2020 was a turning point for Australia’s life insurance industry. Traditionally averse to quick-fire innovation and ill-resourced to manage the customer surge during Covid, the life sector was forced to adapt and digitise at pace – all while resolving a laundry list of post-Hayne regulatory rules.
As part of FST’s Future of Insurance 2021 Leader’s Panel, industry chiefs from Australia’s life insurance sector outlined their business’s response to – and opportunities stemming from – the Covid crisis, how insurgent insurtechs are challenging and inspiring century-old incumbents to evolve their business models, and the outlook for the sector post-pandemic, as insurers battle inertia to turn recovery into newfound opportunity.
Here, we present highlights from the Insurance Leader’s panel, featuring:
- Andrew Howard, Chief Commercial Officer – Group Life & Investments, TAL
- Ben Walsh, Chief Insurance & Investments Officer, AIA Australia
- Megan Beer, Chief Executive Officer, Resolution Life Australasia and AMP Life Limited
Moderated by Joyce Moullakis, The Australian
Joyce Moullakis (Mod): Let’s start off with Covid. Obviously, it’s driven noticeable change in terms of transformation agendas and how the sector has reassessed its product offerings. How have your companies navigated the crisis? What sort of opportunities did you see coming through?
Andrew Howard (TAL): Often at these conferences we talk about disruption and, goodness me, a pandemic is Class A disruption for any industry and any society. What it did for us when we reflect on the last 12 months or so is get us in the life insurance industry focusing on what’s important and where the value lies for customers. It’s never not important, but even more so in a pandemic.
People in society want to know that we’re there to pay claims – that’s the first and foremost thing. And we needed to make sure that people knew we were ready to do that.
We needed to instil confidence in our ability to be up and running to pay those claims. And what we saw – which was important before the pandemic, but was underscored big time by the disruption it created – was the importance of digital channels to get messages out to customers that we’re ready and able to pay claims and to continue to provide the cover that they have bought. Once we got through that stage, in our organisation we turned our mind to providing direct support to customers, whether it be what we foreshadowed would be the impact of mental health on people with lockdowns and isolation, where we could provide direct mental health support, career support, even for those who don’t have cover or those that are on claim, because unemployment was going to be a big concern for people.
JM (Mod): What proportion of customers would have had to have paused paying their policies?
Andrew Howard (TAL): It was a smaller number than we might have expected. But what was important was to get out and tell people that there were mechanisms and options for them. When thinking about insights from this disruption to take forward, first of all, we still have a really big job to do to help the community understand what life cover they have and how it works. We found at times people were ringing in asking to increase their sums insured for IP [income protection] because they were worried about unemployment. Indeed, in some cases, people were ringing in to see if they could use IP as unemployment insurance. So there are some things that we really need to double down on again to help people understand it. It represented both an opportunity and a necessity.
Life insurance is also placed in a contemporary society where, when people pay for something, they think they should get something. So the value of support between paying a premium and the eventuality of a potential claim became very important. And this will continue to be important.
JM (Mod): So part of that opportunity then is increased engagement?
Andrew Howard (TAL): I think so, Joyce. And just being in that space for people between paying a premium and actually needing a claim. What can we do to help people live better lives, which potentially takes away the need for them to claim, so that it’s a win-win? And then the other thing is, we’ve got to continue to underscore people’s confidence in the system. I know many organisations in our space spent time ensuring frontline workers felt that they were covered, making sure that exclusions and so on were removed and adjusted to deal with what was the reality of the pandemic. And there’ll be more instances and moments of truth for us as we go forward. But I’d probably just stop and say the conclusion, which is the importance of digital: it was there before, but it’s incredibly important going forward.
JM (Mod): Ben, was that the case for you, too?
Ben Walsh (AIA): Covid was obviously a business continuity moment, and we really broke it down into three themes: survive, revive, and thrive. We thought about that for our family at AIA, for our customers, and for the general community. Of course, this moment isn’t over, but hopefully we’ve moved from merely surviving Covid into the revive stage and then, now, looking out to the future for how we might thrive. For our own colleagues and our own teammates, there was obviously the challenge of getting everybody to work from home, ensuring that they had the environment to do that. But in addition to the physicality of the situation, it was also in ensuring we were focusing on things that changed in the way that we work – our colleagues’ mental health, asking people to slow down and focusing on teams, and spending time talking to colleagues, because you’re not catching up with them in the corridor or having meetings in person, so there was a huge lean in there.
