The insurance industry suffers from archaic business processes, a poor track record of meeting customer needs, and failure to reach emerging market segments such as millennials. It's an industry "ripe for disruption," believes Andrew Brem, chief digital officer at UK-headquartered insurance giant Aviva. And he relishes the opportunity:
I see financial services as one of the last bastions to be totally reinvented.
He was therefore as surprised as I when a survey of stakeholders said to be driving enterprise digital transformation found that only 6% saw reinvention as their chosen response to digital disruption. Released to coincide with the London conference where Brem spoke earlier this week, the survey found that 33% thought the word "evolve" best described how their business model would change, while 31% chose "transform," 21% said "innovate" and the remaining 9% opted for "remodel". Brem told the audience:
I thought that was really conservative. If you're setting off to evolve, especially as a big business, you're not going to get anywhere at all.
Brem is no stranger to the concept of digital disruption, having joined Aviva from energy utility British Gas, where he created the Connected Homes unit and launched Hive, its highly popular mobile app for controlling home heating systems. So for those prepared to be a little bolder than the crowd, here are 7 tips I gleaned in conversation with Brem after his presentation.
1. Seize the zeitgeist
Brem says that when digital transformation really succeeds, it makes people "feel clever." We're all rapidly adapting to a world in which connected digital devices give us much more control and flexibility in their daily lives, and when it works well it gives us a sense of empowerment and satisfaction. He explains:
Our lives are being optimized — that is the digital zeitgeist.
How does it make us feel? It makes us feel clever. For me, that's the best word. It's not nerdy, it's not technical — I often got emails from people who come home from holidays and turn their heating on, on [their way from the airport]. It makes you feel, you know, 'God, that was clever!'
We want consumers to make clever choices. To me that is the zeitgeist of 2016.
2. Deliver immediacy
Achieving that kind of experience requires businesses to completely reform their processes to match the way the world works today. In insurance, the notion of selecting a product, filling out a form, making an application and getting a quote is a completely outmoded way of behaving, says Brem.
People now expect to be able to adjust, choose [and] claim very instantly, to meet their ever-changing needs. To me, digital enables that. It's a sense of being empowered, that sort of slightly self-satisfied sense, that, 'Well, that was efficient.'
This world of long applications is going to be gone. Everything that you could possibly want is going to be on your digital shelf at Aviva. If you want it, you're just going to have to breathe on it to get it.
3. Use your data - carefully
Organizations have traditionally held customer data in many different places and have not brought it together to see what they can learn about their customers over time. Digital technologies now make it possible to find relationships in the data that weren't previously visible, says Brem.
It turns out that the behavioral relationships are very strong between products that were traditionally felt as being entirely unrelated. For example, it so happens that a regular saver into a pension scheme has very different characteristics when it comes to car and home insurance than someone who doesn't do that. People who lock their windows carefully also drive more carefully.
Those are not relationships that the industry has historically taken into account, but you're mad not to.
Because this is so new, it's important to understand where the boundaries are. Aviva has no qualms about following up cases of insurance fraud that come to light because people have boasted on social media about the success of a false claim. But what should it do if it finds that certain search behaviors when people visit its site correlate to specific risk profiles? It's important to find the right path, says Brem.
What customers tell us, very clearly, is you must never sell my data. We hear that. We are trying to unpack more what they really mean, what are their real concerns?
You can imagine, we're seeing quite significant generational differences here. A whole generation of customers are relaxed about us using that data, particularly if they're going to get something back from it.
We're doing two things. First of all, we're figuring out what can we learn, and then figuring out what do we feel is appropriate for consumers.
4. Ruffle feathers
Brem says one of the reasons Aviva's CEO Mark Wilson hired him was because his background was not in insurance or financial services. He has a brief to take a fresh look at how the business does things and shake them up. To the extent that, at a review meeting a few months ago, Wilson told him:
Andrew, I'm not getting nearly enough complaints about you. You're not being disruptive enough!
Brem has done some things that have led to raised eyebrows, such as hiring the lead designer for Call of Duty from games developer Activision. But at the same time as bringing in fresh ideas, Brem has made sure his team brings the rest of the business along on the journey rather than working in isolation.
