“Bring it on!” Why EXL and the insurance sector can look ahead with confidence
“Bring it on!”
“Bring it on!”
The end of any year is always a natural time to reflect and to think ahead, and the end of 2021 has brought special depth to those reflections and sharpness to future vision. The insurance sector as a whole has responded magnificently to the challenges of the global pandemic – perhaps surprising itself with the speed of innovation and willingness to change. For EXL in particular, it has been a spectacular year of continued progress and growth.
Mohit Manchanda, EXL’s Head of Insurance for UK and EU, set the scene for our December 2nd evening. The business sped past the milestone of $1bn global revenue, 65% of which came from the insurance sector. In the UK and EU, 15 new clients engaged EXL to help in their transformation journey, 10 of whom are leading brands representing all areas of the insurance world, including the prestigious and demanding London Market.
The company’s headline growth performance, of 20%, includes a phenomenal rise of 40% from its Data & Analytics specialisms.
Our brand promise is “We make sense of data, to drive your business forward”, and it is clearly a promise we keep. It is also a promise we, and the 50 leaders who attended, believe is essential for the future of the insurance sector.
Describe the future of insurance in one word? “Digital”
We asked this question of all the attendees, and their response was striking. If Mohit had set the scene for recognition and optimism, this one-word answer set the tone for an evening of insights and inspiration.
The attendees’ 2nd and 3rd most common one-word answers were also highly significant: “exciting” and “disruptive”. Those are not words traditionally associated with the sector, but they represent not only how far (and how quickly) insurance has come, but also the scale of the opportunity ahead.
If you know EXL already, you’ll know that the idea of “opportunity” is important to us: we believe there is always a better way, we look deeper, we find it, and we make it happen. So it was especially invigorating to hear our Insurance Leaders, Advisors and Analysts talk as much about how they are already realising their opportunities, as about their thoughts on the future.
We are grateful to three of our clients, who shared their own experiences of partnering with EXL on just this kind of digital transformation journey. Two insurers and one global broker – each a leading brand in its own right – talked of the real benefits they are already realising and helped build the evening’s conversation into an appreciation of just what might be possible for the sector as a whole.
“Making sense of data to drive your business forward” now sounds less of an offer, and more of an imperative. As the room quickly agreed, that one-word vision for insurance, “digital”, really translates into “data”. That, we can conclude, is the currency of future business success.
And yet, the real surprise came when we asked how many of the organisations in the room were ready to meet this imperative. “Does your organisation have a clearly defined and understood data strategy?” 49% said “no”, with another 14% admitting “don’t know”. This seems something of a pre-imperative, and in the spirit of defining some of the “why” and the “how” businesses should form their digital strategies, the entire scope of our Insurance Leaders and Advisors discussion can be set out under “Four P’s of Change”:
We posed the question: “What type of data do you believe will become most important in delivering your job function in the future?” The dominant response was “customer”. That marks a significant shift – from the traditional inward focus, to the “outside in” approach of true market proposition.
As the COO of a global broker described it, embedding our AI technologies into the business operations not only realised massive efficiency gains (which we will discuss soon) but also created hugely valuable new insights that provide a sharp direction and robust platform for downstream decisions. We estimate that this client is benefitting from between 2-5 times the data now generated from information streams. As insurers look to build greater customer intimacy, any edge gained through better understanding and targeting of products and delivery will impact on top and bottom line results. Here, naturally, data becomes critical.
The shift towards a future focus, rather than the more usual retrospection, is also significant. Again, taking the customer perspective first will automatically lead insurers to re-think their propositions and platforms; and will help force a consumer re-appraisal of what ‘insurance’ might mean to them. We already know – and are helping clients to explore – how realtime, dynamic information can redefine customers’ expectations and choice between insurance brands. By asking questions from the customer’s view, and answering them in the terms most relevant to him/her, insurers can square the circle of improving the customer experience (therefore maximising their preference) and reducing their operating costs. No surprise that one insurer now talks of “understanding people and simplifying insurance” – both are the result of focusing on a digital strategy.