Really, let’s look after ourselves so that we can look after our customers.
As Andrew said, obviously, financial hardship from a customer perspective was something that we thought about. But in addition to that, there were vulnerable customers. There were potentially unintended consequences and policy wordings. There were certain claims processes that had been put in place that just wouldn’t work in a lockdown environment. A lot of time was spent thinking through how we make life easy for customers.
JM (Mod): So, this meant having to go through and really reassess processes and systems, but also how you engage with staff and customers to figure out the best way to navigate through to the other side?
Ben Walsh (AIA): People didn’t have access to printers. They couldn’t physically sign a document and get it to you. They couldn’t go and see doctors. So you needed to be really understanding and be flexible in that environment and after colleagues and customers, as Andrew indicated. We also thought about our role in society and thinking about where we need to double down as a force for good in the insurance industry, thinking about what proactive health and wellbeing activity we can do alongside paying claims as well as what rehab services would be important.
Megan Beer (Resolution): Echoing a lot of the comments that Andrew and Ben have shared. Our first focus was on customers and our employees and what do they need. However, if I step back from that, the insights that we’ve really taken out of that are a few-fold. One is mental health. And in our industry, we’ve spoken a lot about the impacts of mental health on the population. But Covid brought to the fore the need to really respond to this, and to demonstrate enduring value to customers with products and services that help them, and also our employees and colleagues and community more broadly, around mental health.
The second one is how agile we can be in the moments of crisis and what do we learn and take from that for how we operate in the future? And, for me, that’s probably one of the biggest opportunities that’s come for us as a business, to really use the ability to focus in on the outcomes that we’re trying to drive, and lining this up in the organisation, and with external parties to deliver change quickly. And that’s been an enduring outcome and something that has been a real insight and opportunity for us. And then the last thing, and Andrew touched on this from a digital perspective, is the role of technology. If you don’t have the technology and you aren’t accelerating the technology agenda, then I think others will be doing that. From continuing to demonstrate value to existing customers and to the community at large, those investments are increasingly important.
JM (Mod): There has been a bit of debate around how much Covid has accelerated the digital transformation process, with some people saying that ‘in that one year, we’ve made three years or five years of progress’. Where do you sit within that camp?
Megan Beer (Resolution): Oh, absolutely in that camp. For many industries, not just life insurance, this really has been an opportunity for us to seize the moment and think very differently about how do we deploy the technologies that are there today, but also have an eye to the rapid advancements that have been made in response to Covid. The most simple example is that we’re sitting here in a studio doing this and people at home can watch us; this just shows that if we set out to achieve some of those things, we can. It probably would have taken us years to get around to solving that problem otherwise.
JM (Mod): And maybe that’s a good segue way to the theme of disruption. I was watching a video yesterday with the CEO of Lemonade late last year where he was quoted as saying that insurance is the single most ‘disruptable’ industry on the planet. What do you make of those comments?
Andrew Howard (TAL): Lemonade is a very, very interesting business model. And, if memory serves, they started out mainly on insuring things for people, which is an easier place to break down the product model. And that’s probably where they’ve innovated first. I notice now that they’ve gone into life cover, simple life cover, and that will be interesting to see what they decide to do in terms of innovating there.
Where they make us all stand up and take notice is their business model using chatbots, really fast processes of flat technology to serve the customer really quickly. When you go through insurance processes, time-to-decision is very important, knowing when you’re on cover, when you can get off cover, so on, is key.
So that’s the model they present for us in the insurance space currently. But we should all be very careful and watch what they might do in life space.
JM (Mod): Ben, your views on disruption. How closely do you have to be across some of these developments in the industry?
