyst at HDI Global, and Martin Nokes, Head of Business Development at Consor.
The internationalization of business has made the risk landscape more complex for companies, which requires tailor-made insurance solutions. In the area of key account management, suitable processes and applications are crucial in order to support individualization by employees and make use of valuable data.
Global world trade poses major challenges for insurers
We are all familiar with insurance products from our everyday lives, such as car liability insurance or household contents insurance. Such insurance policies for private individuals are highly standardized. It doesn’t matter whether the policyholder drives a Porsche or a Toyota: The policies and insurance conditions are identical and only differ in the sums insured and premiums.
This is different in the large customer business. Companies differ so greatly in their business models, risk profiles and global presence that standardized insurance approaches are not sufficient. The internationalization of business activities that has taken place in recent decades has also led to an increased complexity of the risk landscape, which can only be addressed through the individualization of insurance products.
For example, it may be necessary to tailor the wording of a liability policy if a policyholder wishes to have liability claims caused by drones covered. Or the definition of cover or the scope of cover may need to be adapted.
If the insurance cover is to apply globally, so-called international programs are used. These require different local regulations, e.g. a monopoly for certain risks or mandatory risks to be insured. In addition, different currencies, taxes and languages must be taken into account.
Increasing complexity of risks
Dealing with such diverse customer needs, the associated risk management, the subsequent administration of contracts and claims settlement is extremely demanding.
International insurance programs require an international network with specialized local know-how. This also includes international communication in different languages, with different cultures and perhaps different interpretations – which is correspondingly challenging.
In the large customer business, the contracts have a high frequency of addenda compared to standard business. In addition, the accounting department must be able to process a wide variety of premium/billing types, discounts and commissions, e.g. for leading insurers.
The heterogeneity of policies, even if they are based on the same product, presents insurers with challenges. For example, how can you determine whether you have insured buildings that are located in a foreign area that has just been hit by an earthquake? Is the earthquake risk covered and if so, to what extent? How is it defined? Corona example: Is the pandemic exclusion really included in all my contracts? What does my portfolio exposure look like in detail?
As if the corporate customer business were not challenging enough, in many cases unsuitable and/or outdated applications are added to the mix. As a result, underwriting, for example, has to be done more or less manually, which is prone to errors and inefficient. However, given the current shortage of specialists, the aim must be to deploy these highly qualified experts primarily for demanding tasks and to automate the remaining workload. However, this requires suitable processes and applications.
How can the key account business be conducted in a targeted and cost-efficient manner?
In contrast to standard business, key account business is not about fully automating processes, but about supporting and managing individualization by employees and using the valuable data generated in the process. This requires processes and applications that are separate from the standard business. It must be possible to control and monitor the process for changes to the content of the contractual conditions in a targeted manner. As an insurance company, I want to be able to restrict who can make changes to which clauses. It must be documented and traceable when and by whom which change was made.
Policies in the large customer business are often designed for long-term cooperation between the insurer and the policyholder. Nobody wants to have to renegotiate a complex contract every 12 months. However, the policies must be flexibly adaptable if necessary – perhaps the policyholder wants to include an additional business location in the policy or wants to adjust certain sublimits and deductibles.
In the meantime, however, the insurer’s contract may have changed – perhaps due to legal adjustments or for market or legal reasons.
The responsible underwriter now finds himself in the following dilemma: should he incorporate the changes originally negotiated with the customer into the new policy or should he take the old policy and incorporate the changes made into the adjusted product? Both options are unfavorable. The work has to be done manually, is time-consuming and error-prone. You need to know that policies in the large customer business can be several hundred pages long.
The solution consists of underwriting, policy management and claims systems that are specially designed for the large customer business. Using software, the changes originally negotiated with the customer can be merged with the new terms and conditions to create a new contract. It does not matter how extensive the contract is. The various changes are automatically, quickly and error-free transferred and also made visible.
However, applications alone are not enough: employees in the key account business need a different skillset to those in standard business, e.g. in international communication. They must have in-depth specialist knowledge in order to develop customized solutions and offer high-quality services, e.g. in risk engineering.
In the international program business, globally active companies need a leading global insurance partner with a presence in all key markets who, in combination with entrepreneurial thinking and reliable action, provides a worldwide network on all five continents – such as HDI Global.
