Fireside Chat: Accelerating Innovation in the Insurance Industry

Karam: A very good morning, Matteo to you. I wanted to begin this discussion by introducing myself. My name is Karam Singh, I'm based out of New York. I've been in the insurance industry for about 20 plus years, my role at Infosys is, I am a global head of partnership and alliances a responsible for scaling up the partnership and alliances ecosystem for our Infosys Insurance vertical and a pleasure having a discussion with you today. As you know, the theme of the discussion is all about innovation in the insurance industry and looking forward to the discussion here.

Matteo: Thanks for inviting me to discuss with you a topic that is definitely a priority in all the activities that I have done in the sector over the past 10 years. Really a pleasure to discuss today with you and to talk about the Infosys activity in the insurance sector.
Globally, our sector has gone through a wave of innovation over the past 10 years. Billions of dollars have been invested a transforming the core processes, the customer interfaces. So today, I would like to discuss some trends and a thesis that has characterized all my activities in the past few years. I worked with hundreds of insurers around the world and one of the core thesis of this job has been that the technology and data will represent for them today even more in the future a key competitive advantage something that will allow the players more ammo to mastering the usage of the data and the technology to achieve their strategic goal. So on these thesis I publish a book back in 2018 all the insurance players will be issued after years investing in Innovation we have seen that in the past 18 months a couple of quantitative evidences about this I must published a study on Property and Casualty insurers showing how the best innovators achieved higher growth of their Top Line and a better technical risk. So, recently an Accord published a study about digital maturity. So looking at the same topic from a slightly different angle, all the players with a higher maturity generated the higher growth and higher shareholder return over 10 years then players with a lower digital maturity. So what is your perspective on the Innovation journey in the insurance sector and now new technologies as artificial intelligence are but modifying this trend.

Karam: Matteo, thanks for the question. I totally agree with you and this topic resonates very well with me. Firstly, pardon me I've got a I've got a cough so hopefully I'm audible. But yeah, insurance is typically not considerable as a leader in Innovation despite a long track record of creating new and exciting markets across the industry and across emerging risks. For example. the Cyber Insurance Market is forecast to surpass now about 23 billion by 2026, and this is going in the annual growth rate of about 25 percent in the next five years it's supposed to grow. After COVID, many insurers are rapidly digitizing their customer and agent experience. They are permanently shifting away from traditional face-to-face models. We have also seen an increase in the direct-to-Consumer models. Other carriers are responding to Consumer Demand with loyalty and gamification programs that promote customer engagement. For example, a global insurer launched a Vitality program that gives customer points as incentives for practicing healthy habits and good driving behavior. So these are the patterns that we are seeing so there's definitely innovation. There is a change across the industries and the same applies to Insurance. Firstly, the new customers in New Markets. So new customers plus new world is equal to new Solutions. So how does Infosys or how we see that we come out and develop solutions that address these new customers. Customers today are fundamentally different from their parents; the way they buy and the channel which they use is different. They are typically digital native. With so much focus on instant gratification, endless choice, and consistent change, it's important to have an omni-present channel. With comparison sites, ratings, and testimonials just a click away, our customers are quick to abandon the sign-in process. So we have to come out with new solutions to address these new customers, which are basically digital savvy. Secondly, digital is extremely important, digital is the primer driver of the growth. As per leading analyst by 2024, 33 percent of the premium insurance volume will come from brand new propositions. That means the industry is rapidly shifting from a product led to a service led offering. It also means that the cutting-edge technologies are quickly maturing. While AI, IoT, and Big Data are the buzzwords and we've seen a lot of buzz around ChatGPT, today it is difficult to imagine the future of insurance without these technologies, Thirdly, and you'll have seen that Matteo, there's a shift in culture from legacy to innovation. Insurance always has a reputation of a very conservative industry. Therefore, for traditional insurers, is a challenge to modernize their legacy systems and be more agile. Clients expect more digitized self-service capabilities, more than ever before. One of the prior primary roadblocks that insurance carriers face when aiming to deliver high quality experiences is a seamless integration with their existing legacy systems. So with the help of, at least that's what we've seen at Infosys, with the help of no code application platforms, new technologies and insurtechs, organizations can transform and digitize the customer life cycle from customer engagement to a quote request to underwriting to policy generation and even doing this without replacing the existing ecosystem. We are also investing in building solutions and ecosystems with core platforms. Now the fourth bit is personalization. Personalization is extremely important, is the name of the game now. It is crucial for acquiring new customers. From the moment a potential client lands on Insurance website or Insurer’s website, it is up to the insurer to understand how to use the data and how to make most of the data. So, the ability to deliver personalized well-timed offers is a primary driver of the conversations in this digital world. Not only do new policy sales benefit from personalization but they also plenty of cost-selling opportunities. Now Matteo, I liked what you talked about AI, and we are seeing plenty of use case is of AI being leveraged in Insurance. We're already seeing this in the P&C as well as in the life insurance carriers. So, for example, for life insurance providers, AI improves the chance to increase revenue, improve efficiency, reduce the risk and among the many benefits of AI are the ability to improve mortality and lapse projections and optimize decision making. We have seen wearable technology coupled with AI can help the insurance companies leverage historical data more than ever before and it helps with pricing, prevention, reduction, personalization of life insurance plans. Variable data now provides information that helps us understanding the health and mortality and risk factors of policy holders. Like for example, one of the large insurance clients that we work very closely with sells interactive life insurance policies that track fitness and health data through wearable devices and smartphones. So, these are some of the trends that we are seeing in the insurance industry and at Infosys we're developing point Insurance solutions to address them along with our customers.

