ERGO and its technology partners Deutsche Telekom and T-Systems are implementing new digital concepts together.

Protect, not replace.

Fires, floods, burglaries – unforeseeable events can happen, and insurance companies are experts at calculating the odds. But what if you turned the entire loss management process on its head? What if the insurance company intervened before a loss occurred? – Evolution of a paradigm shift for the risk management industry.
Author: Julia Keller
Photos: Yagi Studio/Getty Images
Podcast: ERGO: Protect, not replace
Every 30 seconds, a water line bursts. Water causes around 1.1 million loss events a year in Germany, according to the German Insurance Association (GDV).* By the time someone notices the leaky pipe, it’s usually too late: water has long since penetrated the floor and wall. Not so in a smart home. Here, a dripping pipe will be picked up by sensors in the kitchen or laundry room that immediately sound an alarm and initiate an automated notification process. They push out a notification to the homeowner and the insurer’s service portal. The insurer will contact the owner directly and find out what has happened – was it a false alarm, for example? If the homeowner is unavailable or maybe not even at home, a call will go out to another contact such as a neighbor. Once the facts have been established, the insurance company will contact a plumber directly to fix the problem. Right then and there. And not days later, after the homeowner comes back from vacation.

Technologie meets insurance

The marriage of technology and insurance opens up new frontiers. It tilts the scales away from traditional insurance products that only cover risks, and toward integrated solutions with an all-in-one service that kicks in before damage occurs in the first place. It’s an approach that’s setting new standards for policyholders, thanks to ERGO Group and its technology partners, Deutsche Telekom and T-Systems. They have linked smart home sensors to Allysca, the insurance company’s service portal. It supports water sensors, smoke detectors as well as door and window alarms. Each incident, whether water, fire or burglary, costs over 1,000 euros on average, according to GDV. However, that often pales in comparison to the intangible losses, particularly those caused by fires. Not even the best insurance company can compensate for them. And that is exactly where the strategic partnership comes in.
ERGO Group AG is one of Europe’s largest insurance groups with locations in over 30 countries worldwide. Around 44,000 people work for the Munich RE subsidiary, either as salaried employees or as registered sales representatives.
“The future is in digital innovation and services – whether you’re talking about communications, sales or the products themselves,” explained Gregor Wiest, Head of Innovation of the ERGO Group. “A strong technology partner is key. That’s why we’ve been working with Deutsche Telekom and T-Systems from the start.”
This August, the partners announced their digital collaboration on smart homes and cyber security, unveiling the ERGO Safe Home program at IFA, the trade show for consumer electronics and home appliances. ERGO Safe Home is built around the automatic notification process. It’s available from Deutsche Telekom as an added service for smart home customers, but can also be obtained through ERGO as a rider to a homeowners insurance policy. “Smart homes and cyber security are ushering in a paradigm shift in the insurance industry that is being driven by ERGO, Deutsche Telekom and T-Systems: from adjusting and settling claims to curating the entire loss process. This smart home product is just the beginning of a multitude of new products and services that were inconceivable before digitization,” stressed Stephan de Haas, Head of Digital Consulting at T-Systems.

When design thinking sparks innovation

The kick-off for this visionary innovation program dates back to a management meeting held nearly a year ago. This was when ERGO and Deutsche Telekom made a decision to aggressively pursue digitization. Deutsche Telekom and T-Systems then joined up with Detecon, a T-Systems subsidiary, to identify promising digitization issues. Their efforts produced a big-picture view of the project. Next came a design thinking process to refine and clarify the core issues: eight weeks, six issues and two days of workshops per issue at the Digital Co-Innovation Labs in Berlin. “T-Systems and Deutsche Telekom have nearly ten years of experience in design thinking, and we benefited tremendously from their expertise,” stressed Wiest. The approach: a transparent, interdisciplinary, open-ended creative process that sets realistic expectations, but also demands the audacity to explore new paths, discard well-worn scenarios and replace them with new concepts, no matter how offbeat they may be.
800 consultants, 200 innovators and scientists and 10,000 ICT specialists worldwide. Deutsche Telekom and T-Systems have pooled their innovation resources in the Digital Co-Innovation Labs since 2016. Besides technology experts, the labs employ agile processes and innovative tools and methods like design thinking and rapid prototyping.

Ideas for business

To encourage creativity, Deutsche Telekom and T-Systems brought in experts from a multitude of disciplines to discuss ideas and projects. At one ideation session, the participants exchanged experiences in artificial intelligence. “We want to develop new digital business models that have maximum relevance for the market and our customers,” explained de Haas. “When you’re engaging in this type of user-centric development, you don’t just need technological know-how; you require extensive business and industry expertise as well. Luckily, the ERGO team was on board from the start, and so we were able to learn about and understand the unique needs, drivers and obstacles facing the industry as a whole and the company in particular.” The participants were motivated by the desire “to develop innovations that would add real value and allow us to leverage untapped business opportunities. I’m convinced that’s the reason for the success of our joint innovation program,” said Wiest.

Changing old thought patterns

Digital insurance services harbor far more untapped potential in and outside of smart home and cyber security solutions. At the start of the year, for example, Deutsche Telekom plans to add cyber security to “Computerhilfe Plus” (Computer Help Plus), a product that comprises reputation protection, data security and home network security. “We’re breaking down longstanding boundaries and re-imagining insurance in broader digital contexts, such as connected cars,” said de Haas. That’s the approach that the team is taking at the Digital Co-Innovation Labs in devising new concepts and cross-industry scenarios. One thing, though, is clear: these partners have no plans to abandon digitization.

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