When the Customer Doesn’t Fit the Grid

Rejected Declined Negative Document Form Concept

From Underwriter to IT Service Provider – Alexander Stolte’s digitization column

I first made the acquaintance of the downsides of digitization when I moved to Hamburg a year ago. We wanted to take out contents insurance for our new apartment, but it evidently had an unusual modern locking system with which the insurers were not familiar. All our attempts to take out insurance cover online failed, so I rang the insurers and asked: “Can you insure it? You don’t list the locking system in your choices.” The answer was a consistent “No, we’re sorry but it isn’t worth the trouble.” The result of the black or white decision was black.

In the end it took ages to find somebody who was prepared to address the risk. A solution was finally found when we submitted the locking system’s certification. But the experience is a very good example of the negative effects that digitization of insurance products can have. A risk that does not conform to the standards can end up high and dry. That is the risk of transferring business to the Net and leaving software to make strictly black or white decisions.

To spare customers experiences of this kind insurers should remain open for individual solutions. This is where I see a great opportunity for digitization. Automated handling of standard risks surely creates leeway. It enables the underwriters to devote their time to cases in which the machine comes up against its limits. Every responsible initiative for automated standard underwriting should also on the basis of this leeway make provision for better individual underwriting. Digitization is a sharp sword to be used with caution. Wield it without due caution and you will risk harming not only your customer but also yourself.

About the author:
Alexander Stolte spent over 20 years as an underwriter assessing risks in transportation insurance. He is now taking the digitization of industrial insurance forward as an IT and consulting service provider. In his column he deals with the experience he has gained from this change of perspective.

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