Matteo: Thanks, and a couple of elements you mentioned we resonate with the activity and discussions I have a weekly with the insurers around the world that I'm working with. These aspects of the instant gratification and the services wrapped around risk transfer solution, for sure, are two of the areas that I believe can be pretty beneficial for many more carriers compared with the few pioneers that have already been able to achieve results using it. You mentioned Vitality program, are exactly 10 years from the moment I had my first exchange with the CEO of Discovery that created the Vitality program, and I was in Johannesburg a few weeks ago with older partners from Japan to Latin America in Johannesburg, discussing the evolution of this behavioral change as a service wrapped around the risk transfer solution. So, the two elements you mentioned at the end are two aspects that in their case history are burdened and I perceived how in these 10 years the sector has changed. So honestly, 10 years ago this was something that was exotic in the sector. Try to change the behavior of policy holder to make them safer instead of only paying a claim when something will happen. So, insurance sector is a typically and probably superficially considered resistant to any change, conservative but we have such stories we have pioneers that have been able to create a tangible impact on their business, on the relation with their intermediaries, the agencies, their brokers, the financial advisors, and with their clients. So, considering that we are seeing year after year war incumbents that are committed in the innovating the way they do business. Some obviously are still at the beginning of their journey, others have already reached a more mature stage. I would like to ask how your company and the recent initiatives, the new campaign that you introduced the market are fitting in this context. Can you share something about the division and the key pillars of this approach that you are bringing to the market.

Karam: Yeah, Matteo, you summarized it very well that insurance industry is conservative, but they are getting on the path of the transformation some of the pioneers are leading the way. And what we see is the insurance industry is global, they are grappling with climate change, aging demographics, financial uncertainties, political instability, and fundamentally what is insurance, we ask ourselves what is insurance. Insurance is all about managing risks and protecting against it. So, it's about managing risk and protecting against it, and insurers have a critical role to play here. At Infosys, we believe, we serve the ecosystem that are guardians of economic global financial risk. So that's our positioning that we are supporting the ecosystem that are guardians of economic global financial risk. Our value proposition and approach include promoting transparency, creating trust, and delivering with speed and thus maintaining the financial stability to protect both individuals and businesses from potential financial losses. The insurance industry ecosystem has expectations higher than ever before when it comes to speed, accuracy, and trust. These three elements are the cornerstone of a strategy. Stakeholders and customers want fast, they want efficient services, accurate information and advice, and complete trust in the company they choose to do business with. Digital transformation has become critical for insurers to streamline new product development, enhance customers, enable hyper personalization, reimagine functions from marketing, distribution, underwriting, claims to financial accounting, and do all this by bringing in operational efficiencies and providing better customer experience. So, all this has to be done in an agile, speedy manner with accuracy and long-term trust with a customer. So that's the cornerstone of a strategy speed, accuracy, and trust, and we have categorized a number of our solutions for the P&C industry, for life, reinsurance in these three broad categories to enable our customer and be a part of the success.

Matteo: Interesting. I would like to focus on one of the three elements you mentioned, speed. Is inevitable that large organizations established with a history have their legacy systems, organizational constraints, and so on. So, it's common to hear conversations in our sector, their executives, the executives of the incumbent, talking about their organizations is beginner. Its complex from where they are but we know when they move typically there are impacts, results come. How speed can help these kinds of players. Can you elaborate a little more about your vision on supporting the sector with the additional speed?

