Episode 73: The Impact Of Data And The Internet Of Things In Insurance

How Data Can Modernise Insurance

For me, it's about how can you drive the deployment and the adoption of IoT devices for a client and an insurance basis. As insurers recognise the benefits in that cyclical improvement in risk and reduction in premium, it's a positive circle of activity.
 

Hélène Stanway, Market Engagement and Adoption Lead for Lloyd’s joins James Harrison on The Power of Data Podcast to share her thoughts on the game changing impact data and the Internet of Things can have on the insurance industry when harnessed to its full potential. They also explore the influence of M&A activity on the insurance market and Future at Lloyd’s efforts in modernising the industry and how data is underpinning it.

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(Please note that this podcast was recorded remotely.)

 

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The Power of Data Podcast

Episode 73: The Impact Of Data And The Internet Of Things In Insurance

Guest: Hélène Stanway, Market Engagement and Adoption Lead for Lloyd’s
Interviewer: James Harrison, UK Head of Insurance at Dun & Bradstreet

James 00:00
Hello and welcome to The Power of Data Podcast. I'm James Harrison, UK Head of Insurance at Dun & Bradstreet and today I'm delighted to be joined by Hélène Stanway, Market Engagement and Adoption Lead for Lloyd’s and President of SENSE. Welcome Hélène, how you doing?

Hélène 00:13
I'm great. I'm delighted to be here and it's such a great topic, so looking forward to chatting it through with you.

James 00:18
Thank you. Hélène, you have a fantastic wealth of experience in the insurance industry spanning 25 years. The vast majority has been part of the evolution of Catlin, from Catlin to XL Catlin and then to Axa XL. Your career is especially interesting and hugely relevant for the time that we're in, as you've been a champion of digital and technology innovation in the insurance industry. In 2016 you were appointed as Axa XL’s Head of Technology Innovation, where you co-founded Cube, the world's first risk innovation incubator. And I think this is the time actually where we first met as you were a mentor of the Accenture’s FinTech Innovation Lab to the insuretech cohort which I was supporting - long time now. In January of this year, you recently joined Lloyd's, where you are now the Market Engagement and Adoption Lead for the Future at Lloyd’s with a significant focus on data. Congratulations.

Hélène 01:05
Oh thank you.

James 01:06
And you've also been appointed as President of SENSE, a new thought leadership consortium looking to drive the dynamic use of IoT and data and speciality insurance market. So actually, a double congratulations that's in order.

Hélène 01:17
Thank you. It’s a busy time hey?

James 01:19
Absolutely. So Hélène, it'd be great if you could give our listeners a short introduction to yourself and your journey in innovation within insurance so far.

Hélène 01:27
Yeah, of course I can. It's quite nice when you summarise it for me because I can pinpoint to things. I think what's quite interesting from my career perspective, is I've done quite a lot of different things. And I would always classify myself as a generalist. I started actually in operations which I loved because you get to put your hands on so many different things. You understand process, how people work and how people are needed for the process. And then that third leg of that conversation is obviously the technology and how that technology underpins everything that you need to do. One of the things that was really interesting when XL and Catlin came together was how new roles and new opportunities came about. I remember my boss at the time, he said to me, “oh, Hélène, can you have a look at this technology trends thing”. And I remember thinking, “Okay, well, that's interesting. I don't know anything about that”. And it did freak me out for about three weeks I have to say. And then after about three weeks, I thought, “you know what, let me do some research”. And I went down the research rabbit hole of technology and what it means and how it applies to insurance, what's meaningful, what's not meaningful from those contexts. And that's where it started and it flourished. We created a team, we then did a whole bunch of experiments: I think at one point, we did about 40 different experiments. But to underpin all that it's very much about the mindset. So okay, I might have had a little bit of a brain freeze moment for three weeks thinking, “Oh, my goodness, how do we do this?” But actually, if you have that growth mindset it's “I don't know how to do this yet”. And it's the yet, that's the key. And I'm sure you've heard Carol Dweck and her yet phrase about the growth mindset; I absolutely think that applies to me. And it really was scary, I'm not denying that it was scary, because you're figuring something out that you don't know when you've come from a world where you're really sure of yourself, sure of your experience and expertise, into looking at something completely, completely new. And I deliberately chose my team for people who have that growth mindset. We advertised for roles in the team to say, “you know what, you don't need to know anything about the topic, but you have to have a willingness to learn”. And that was so powerful, and we've got some great people in the team as a result.