Ben Walsh (AIA): Well, it’s good for the industry, right, having innovators and disruptors looking to find pain points in the value chain that we deliver to our customers. It’s a great opportunity to learn and to follow or to lead, depending on where we place our priorities. We all know what we need to do: simplicity, customer-centric models, we’ve also talked about automation and AI and other things for a very long time. Megan is right, you should never waste a crisis.
And Covid has shown us just how much change and how fast the leaps are that we can make.
And similarly, we should continue that journey now and ask what else we need to do differently, and be faster and take that spirit of continuous improvement, but be urgent and have a sense of crisis around it. At AIA we pay $6 million a day in claims. If we can do that more effectively and efficiently by taking ideas from disruptors, that’s something we need to and will do.
JM (Mod): Megan, Resolution obviously has a slightly different model, but, in a way, they’re also disrupting this space.
Megan Beer (Resolution): Just so everybody understands, our model is really looking after the existing customers we have. Our business is to not acquire new customers, it’s really to say we’ve got a great bank of customers, how do we understand their needs more and be able to use technology in ways to serve them so they’ll continue to remain insured with us? From there, hopefully, we’ll be able to help others in the industry, maybe with their existing problems or existing customers or opportunities with existing customers to really evolve the business model there.
So, when we think about something like Lemonade, it’s not really about disruption. It’s about saying, know what your business model is and what value you deliver to customers and why they still should stay with you. And when Lemonade makes some of those comments, they look at an industry with millions and millions of customers around the world that, maybe, existing insurers haven’t focused in on enough. So it’s less about disruption and more about a great opportunity, as Ben said, to deliver services more effectively and efficiently, whether that be paying claims, communicating, or additional services – all the things that help customers really understand the value in the decisions they’ve made to insure themselves.
JM (Mod): And how do you balance that with transitioning away from legacy systems and making sure your digital systems and processes are up to speed as you move away from legacy towards the new normal?
Megan Beer (Resolution): For us, we’ve said that it’s not really about legacy systems; it’s really about leveraging new technologies.
If we think about the world we’re in, we’re at a convergence of data and data just being so widely available and really cheap to store and access.
It’s about new technologies that are much more nimble and easy to manage. And then, of course, artificial intelligence and machine learning, the algorithms are so much more powerful in what they can do now. So it’s thinking about how does new technology go to where value is for customers, either by delivering better outcomes or reducing the cost and inefficiency – those friction points in what we do. And, in a way, the legacy systems are less of a focus because it’s really about deploying those new technologies to solve customer problems. And then it changes the focus and moves away from, ‘We’ve got to do a policy admin system (PAS) migration’, to thinking much more about the customer, which is how we’re really thinking about it in our business.
JM (Mod): Andrew, obviously, TAL took over Suncorp’s life insurance business not too long ago. Legacy systems are an issue for everyone, I assume, in the life insurance industry. Do you want to walk us through how your thinking about it?
Andrew Howard (TAL): Yes, there has been consolidation in the life insurance industry. And when we think about consolidation, the overlay that’s important here is, how can you make it strategic? How can you use it as a way to step forward? Naturally, when you buy another life company, you’ve put aside a lot of capital and also allocated some additional capital to make the integration and the transformation happen. Hopefully, you can gather together the best and brightest in your team to say, ‘Well, if we’re going to move things together, how can we move a step forward towards a future state that’s more like the one we think customers will really appreciate? And that’s been at the top of our mind.
How do we also make sure that the operational backbone of the business is in great shape to serve the digital world that our customers know and will want more of? And we don’t always get it right. But that’s the mindset that we think is important with respect to taking steps forward away from legacy. It’s not about the legacy itself, as Megan said, but rather well, what do you do? And we’re also faced with a lot of regulatory change. So, every time we touch our operating backbone, there is an opportunity to ask, ‘How do we take that one step further forward?’ The other thing that’s very important here is, you’ve got to find ways to invest to move it forward.
Quite often in life companies, and I’ve been in a few in my time, the work on the back book or the mature products is deprioritised which is why we end up in states where we find it harder to move.
JM (Mod): And Ben, sticking a bit to this consolidation theme. How is AIA looking at legacy systems and moving forward from those to deliver a more seamless experience for customers?
