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Digital transformation in insurance


Roland Scharrer, Chief technology innovation officer, AXA

John Berry, Chief risk officer, Allianz

Dr Matt Connell, Director of policy and public affairs, CII

Gareth Hemming, Managing director, personal lines, Aviva

Conny Kalcher, Chief customer officer, Zurich

Gijsbert Cox, Insurance lead, Appian

Q: Now that insurers have recognised digital innovation is a must, how has that begun to transform the customer service journey?

CK: We have been a little bit of a laggard industry in this space. I think we were very good at finding excuses for why we are different in insurance, so we didn’t really need to change, or we looked at our customer base and thought this was an issue for millennials and not for all our customers. What we learnt through the first phase of COVID-19 was everybody suddenly got very digital and they had to manage their life digitally. Thus they were also expecting to engage with their insurance company via digital channels.

“What’s interesting is that digital adoption was across all segments, all age brackets” - Gareth Hemming, Aviva 

RS: In the past, digital was an appendix, an add-on to the distribution channels we have in the industry which are mainly broker and agent driven. Now, on the one side, the insurers themselves rethink how to drive digitalisation forward; so what kind of services you want to provide to end-customers. We have to face the reality and digitalisation is a must. Not only for nice advertising on the website, but also for the full value chain coming from underwriting, customer service, up to how to cope with claims and support the client in challenging times.

GH: It made us really focus on what demand we could provide a digital solution for, which therefore meant the people we had on the phone in the early days as we were sorting our remote telephone access. We could focus on those people who needed the telephone support. It is about using the two in combination so you can provide something for all your customers effectively. What’s interesting is that digital adoption was across all segments, all age brackets.

JB: Certainly in the UK market, vulnerability is a big topic for the regulators. We’ve had to stand up the capability to deal with vulnerability, not only in the customer base, for the people who can’t necessarily afford to meet their premium payments and figure out ways of changing our products and changing payment plans to support the customer. But also be acutely aware of vulnerability in our own workforce to deliver that service.

Q: How have customers shown increased confidence when it comes to using digital channels to communicate with their insurer?

GC: Insurers have organised themselves in a siloed way. They need to think from the customer perspective and, to enable that, jump away from the siloed thinking and create end-to-end customer journeys. But that has operational challenges. We have to overcome these because people don’t accept poor customer service anymore.

“It starts with what the customer wants, and taking friction out of the process every step of the way” - Conny Kalcher, Zurich

MC: We do consumer research, we call it the CII Trust Index. Our customer services institute, which did the work for us, did a lot of in-depth interviews with consumers and came up with nine categories that make up people’s opinion of their insurer, and obviously ease of service and speed of claims were two of those elements. In terms of designing digital processes, the operational side and their slickness are very important. But probably an even bigger challenge is that creative challenge to understand how people use these processes and what it looks like from their point of view.

CK: It starts with what the customer wants, and taking friction out of the process every step of the way. Sometimes customers don’t want to talk to a person, they just want to do something easily, without any hassle. We need to take all that stress and friction out of the system and then be there when they want to talk to a human being. It’s also another way of working for us because we need to really understand them and which person goes where for what, and then adapt our systems to that.

Q: Has COVID exposed any areas of customer experience where more investment is needed?

JB: Certainly, commercial lines would be an area where with the ongoing test case, with the FCA [Financial Conduct Authority] involved, there’s clearly an opportunity to clarify and simplify products to meet customers’ needs. I think further investment around product definition, around how those products are developed in conjunction with brokers, and how they are provided and explained to customers, will be a key area of opportunity.

GC: Insurers have learnt they need to become more agile, more able to adapt to higher claims on the one hand, or lower claims on the other, providing customer service where it’s needed and shifting it where it needs to go. Agility, I think, is a key word that insurers need to bring into their DNA, their processes and their IT as well.

Q: Where can we see evidence of digital transformation taking place in underwriting and has COVID hastened it?