It's not a crazy skunkworks thing. A lot of what we're doing there is building practical digital assets.
Why do we expect our customers to do 90% of what they do digitally, and for insurance do it archaically? All we're doing is meeting the needs of our customers today.
5. Work with IT
Brem credits Aviva's CIO, Monique Shivanandan, as a key contributor to the company's digital transformation.
What's very helpful there is that our whole approach to IT development is pretty agile now. In parallel to our digital revolution, we've actually had an agile revolution throughout our IT estate to accelerate the pace of development. That's what Monique's done, and she joined shortly before I did.
I will say it's not easy, it's not plain sailing, it's not the same as starting as a challenger institution with no heritage, not at all. But, for this to be successful I need an IT partner.
6. Create icons
Large organizations "need icons" to spearhead the message about digital transformation, says Brem. He admits that his job title is "a bit pretentious" but "it does give the business a visible figurehead."
That is coupled with a clear focus across the business on driving customers to the digital properties.
We've got everyone in the business quite focused on our main digital assets — the Aviva website and My Aviva app. We want that to be the main place that they interact with us.
We just got the whole organization to understand that, and to rally behind it. That will be the place where increasingly customers come to see what products they have with us, to choose more things off the shelf, to be alerted of some risks that they might face.
Another important icon has been the creation of Aviva's Digital Garage as a focal point for digital development, with locations in London's Tech City and in Singapore.
A garage is a very useful, practical icon of change, it helps people understand the journey you're on.
We do not operate as a silo in Hoxton Square that doesn't have to bother with anyone else. No, quite the opposite. We are actually continually working with the manufacturing business unit to bring things onto My Aviva.
7. Do things differently
This is all focused on thinking about how to use digital technology and structures to deliver insurance in a way that's relevant to today's consumers — that fits with the 'digital zeitgeist'. That often means considering ideas or angles that would never have been possible without today's connected digital technologies, and which transform how to think about the business and its interactions with customers. For example, Brem foresees potential for big changes in how the industry approaches risk analysis.
With the capabilities of big data, and with our ability to understand our customers through many means, not simply them answering questions that we ask them, you can look at risk in a very different way.
The habit in our industry is that people review their products very infrequently. But the risks you face, the obligations you have, might vary far more frequently than that. I think [we'll have] the ability to make much more fine judgments more frequently. So rather than committing to this product for X years or whatever, actually we need to make and think much more flexibly for consumers.
The potential for more pervasive monitoring opens up new approaches to risk prevention, too.
In insurance, this whole notion that you wait until something goes wrong before taking action, just does not feel appropriate to the 21st century.
In home insurance, leak detection is the holy grail ... We're seeing non-intrusive leak detection that looks at the flow through your mains pipe and looks for odd things, like even a tiny flow rate while you're not in the house, and then would alert you to take action.
The other area where this is incredibly relevant is digital health, and using health-related data to help people make smart choices about lifestyles.
I think our whole industry will gradually be transformed by services that help people make smart choices and reward them for that, and I genuinely think it's in everyone's best interest.
From Brem's perspective, Aviva's digital journey comes across as much more of a reinvention than an evolution. But at the same time, all this change has to happen while the business is still 'in flight'. The company can't leave the market for two years while it goes off and reinvents itself. It has to continue to service its customers in the old way while it transitions to its new digital model, which some might see as more of an evolutionary path.
I think what matters here is the mindset. If you approach digital transformation with a reinvention mindset, you'll force a much faster pace than if you think of it as an evolution. It's similar to the debate about bimodal IT — if you see bimodal as a way of delaying or avoiding change, you're doing it wrong.
What is fascinating is that all of the points Brem makes from the perspective of the insurance industry are equally applicable to every other industry. We see similar stories playing out across digital government, healthcare and retail. Organizations have to bring together the data they hold on customers, match it up with other data they collect, and then deliver tailored choices that not only fit with, but also adapt to changes throughout, the customer's lifecycle. That makes his advice practical and relevant to anyone embarking on or facing digital disruption.