Restructuring coverage affects not only tied agents, but also more and more brokers. In exclusivity, inflexible products, low commissions and high sales targets often lead agents to look for new opportunities.
In this context, the entire insurance industry faces a key challenge: How can business strategies be optimized while effectively meeting customers' needs?
In order to be successful in the market, a permanently changing insurance landscape requires innovative approaches. But what opportunities are there for reinsurers, primary insurers, insurance pools and brokers to make the most of the potential offered by reinsurance while keeping an eye on customers' needs?
In addition to the definition and goals behind the concept of reinsurance, we also take a critical look at the practices that are increasingly being questioned in the context of commission-driven transfer cover. We provide an exciting perspective on this discussion and, in equal measure, show you how AI-based models can not only improve customer satisfaction, but also enhance your insurance business with cutting-edge technologies such as Artificial Intelligence (AI) and Optical Character Recognition (OCR) can drive forward.
This article was written in German, automatically translated into other languages and editorially reviewed. We welcome feedback at the end of the article.
The most Important in a Nutshell
- Transfer cover in the insurance industry: it allows adjustments, better benefits and individual protection for policyholders.
- Advantages for insurance companies: Transfer cover improves customer loyalty, enables new customer acquisition and optimizes risk management.
- Process Optimization: Konfuzio is a smart add-on for the insurance industry that uses AI and OCR to speed up the processing of insurance documents.
- Benefits of automation: AI deployment saves time and costs, minimizes sources of error, and enables real-time decision making.
- Konfuzio Marketplace: Numerous AI models for different insurance policies are available in the marketplace. Register now for free and try it out.
Types of insurance at a glance
Insurance is divided into several umbrella categories. Each of these categories has a variety of specific types of insurance. The table below provides an overview of the main categories of insurance and some examples of each type of insurance:
| Category | Types of insurance |
| Personal insurance | Life insurance, pension insurance, accident insurance, health insurance, occupational disability insurance, long-term care insurance |
| Property insurance | Household insurance, residential building insurance, motor vehicle insurance (car insurance), liability insurance (e.g. private liability, pet owner liability), travel insurance, legal expenses insurance |
| Asset insurance | Liability insurance (e.g. public liability, product liability), property insurance for companies (e.g. business content, machinery), credit insurance, loss of earnings insurance, cyber insurance, transport insurance |
| Pension and old-age provision insurance | Private pension insurance, Riester pension, Rürup pension, company pension scheme (bAV), direct insurance, pension fund |
| Special insurances | Bicycle insurance, musical instrument insurance, valuables insurance, vintage car insurance, aviation insurance, terrorism insurance. |
| Agricultural insurances | Animal health insurance for livestock, crop failure insurance, livestock insurance, forest insurance, agricultural liability insurance, agricultural machinery insurance |
| Leisure and sports insurance | Ski insurance, golf insurance, boat insurance, climbing insurance, event insurance, diving insurance. |
| Insurance in the healthcare sector | Supplementary insurance for non-medical practitioner services, supplementary dental insurance, daily hospital allowance insurance, daily nursing allowance insurance, foreign travel health insurance, supplementary eye laser insurance |
Depending on their individual needs and life situations, policyholders choose the coverages that are relevant to them. But people and their life circumstances change over time. One well-known method of solving the problem is so-called transfer cover.
Transfer cover
Transfer cover is the termination of an existing insurance contract - or policy - on the advice of an insurance broker or exclusive agent. At the same time, a new contract is concluded, either with the same insurance company or with a competitor. Transfer cover is also known as regrouping and can be divided into three types:
- External portfolio transfer = Change of risk carrier: Main motivations behind this are usually higher commission rates and the best possible protection for customers according to IDD Directive.
- Internal inventory turnover = Transfer of old tariffs to current tariff generations, also taking into account the IDD Directive. The main motivation for customers is to benefit from new insurance services.
- Mandate transfer = Change of broker or exclusive agent instead of risk carrier. There are legal requirements that stipulate an obligation to inform the customer and grant a two-week objection period.