Ben Walsh (AIA): I agree with Megan that there’s often a focus around legacy systems, but it’s the technology wrappers that you put around your historical backbone that interfaces with customers. And it’s an incredibly exciting time to be in the life insurance industry today. When we think about the investments to make in technology, cloud, APIs, automation, data analytics, AI, all of these things are quite independent of the discussion around legacy platforms.
Yes, modernisation and consolidation of legacy platforms is important, but it’s not actually the main game for the customer and it shouldn’t be the main game for the industry.
All insurers will have, I’m sure, a strategic roadmap around what they’re doing from a technology perspective with tactical moves that occur along the way. None of us really want to do any big bang technology type projects. So it’s a continued evolution of the overall infrastructure. And I’d get away from worrying too much about the legacy platform and spend more time thinking about the aspects of the technology that have the smarts and interface with the customer.
JM (Mod): And how far along is AIA on the cloud journey, just to pick up on something you said there?
Ben Walsh (AIA): Well, I’m not sure how much of that’s a secret. But I will say that cloud is certainly on our investment roadmap this year. Similarly, with APIs, we do have quite a decent technology, digital, and analytics investment that we’re making across 18 countries in the Asia-Pacific over the next three years. So, yes, that’s well and well and truly in the here and now.
JM (Mod): In a time of crisis, history tells us that great reform can come about. What are your hopes for 2021 as the insurance sector begins to emerge from the other side of Covid?
Andrew Howard (TAL): Oh, I definitely think one thing that I take away from the last 12 months is the importance of resilience. And that was needed in all sorts of areas: in our people, technology, customers and community and the industry for that matter. My personal hopes relate to taking that reflection forward for all of us.
A crisis presents an opportunity and a clear purpose. But can you sustain the build on that – which is, can we make ourselves stronger? Can we build our capability to be resilient?
And our people went through a lot of change, going from office to home and working remotely. Our colleagues have been focused on each other and making sure that their wellbeing is in good shape, and that’s a wonderful thing. Can we keep that going?
JM (Mod): What sort of model has TAL moved to in terms of getting people back in the office? Are you 50/50, one week on, one week off, or is there some other hybrid that you think works better?
Andrew Howard (TAL): We’re talking to our teams right now about a hybrid model. We’ve run the case and proved the case that we can work from home really effectively and productively. But we also know that when we’re all there, we’re missing an opportunity to collaborate and build the culture of the organisation and onboard new people. So we’re trying to have two to three working days in the office and the rest remote, but there’s still flexibility around that model. And that seems to be working quite well.
What we’re finding is that it’s an organic process, so as people return to the office and they see others, they get a positive experience and then come again. But if they’re coming in and sitting in front of a video screen eight times in a row, they’re saying, well, maybe I should just be at home. So there is an effort there that requires us to almost curate and have a level of organisation when people come back into the office.
But if I’m to extend the point on technology, being fast and secure is something that will become really important. We’ve got to take that forward. I spoke about customer and communities: keep building the confidence of people in our industry. We need to speak positively about it so that customers feel positive about it, but also deliver the value in between premium and claim. We think there’s still a way to go for what the out-workings of the pandemic will be. And, just finally, I would say for the industry:
I’m in awe of all of my colleagues at different organisations for handling the range of change, including the pandemic.
You mentioned before the Royal Commission, PMIF (Putting Members’ Interests first) legislation, PYS (Protecting Your Super) and then the pandemic. We’ve been through a lot together as an industry. That should make us stronger once we’ve paused and regathered our strength. But how can we make sure that we draw strength from that and build the industry up from here?
JM (Mod): And Megan, how are you viewing 2021? Well, being three months in already.
Megan Beer (Resolution): I’m really hopeful for 2021. And maybe a few things that are personally really important for me. Picking up on this comment about what has pandemic shown us and I think it’s really about sustainability and about care. And that also starts with our colleagues. It’s quite different from the approach that Andrew and TAL are taking. We’ve actually said to our people, ‘We encourage you to work flexibly!’. And that’s the choice that we’re following through with across all of our teams.
We see that this intersection of your personal purpose, what’s important for you at home, and managing a sustainable life can work really well with an organisation that’s oriented around the organisation’s purpose of looking after existing customers.
