Due to new challenges, business models have to be continuously questioned and adjusted. First, the actual concept of business models has to be examined. After that, the current set of facts should be evaluated and finally, one should look at possible courses of actions in corporations − in our case, insurance companies.

A business model generally comprises

  • the value proposition to the customers and partners,
  • the strategies concerning product and market and
  • the model for revenue.

According to the St. Galler Business Model Navigator, the business model is defined by answering the following questions:

  • Who is the user or customer to focus on?
  • What are the products or services offered to said customer?
  • How is a product or service made available?
  • Why is it possible to generate revenue with the business?

Modelling the business can be conceptualised regarding two processes:

  • the customer journey and
  • the (internal) process journey (end-to-end).

Not the internal process but the customer experience should be the main focus and improving performance has to be accomplished by planning and working cross-departmentally.

The current situation for insurance companies in Germany is challenging. In the long run, the traditional way of making business diminishes value because of the branch’s focus on costs and growing competitiveness without sufficient innovation. Insurers currently react with traditional initiatives to reduce costs on the level of optimising processes and restructuring. But regarding the future, this inhibition is a risk for those insurers especially that don’t pay enough attention to digitalisation.

The current reality is encouraging us to think of new business models. The German market is mostly saturated, new rates are developing, community-based models are spreading and should also be considered by insurers. Digitalisation brings new opportunities and other sectors have already exemplified how important − and in the end profitable − changes to the business model that adapt to this new reality can be.

In short, in developing a new business model one should focus on value proposition and customer journey. Digitalisation especially is of utmost importance and will fundamentally influence the business models of insurers. Additionally, risk prevention and avoiding financial damage are increasingly competitive factors, which is why insurers should more and more be risk managers.