Digitalization

Mr. Bäte's Bots

Hauptversammlung Allianz
Robo mojo. Source: DPA

With the global insurance industry in the grip of digitalization, the future of Allianz can be glimpsed India. In the southern city of Trivandrum, the German insurer, one of the largest in the world, employs 100 bots – software creations that can perform tasks with little or no human guidance – to process, among other things, applications for insurance coverage for Allianz’s global industrial insurer, AGCS.

“We’re creating a center of excellence for robotics for all of Allianz’s business units,” Ashish Patel, the head of the company’s Indian operations, told WirtschaftsWoche, a Handelsblatt sister publication. Some 3,400 employees made of flesh and blood work in Trivandrum, also known as Thiruvananthapuram. But it is the much smaller cache of virtual employees that forms the heart of the Allianz’s modernization strategy as the internet brings change to all aspects of insurance.

“We’re creating a center of excellence for robotics for all of Allianz’s business units.”

Ashish Patel, head of Indian operations, Allianz

How Allianz’s bots fare here in Trivandrum is a critical test for chief executive Oliver Bäte, who took the reins at Allianz a little over two years ago. The 52-year-old executive, formerly chief financial officer and head of western and southern Europe, must ensure that the company, founded in Munich 127 years ago, thrives in the age of automated online sales or machine-learned risk-assessment.

Many investors have their fingers crossed for Mr. Bäte’s bots – and it’s easy to see why. Even as operating profit last year remained stable at nearly €11 billion ($13 billion), the German insurance giant saw revenues fall by some €3 billion to €122 billion. Since taking the helm in 2015, Mr. Bäte has committed Allianz’s 140,000 employees – and its rising number of bots – to a program designed to revive and digitize the company. And the foundations for this are being laid in Trivandrum.

The insurer’s activity in India is about far more than outsourcing and cost-cutting – it’s about finding ways to fully or part automate various aspects of the insurance business. Accordingly, the team in Trivandrum is working with artificial intelligence, as well as developing distribution and customer-care apps, and experimenting with new models of risk assessment. Services that Mr. Patel and his colleagues already have on offer in the Indian and British markets will soon be on offer globally. “We are building know-how and hope one day to be the global test factory for Allianz,” he said.

As he spoke, some 300 Allianz programmers based in India were working on streamlining one of the insurer’s most crucial pieces of software. The Allianz Business System is used Allianz offices around the world to calculate premiums and process claims for policyholders, but different countries use different versions of “ABS”. Step by step, they are all scheduled to be replaced by an updated and harmonized version, keyed and coded in Trivandrum. “Soon we’ll have done the complete rollout for eastern Europe,” Mr. Patel said. “And then other regions of the world will follow.”

A key part of Mr. Bäte’s plan is to use technology to better integrate a company with around 70 country subsidiaries long free to organize their own systems. The subsidiary Allianz Technology now has the task of making sure that all of the insurer’s offices around the globe have the technology to get things done, and that it’s compatible with the rest of Allianz. Turan Sahin, head of global delivery at Allianz Technology, said cooperation will become increasingly important at Allianz. “Units that up to now have been operating on their own have to close ranks,” he told WirtschaftsWoche.

This new spirit of technology-driven co-operation will go hand in hand with technology-driven centralization.  Allianz Global Corporate and Specialty (AGCS) insures industrial clients around the globe, but processes all if its data in Trivandrum. Using a wealth of data – from a production facility’s age to the likelihood of an earthquake in a particular location – Allianz employees and bots can from afar determine the risks associated with insuring almost any large-scale corporate venture.

Unlike some other divisions, Allianz’s industrial insurance business is actually growing. Income from premiums has increased by the year, reaching almost €8 billion in 2016. AGCS still needs experienced risk managers across the globe to oversee its business. But centralized functions in India are growing more quickly than offices anywhere else. Trivandrum has seen 800 new recruits since January.

Among the veterans in Trivandrum is Smitha Nair. Her job is to handle pet insurance policies for customers in Britain – a lucrative business for the company, with income from annual premiums totaling £250 million ($320 million). Allianz ensures some 1.2 million animals in the UK, and with three quarters of British pets uninsured, the company still sees substantial opportunity.

As a result, the sector has grown more competitive in recent years. Ms. Nair said her team in Trivandrum was always looking for ways to work more efficiently. “Digitization can help us with that,” she told WirtschaftsWoche. Indeed, she said she hoped technology could one day help her concentrate only on her more demanding tasks – when she was freed from more humdrum tasks by Mr. Bäte’s bots.

This article first appeared on WirtschaftsWoche’s website. Matthias Kamp reported this story. Amanda Price adapted this article into English for Handelsblatt Global. To contact the author: matthias.kamp@wiwo.de

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