And we really see that giving people that choice and flexibility and with the right support around them is going to be really empowering. We’ve seen that at the back end of 2020, and I’m really optimistic about that. We’ve, in particular, adopted much more agile ways of working across the organisation. We’re really thinking differently about how the way we work can bring the best out in people.
The second thing I’m really passionate about in 2021, we’ll start to see quite a shift in female participation in the workforce because of this additional flexibility. And it extends more broadly with just the ability to access talent around the world. We’re working with people from around the globe on some projects we’re doing right now because we can work in this flexible way. That opportunity for talent, again, comes back to that intersection of ‘What do I want to achieve as a human and what does the business want to achieve in this great environment?’ I think, personally, that’s going to be absolutely wonderful for women and particularly women in financial services and in insurance.
JM (Mod): And Ben, do you want to round that out by giving us your take on 2021, perhaps touching on some of the points that the other panellists have raised?
Ben Walsh (AIA): Picking up on this theme of future ways of working. Eighty per cent of my colleagues said they really value the flexibility of being able to work from home, and two-thirds of them want to work two to three days in the office.
We found in 2020 our service levels for our clients actually went up above those levels in 2009.
We had a dip as we moved to work from home, but we did prove that we were able to work very productively whilst being in this new future way of working environment. Thinking really personally, as Megan was saying, I’ve encouraged all of my team to establish three work goals for this year and one personal goal and for us to share those personal goals as a team, to really get that balance right and to maintain that balance between what we expect at work and what we expect at home.
In 2021, we’ll continue to be a customer-led, digital-led industry. After Covid and the regulatory changes post-Royal Commission, we are more mindful now about the future. Often there are unintended consequences to things that happen in a tactical, reactive, piecemeal way. So, continuing to work together in being strategic and looking into the future to make sure that we’re not solving one problem and creating a bigger problem down the track, or we’re not solving an issue for one cohort of stakeholders and creating a problem for other stakeholders.
And my final point, Joyce, it’s a shared value. I heard Andrew talk about community, I heard Megan talk about purpose. We can all be purpose-led organisations doing great things for the communities that we live in and create shared value for our customers, for us, and for our partners that are in our ecosystem. That’s a huge focus for us this year.
JM (Mod): Finally, on claims processing. I read somewhere yesterday that, in terms of some of the robotics being implemented, that death certificates can now be automatically uploaded into a claims system to expedite the life insurance claims process. Is there anything else that you’re looking at in a similar vein that would really change the process for customers?
Andrew Howard (TAL): We’re focusing on how we can use mobile technology to assist clients in managing their claim and get updates and so on to offer them more of a sense of certainty. And that includes document upload and transfer. But the true north for every claimant is certainty and speed.
Megan Beer (Resolution): As I said before, data, artificial intelligence, and new technologies offer massive opportunities to automate complexity and processes so that our claims assessors can really focus in on the human interactions that we all aspire to. And sometimes today the process gets in the way of delivering that. We’re doing some good experiments in this space to automate parts of the process that really don’t really add a lot of value to customer interactions; and machines can do it so much better.
Just more broadly, beyond claims, it’s not just about the technology spend, it’s also about how we’re investing in our people so that they can use technology to solve customers’ problems. And we’re probably spending about as much on that change journey with our people and capability uplift as we are on the technology.
Ben Walsh (AIA): I’ll just echo Megan’s point, it’s not about the technology. I mean, it is, but it’s not just the technology. It is people, process, and technology. And so, you started the question by saying you saw the general insurance results, and they’ve had to find more efficiencies. Of course, the business interruption from Covid was a very specific issue for the general insurance industry, which is a bit different from ours.
But we do often say we need to do more with less. Actually, that’s not a good way of thinking about it. We just need to do better with what we have.
And that’s looking at the capability of people and processes and finding ways to take a 20-step process and turn it into a five-step process. It’s that happy marriage of people, process, and technology that all needs to be constantly and continuously improved.
This is an edited extract from the Insurance Panel featured on Day One of FST’s Future of Insurance, Sydney 2021 event.