Transfer cover from the point of view of the policyholder
The 5 most important goals of transfer cover from the customer's point of view are:
Update: The adaptation of the insurance to changing life circumstances and needs.
Better performance: The improvement of insurance coverage or contract terms.
Cost savings: The reduction of insurance premiums or other costs.
Customized protection: The possibility to individually adjust the insurance coverage to changes in life circumstances.
Continuity: Continuing the existing insurance relationship and receiving benefits as a long-time customer.
Transfer cover from the point of view of exclusive agents and brokers
The top 5 goals of transfer cover from the perspective of insurers, pools, agents and brokers are:
New customer acquisition: Rescheduling makes it possible to attract new customers who are convinced of the benefits of a contract adjustment.
Commissions and brokerage fees: Recoveries generate additional revenue in the form of commissions or brokerage fees.
Customer satisfaction: Rescheduling increases customer satisfaction by allowing customers to adjust their policies to meet changing needs.
Retaining existing customers: Rescheduling helps retain existing customers by maintaining the existing customer relationship.
Risk management: Insurance companies are able to better manage risks through reinsurance and allow policies to be adjusted to current market developments.
Transfer cover in the criticism
Eyes open when switching contracts? Transfer cover in the insurance industry is a controversial topic. There is often debate about whether customers are being lured away or whether transfer cover is a "normal" practice. Viewed neutrally, the reality lies somewhere in between.
Exclusive agents and brokers often pursue their own interests when it comes to transfer cover, as illustrated by the above objectives such as increasing the customer base and commission income. Especially in private health insurance and life insurance, commission-based re-coverages and poaching are a critical issue. However, they can also make economic sense from the insurers' point of view, as they gain new customers and their business is thus expanded.
Those who play fair enable customers to weigh up the pros and cons intensively before switching policies, which consequently improves customer satisfaction in the long term and builds trust. Regulatory measures such as the IDD Directive are increasingly improving transparency in the insurance industry, which helps customers as well as insurance companies and their agents and brokers to see reinsurance in a more balanced light.
Opportunities for increased revenue and customer satisfaction through cover transfer with AI
The processing of transfer cover for insurance pools, exclusive agents and brokers ranges from relatively simple to very complex. Efficiency and effort depend on internal resources, processes, existing IT structure and technical capabilities. Factors that influence the processing effort of a transfer cover include:
- Type of insurance: Different types of insurance require different processing steps.
- Scope of changes: The complexity of the desired changes in the policy influences the effort.
- Efficiency of internal processes: The efficiency of the insurance company's internal systems and processes play an important role.
- Legal and regulatory requirements: Legal and regulatory compliance can make processing reinsurance more complex.
- Number of customers and policy volume: The number of customers and policies has an impact on the processing effort.
Progressive insurance providers rely on reinsurance for automation and digital processes to speed up processing times and reduce administrative work.
But in addition to digital reinsurance, there are other benefits that significantly reduce the potential for human error in the reinsurance process: The risk of reinsurance means that if it is not carried out properly, customers will be less well insured after a policy change than before. The result: uncertainty and dissatisfaction among policyholders.
Efficiently design remapping with AI and OCR
One promising solution is to help insurers to transfer cover with cutting-edge technologies such as OCR with AI to support efficient document processing. The use of AI models makes it possible to carefully analyze existing insurance policies and ensure that no important aspect is overlooked.
Customizable AI solutions are able to check policies of different types for errors or ambiguities so that the new contract meets the customer's needs and does not omit any protection. This is an important step towards a more transparent and consumer-friendly transfer cover process in the insurance industry. In this context, we would like to introduce the Konfuzio Marketplace.
AI models as growth drivers in the insurance industry
The Marketplace by Konfuzio is a central hub for trained AI models and tools and forms an optimal platform for
- Reinsurance,
- Primary insurances,
- Insurance Pools,
- Exclusive agents and
- Brokers,
interested in an advanced handling strategy of their transfer cover processes and supports in parallel to overcome the challenges related to AI as well as to deploy AI solutions quickly and efficiently without specialized knowledge.