James 03:44
Great. And I assume now that growth mindset is very much applied to your new role with a new consortium of innovative players called SENSE where, of course, you're the President. For our listeners, they're unfamiliar with SENSE. Can you please tell us a little bit more about what SENSE is and the goals of initiative?

Hélène 04:00
Absolutely. SENSE was probably born out of quite a lot of frustration. I know from the experiments that we've done on IoT, what a game changing technology IoT is. Internet of Things, sensors that are attached to buildings, to people, to machinery to ships, you name it; it gives you a real-time view of what is going on with that, and we call them assets. And we saw clear benefits of doing that, we could predict things, we could spot things as soon as they happen, you're going to fix things. From a risk perspective, you're really shifting from that paying for something that's happened, to stopping it happening in the first place. But it really seems to be difficult to penetrate that concept and that idea into the insurance sector. Because there are so many challenges around how do you cope with real-time data? You get this plethora of data: what's meaningful, what's important, what should I be paying attention to? And insurance companies today are relatively siloed in how they operate, i.e. you have a data team and then you have a technology team, and then you have an underwriting team and a pricing team. And actually, you probably need a whole horizontal across those silos to drive change to make that happen. So the frustration “oh we can see all these benefits, it's such a great technology, why isn't it landing?”, and I wasn't alone in that. All of the folks that are in the SENSE consortium all have that frustration; we can see it's brilliant, it's going to make a change, it's the right thing to do. Let's group up and see if we can drive that change together. And we really do not want it to be a talking shop, we really want it to be something where we can drive action. And then we can drive the insurance industry to understand what is needed to take on that change and to do things differently based on IoT devices and data.

James 05:51
Brilliant. So it sounds like it's you know, it's actually about realizing the opportunity through the new digital technology that are available to the market. You know, I think I'm in the same group is what SENSE is trying to achieve there where the opportunity is there and now it's time to realise it. When we're talking about innovation, they'd be great. Now talk about the work at XL Catlin and some of the experiences from XL Catlin. You of course, were there for many years, before as acquired by Axa for over $15 billion. So you've seen an experience significant consolidation in the insurance market. When I was a Lloyd's broker when I first started my career I always considered XL Catlin as one of the most innovative players in the London market with fantastic talent. I'm sure that's part of the reason why Axa was so interested in the acquisition. As you know, there has been significant consolidation of insurance market in the last five to 10 years. How does consolidation of the market impact innovation? Do you think it helps or hinders it? It'd be great to see and understand some of your colleagues from SENSE, whether that has also helped support that initiative as well.

Hélène 06:50
I think it does a bit of both, actually, I think where it's a positive thing is in size and scale. So the more you consolidate, the bigger the player, the more interesting they become, for startups to connect with. Even the Googles and the Amazons and such like of the world, because you think because you hit one organisation, you're then automatically the target size and scale of the solution. So that is a positive and I know from my days at Axa XL, we got exposed to so many different players in the market, so many different solutions that we would never have got when we were a much smaller organisation. So that was a real positive. I think the difficulty comes from a people perspective, because when you go through an M&A you get people consolidation as well, there are two people in one role. What are you going to do? That tends to focus people away from innovation, which is ironic, because actually, you probably ought to try more innovation to make you as an individual more appealing and what have you for go forward roles. But it tends to make people retrench into, “oh my God, I've just got to do the best job I've got to do with my business as usual”. I think it does hinder the people aspect to step out of their comfort zone to do certain things differently, which is what you need for innovation. You need to take a step back, think differently, use new partners and new solutions. But I think that's just a timing perspective, once the organisation then settles down, I think we then can motor forwards because you’ve then got your size and scale and your people are settled and they feel more comfortable to then go out of that comfort zone and do something slightly different.

James 08:27
That's interesting. You mentioned there in your in your answer there about Google and Amazon. I think the insurance industry, we know we've been told for the last 10 years or so that there's an external threat there from those likes to disrupt the industry and apply their innovative techniques and success and experience to the insurance industry. What I'd be really interested to hear for yourself is you know, where are you seeing the most impactful innovation that's actually coming from within the insurance industry as opposed to external?

