Dynamics Matters Podcast Ep 87: Disruption vs Insight in financial services

Welcome to episode 87 of the HSO Dynamics matters podcast.

Your regular sonic dive into the world of Microsoft technology related matters and much more besides.

And I’m your host, Michael Lonnon.

Do you find managing insurance a pain? So much cover across so many providers, all with different policy periods. Insurance should be about making the lives of me, and you, and anyone, easier. Part of this comes down to the experience provided.

I sat down for a chat with Microsoft’s Insurance industry adviser, James Harrison, for chat around how, and why, technology can be used to improve the customer experience.

So, grab a brew, sit back, relax, and enjoy the show.

Michael Lonnon
In the insurance markets today, have you seen much disruption in terms of use of technology?

James Harrison
I'm seeing a mixed bag. People would like to think they're disruptive, but largely, they're just doing things in a more efficient way. But then I do occasionally see people doing it completely differently. When you go, wow, that is really innovative. So, I'd say in general, it's not innovative, but they're all sort of green shoots, where you see people and you're like, wow, that's just bonkers. The way you're doing that is amazing. I hope you’re successful.

Michael Lonnon
How often do you see this?

James Harrison
Like 10-20% of the time.

Michael Lonnon
How are they going about it? Do these ideas just come to them, and they decide to, I don't know, to stick a black box in a car that allows you to pay insurance per mile or are they just using technology to help fuel the kind of innovation? Or how are they going about it?

James Harrison
I think with innovation, you can’t have innovation unless you got agility and you can't have agility, if you're stuck in a legacy, right. So, it's a way to take control of your legacy is to do things in a different way. But it starts with the whole company culture. So, if you've got a company that doesn't see it, and technology is just a cost centre for processing business, then those are the companies you need to be in. So, the ones that really look at an insight driven approach to the way they do their business and then the way not to get stuck in legacy is stop using other people's third-party products, which basically just monoliths so there's a number of them in the insurance industry. I mean, even some of the more modern platforms, I just call like more, they're just modern monoliths, right. So, where I see innovation is where people go, you know what we're going to, we're going to build our own system and you go, that's crazy. Nobody's doing that and they go, Yeah, but we don't want to be the same as everybody else, that's why you can add a new product and it takes months rather than years. That is true innovation, but those people are only able to do that because their company culture is that they invest in their technology as a differentiator and that they eat their own dog food.

Michael Lonnon
Is that culture element, perhaps one of the bigger barriers to innovation then if you don't have the right culture to want to accept and adapt and take on board, a new approach, they're just not going to change the way they operate?

James Harrison
I think so. I mean, and I'm not saying these companies want to be like a Fintech. Or that they're confused, that, you know, they know that they want to operate an insurance company and then want to run the best company they can. They want to have a great customer experience, they want to build their book of business, they want to increase the value of a company. I'm not saying that they want to be a FinTech, but there's a way of going about it, where they go, you know, what, we truly are going to use technology as a differentiator and what does that mean? It means building agility, as much as you can, whilst you're trying to operate. They are eating their own dog food. A lot of companies, and I'm generalising between general insurance and London markets, specialty, the large complexes in between general insurance and writers for underwriters, and everything else is just a cost. It's difficult for those companies to think of technology and agility because they're like, well, it's our underwriters run the current rate. It's our underwriters that have the relationships, and that's how we get the business in and then processing it, and pricing it, is just an overhead and you go, yeah, but you can't keep hiring underwriters, right? Because there's only so many of them and it's really expensive, and you're constrained by the physical amount of work a single person can do. So, the only way that you get more business, more market share, is by making those people more efficient, more agile, giving them the culture to do more and the only way you can do that is with technology. There's then a aha moment where they go, oh, we get that now we understand that technology is an enabler to agility and basically making fewer people more productive.

Michael Lonnon
Do you think insurance organisations in general are aligned internally? Do you think they're not thinking enough about consumer needs and wants, and that's why they're not perhaps adopting different approaches?