This role plays Konfuzio in the marketplace
Konfuzio brings expert knowledge, AI softwareOCR and many other relevant technologies and brings together in the marketplace what belongs together:
Technical innovations combined with practical use cases.
Konfuzio as smart add-on for your document management
Just as individual as the needs and requirements of many policyholders are, so are the different policies. It is possible that customer expectations are developing in the direction of tailored insurance solutions, which would further complicate the processing and administrative workload.
The challenge, then, is to find the right coverage for individual customer needs while efficiently and accurately performing transfer cover.
Scalability and customization are key factors in meeting policyholder expectations while ensuring accuracy across a large policy portfolio. Konfuzio is a provider that can meet these requirements. In addition to specializing in automated text recognition and data extraction, the software uses advanced algorithms of AI and the machine learningto extract and analyze data from documents in a precise and fully automated way.
These capabilities not only save time and noticeably reduce human error, but also create the opportunity to gain valuable insights from in-force policies in the context of transfer cover, thereby improving decision-making processes and customer offerings. A user-friendly interface and seamless integration capabilities with existing systems complete Konfuzio's portfolio.
Integrations with the Konfuzio REST API
The REST API of Konfuzio offers the possibility to import both your post-processed and pre-processed documents into any Workflow integrate, whether by automatically uploading documents received via email or post-processing documents in spreadsheet software (Excel, Google Sheets, etc.) with specific triggers.
Competitive Analysis with AI and OCR for the Insurance Industry
Insurance companies can use technologies such as AI and OCR not only to evaluate their customers' policy documents quickly and precisely, but also to compare competitors' offers. scan and analyze, this approach lends itself well. This enables a simple comparison between insurance coverage and pricing of the competition.
Taken as a whole, this leads to an optimization of the sales process and makes it possible to create more competitive insurance offers.
Would you like to learn more about Konfuzio? Contact our sales department directly via the Contact form.
Other benefits and use cases of transfer cover with AI models
Automating transfer cover with OCR and AI offers insurers, tied agents, and brokers even more benefits, as the assigned use cases illustrate:
Time saving
AI-based automation significantly speeds up transfer cover, saving insurers time and resources.
Use CaseA customer has changed his circumstances and wants to adjust his existing life insurance policy to increase the amount of coverage. Thanks to AI-based automation, the review and approval of the transfer cover takes place in a few hours instead of days.
Reduced error rate
AI systems are precise and minimize human error, resulting in higher data quality and accuracy.
Use CaseWhen transfer cover a vehicle, numerous data points must be taken into account in order to create the new policy correctly. The use of AI ensures that all the necessary information is correctly incorporated to avoid errors in policy creation.
Cost efficiency
Automation reduces operational costs because less manual effort is required, resulting in lower operating costs.
Use Case: An insurance company that covers a wide range of operational and production risks regularly processes transfer cover requests from businesses. By automating reinsurance using AI, the insurance company saves significant labor costs by reducing the need for manual reviews and data entry. This leads to efficient transfer cover of operational risks while reducing operational expenses.
Decision making in real time
AI enables instant analysis of policy data and the provision of real-time recommendations for transfer cover.
Use Case: A customer urgently needs an adjustment to their travel insurance policy to cover unexpected travel changes. By using AI, the insurer is able to approve the policy change in real time and provide the policyholder with an updated policy.
Better customer satisfaction
Faster and more accurate transfer cover processing results in higher customer satisfaction as their needs are met more effectively and in a timely manner.
Use Case: A pet owner has an existing pet owner liability insurance policy, but wants to increase his coverage amount to get additional protection. Thanks to the fast and accurate transfer cover provided by the appropriate AI model, the customer feels well taken care of and is satisfied with the insurance provider.
