Reimagining insurance

Reimagining insurance | Insurance Business

Reimagining insurance
In her own words, Julie Batch has “insurance genes”. Part of a family with a long history in the business, she began her own career in reinsurance and has since worked in France, the UK and Japan.

But a desire to better understand the workings of the customer ultimately saw Batch switch out of reinsurance. At IAG, her roles have included chief risk officer in its direct insurance division, as well as chief analytics officer. In December 2015, she became IAG’s chief customer officer, heading up its Customer Labs division.

“It’s a great role,” she says. “It’s very exciting in the context of IAG, which is looking at transformation.”

It was a couple of years ago when IAG embarked on a project to determine what could potentially disrupt its insurance business.

“We brought a group of our best and brightest people together to think about what the industry might look like 10 years out, which is very difficult for us because we often operate annually, in terms of the way we buy and sell policies,” Batch says.

Key issues to emerge from that work included the perceived role of big data.

“Interestingly, big data’s a term that’s not used so widely now, as we’ve realised that all data is valuable,” she says.

“We looked at the role of partnerships. For us to be able to be relevant in the future, we need to move outside our own vertical and think about how we partner with other businesses in other industries to create complementary products and services for our customers.”

Batch also talks about the prototyping of new products.

“Our industry has been fantastic at selling highly commoditised products at scale … and we’ve built amazing service models around that across insurance, generally,” she says.

“We’re not so great at building new products and services and rapidly iterating them. When we look at how many new products we’ve launched over the last 10 years, there’s less than a handful. You look outside the industry, and they’re releasing new products and services every day. We felt we needed to create that capability.”

Batch says the project team also turned its thinking to how IAG could benefit from some of the new capability being built in the start-up space, and that was the catalyst for creating its venture fund.

“We need to create the right environment for innovation, creativity and new thinking to flourish … What we don’t want to do is use the word ‘innovation’ for innovation’s sake”

The story so far
Since those conversations began, considerable work on the innovation front has been undertaken.

“When we set up Customer Labs, we were trying to figure out what it was that we needed to do, and there were a few things that were really critical for us,” Batch says.

“The first thing we did – which we’re still building – is create a single central repository for all of our company’s information. We call that our Enterprise Data Hub, and that data hub is essentially a platform that pulls every piece of knowledge and information that IAG has collected, for as much of its history as we can find, into the one place.”

In Customer Labs’ early days, this work was carried out by a group comprising only 10–15 people.

“It’s actually been a relatively inexpensive project for our organisation, and I think that’s helped us be more innovative in the way we’ve approached it,” she says. “As much as lots of funds drive some speed, they also maybe result in you making lazier decisions.”

Batch says the building of the data hub has been an “exciting piece of work”.

“We’re now in a position where we can stream into this hub, in real time, a huge amount of knowledge, and we’re building out new services from that now. That’s kind of the foundation of all the work that we’re doing.”
 
PROFILE
Name: Julie Batch
Company: Insurance Australia Group (IAG)
Title: Chief customer officer
Number of years with IAG: 12 Fast facts: Batch joined IAG in 2005 as group general manager, reinsurance. She is a graduate of Charles Sturt University and holds a Masters of Applied Finance

Another key focus of Customer Labs has been customer segmentation. Batch says the business saw an opportunity to think differently about customer needs.

“We used the data, we combined it with some information that we’d sourced through one of our venturing investments, and then attached that to our 5.5m customer records. We were able to build a really rich customer segmentation model that goes far beyond the insurance opportunities that we’ve seen before and it’s now being deployed across our company,” she explains.

Batch says Customer Labs works closely with CEO Australia, Mark Milliner, ascertaining how to create reimagined customer experiences on the back of this work. 

“It gives us visibility of new products that we don’t currently sell, the way that we might partner, how we might build adjacencies, how we should best deliver to the customer, and the new technologies that are going to be most relevant for each of those customer groups,” she says.

Batch says the division’s work in redefining its approach to pricing is also starting to pay dividends.

“We have again used the data and brought a lot of new analytical capability into our organisation, particularly through our [2014] acquisition of Ambiata, a data science company that we acquired from NITCA – now Data61 – which is part of the CSIRO,” she says.

