Reimagining Life in a post-Royal Commission world – Sarv Girn at the Future of Insurance
While the landscape may appear “bleak” for life insurers in the wake of the Royal Commission, the industry has an opportunity to “hit the reset button” and to capitalise on new technologies sweeping the industry that could positively transform their relationships with customers, says MLC Life’s Chief Innovation and Transformation Officer, Sarv Girn.
Speaking at the Future of Insurance conference in Sydney, Girn said that despite Australia’s financial services being in the throes of “arguably the most turbulent period” in their history following the release of the Royal Commission's final report, life insurers had positioned themselves well to bounce back from the industry's nadir, having already laid the groundwork to meet most of Commissioner Hayne’s recommendations.
“It’s not a low base [we] start from, because it’s already work in trade,” Girn said.
“In the last year to two years, there’s been a lot of focus around the implementation of the life insurance framework, [which was implemented] last January. There’s also been the ASIC claims review, which has led to a number of life insurers making lots of improvements in their processes. And there’s been a life insurance code of practice as well, which has been refreshed, as well as two parliamentary inquiries, which are driving a lot of improvements.
However, while it has no doubt sparked necessary regulatory reform within the industry, for Girn, the Royal Commission played an equally important role in bringing to the fore the transactional, profit-at-any-cost culture that had seeped into the industry and had most negatively impacted insurers’ relationships with their customers. Indeed, this mercenary culture, often devoid of emotional connection with or empathy for customers, did little to engender trust; it merely broke what Girn believes should be a "promise for life" between a life insurer and its customer.
“We do need to move from a transactional to a transformational [relationship]. It’s not about the premiums; it’s actually about the wellbeing and the trust that we create with customers. It’s about understanding what the customer’s going through, [and] what our distribution partners are going through in terms of their obligations on compliance and regulatory matters.”
Where humans have failed, technology may serve. These 'digital gatekeepers' could prove essential in not only meeting regulatory obligations but also in driving positive cultural change.
“We’ve got a greater momentum in the use of technologies in life insurance," he said. "That whole wave that came through banking five to 10 years ago in online digitisation [is now] sweeping its way through into life insurance.”
In an effort to “reset” and “reimagine” their place in a Post-Royal Commission world – one which embraces customer-centricity at the heart of any transaction – MLC Life developed a technology agenda with two distinct dimensions: one which empowers emotionally driven cultural change – the‘softwiring’ – and the technical capability to support both the company's regulatory requirements and innovation goals – the ‘hardwiring’.
For Girn, ‘softwiring’ is, at its core, focused on one's "principles and purpose" as a company.
“It is centred around a promise for life to our customers," he said. It is, in essence, about gaining, and indeed maintaining, customers’ trust – one of MLC Life's core goals under Girn.
“Customers out there are giving us the trust and they want us to be around for the long term. But we also have an ambition to be Australia’s leading and most trusted life insurer.”
“Through the behaviours that we demonstrate when we engage with them or engage with our partners, [this is how we’ll be] seen as the most trusted.”
At its heart, “softwiring relates to values”, Girn said. “It’s about doing what’s right – and I don’t think you need any more description of that.”
While a strict measure of morality can often be difficult to benchmark in the corporate world, for Girn, the 'rightness' of any decision can be determined by asking a simple question: ‘are you happy to see it published?’
“In the past, we’d have called it the ‘Sydney Morning Herald test’: if you’re happy to have what you’re doing published in the Sydney Morning Herald, then it’s probably ok; but if you’re not, then you’re hiding something and maybe you shouldn’t do it.”
Yet, in rebuilding customers’ trust and delivering services that they demand, “culture and conversations isn’t enough,” Girn said.
This is where ‘hardwiring’ comes into play. Broken into three core components, MLC Life's hardwired goals are predicated on relationships – of co-creating with customers and distributors, and in building strategic partnerships across the industry. However, arguably the most important hardwiring goal is the company's ability to utilise data for the benefit of customers.
For Girn, “data is currency.”
“We’ve got to manage it carefully, both in terms of privacy and safeguarding it, but also looking at ways to use health data as a way of helping customers prevent illness and keep them fit.”
Data is indeed opening the door to further innovation, including pioneering efforts in sensor technologies that could help reshape insurance product offerings.
“The internet of things (IoT) is bringing new business models, where your health, wellbeing, your walking, your patterns of exercise are leaving footprints out there on the behaviour, and that can be used in a life insurance sense to price, but more importantly to prevent and hopefully avoid illness, which I think we all want.”
A new platform for change
Fortune fell on MLC Life with its acquisition by Japan's Nippon Life in 2016. Rather than rehashing legacy infrastrcuture on the cheap, the new owner supported the complete rebuild of MLC Life's digital platform – a project now two years in and just over a year and a half from completion.
According to Girn, building from the ground-up allowed MLC Life to weave these soft- and hardwiring features into the fabric of their infrastructure, “both in terms of the culture and conversations, and in controls and governance.”
“As we separated from our previous owners, we didn’t have to lift and shift the old legacy world of technology, processes and all the aspects around that,” he said.
“It means that we can embed the trust and the fairness and the customer perspective into our day-to-day operations without having to have an overlay, and it’s lived through our company. And so governance, controls, processes and digitisation of key aspects.”
While many hard heads may see them as “soft words when you start talking about 'values and behaviours'”, it is, according to Girn, precisely this language that is used by Commissioner Hayne's final report to invoke change within the industry.
“I don’t think any of this should be underestimated. And [these values] really need to be embedded into today’s technologies.”
“The possibilities in today’s world certainly are a lot easier when you’ve got a digital platform that can give you the guidance around compliance, customer service and also not be a hindrance.”
Building and amalgamating a complex, multi-pronged operations platform – embedding “corporate systems, HR, financials, infrastructure, and most important of all, customer systems such as Salesforce and product administration system for our policies to engage customers” – remains an ongoing challenge for MLC Life. APIs have become the crucial bridge to deliver these distinct, though fundamentally integrated, digital services.
“All of these systems have been knitted together through APIs so that we don’t create a new legacy for the future. We can then take modules out of it and replace them as they become dated, as they will no doubt,” he said.
“Having one monolithic beast is something we just definitely wanted to avoid.”
While technology serves increasingly as a vital conduit to support MLC Life’s compliance goals, Girn stressed that in the face of an increasing push to embrace automated technologies, there is an even greater need to not just humanise technology but to maintain the human consultant as part of the life insurance transaction.
“One thing that we’re very conscious of [is that] it’s not always about the digital experience,” Girn said.
For Girn, finding the right balance between IQ, EQ (emotional intelligence), and ‘DQ’, or digital intelligence, is key.
“We all know what IQ is, we know what the emotional side is, but for us, the digital side is about consciously working out which transactions we want to automate and put a computer behind them and consciously working out which ones do we want a human to speak to someone about whether it’s their illness or their claim or so on.”
The concept of DQ, embraced by Girn, is about “making sure we don’t automate every single transaction”.
“We really have to be very careful with things like AI and robotics, big data, don’t suddenly get in the way of what is fundamentally a life proposition and a promise for life.”