James Harrison
When we say consumer, or customer, I'm talking sort of agent broker intermediary as well, it's not just the end customer. So, they need to think about those interactions. A lot of the time people take bad customer journeys or bad processes, and they just automate them and use technology, and then they wonder why they're not getting the benefits, we got to do is look at, a lot, of things people are like, oh, you know, we've got a customer journey and we've mapped it and this is what, you know, whether it's a purchase journey, or its claims journey, and then we're going to use technology to automate it and think about is giving people unique journeys. So, whether that's, you know, broker, an intermediary or an end customer, you're never going to sell them more than that one product, because you're constrained by this kind of process, and you're only going to give them that same experience. If that experience is the same as everybody else's, then how are you going to differentiate yourself. So the same as a car renewal, you're just going to go to that consolidator website get the same journey, the lowest price, because if you give somebody a unique journey, you're like, oh, actually, these people understand me, and they're asking the right questions, and they may not give me the best price, but actually, I feel like I'm understood. It benefits the company as well. So, I'm a strong believer in, you have to have insurance to enable your life and there's whole bunch of things that you need to insure, I would rather give all my money to one provider, who gave me great service, understood exactly what I needed, and understood the portfolio of what I've got and if I gave them all my money, it would be cheaper than buying my house insurance, car, or contents insurance, my travel insurance from different providers, and then have to have to work out all, did I renew that or not? Oh, you know, I want somebody who actually understands me, I will give them all my money and in return, I won’t a lower price. I have this with my multi car insurance, right, I get I get a great price, but I'd be happy to add you know, things on to that. Yeah, they don't ask me about it. They don't ask me about it. When I go to the renewal. They're like, oh, who's your house insurance with and you go well, you know, that's it. I don't know who it's with. I've no idea. I don't even know when the renewals up and they go okay, then fine. What they should do is buy me out of that policy and so right well, today, we're going to take on everything and we are going to buy you out that policy, and then we're actually going to make it free for a year. You know, and because we understand you, because we understand that, you've got a bit of money, and you're exactly the kind of customer that we want.

Michael Lonnon
I was just thinking this the other day, I was sure my insurance has come up, I can't even remember the build insurance was with, I still don't know who the building insurance and then just wondering, oh, God, would it be simpler if I had these 5,6,7 different policies all in one area, that’s just so much easier to manage? What do you think the future holds for insurers? From a technology perspective, where do you want to take insurers and what would you advise them?

James Harrison
What we're seeing, despite what I'd said about the constraints of legacy and agility and stuff like that, you're seeing quite a large uptake across the insurance industry in terms of tech. So, people are using all the productivity tools, using the biz ops tools, and the automation and the cloud stuff. We're seeing it's quite a mature market and then they were quite surprised people, if you think about it as a kind of third, a third, a third, a third people are actually quite advanced. They're leveraging the tech, they're building ecosystems, they're creating new products and new services and new experience and then we've got a third where they're consuming the cloud and they're consuming a lot of stuff, but they're on the journey, and not really transforming yet and then there's a third that laggards but even the laggards have gone, well, you know what, we've got a plan, we've got a plan to kind of get onto this. So, you actually see a mixed bag of adoption. But you compare it to other industries as quite advanced things, they need to do it quicker, because Amazon is going to come and eat their lunch, they need to do it faster, otherwise, they're not going to exist. I would say the same way the UK retail banks they’re as well not going to exist. They need to get on that journey quicker. They need to use technology, because that's the only thing that's going to allow them to change. I would go as far as to say, that's the same with the with the specialty markets, the large complex risk carriers as well, the modernisation of Lloyds, we're going to do another cycle of that. But you know brokers like, Aeon Willis and Marsh to go, actually, we're going to start our own marketplace. Right, and then Lloyd's wouldn't exist. and I know they exists by the way that the structure is and stuff like that, but it will be less relevant, and it would basically be a subsidiary of those big brokers.

Summary
James believes the latest technology may not turn big established insurance providers into Fintechs, but it can be used to improve customer experience.

Yet before you get there, something fundamental needs to change in your organisation first.

It starts with the whole company culture. And looking to technology to provide an insight driven approach to the way you do business. And to not get stuck in the continual loop of using third-party products.

Providing the best customer experience requires agility, and you can only get agility by taking more control over what technology you have, and how it’s used.

I hope you enjoyed this episode, until next time, take care of yourselves.