Batch says that acquisition has meant the adoption of a completely different approach to pricing.

“We’ve looked at our pricing models, we’re building machine learning into those models… and we’re now generating some very significant pricing benefits as a result of re-thinking the way that we analyse and go to market,” she says.

“In trying to think about what the future looks like and imagine it, we want people that are outside of our current paradigm, our current frame, to be able to help shape it for us”

The next chapter
In July, IAG opened its new innovation incubator, Firemark Labs Sydney. Batch discusses the concept and its role in IAG’s strategic direction going forward.

“It’s one of my beliefs that we need to create the right environment for innovation, creativity and new thinking to flourish,” she says. “What we don’t want to do is use the word ‘innovation’ for innovation’s sake. I think it’s a widely used word and a poorly used word often.”

She says Firemark Labs is a means of accelerating innovation.

“Sometimes, corporate structures aren’t the right places to facilitate rapid development prototyping. So this environment, where people are provided with a collaborative space to work, [and] they’re given tools and services to help them work quickly, is really what Firemark Sydney is about.”

She talks about the occupants of Firemark Labs Sydney.

“A big part of this strategy is about taking amazing thinking from within IAG – so, a lot of our entrepreneurs – and then bringing great talent from outside and joining it together and creating a space where people can co-create products and services for our customers,” she says.

IAG has also opened a Firemark Lab in Singapore, in collaboration with the Monetary Authority of Singapore (MAS).

“We’ve had a long association with [MAS] because we obviously have strong business ties in Asia, and Singapore is a hub for us,” she says. “So, that’s about looking at prototyping new technologies [and] new businesses that may be a little outside of our core insurance offering.”

And there’s also Firemark Ventures, IAG’s $75m venture capital fund launched in 2016.

“Firemark Ventures … is about investing outside our organisation and finding new capabilities that we can bring back in and help enhance the insurance product and service offerings.”

Batch cites examples of how IAG is currently working to bring the best of the small-scale disruption into its business in efforts to shift and change the customer experience.

“We’ve invested in a cyber business, UpGuard, and we’re now co-creating a product with them,” she says. “We’ve invested in a company named Pocketbook and we’ve worked really closely with them, looking at the way that we might better understand our customers; we’re working with the University of Sydney with their data and analytics department, looking at how we bring capability and then start to focus on artificial intelligence.

“We see all of those things as being ways that we can accelerate and improve the experience that the customer has every day, and so it’s critical to our strategy.”

Landscape and culture
Asked about innovative businesses in the marketplace that have piqued her interest based on what they potentially offer the insurance space, Batch mentions the publicity around Lemonade, the growing New York-based property and casualty insurer launched last year.

“I certainly think that anybody who’s looking at using machine learning, rapid solutions for customers and artificial intelligence to develop a new business is on the cutting edge, and that will increasingly be how things will move in the future, in my opinion,” she says.

“There are other businesses we look at around the world – companies like Friendsurance, looking at more collaborative peer-to-peer sharing models. That’s something that’s really important to us to consider. It’s essentially the foundation of insurance in many ways, so we talk frequently with companies like that to help understand how they’re thinking about disruption across the industry. We also then look at how we can build products and services to meet some of those customer needs.”

Of course, having the right people on board driving Customer Labs is crucial, and Batch says there’s been a strong focus on creating diversity of thinking within the team.

“We’ve pulled together the best analytical people we could find, the best data wranglers we could find, people with deep customer empathy, we’ve pulled people out of organisations who are used to working with entrepreneurs and scaling businesses,” she says.

Batch refers to the recent appointment of chief marketing officer Brent Smart, who joined IAG after three years as Saatchi and Saatchi’s global CEO, and Mark Drasutis, who’s now the group’s chief digital officer after a number of years spent with News Corporation.

“In trying to think about what the future looks like and imagine it, we want people that are outside of our current paradigm, our current frame, to be able to help shape it for us,” Batch says. “Bringing that team together has been one of the most exciting parts… and sitting around a table with that sort of different thinking, that’s assimilating fantastically well into an insurance environment … has been one of the most rewarding pieces of the role.”