IT control in insurance companies

Platform provider 'IT department' - or IT as innovator?

In the past, IT organizations were regarded as pure service providers within insurance companies, which provided their services at the request of actuaries, product development and customer service departments, but now they play a much more important role: As owners of IT processes and systems, they act as drivers and designers of innovations and processes in insurance companies. This applies in particular to the digital transformation in the insurance industry, which they are driving forward with innovative products and services. But in this role, IT organizations are exposed to considerable tensions. 

Which areas of tension are currently affecting your IT organization?

Permanent dynamism and innovation

Some of the system landscapes that insurers have developed over the years are still based on large computer systems from the 1980s - as a result, they are less and less able to meet the requirements of customers, supervisors and cooperation partners. The systems remain in place, especially with regard to flexibility and connectivity to internal and external platforms. However, this is more important than ever before. Old technology and old systems must be "renovated" or even better replaced by future-proof systems. The (mostly run-oriented) control system must be adapted with regard to tasks, capabilities and installation.

The new players in the insurance market are Insurtechs. Not only do they noticeably increase the pressure to innovate within the industry, they also counter insurance companies in traditional competitive areas. In the meantime, however, the insurance industry and Insurtechs have recognized that this unrest is beneficial for both sides through targeted collaboration. In this respect, insurance companies are now faced with the task of developing smart solutions, facilitating cooperation and making Insurtechs a part of their own ecosystem wherever possible.

Regulatory requirements

Whereas in the past the requirements of the supervisory authorities were mainly directed at actuaries and product developers, they now also affect IT processes and systems. While, for example, the data protection code ("Code of Conduct") of the Gesamtverband der Deutschen Versicherungswirtschaft required IT organizations to block and delete customer data in existing systems in a comprehensible manner, insurance regulatory requirements for IT (VAIT) aim primarily at the management of IT resources and IT risk management and formulates the expectations of companies in terms of controlling and monitoring IT operations. The main challenge for insurance companies is the implementation of requirements for business organization and the design of structures, IT systems and processes.

Increasing complexity

Insurance companies no longer act as lone fighters. The industry is experiencing an increasing number of mergers as the insurance market consolidates. In addition, more and more companies see opportunities in targeted cooperation. Especially Insurtechs are used as innovative partners. For IT organizations, these developments lead to an overall increase in complexity, as their own processes and systems must be able to collaborate with external instances. One of the key elements is the development of a professional service provider control system, which is often only weakly developed.

Workforce Transformation

Last but not least, the high average age in IT organizations - among other things due to the use of old technologies - also harbours a risk: this will lead to an increased loss of long-term know-how carriers in the coming years and, in addition, the existing systems will no longer be able to be operated or will only be able to be operated at very high costs. Employees who leave the company take with them knowledge of the organization, so that comprehensive transition and succession solutions are necessary. At the same time, IT departments are now also competing with tech giants such as Google, SAP and IBM to find junior staff. To attract and retain the best talent, IT organizations must offer attractive roles and development opportunities.

Threats only? How you can use the tension field

Conversely, all elements of the tension field also offer opportunities for insurance companies - especially for IT organizations. The entire industry is in a state of upheaval. Existing perspectives are being questioned and new strategies are being developed in the boardrooms. Customers are not only open to innovative solutions, they even consciously demand them. The willingness to test and try out in the insurance industry has become a basic principle. Unconventional ideas and approaches are also discussed and implemented. A better starting situation for change is hardly possible.  

IT organizations can actively take advantage of this. By concentrating on the targeted use of new, customer-focused technologies, methods and trends as well as the consistent evaluation of available data (data-centered insurance), IT organizations become the heart of insurance companies. 

These services are often represented in functional organizational structures and processes: The organization is divided, for example, into the administration of hardware or software components. The divisions offered by the company are also frequently replicated, so that developers take care of life, health or composite divisions separately. But is this organizational form still efficient?

In practice, this leads to intransparent performance relationships, which in turn complicate effective and efficient process-oriented cooperation. In addition, there is a risk that inquiries from internal or external customers could end up in the so-called service desert. So it is all the more time to not only capitalize on the service concept in IT organizations, but also to live it. 

Quo vadis, IT? What will be the IT control of the future? 

In order for the IT organization to be optimally prepared for current and future challenges, basic principles must be anchored in the DNA of IT: 

Distinct, consistent and target-oriented ability to control performance, quality and costs and thus a clear basis for discussion with customers in the company.

Comprehensive transparency about internal supply and service relationships as well as responsibilities and content-related relationships

• Lean and cause-related service allocation - from IT to all customers in the company
• Holistic and professional further development of the IT organization supported by integrated, lived processes
• systematic and sustainable anchoring of compliance with legal and supervisory requirements

Next Generation IT: Let's get started together

We want to work with you to design the next generation of IT organization and restructure and implement IT control:

The modern IT organization combines IT service management with professional IT control. The interaction of systematically structured services with IT control results in direct insights into optimization and savings potential as well as full operational and strategic control capability. This enables the use of all relevant control capabilities and provides reliable and objective decision-making aids for IT control.

The IT strategy determines the positioning and orientation of the IT and defines the criteria for the evaluation of the service portfolio for an optimal value contribution for the business. It harmonizes requirements from technical and market trends, the business strategy as well as internal company innovations via a common prioritization. IT is increasingly evolving from a service provider to a business enabler and innovator at eye level. The foundation for this management approach is the development of an IT-wide, integrated management philosophy. Building on this, the IT governance and IT strategy (including individual sub-strategies) are tailor-made and established in a self-regulating control loop.

By introducing a service pyramid, IT services are defined and their performance relationships mapped end-to-end. In this way, you receive tailor-made services that are precisely tailored to your internal and external customers. The service pyramid defines clear responsibilities at every level of the pyramid. The full responsibility for results - i.e. both conceptual (content, performance, quality) and commercial (costs) - lies with the service owner for the entire IT service.

Within the service pyramid, all relationships between entities are mapped throughout the entire organization and can therefore be actively controlled. This enables you to identify the critical path in the value chain of each individual IT service and to monitor it in a targeted manner. 

We support our customers professionally in coping with the transformation as experts for IT control and IT service management. We are the experts for Next Generation IT.