Services

“Now the Car Speaks Directly to the Insurance Company”

Zurich is one of the world’s largest insurance groups and has ambitious goals: even more customer focus, growing margins, and a 20 percent return on equity. But how can this be done? The Swiss insurer’s German subsidiary presents a practical example. 

03/2023

Horst Nussbaumer busy at the Zurich Campus in Cologne. As Chief Operating Officer and Head of Claims, IT & Operations, he is driving digitalization at Zurich Group Germany.Porsche Consulting/Caroline Gerst

Com­pre­hen­sive car insur­ance pays out in the event of dam­age, destruc­tion, or loss of the vehi­cle. When cus­tomers report a claim, a time-con­sum­ing and per­son­nel-inten­sive process begins for their insur­ance com­pa­ny. In addi­tion to gen­er­al claims pro­cess­ing, it often involves legal exper­tise and expert opin­ions. This takes time, is expen­sive, and squeezes prof­it mar­gins in com­pre­hen­sive insur­ance. Horst Nuss­baumer intends to change that—by using arti­fi­cial intel­li­gence and data analy­sis in claims pro­cess­ing. And it starts right from the very first sec­ond. “Now the car speaks direct­ly to the insur­ance com­pa­ny,” says the chief oper­at­ing offi­cer and head of claims, IT & oper­a­tions at Zurich Group Ger­many. Nussbaumer’s con­cept revers­es the tra­di­tion­al process, because in the event of a claim, the cus­tomer no longer has to con­tact the insur­ance com­pa­ny. Instead, at the moment the dam­age occurs, the car auto­mat­i­cal­ly reports it to the com­pa­ny and feeds the com­put­ers with data from the event. The insur­er then instant­ly con­tacts the dri­ver to pro­vide assis­tance, for exam­ple with a tow­ing ser­vice, a near­by work­shop, and a replace­ment car. It may sound like sci­ence fic­tion, but ini­tial tri­als are already underway.

Horst Nussbaumer doesn’t want to go it alone. He is striving for a harmonized system with partnerships between the insurance industry and the automotive industry. That way, all policyholders will able to benefit.Porsche Consulting/Caroline Gerst

The test fleet is on the road

Nuss­baumer has recent­ly been tri­al­ing a small fleet in ordi­nary road traf­fic. He says, “Mod­ern cars already send a wealth of data, but there aren’t enough users who can do some­thing with it.” The tech­ni­cal pre­req­ui­sites are already pret­ty much there thanks to built-in sen­sors and elec­tron­ic net­work inte­gra­tion in the vehi­cles. The “Zurich Call” builds on this. The aim is for the vehi­cle to auto­mat­i­cal­ly reg­is­ter an acci­dent and report all the rel­e­vant data direct­ly to the insur­ance com­pa­ny. The sen­sors in the car, mobile tele­pho­ny, and satel­lite nav­i­ga­tion pro­vide the tech­ni­cal basis. Airbag deploy­ment is one of the sig­nals that would cause the acci­dent to be report­ed to the insur­ance com­pa­ny, but dri­vers can also trig­ger the noti­fi­ca­tion man­u­al­ly by press­ing a button—for exam­ple, in the event of minor damage.

A high­ly moti­vat­ed, inter­dis­ci­pli­nary team is work­ing on prac­ti­cal imple­men­ta­tion at Zurich. “When cars start­ed talk­ing to each other, we saw new oppor­tu­ni­ties,” recalls Horst Nuss­baumer, who has been push­ing the idea for­ward for around five years now. The first task was to take the flood of data that vehi­cles pro­vide and iden­ti­fy the infor­ma­tion that is rel­e­vant for car insur­ance. But that was not enough, because pat­terns had to be rec­og­nized: which com­po­nents in each type of vehi­cle are most like­ly to be dam­aged in typ­i­cal rear-end col­li­sions? How much dam­age occurs on aver­age when a car hits a con­crete bol­lard while parking?

Zurich in figures

Zurich Group in Germany is part of the globally active Zurich Insurance Group. With premium income of more than €6.3 billion in 2021, investments of more than €53 billion, and approximately 4,500 employees, Zurich is one of the leading insurance companies in Germany. It offers innovative, high-performance, and sustainable solutions and services for insurance, pensions and risk management. With its declared goal of “shaping a better future together,” Zurich strives to be one of the most responsible and effective companies in the world.