Karam: Yeah, speed is a key, that's important. And we are seeing the product mix change, we're seeing the distribution and channel change, there's a need for expedited time to market. So being flexible, easy, personalized, accessible and visible is the need of a customer and all of it needs to be quick. There's only one way for insurers to stay relevant in the industry and to be competitive is the need for them to be agile. So Matteo, what we've seen is the product mix is evolving with the market dynamics and changing buying patterns. For example, P&C insurers need to adapt their go to market strategies, reallocate capital between the personal lines and the commercial lines, and compete to insure new types of risk. On Commercial lines, for instance, data and cyber security, terrorism are the new types of risks that need new product offerings. So, the systems have to be flexible, elastic enough to launch these products. In personal lines, especially in the auto industry, we've seen a transformation with the advent of autonomous driving and millennials using Uber there's so much data the cars like Tesla can collect. So, the product mix is changing, the user patterns are changing. We've seen Progressive and Allstate have products like Name Your Price, discounts based on the driving patterns. In life insurance, we've seen insurers are playing an increasingly prominent role in health of the customers as life expectancy increases and the health trends change. So speed is a key and at Infosys our solutions are based on New Gen technology architecture, microservices architecture, we rely heavily on the ecosystem like no code platforms. I think InsurTechs will play a key role here. And it's important that the insurers are able to react, respond to the market, enable expedited time to market. So that's one of the pillars we focused upon and bringing the solutions to our clients.

Matteo: Thanks. Next aspect to discuss with you, I'd love to address other pillar that you mentioned, that is the trust. This essence of the insurance, is of the activity of an insurer is to assess, manage and to transfer risks. So obviously in doing this Insurance are dealing with the larger quantity of data, with diversified kind of data and different sources, with a frequency that was not experimented before. So even the insurance sector is characterized today by the four Vs : volume, variety, velocity and veracity. So I would like to discuss with you how trust is one of the core element that you mentioned about vision that characterized your initiative on the insurance sector fits with this, Because I'm an insurance guy and from my perspective trust is already a fundamental element of the insurer DNA, so if I am expecting that an insurer need more speed, it's not something that is historical in the sector. From the bias of the foundation of the sector, trust is something that is already present, All the insurance business is about trust. In any business line, policy holders pay in advance an amount of money to the insurance, which we call premium that is a based on the trust that the insurance will be able and fair to reimburse the claim itself in about the short event what is written in the contract happens. So can you articulate a little more what you mean with trust and what you are supporting the insurer with?

Karam: Matteo, whatever you said resonates really well with me because you know what is insurance, insurance is matching the risk, transfer of the risk and trust is so very important. It's the center point of all the business in an insurance industry. For example, you buy a life insurance maybe once in a lifetime. Now when you buy a life insurance once in a lifetime, you would like to insure yourself with a credible trusted organization, so extremely important. And along with trust, accuracy is also one of the cornerstones of strategy. I mentioned speed, accuracy, and trust. So I'll talk a little bit about and you'd mentioned data there's plenty of data that is available right now, so I'll bring both aspects of data and accuracy to this conversation. Now we've seen an increase in the volume of data and we've seen very few insurance have harnessed its true value. So if you want to gain a competitive edge, there's no option but to leverage the data with vast amounts that are available but derive accurate insights and drive decisions. So by using data driven accurate insights, Insurers can streamline the customer journeys and substantially improve up the conversion rates. One of the examples I'd like to give is about a leading insurer that is using advanced analytics to mine the data it receives both from the internal and external parties and that significantly reduces the number of questions prospective customers must answer in order to receive a quote. By using AI, this company was able to automate, enhance its code accuracy, and simplify the customer experience. So data analytics extremely important, that changing the play in customer acquisition, risk selection, underwriting and pricing. And now you have the rise of IoTs, sensors and telematics, so you have more data available than ever before. Driving accurate insights from data has become critical. Now when we talk about accuracy, the accuracy is important because you need to drive actionable insights which help the insurers create long-term value. We've seen cyber security as the number one threat and it's a top priority for insurers, so organizations are realizing that's imperative to protect against cyber-attacks. They are investing in making the networks secure and launching cyber security products or to protect the customers, this is extremely important. This caters to the trust aspect part of it, that the systems have to be secure against the cyber security. An insurance carrier must invest in robust, scalable security platforms to protect the data of the policyholders. So trust, extremely important. So all these are related and as we discussed earlier insurance is all about managing risk and we think that trust is a critical to create a long-term value and a relationship with the customer.

Matteo: Thanks, thanks for clarifying and detailing the meaning of trust in your vision. So it has been an extremely interesting and though provoking discussion. Would you like to wrap up with some final comments highlighting some aspects for the transformation of the sector?

Karam: Yes Matteo, and Matteo pardon me again, I've got a bad cough hopefully I'm audible, but it's been a pure delight having this discussion with you. You are thoughts leader in your space, and I do follow you. So really enjoyed the chat today. I just want to mention that in this industry it's important to create a customer-centric efficient and sustainable platform by using the power of technology and innovation. We have already seen Generative AI and use cases of such in the industry. We must focus on creating a culture of innovation and continuous improvement where the customers at the heart of everything we do, so customer centricity is extremely important. That's why earlier on I mentioned about personalization, hyper personalization, understanding from the data available, to come out with the voice of the customer, understand the customer and we need to do all this in a transparent, speedy manner with accuracy and with trust. So those are some of the thoughts that I had today, Matteo.

Matteo: Thanks, it’s been a pleasure.

Karam: Likewise, a pleasure.