Skip to content
Finance — Business — All about technology.

Customers are invited by these digital services to visit their website for insurance-related matters.

Majority of Private Insurance Customers in Germany Tend to Favor Digital Transformation Initiatives by Insurers, Suggests Research

,   and  Administrator
3 min read
Encouraging insurance clients to visit our digital platform.
Encouraging insurance clients to visit our digital platform.

Digitization and Data Sharing in Insurance: A Double-Edged Sword

In the rapidly evolving world of insurance, the integration of digital technologies and data sharing is transforming the industry, offering benefits such as enhanced personalization, faster claims processing, and more accurate risk assessment. However, concerns about data privacy, security, and transparency remain prevalent among customers.

According to a recent study conducted by the market research institute Today and Tomorrow in collaboration with Florian Elert, Professor at the HSBA Hamburg School of Business Administration, over 1,500 insurance decision-makers aged 18 to 65 were surveyed. The study, titled "Opportunities and Challenges of Data-Driven and Digital Approaches in the Insurance Business Model," reveals that customers stand to gain significantly from a digitized insurance industry, but also express valid apprehensions.

Advantages of Digitization and Data Sharing

The study highlights several key advantages of a digitized insurance industry. For instance, personalized services become possible as digitized systems, enabled by AI and unified data sharing, allow insurers to tailor insurance products based on customers' behaviors, lifestyles, and risk profiles rather than generic factors. This customization improves customer satisfaction and retention and ensures customers pay for appropriate coverage.

Furthermore, faster, more accurate claims and underwriting are made possible through the integration of data from wearables, electronic health records, and connected devices. AI-driven automation can handle over half of claims processes by 2030, reducing delays and errors that come with manual data entry.

Improved Customer Service is another significant advantage. Automation and real-time access to unified customer data improve responsiveness and transparency in customer interactions, replacing slow manual follow-ups and fragmented record-keeping.

Lastly, better risk management is achieved through AI analytics that identify subtle behavioral patterns and fraud more effectively than traditional underwriting, leading to fairer premiums and more accurate assessments.

Concerns About Digitization and Data Sharing

Despite these advantages, customers have important concerns. Data Privacy and Security is a significant issue as sharing personal and health data across platforms raises risks if systems lack robust encryption and compliance mechanisms. Fragmented legacy systems increase the chance of breaches, and there remains apprehension over who can access sensitive data.

Transparency and Explainability is another key concern. Customers want to understand how their data influences premium calculations and claim decisions. Current AI models often lack clear communication or explainability, making customers wary of automated decision-making.

Regulatory Compliance is also a significant concern. Rapid evolution of insurance and data regulations requires insurers to maintain compliance to protect customer rights. Failure to do so exposes customers to misuse or mishandling of their data.

Potential for Algorithmic Bias or Errors is another risk. Use of AI, while efficient, carries risks of hidden errors or biased outcomes if not properly supervised, which can affect customer trust and fairness.

Balancing Benefits and Concerns

In conclusion, while digitization and data sharing in insurance offer significant efficiency, personalization, and accuracy benefits to customers, these advantages must be balanced with stringent data protection, clear communication, and trustworthy AI governance to address valid customer concerns.

The study also reveals that more than half of insurance customers would be willing to share photos of their existing insurance contracts and make them available to the advisor in advance for analyzing their own insurance situation. Most customers are also willing to register insurance policies from other providers in the customer portal to improve their overall insurance coverage.

Interestingly, among younger consumers, the willingness to share health-related data is often significantly higher than among older individuals. About half of consumers also wish to utilize multiple data sources when reporting a claim to accurately represent the incident.

One-third of respondents also see value in automatically sharing their data with their advisor or other insurers for analysis and optimization. Customers would most likely provide their existing insurance or bank advisor (additional) data.

Read also:

Related

Latest