The need to retire legacy systems, combined with the pressure of changing consumer expectations and the rapid pace of technology innovation, is pushing insurers to undertake digital transformation journeys to serve clients better and improve behind-thescenes efficiencies.
That journey will look a little different for each company, depending on what pain points they have and what they hope to accomplish at the end of the day. At StarStone Insurance, a global specialty insurer that created an underwriting capability in Australia in 2016, the focus has been on artificial intelligence.
“Brokers are entering data in our systems, they’re classifying risks, and we’re relying on their expertise to properly classify a risk,” explains Kardiner Cadet, senior vice president of StarStone’s e-commerce division. “At times, either because they’re moving very fast or because they don’t have enough knowledge of how to classify a risk, they may misclassify a risk. We’ve implemented artificial intelligence to confirm what they’ve entered in the system.”
For instance, StarStone’s AI capabilities will catch if a broker classified a ‘family’ restaurant as one that doesn’t serve alcohol. However, that same restaurant could serve alcohol on the weekends, which means the risk hasn’t been accurately captured.
“Understanding that nuance through AI has been transformative for us. It’s allowed us to cull our book of many risks that we otherwise would have written,” Cadet says, adding that the new capabilities haven’t changed StarStone’s broker-facing interface, which remains as seamless as ever.
“[Artificial intelligence] has allowed us to cull our book of many [inaccurate] risks that we otherwise would have written” Kardiner Cadet, StarStone Insurance
Another step in StarStone’s transformation has been getting a better understanding of the data the company has in its systems.
“Having access to the data has allowed us to have insights that we otherwise would have never even thought of,” Cadet says, pointing to a statistic unearthed by data analysis, showing that within three days of when a broker starts binding, a deal often falls off the table, which means the broker can get more out of an account within those first few days.
It’s been three and a half years since StarStone embarked on its digital transformation, and the company has learned a ton during that time.
“Initially when we started doing the AI work, we opened the floodgates,” Cadet says. “I wanted to know everything there is about these risks, which is good to know, but does it really matter? All of this extra information was flooding us, and it was preventing us from actually looking at what really matters.”
Axis Capital, which serves the Asia-Pacific region from a Singapore office, has gone through its own transformation, which Darryl Catts, Axis’ CIO of insurance IT, presented on in detail at Duck Creek’s Formation ’19 conference earlier this year. The past four years have been full of change for Axis as it upgrades its platforms, looping in various applications and allowing its partners to write more profitable business while also being more efficient.
“One of the major things we’ve seen with our underwriting is that we’re able to shift work from underwriters in the system, who are keying in things and generating policy documents, to our operations group,” says Tim Bibler, VP and North American IT business lead at Axis Capital. “We have the operations folks now doing those tasks that they were doing in the legacy applications, which is freeing up the underwriters to go out and deal with the brokers directly, write more business and do the things they really need to do to expand their book even more profitably.”
When undertaking such a big transformation program that necessitates multiple workstreams, Bibler admits that challenges are inevitable.
“One of the major things we’ve seen ... is that we’re able to shift work from underwriters ... to our operations group” Tim Bbler, Axis Capital
“We knew we were going to have, being in the specialty business, pretty complex custom specialty products,” he says. However, Axis was able to build out its technical and marketable products “and then take things like coverage for cyber and very quickly apply it to other marketable products”.
Before starting a digital transformation journey, it’s crucial that all team members are on board, from the top of the organisation all the way down.
“When you have these great ideas, you assume that people will immediately buy into this fantastic idea, but quite often, they don’t understand what you’re doing and they may not even trust that it’s coming from a good place because there have been so many people who’ve implemented technology with the approach that they’re going to cut out humans,” Cadet says, adding that it’s important for executives to communicate to their teams that there’s nothing to fear. “We just want them to make decisions faster with better data and more consistent data.”