JB: A lot of this is about data and data science, and how insurers are using data to optimise risk selection and their pricing. I don’t think that’s a new theme as a consequence of COVID. But insurers are having to become more savvy around data for all kinds of reasons. We’ve seen an increased use of data science, machine-learning and artificial intelligence techniques, and we’re starting to see those techniques come across from the customer experience area for the first time, rather than necessarily being homegrown within the underwriting department.

GH: What the restrictions and measures to tackle COVID have done is change the way people behave, and underwriting is a reflection of people’s behaviours and risk approach. Some of the historical norms you would probably use to underwrite have changed and they’ve changed both in the short term and the longer term, and not necessarily in the same way. Machine-learning is brilliant if there’s a predictable past, but it’s not so great when there are random things going on. The underwriting process at the moment is probably being tested more than it ever has before because people’s behaviour is changing.

Q: Do Amazon and Google pose a threat to the insurance underwriting industry because of the volumes of data they hold?

GH: I think they potentially have a role in the distribution of insurance and augmenting the understanding of risk and pricing with the data they have. Carrying risk is an extremely different business model though. They certainly have data that could make access to insurance easier for customers. They are the people who are setting the expectations about digital experiences, so we should probably think about how we work with them to understand how they can help us do that.

GC: Amazon and Google are enablers, they come up with a lot of good technologies that you can use. But the insurance industry has a lot of knowledge as well and you should make good use of it. You have fantastic underwriters, great claims handlers, and you understand financial dynamics. It’s a wake-up call to combine all the data gathered from insurtech, Amazon and Google, and add this into your processes to provide a better experience for your customers.

Q: In terms of a vision of the industry, how will underwriting look in five years’ time?

RS: The question we really have to face is about the products we are actually providing. The fixed products that are defined in documents and are written down once for the client. Are these still relevant in the future or will they have to be more modular, more itemised, more flexible and adjustable to customers’ needs? And how this is inter-related with underwriting, that will be a challenge. So the question is does a fixed defined insurance product exist anymore in the future?

MC: Maybe the underwriter of the future is going to be a more public figure, a more visible figure. I think the one thing we’ve learnt from the pandemic is how little people understood about where the risks could be handled by insurers and how much the taxpayer had to step in. We hear a lot about economists telling us what we need to do for the economy. If we hear more from underwriters about where the risks lie and the nature of risks, I think that would be a real benefit to society.

GC: I like the idea of underwriting moving forward and becoming more visible to customers. Together, we can enable technology and people, and by using hyperautomation to get rid of these tedious tasks, and help with augmented data, bring that capability to the underwriter so they can be more customer centric.

Q: With a change in the nature of claims, how have insurers been able to innovate to adapt to this?

MC: Our claims performances on the CII Trust Index tend to outperform the performances in setting up insurance and renewing insurance. The good news there is, when it comes to the moment of truth, that’s when insurers are at their best. I think they’ve held up well overall in terms of speed of claims and putting customers in a position where they feel like they can continue with their lives while the claim is being settled.

RS: There’s a change, a shift in volume. Less motor, more health claims, more business interruption claims. It’s the moment of truth for the insurance industry because we now have to play our part in society to do that right, and we also have to cope with a different kind of risk and adjustment of risks.

CK: As we entered the first phase of COVID-19, all our business units supported each other and cross-fertilised ideas to speed up the whole process, while still showing empathy, to continue to engage with our customers and come up with creative solutions in the moment. I think as an industry we have had far to go in this moment of truth. We saw that we could do much more to build trust, be much speedier and break down the silos in our own systems to service customers better going forward.


The experts agreed that where the insurance industry had lagged in terms of digital adoption, COVID-19 has encouraged digitalisation and agility across customer experience, underwriting and the claims process to create a more seamless journey. But the work is not over and the roundtable panel concluded that it is vital insurers continue to innovate in line with the ever-changing needs of their customers.

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