Available marketplace offers for insurance types
As of today (10/2023), our experts have trained customizable AI solutions for the following insurances and presented them to you on the Marketplace provided.
-> Register now for free and test
In the tables below you can see the name of the so-called label (= specification that AI extracts), a short label description and the recognized value of the respective document that was analyzed with the AI model.
The Document Validation UI is part of every AI model in the marketplace and is, at its core, a custom web user interface module that allows users to continuously improve their AI through manual validations.
AI model for legal protection insurance
Legal expenses insurance is a type of insurance policy that provides legal support and financial protection in legal matters. It helps the insured protect their legal interests and guard against potentially high costs associated with legal disputes.
Policy details of the insured peril that can be covered by the AI model:
| LABEL | DESCRIPTION | TYPE | EXAMPLE VALUE |
|---|---|---|---|
| Modification date | Date of change in the overall contract or change in the benefit of a line of insurance. | Receipt date | 01.01.2023 |
| Occupation | Describes whether legal expenses insurance covers the profession. | Text | Production employee |
| Gross payment | The gross amount paid by a policyholder in the period of payment for the benefit of the insurance party. | Number | 1234,56 |
| Company name | Name of the insurance company including the legal form. | Text | Insurance XY |
| Annual gross | The gross amount that a policyholder pays annually for the benefit of the insurance line (if this amount is not the gross payment method). | Number | 1234,56 |
| Annual net | The net premium that a policyholder pays annually for the benefit of the insurance line (unless this amount is equal to the gross payment). | Number | 1234,56 |
Sample document
AI model for home insurance
Homeowner's insurance typically covers damage or loss to movable property located within an apartment or house. This includes furniture, electrical appliances, clothing, jewelry, electronics, household appliances and other personal belongings. Also, homeowners insurance usually provides protection against various events, such as: burglary, fire, water damage, storm and hail damage, vandalism, natural hazards.
Policy details of the insured peril that can be covered by the AI model:
| LABEL | DESCRIPTION | TPY | EXAMPLE VALUE |
|---|---|---|---|
| Modification date | Date of change in the overall contract or change in the benefit of a line of insurance. | Receipt date | 01.01.2023 |
| Inhabited | Describes whether an insured building is unoccupied. | Text | uninhabited |
| Gross payment | The gross amount paid by a policyholder in the period of payment for the benefit of the insurance party. | Number | 1234,56 |
| Elemental damage | Describes whether natural hazard damage is also insured. | Text | XY co-insured |
| Bike | Describes whether the insurance coverage includes bicycles. | Text | XY co-insured |
| Bicycle total | Describes the amount of insurance coverage for bicycles in percent or EUR. | Text | 1234,56 |
| Fire | Describes whether damage caused by fire is insured. | Text | XY co-insured |
Sample document
AI model motor vehicle for car insurance
Motor insurance, also known as car insurance, is an insurance policy that covers vehicle owners against various risks related to their vehicle. It is required by law and covers financial losses that may occur due to accidents, theft, damage to the vehicle or third-party liability claims.
Policy details of the insured peril that can be covered by the AI model:
| LABEL | DESCRIPTION | TPY | EXAMPLE VALUE |
|---|---|---|---|
| Official license plate | The registration number of the insured vehicle. | Number | AA-AA 123 |
| Modification date | Date of change in the overall contract or change in the benefit of a line of insurance. | Receipt date | 01.01.2023 |
| Gross payment | The gross amount paid by a policyholder in the period of payment for the benefit of the insurance party. | Number | 1234,56 |
| Initial registration | The date of first registration of an insured vehicle. | Receipt date | 01.01.2023 |
| Vehicle identification number | The vehicle identification number of the insured vehicle. | Number | WVWZZZ123456789 |
| Warranty insurance | Describes whether warranty insurance is included. | Text | XY co-insured |
Sample document
AI model for pet owner liability insurance
Pet owner insurance is an insurance policy that protects pet owners from the financial consequences of damage or injury caused by their animals. Especially for animals that travel in public areas or come into contact with other people or animals, this insurance is an important coverage.