Hélène 08:54
I think I would struggle to answer that question because I have much more of an ecosystem view. As in, I don't think somebody can do something in isolation, because an insurance organisation serves brokers, it also serves clients and reinsurers in the mix. We are an ecosystem; we work together well because we have an ecosystem of people that all know part of the problem to solve. And actually, by bringing in other players and other solutions, that's kind of how you can then drive that continued progress. I'd say my favorite innovation, is probably the Axa XL construction ecosystem: a massive ecosystem of players whereby I think they got it right, because they had a platform whereby they were getting the data, curating the data, and then they were playing back to the client, all of the different insights from the different solutions that were being deployed on a construction site. And then they then had this thing called TAMI, which I thought was the great acronym, Technology Assessment Maturity Index, where they were pre-vetting startups. For clients, they could look to that list and say, “oh, okay, I've got confidence in solution excellence, because it's been pre-vetted”. And actually, they recently won an award for that innovation. So I think that's one of the highlights for me. And I actually also am super interested in what Brit did with the Ki Syndicate. That is really interesting and it's going to be interesting to see how many other carriers follow suit, and where you then get that division between the lead and follow and how that matures.

James 10:27
Absolutely. And you mentioned there a really interesting point that almost your isolation, that will actually hinder innovation. You need a consortium, or you need an ecosystem of players to really enable innovation in an industry like insurance. And that leads us very nicely to what I want to talk to you about next, which is the Future at Lloyd’s, which is, of course, as a huge modernisation programme at Lloyd’s where you said, you need the brokers, and you need the underwriters and third parties and consultants and technology and data providers all to come in together to really achieve the goals of Future at Lloyd’s. It's so great to talk now about your work, what you're doing right now in that programme, and the Future at Lloyd’s. How does data underpin and support the modernisation efforts that you're trying to carry out at the Future at Lloyd’s programme?

Hélène 11:12
I think the key word though is underpin. We have so many problems as an industry because we think we're talking the same language, but we aren't. Because you can say premium to somebody and they will have a view in their head of what premium means. And I'm going to have a different view probably of what premium means. Even in its simplistic form, are you talking gross are you talking net? If you have a set of data that everybody understands, they understand the definition, they understand all of the standards that are associated to it, and they understand why it's needed and the fact that their data is going to be treated respectfully and securely, and so on. You can then talk to each other in the same way that avoids all of that reconciliation, when “Oh, I thought you meant this” and “Oh gosh, no, I didn't mean that”. And it makes the data just flow completely seamlessly. And the other thing for me that's super exciting is we're really talking about data as a data-first journey; there's a real drive to start with data first. And at this point, it's looking at the data that that helps drive financial certainty, and all the processing and the payments of premium and so on. Because actually today, you know, it is a very, very painful process, because so many people have different understandings of the data, they have different ways of recording it in different systems. So people and data, in fact, can't talk to each other. Unless you have that data-first journey, where we start on, we end with the data that is the same and understood in the same way by everybody, you take away so much pain, so many mistakes. And don't even get me started on rekeying data and how many times that happens, and whether it’s a zero? Is it an O? Is it a one? Is it an L? If people understand the standards, and it's keyed in once and it flows through, wouldn't that be magical? And that's what ultimately, one of the many things that Blueprint Two is trying to achieve, is having that great flow of data. To take out the 91% error rate and how many times rekeying that is just costly, inefficient, and actually drives everyone nuts, myself included.

James 13:24
Absolutely. You mentioned there some of the challenges that you're finding, with not everyone speaking the same language, but they think that they are. Breaking that down is super important to make sure the program works and buy-in from both sides of the box and Lloyd’s. You mentioned there about a data first journey and at Dun & Bradstreet we totally agree when data is utilised well in insurance, it can have significant impact in a number of areas across the value chain. It can streamline underwriting, it can quicken onboarding, can remove those areas that we're finding in rekeying. I think there's an example in the market about 17 different ways to spell Coca-Cola, but you’re talking about the same entity. When data is used well, it's about reducing policy administration and improving the overall customer journey. Data is certainly the foundation to enable the digital acceleration of the insurance industry. What other examples are you finding in the work that you're doing about how powerful data can be in the industry when, when utilised effectively? Are there any key examples that really come to mind?