Expertise from the market

Now it was a mat­ter of ana­lyz­ing the data. Ordi­nar­i­ly, Zurich would have had to accu­mu­late new exper­tise to do this. “But why build it up our­selves when the knowl­edge and skills already exist else­where in the mar­ket?” says Nuss­baumer, who specif­i­cal­ly focus­es on core com­pe­ten­cies as an insur­er. And so he brought a team from man­age­ment con­sul­tan­cy Porsche Con­sult­ing on board. Since the begin­ning of 2021, the Porsche experts have been work­ing as guides to this ter­rain, which was pre­vi­ous­ly quite unknown to insur­ance com­pa­nies. Just one year later, the insur­ance company’s in-house project team at the Zurich Cam­pus in Cologne now has all the skills and knowledge—as well as the assis­tance of arti­fi­cial intelligence—to cor­rect­ly inter­pret and process the rel­e­vant data for han­dling and set­tling claims and con­vert it into tan­gi­ble ser­vices for the customer.

Seeking advice from the automotive industry: Horst Nussbaumer talking to Dr. Henning Droege, Associate Partner in the Insurance department at Porsche Consulting. The COO brought Droege and his team on board in 2021 as what he calls “pilots.”Consulting/Caroline Gerst

Even so, Zurich still regards tech­no­log­i­cal tools as a way to improve ser­vices, rather than as a sub­sti­tute for per­son­al atten­tion: “Our top pri­or­i­ty is to be close to peo­ple, to our pol­i­cy­hold­ers,” says Nuss­baumer. “That’s why we will never let machines work alone when it comes to dia­logue with our cus­tomers in the event of a claim.”

Cus­tomers must be able to trust their insur­ers to han­dle their data with care. The dig­i­tal infor­ma­tion on acci­dent dam­age that the vehi­cle sen­sors sup­ply belongs nei­ther to the insur­ance com­pa­ny nor to the car man­u­fac­tur­er. It belongs sole­ly to the per­son behind the wheel. This means the dri­ver must con­sent to its use. If they have done so, they can be offered imme­di­ate assis­tance in the event of an acci­dent. This means the insur­ance com­pa­ny is right by their side. “This is impor­tant to us,” empha­sizes Horst Nussbaumer.

Faster, simpler, fully digital

 

How Zurich will pro­vide imme­di­ate help in the event of accidents

Despite comprehensive insurance, German motorists are often left alone at the scene of an accident, having to call a tow truck, choose a repair shop, organize the rest of the journey, or book a rental car all by themselves in a stressful, usually confusing situation. Although many of the services are later reimbursed by the insurance company, conventional claims processing does not begin until days later—once the insurance company has been informed of the accident by the parties involved. The companies then begin the personnel-intensive, costly, and time-consuming processing of the claim, which regularly requires inquiries, expert opinions, and a wide range of other information.Porsche Consulting/Clara Philippzig
In the future, sensors in the vehicle will report accidents to the insurance company as soon as they happen. Information on the place and time of the accident will be supplemented by initial data on the damage. At the same time, the insurance company will contact the driver, find out what help is needed, and initiate all the necessary assistance. The precise information provided via digital data transmission will enable targeted service without delay. Regular claims processing will be fully digital. Instead of staff, artificial intelligence and databases will be used to check facts, settlement outlay, and expenses. A further stage of digital expansion will eliminate the need for expensive expert opinions.Porsche Consulting/Clara Philippzig

A strong network of partners

The insur­ance com­pa­ny also finds out the nature and extent of the dam­age much ear­li­er than before thanks to the data that is trans­mit­ted direct­ly and auto­mat­i­cal­ly. This includes infor­ma­tion that allows an ini­tial esti­mate of repair costs. “This means we can process claims more effi­cient­ly and also at a much lower cost,” says Nuss­baumer. Speed often saves money, and this not only ben­e­fits the insur­ance com­pa­ny. Cus­tomers also ben­e­fit, and so do all the part­ners in the net­work, such as car man­u­fac­tur­ers with their autho­rized work­shops as well as com­pa­nies pro­vid­ing tow trucks or replace­ment rental cars.

