The insurance business might sometimes seem rather dull and fusty, but it is also one of those industries that can be an example of a technology bleeding edge in action. That was certainly the case when I spoke with Luigi Vassallo, the Chief Operating Officer of Italian insurance company, Sara Assicurazioni. Like a growing number of insurance companies, it now finds itself a leader in developing applications that demonstrate edge computing in action.
The combination of mobile communications, and in particular 5G, with smart sensors and localized processing means there is now real potential in using such embedded sensors in vehicles that report on a driver’s performance and capabilities and adjust the premiums charged accordingly. But those self-same sensors can also play a major role in change across the automobile insurance industry, not least because the car makers are, at present playing the shrinking violet in letting anyone else near the data they generate.
There are technological developments to address before this finally plays out, but it could end up that car manufacturers insure their own vehicles. If it gets to be that people no longer own their own car, but rent autonomous driving vehicles on a per trip basis, it could be a mix of manufacturer and rental service providers that organize and provide the passenger insurance. However this all plays out, insurance will play a big part in the overall process, and for the insurance industry getting ready for it is going to be the big step that all of them are going to have to make.
This was the job that Vassallo took on when he joined Sara Assicurazioni, some four years ago now. His story provides a useful object lesson on digital transformation that is applicable across most business sectors with an extensive legacy infrastructure in place, but a serious need to transform into as close to being cloud native as possible. Vassallo’s background in the telecoms industry gave him a good grounding in where his new employer needed to get to, but when he joined the company it had a long way to go:
Let's say even things that today are very normal, like WiFi in the office, was not normal. Even the social networks were blocked inside the office and the usage of smartphones was very limited. So what we did that very beginning was a lot of activity to change the mindset of the company, like everyone had to have a tablet because we need to be acquainted with mobile apps. Normal people use mobile apps in their in their life. I know that many other insurance companies also have some marketing claim that they are in the cloud, but most of the time, they have just some complimentary application, we now we have everything on the cloud.
This includes a national network of some 500 physical agents, all using its business platform for policy sales and claims management. This application was redesigned so that it can be used on a smartphone or a tablet, together with a VPN client, anywhere a connection can be made.
The game of ‘do this or die’
Vassallo acknowledges that undertaking this program of work was a serious risk, involving some major transformational work from mainframe to cloud that could have ended up causing significant business-critical disruption. But the organization took the view that it had to be prepared for the future before it arrived rather than trying to catch up afterwards:
You know, we don't really need all these new digital services, even today, but we want to be ready for the future. So as soon as our customers start asking for digital services, we already have everything in place and we can support the digital services market. We are the first company, at least in the traditional insurance market, that can claim to be a full cloud company.
He describes himself as feeling `very good’ when the redesigned application came in on time ready for the cloud, not least because the project was complex in itself, but also because it was a project that that involved the entire company. This required getting everyone involved working together, with everybody on the same page. This is easy enough to say, but it does beg a question - just how did he manage to get everyone, from the C-Suite downwards, onto that same page, all pulling in the same direction? Vassallo says:
That's a good question. We explained to them that we have a strategic risk that the company will become a commodity in the future if we won't be ready to offer digital services. we will become outdated on the market. Probably the best scenario for us would be that our upper insurance product will be included in the offer of someone else. So let's say the risk not to do this program is significantly larger than the operational risk of doing a digital transformation.
Tying in TIBCO
According to Vassallo, TIBCO played a very important role in this migration, playing a big part in achieving that one-year goal for the migration of the core applications off the mainframe and into the cloud. The applications were developed on top of TIBCO middleware, including the use of the TIBCO suite of connectors to integrate and synchronise the applications with others, such as Salesforce, which the company is now using. This now gives the company a 360o view of the customer on Salesforce because all data are synchronized in real time between the different platforms and the core business system.
This turned into quite a strategic relationship for both parties. Sara Assicurazioni gained extensive support from TIBCO’s professional services group in the development of the code and help with the migration. TIBCO was keen to break into the Italian insurance market and got a successful reference customer, recalls Vassallo:
Today, I have a team of TIBCO professional services working with us for maintenance for the evolution of the of the application. And because of course, I like the eye level special support from TIBCO when it comes to highly complex software. I need these skills from TIBCO to help my people to develop correctly.
Moving to the cloud has opened up new opportunities for the company for new customer services, such as online and e-commerce interaction, with customers buying digitally on the website or on a mobile app. It can also offer API connectivity to partners, including digital payment options interconnected with the digital signature platform. The team has also built an integration with Alexa, just to prove that they could interconnect with the gateway. With customer consent in place to satisfy GDPR requirements, this would make it possible for a customer to exploit the growing volume of data available to query the policy about specifics of what is covered and the like:
It happens now that we can develop new services in one week. We have offices where the real life story is of product that has been developed and then launched on the market from Friday to Friday. We are now very, very fast. In principle we can tailor our product, we can sophisticate our risk model, collecting all this information from different channels. Why not?
Like every other business, insurance is driven by data. Sara Assicurazioni is not alone in offering better insurance terms to those willing to have logging `blackboxes’ fitted to their vehicles. But Vassallo is well aware that the vehicle manufacturers are now generating a huge amount more data that could be of value to the company in terms of assessing risk and setting premium prices based on a more detailed assessment of overall driving – which could then include ignoring failure warning data that later becomes relevant to a claimable incident:
So in future, we wouldn’t need to instal our box because we can leverage this information. But you know, there is there is the market is not mature enough because the car manufacturers are very, very strict with this information. They can send this information but at the moment it is at a very high cost. Maybe in the future, this information will be cheaper for us. We don't know what will be the future, but it's a threat for the insurance world. In the future, when the guy will be completely driving by software, by some artificial intelligence, we won't be able to insure that person, because they are not going to drive the car. And so maybe in 10 years, 15 years, we don't know.
Their option then might be to offer insurance to passengers against the vehicle manufacturers and their risk of failure.
There is one other new line of business that might be pursued, however. As a cloud service, Vassallo sees the possibility of offering the service capability it has built as a SaaS offering to other insurances businesses, which could open up new areas of specialist service provision based on the savings of not having to develop a core business system every time.