Hélène 14:26
At the moment with Lloyd’s, we're still in that foundational stage. I'm very, very proud of the work that we've done. We've got a Core Data Record out there for market consultation; we're looking for feedback, so we're trying to bring the market together and build consensus. But in terms of things that are slightly more mature and where data has made a meaningful impact, I see so much of it, I couldn't really pick one example. But it really feels like we're chipping away at how can we move from passively paying claims to really try to drive upstream and talk to the client about how they can better risk manage, and that's through the power of data. And I think the one example I always revert back to - and people may have heard me say this before - we did an experiment with an IoT device on a conveyor belt that was processing bread rolls. And the data told us something that no human being could see. And the data told us that actually the metal detector was being switched off for two hours a day and nobody knew. And that's quite serious when bread rolls are going through and you're trying to detect small particles and shards of metal. But that's the exciting stuff for me, is how can data tell us something we don't know. And I think the other one from quite a while ago was an experiment with a startup. We gave them around 10,000 loss reports and we said to them, “tell us something we don't know”. And they said to us - after a period analysis - “Oh, well, the highest proportion of claims that you're getting in this particular book of business on Wednesday afternoon”, and we were like, “oh, okay, well, what do we do with that?” So there's some great examples out there, but it's what do you do with that?

James 16:12
It's all about the insight that you can get from this data or the insight that you're getting for a data strategy. That's where the value’s at, absolutely. So the work at Future at Lloyd’s I think is truly fascinating. And it's showing how Lloyd’s as a marketplace must and should be at the forefront to set the standards for the market when it comes to digital, data, culture and innovation. So following this theme, it was recently announced by Lloyd’s CEO John Neal that climate change is the biggest single investment opportunity for the insurance sector in this lifetime. And this follows Lloyd's indication to scale back its exposure of coal and oil last December. We've also seen similar commitments from Zurich and Swiss Re in recent months. The insurance industry, we certainly believe - like the investment industry - has a real opportunity to make a significant contribution in the fight against climate change by influencing behavioral changes for its underwriting decision making. Industry’s growing commitment to ESG is, I think very, very encouraging. But how do you think the insurers should use digital and digital technologies to really support the goals or its approach to ESG and what should insurance be investing in to support their goals?

Hélène 17:15
I don't think you could have asked me a bigger question there could you. Let me pick on my favorite topic, which is IoT. What's fascinating about IoT is how many facets there are to it. I've already talked about how IoT can move from paying a claim to preventing a claim happening in the first place, or mitigating it much, much more quickly. The thing we found with deploying that tech however, was over and above anything from a risk perspective, was optimising power usage. If you think about it, you put a box in a building, and it's reading all sorts of stuff about the building, including how much electricity is being used. Through optimising when electricity came on, and when electricity goes off, or how much assets are using electricity, actually, we paid nine times over in savings in power usage than the cost of the box in the first instance, so never mind all the risk impacts. But if you're looking at how much electricity you're using, in such a simple manner, you're delivering a big part of the ESG goals, which is making those buildings - I use buildings as an example - but you're making them much more effective, you're reducing power. And the other thing that's a knock on is, the better that you maintain the assets, again, you're minimising the electricity that they're using, because we found one, I think it was an air conditioning unit that was on at full power all the time. And that can't be right, it shouldn't be on at full power. Somebody opened it up and saw that it was so humid, it was kind of raining inside. Again, if you if you can pick that stuff up, these faults much, much sooner, they're not overloading the use of electricity. That's why it's just so multifaceted and interesting. For me, it's about how can you drive the deployment and the adoption of IoT devices for a client and an insurance basis? As insurers recognise the benefits in that cyclical improvement in risk, reduction in premium, it's a positive circle of activity.

James 19:21
That's really interesting. And I totally agree IoT and sensory data has a huge opportunity to one for the insurers to help inform operational changes, but also, as a benefit of that is around ESG and improving ESG scores of as policyholders so that's really interesting. Hélène, before we end the podcast, we on The Power of Data Podcast, we like to ask our interviewees to leave our listeners with a piece of advice or a lesson learned that's held you in good stead and you've taken throughout your career.

Hélène 19:51
Oh, that's a tough one. I would probably say, for people to care less.

James 19:57
That's interesting.

Hélène 19:58
Now let me explain that. Now, people get very invested in their favorite solution, or their favorite way of doing things. And they put a lot of kind of emotional energy into maintaining what they know and love. And actually, if they cared slightly less about that, it would open up their minds, their hearts, to doing things differently, and to change and to think, “actually, you know, I could do this more quickly”, or, actually, there's a better technology out there”. So not to get too invested in one thing, but to kind of, to care less and to be open to other things.

James 20:36
And that's really interesting Hélène, because that almost goes back to what you're saying before about taking more risks to support innovation. So I totally agree that a lot of sense. Hélène thank you very much for your time today. This has been really enjoyable and it has been great to catch up. Thank you.

Hélène 20:49
Oh, it's been a pleasure. And thank you to you, too.