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Most people are certainly familiar with the sentence, ‘data is the oil of the 21st century’. Although companies have known about the importance of data for quite some time, it is still new ground for insurance providers.

On the one hand, this is due to the specifics of the insurance industry. Although insurance products are purely digital, insurance providers have little data, especially at the customer interface, due to the low number of customer touch points. In addition, aspects such as strict regulations, organisationally grown data silos or a low level of digitalisation prevent existing data from being used.

On the other hand, the need for data-based applications continues to grow. The younger generation in particular is demanding flexible, digital and customised services. Customers want independent consultation at any time of the day or night, no matter where they are, and to conclude insurance policies in a matter of seconds – and preferably without the hassle of paperwork. Companies are therefore increasingly turning to new technologies such as AI to not only meet changing customer needs, but also to reduce costs and offer innovative products. Small insurance providers in particular often do not have sufficient amounts of data to introduce these types of technologies on their own.

However, a look at the adesso industry report shows that using new technologies (for example AI), optimising the customer journey and optimising the customer experience will be the three key challenges for insurance providers in the coming years. In order to overcome these challenges and thus remain competitive in the long term, data sharing will become enormously important in the insurance industry.

Data sharing is associated with major hurdles

There is still very little data sharing going on in today’s insurance industry. This is because the value of data is difficult to calculate in advance. Data is not a material resource for which the price can be determined by weight or other properties. Data also always reflect the intellectual property of an insurance provider. Many insurance providers, especially in the B2B sector, are reluctant to share data for fear of suffering a competitive disadvantage.

Another obstacle is the strict and often unclear regulations in the insurance industry. For example, the General Data Protection Regulation (GDPR) places high demands on sharing personal data. In addition, the lack of standards makes sharing data an expensive and time-consuming process. Interfaces and data formats have to be adapted individually, resulting in high costs.

The Gaia-X initiative was launched to overcome these challenges. But what exactly is the Gaia-X initiative?

What is Gaia-X?

Gaia-X is a European initiative to create a secure, open and independent data infrastructure. The aim is to bring together data from citizens and companies within this infrastructure, to share it and to use data services based on it. The data owners always have full control and can trace which data is used by whom and where.

Data no longer has to be stored centrally on a database and can instead be managed decentrally. For example, it is possible to collectively train an AI model with decentralised data together with other companies. The data does not have to be shared with other participants. Instead, it remains with the data owners. Uniform rules and standards are needed for this type of decentralised ecosystem to function.

A non-profit association called ‘Gaia-X AISBL’ was founded to take care of the technical implementation. This association is responsible for defining and developing the rules, standards and necessary functions to be able to operate the decentralised network. In addition, industry representatives and users are organised in Gaia-X Hubs to define industry-specific requirements and develop business cases.

In total, more than 2,500 people from over 300 organisations now support the initiative. The timetable for implementation is tight. The initiative was first presented in 2019. According to Francesco Bonfiglio, CEO of Gaia-X AISBL, the first services are expected to be offered this year and established on the wider market in 2023.

Gaia-X offers insurance providers enormous potential

The low entry barriers to data sharing and the ensured independence increase insurance providers’ willingness to share data between themselves and other companies. The costs for sharing data can be drastically reduced thanks to the uniform standards and GDPR-compliant applications. Data can be used to better assess risks and increase efficiency, as well as to improve cooperation between different participants in the value chain.

In addition, the willingness of citizens to share data with insurance providers in a trustful environment such as Gaia-X is increasing. In return, insurance providers can offer customised and innovative services. The business model can thus evolve, for example, from pure risk assumption to loss prevention and support for the customer through preventive measures.

The core of the insurance business is driven by data. Risks are calculated on the basis of historical data. Nevertheless, many companies in the industry are struggling to use data-driven applications profitably. Gaia-X creates an ecosystem in which insurance providers can share data with confidence, thus enabling the use of new and innovative services. Insurance providers should therefore no longer hesitate and participate in Gaia-X.

Would you like to learn more about exciting topics from the world of adesso? Then check out our latest blog posts.

Picture Steffen Spliethoff

Author Steffen Spliethoff

Steffen Spliethoff has been working for adesso as an Associate IT Consultant since May 2021. His main areas of expertise are business analysis and requirements engineering. He is also involved in data-driven technologies in the insurance context.

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