CFO Knut Arne: We believe that with change, there may also be new opportunities. When it comes to the sharing economy, we are already taking a part in this – offering coverage to the car sharing service “Nabobil” launched in autumn of last year (www.nabobil.no). I think it’s very important to actively follow the developments in the market, to test new technological trends and to be “tuned in” in order to understand them.
You previously referred to stability as an important characteristic of If, but at the same time emphasise that you are conscious about the need to adapt in a timely and appropriate way to changes and developments in your markets. How do you ensure you have the necessary flexibility and capacity to innovate and experiment and to collaborate across the organisational boundaries of business and IT?
CIO Kjell Rune: We don’t really like the distinction between “IT” and “business”. In our world IT is business and you will see that reflected in our organisation as well. People from my IT organisation form an integrated part of the leadership teams across the organisation. What we achieve through this, is to stimulate mutual understanding and a shared perspective and mind-set. My “IT people” become concerned about the development of the “business” in the same way that the people from the “business” are. We strive to make a shared mind-set part of the culture and seek to break down and erase the traditional barriers and silos.
As a CIO, I’m also happy for the business to appoint “digital officers” and establish Internet units to drive the development from a business perspective, as long as we have a shared mind-set in place and a set of agreed governance processes, even if the word “governance” perhaps sounds a bit strict.
Agility is a key concept for us and investments in flexible production systems are pivotal to achieving the necessary agility. For instance, the new core system for the commercial area has been built using an agile approach. And while product development and pricing traditionally would require dedicated IT development resources, today these activities shouldn’t require IT development time at all. We seek to build solutions that enable our product teams to configure products and adjust the pricing themselves. The era where you would have to wait for available resources to do weeks of IT development is over.
I think an important aspect of the way we’re working is that we’ve built a culture and an organisation for innovation that start from the top and continuously test new concepts. A core enabler in this is that we have focused on implementing agile ways of working that extend far beyond IT. In my view, working in an agile way has become part of our culture.
CFO Knut Arne: I agree. When I first heard of “agile”, it was seen as an “IT thing”. Now however, in my view this has changed completely. Now, it’s something that characterises the way we do business and develop our organisation – it has a much wider scope and fundamental impact. Getting to this point has been a journey and something that we have built over time, and I think we have come quite far. Now, this is our way of working across the business.
In order to adapt in today’s changing market, we need a culture and an infrastructure for innovation that is integrated with our long-term strategy but at the same time enable a shorter time to market. I think our investment in agile working practices has positioned us well and will prove important in our ability to adapt and meet the future.
CIO Kjell Rune adds: We obviously also follow technological developments closely. It’s clear to us that cloud technology, big data and the Internet of Things provide completely new ways of solving our business challenges and serving our customers in new and better ways. The development towards increasingly individualised pricing and micro tariffing will continue. It’s paramount for us to put in place the necessary infrastructure and processes to access and utilise the increasing breadth of information, and we’re working hard to be in the frontline of this.
To win in the market we also need to create convenience for the customer and this requires customer focus in all aspects of our business. For example, with regards to claims, we seek to automate as much as possible and adapt the claims process “on the fly” depending on the properties of the specific claim.
We are also experimenting with machine learning and robotics to reduce claims leakage and aim to use this as an effective tool to move away from the traditional, work intensive claims leakage studies. In terms of innovation, the car insurance market is the big thing now and of course important to us in terms of size and volume. The fact that a modern car continuously generates about 25 GB of data on all aspects of the car’s movements is enough to understand that it presents interesting opportunities from an insurance-perspective. It’s obvious that this information could be used to price insurance based on actual driving behaviour, and as a consequence it’s also quite easy to foresee subscription-based car insurance pricing.
In general we seek a very close collaboration with the car industry to connect with the developments in the industry as they have an important impact on both claims frequency and cost. If you take an apparently simple example like car glass and windscreens: today windscreens have become high tech, including advanced electronics, and they come in a multitude of variants and degrees of sophistication, something which has important consequences for the complexity and cost of repair and replacement as well.
One area that currently receives a lot of media attention is the concept of self-driving cars. However, nobody really knows what the end game will look like. In our experience, the car industry itself is searching for the right solutions too, in order to find the right path forward, and we have to be there, working with the industry, to be part of these solutions.
CFO Knut Arne: We believe in a gradual evolution and don’t really think that we’ll see overnight revolutions. In the P&C market we currently don’t see any equivalent to the mobile payment market where “Swish” in Sweden, “MobilePay” in Denmark and “Vipps” in Norway have achieved remarkable penetration rates in a very short time.
However, other things may happen and it’s very important for us to be present to experiment, to test new ideas and concepts. We believe there will be new opportunities also for us as insurers. The insurance companies’ future role and place in the ecosystem may well change but we think the capabilities, knowledge and information that we have will remain valuable.