Policy details of the insured peril that can be covered by the AI model:
| LABEL | DESCRIPTION | TPY | EXAMPLE VALUE |
|---|---|---|---|
| Modification date | Date of change in the overall contract or change in the benefit of a line of insurance. | Receipt date | 01.01.2023 |
| Gross payment | The gross amount paid by a policyholder in the period of payment for the benefit of the insurance party. | Number | 1234,56 |
| Annual gross | The gross amount that a policyholder pays annually for the benefit of the insurance line (if this amount is not the gross payment method). | Number | 1234,56 |
| Annual net | The net premium that a policyholder pays annually for the benefit of the insurance line (unless this amount is equal to the gross payment). | Number | 1234,56 |
| Fighting dog | Describes whether the insured animal is a fighting dog. | Text | Race XY |
| Deductible | The amount of deductible of the insurance or insurance product. | Text | 150,00 |
Sample document
AI model for residential building insurance
Homeowners insurance protects homeowners from financial loss due to damage to their residential building. This usually includes the actual building as well as related structures such as garages, sheds and stairs.
Policy details of the insured peril that can be covered by the AI model:
| LABEL | DESCRIPTION | TYPE | EXAMPLE VALUE |
|---|---|---|---|
| Modification date | Date of change in the overall contract or change in the benefit of a line of insurance. | Receipt date | 01.01.2023 |
| NumberGarages | The number of garages insured. | Number | 2 |
| NumberOther buildings | The number of insured outbuildings. | Number | 1 |
| Year of manufacture | The year in which an insured building was constructed. | Number | 1990 |
| Inhabited | Describes whether an insured building is unoccupied. | Text | inhabited |
| Gross payment | The gross amount paid by a policyholder in the period of payment for the benefit of the insurance party. | Number | 1234,56 |
Sample document
AI model for accident insurance
Accident insurance protects the insured person against the financial consequences of accidents. Unlike health insurance, which covers medical costs in the event of illness and accidents, accident insurance focuses specifically on financial support in the event of accidents and the resulting injuries.
Policy details of the insured peril that can be covered by the AI model:
| LABEL | DESCRIPTION | TYPE | EXAMPLE VALUE |
|---|---|---|---|
| Modification date | Date of change in the overall contract or change in the benefit of a line of insurance. | Receipt date | 01.01.2023 |
| Gross payment | The gross amount paid by a policyholder in the period of payment for the benefit of the insurance party. | Number | 1234,56 |
| Dynamics | The amount of the agreed dynamics in percent | Number | 5 |
| Company name | Name of the insurance company including the legal form. | Text | Insurance XY |
| Basic sumDisability | The basic sum of the insurance product against disability | Text | 1234,56 |
| Annual gross | The gross amount that a policyholder pays annually for the benefit of the insurance line (if this amount is not the gross payment method). | Number | 1234,56 |
Sample document
An update and expansion of the marketplace offerings for numerous use cases and types of insurance takes place on a regular basis.
You can find more blogposts on our marketplace offers here.
Conclusion
The insurance industry faces the challenge of optimizing business strategies while effectively meeting customers' needs. Transfer cover offers the opportunity to adjust existing insurance contracts and provide better services. Using AI and OCR in this process brings significant benefits such as time savings, reduced error rates, cost efficiency, and real-time decision making for increased customer satisfaction.
The Konfuzio Marketplace is a platform that provides trained AI models for various insurance types to optimize the reinsurance process. Automated reinsurance with AI helps meet policyholder needs and ensure both efficiency and accuracy across a large policy portfolio.
Do you have any questions? Our experts provide a comprehensive initial consultation, which includes an illustration of Konfuzio's potential and customized AI solutions in the marketplace for insurance companies, pools and their agents.
This initial consultation is completely risk-free for you and does not commit you to anything. Feel free to contact us for an in-depth informational discussion. We look forward to hearing from you.