Horst Nussbaumer is a graduate in engineering mathematics and comes from South Tyrol in Italy. He studied at the Technical University of Vienna from 1984 to 1989. In March 2012 he was appointed to the management board of Zurich Group Germany, where he has been responsible for various departments since then. In 2019, Horst Nussbaumer was appointed COO of the newly created Claims, IT & Operations division. Porsche Consulting/Caroline Gerst

“Pro­vid­ing the best pos­si­ble cus­tomer expe­ri­ence in the dig­i­tal pro­cess­ing of com­pre­hen­sive insur­ance claims is a joint task for part­ners act­ing in har­mo­ny with our val­ues and expec­ta­tions. If this suc­ceeds, every­one involved prof­its,” says Nuss­baumer. He says that an “orches­tra of vehi­cles and asso­ci­at­ed ser­vices” is com­ing togeth­er. Zurich has set itself the goal of becom­ing the leader in the claims sec­tor. “But we don’t want to always be the con­duc­tor,” says Nuss­baumer. “Insur­ers gen­er­al­ly can’t put them­selves at the cen­ter of ecosystems.”

Com­plex inno­va­tions also require patience and per­se­ver­ance. Devel­op­ing a per­fect­ly func­tion­ing dig­i­tal sys­tem for claims pro­cess­ing is, he says, a long, fre­quent­ly chang­ing process: “a jour­ney, not a sprint.” Nuss­baumer then con­tin­ues, “To achieve this, we and the other part­ners involved must learn, and must take things step by step.” The goal, he says, is to obtain excel­lent data, to achieve rapid pro­cess­ing and set­tle­ment, and to stay close to the cus­tomer through­out the process, from the acci­dent to the con­clu­sion of the claim. “The result of all that is what makes the dif­fer­ence in qual­i­ty,” Nuss­baumer stresses.

Added value in a package

The prod­uct of motor vehi­cle insur­ance itself is large­ly inter­change­able, he says. Now the job is to find the tar­get groups that are open to the new, dig­i­tal­ized process. And the empha­sis is on groups, because address­ing every car insur­ance cus­tomer indi­vid­u­al­ly would “not be very effec­tive.” This is why Zurich is focus­ing on offers as part of a wide range of value-added ser­vices pro­vid­ed by the deal­er when a new car is pur­chased or leased. Three years of ser­vice includ­ed? Mobil­i­ty guar­an­tee? Dig­i­tal claims set­tle­ment as well? To make sure the offers are linked at the begin­ning of the con­trac­tu­al rela­tion­ships, Zurich wants to close­ly involve the auto­mo­bile man­u­fac­tur­ers in its con­cept. Once that is done, the next step, accord­ing to the COO, is to bring all the other insur­ers to the table: “If we work togeth­er as an indus­try, we will quick­ly achieve the nec­es­sary stan­dard­iza­tion in dig­i­tal com­pre­hen­sive claims set­tle­ment.” Nuss­baumer makes this appeal: “The auto­mo­tive and insur­ance indus­tries should step on the gas togeth­er now.”

The customer perspective is the key to success

Dr. Henning DroegeDr. Henning Droege
Associate Partner Insurance, Porsche Consulting

Two questions for Dr. Henning Droege:

1. What role did Porsche Consulting play in the transformation process of Zurich Group Germany?

With our mobil­i­ty and dig­i­tal­iza­tion exper­tise, we were able to help devel­op a cross-sec­tor solu­tion that cre­ates real added value for the cus­tomers of Zurich Group Ger­many and all the other stake­hold­ers. In devel­op­ing and real­iz­ing this inno­v­a­tive busi­ness idea, it is impor­tant to bring togeth­er the right part­ners and con­nect them and their spe­cif­ic com­pe­ten­cies in an effec­tive way.


2. And how can the innovative business idea be successfully transferred into practice?

We took the per­spec­tive of a cus­tomer who is placed in a stress­ful, unfa­mil­iar sit­u­a­tion imme­di­ate­ly after an acci­dent. What direct added value can they expect in the future from their insur­ance com­pa­ny and its net­work of part­ners through intel­li­gent use of data in the event of a claim? Based on this premise, inten­sive work was then car­ried out on the iden­ti­fi­ca­tion, flow and, above all, inter­pre­ta­tion of the data from the vehi­cles. The aver­age new car is already equipped with numer­ous sen­sors that can pro­vide data for qual­i­fied claims report­ing. We ana­lyzed these elec­tron­ic sources, used them with­in the project for a pilot crash test with a typ­i­cal vehi­cle, and were able to ana­lyze valu­able results. In par­al­lel, more and more Zurich pol­i­cy­hold­ers with their indi­vid­ual require­ments will be involved in fur­ther devel­op­ment. Prox­im­i­ty to prac­tice is crucial—the sys­tem must be convincing.

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