Why Insurance needs to be at the forefront of Digital Transformation

November 8, 2018

Daniel Litscher

Daniel Litscher, Head of Business Innovation, Helvetia

Financial Services is a massive industry, with a wide variety of sub-sectors within it. All of these are at differing stages of their own digital transformation journey and insurance is no exception. We caught up with Daniel Litscher, Head of Business Innovation, Helvetia, a mid-sized insurer in Europe with more than five million customers, to talk about Helvetia’s digital transformation and use of augmented intelligence.

What specific challenges does the insurance industry face around digital transformation?

Daniel Litscher: Insurance is by no means at the forefront of digital transformation or is known for a very strong customer centricity. Many insurance companies for many years have surrendered the customer contact solely to sales representatives and did not know the customers’ needs and requirements.

Yet at the same time, most within the industry are becoming aware that insurance products of the future (at least standard products like motor insurance) are almost certainly going to be digital and fully online, and also that getting to that point won’t happen overnight. Unlike other areas of FS and indeed entire other sectors, insurance has not really lost business yet to digital, so some boards struggle to see the long-term vision and need for digital transformation.

Was that true for Helvetia?

Daniel Litscher: It wasn’t actually. Helvetia is an old company, which will celebrate its 160th birthday this year. So it is safe to say that there are processes and approaches that have been around for a long time. Fortunately, the board and senior teams at Helvetia are mindful of the need for digital transformation and are supportive of the collective efforts being made across the organization.

I started at Helvetia in 2015 and at the same time our strategy Helvetia 20.20 has been introduced which has strong focus on the digital transformation of Helvetia and which is supported by the CEO and the board of management.

So how did you begin the overall process?

Daniel Litscher: Well, we didn’t need to convince the board, so that was a good start. But what we did encounter at Helvetia initially, was an array of different departments and people within the business, all embarking on their own digital projects. There was no common approach and little discussion and collaboration between each party.

We knew that our efforts needed much more focus to succeed, and there was subsequently a significant investment in ideas and concepts. This collective effort is essential to any digital transformation project

How did you engage the rest of the company?

Daniel Litscher: In 2017 Helvetia had its best earnings and profit in its history. And it was clear, that this is mainly based on traditional, “analogue” business. So we had to explain the employees why we have to change the way we do business – to create a sense of urgency that is critical for success.

In spring 2018 we held an event – Helvetia Future Days – during which we outlined our vision to 2,500 employees, explaining why it is important and what we (all) need to do to arrive at our destination. One important element of the story was to tell the employees that we as an insurance company have successfully overcome major changes in the past and we will do this also this time. And that also in the age of digital transformation the human beings will make the difference.

For example AI – augmented intelligence – is also there to assist humans, not to replace them and a team of robot agents is certainly not part of the journey for Helvetia.

Our agents will be supported by the right technology that will allow them to do their job more effectively and efficiently. Perhaps standard products will one day be fully digital and the agents can spend their time managing more involved, complex products and queries, but full automation in this area is not part of the journey and it was important to make that clear.

What other tips can you pass on about successful digital transformation?

Daniel Litscher: Collaboration is absolutely essential – insurers must recognize what they can and cannot do. We work with a number of startups to help us where we may lack the in-depth knowledge and expertise.

One example is our partnership with Squirro, which we use to help with our underwriting process in engineering, special and large risks. We know that the data we hold is rich with insights and will be key to supporting our digital transformation. We also know that extracting those insights is a challenge, so we work with Squirro to make sense of the unstructured as well as structured data.

This enables the underwriters to better and faster assess the complex risks they are working on. Further we are using external data from different news sources to systematically gather relevant data regarding those projects.

But collaboration can come from many sources. We need more collaboration and interaction with different partners and services. The ability to create or take part in eco-systems will be key in the future.

Further we actively involve our employees in the innovation process with Helvetia Kickbox, an internal programme to encourage new ideas and concepts. Staff submit an idea to transform an element of the business. In a first phase they get working time and support to further develop their idea. And in the last step of that journey it is even possible that they found their own company based on this idea.

Our first internal startup is now in this final phase. This is where the employees leave their day-to-day job and are engaged by the innovation department. They receive some initial funding and are then encouraged to attract external VC funding, a process in which Helvetia provides support.

Can you put a timeframe on digital transformation?

Daniel Litscher: It is virtually impossible to say that an organization should be digitally transformed within one year, two or even five. Digital transformation is, or should be, a coordinated effort across an organisation that changes everything from backend processes to customer interactions, so it can be a lengthy exercise for many.

Getting bogged down by deadlines is counterproductive, and what’s more important is to learn from every part of the journey. It’s certainly true for Helvetia, and we have already learned that along that journey, a number of initiatives will work and be highly lauded, while others will almost certainly not be as successful. The digital transformation journey will involve a good deal of trial and error and it’s vital make sure you learn from any failures and do not let them distract you from the overall objective.

What we are trying to do is future proof our business. Insurance products will never be sexy for consumers, even if they are fully digital. So there’s a need to bundle products with added services and looks for new ways of engaging and delivering to customers. This is what digital transformation is, in essence, allowing us to deliver more modern and better services and products to our customers. We aren’t quite there yet, but feel we are a good way along the journey.