Clearly, any change to an operating model has to include change to business processes. The Group Financial Controller of a leading insurance group shared her organisation’s journey from a “legacy finance” to a “data-driven finance” approach. The first step was to streamline finance through a new operating model, built on the three pillars of ‘Right Skill - Right Location’, Centres of Excellence and Process Excellence.
Any business looking to transform its model would learn much from this organisation’s move from a former 20: 80 split of Data Analytics : Transactional Finance, to one of 60 : 40 of Analytical Finance : Transactional Finance. Putting ‘Digital Adoption’ as the crucial second step in their journey meant that data became the fulcrum point for the business improvement. EXL NervehubTM, for example, played a critical role in this adoption of digital capability.
The Head of Enterprise Data at a UK based insurer succinctly expressed the value of this kind of improvement in two phrases: “processing data at the speed the business needs…making the right data available at the right time”. This capability is core to the business objective of being “smarter, faster and more affordable”, and again highlights the dual gains for both internal measures and customer delivery.
Our Leaders and Advisors highlighted both the need for businesses to act with pace, and the dramatic improvements to the pace of operations made possible by implementing a truly digital strategy.
The pandemic has had a transformational impact on in the insurance sector, most of it positive. We agree with those who say that the equivalent of one year’s technological innovation has been achieved in every month of Covid’s disruption. It is vital now that we all recognise the need to maintain this pace as ‘business as usual’, to build on the gains made and to fulfil the potential we know exists in our markets.
That sense of urgency was palpable in the leaders’ discussion: the one-word answers to our first question of how they saw the future of insurance, made that clear. Other ideas, like “changing”, “innovation”, “opportunity” featured strongly. So our market is primed for accepting necessary change – and yet we go back to that surprising statistic of 49% of our businesses not having a clearly defined and understood digital strategy. Businesses need to act now – and the advantages for those early movers will be huge.
If we look more closely now at the “dramatic improvements” we referred to above, that becomes clear. Our broker client for example, outlined the results they are already enjoying as a result of the partnership with EXL. Our EXL XTRAKTO. AI platform has helped to improve process speed by between 50-70%, and the business is now recording a reduction in cycle time of around 20-30%.
We might also repeat here that a vision to be “smarter, faster and more affordable” puts pace is in the middle of that statement.
This is undoubtedly the most important of our four Ps, and is the measure by which everything we do should be judged.
What, then, did our Insurance Leaders and Advisors share about their successes? All of our clients talked of increased efficiencies: one insurer talked of achieving “double digit effectiveness over a five year period”; another now has the “data capabilities to support our vision” and the basis for making better decisions in the future; while our broking partner is already enjoying a simultaneous reduction in target process of 50-70% and a 5-10% improvement in quality over the former manual process.
Ultimately, EXL’s value to our clients can only be understood by the improvement we help them create for their business. That is why we “make sense of data, to drive your business forward”.
In terms of the evening’s event, the conversation then moved into a “fireside chat” around some keynote themes. Led by Roger Oldham, Tony Tarquini and Matt Marsh, we enjoyed the open discussion of how important it will be to integrate the technical and the human dimensions of our sector’s evolution. Over-emphasising one, at the expense of the other, would result in our falling short of the potential we see ahead.
As a base, our client presentations and dramatic business improvements clearly reinforced the expectations that “digital” would be the centre point of the future of insurance. And that “digital” really translated into “data”. Good use of those insights would be critical to building consumer trust and relationships, and driving business growth.
Insurers who truly commit to a digital strategy will open a delta between themselves and those who are slower to move.
In broader terms, EXL grew out of an insurance company, and has been a pioneer in the sector for over 20 years since. Of our group’s total revenues, 65% comes through this domain. So we’re experts, and enthusiasts, who are committed even more to helping our clients to achieve great things. Data, Analytics and AI are creating new capabilities, deeper understanding and more ambitious transformation. If you would like to explore any of the issues raised by what was a thoroughly absorbing and enjoyable Insurers Leaders, Advisors & Analysts discussion, please let us know – we’d be delighted to talk more.