Solving the digitization trilemma

Solving the digitization trilemma

Written by Manuel Holzhauer, Managing Director InsurTech Hub Munich on 2 Oct, 2019

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The fourth stage of the industrial revolution brings huge opportunities for insurers to hedge new risks and digitize processes. To seize these opportunities, the industry should not see innovation and tradition as contradictory. Solving the ‘digitization trilemma’ means overcoming the limitations of legacy IT systems and traditional corporate cultures.

In the second half of the 19th century, a new disease connected both physicians and scientists: Railroads were an upcoming means of transportation, moving at unprecedented speed, leading some passengers to complain about exhaustion, irritability and indigestion. This was a lifestyle disease typical for that time, comparable to the ‘texting thumb’ that people suffer from these days. But you could also look at it as a timeless expression of scepticism about technology, in which the risks and side effects are emphasized instead of praising the progress being made.

According to this logic, many assume that risk-averse industries such as insurance don’t really move forward in times of great change. However, in retrospect, the opposite is true: the insurance industry, like the economy, has profited massively from the innovations created during the three stages of industrialization. The value of production plants, which were initially equipped with steam power, then with assembly lines, and finally with computers, has risen considerably – and so has the need for hedging risks

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