The document summarizes a panel discussion on innovation in the insurance industry. James Platt of Aon Risk Solutions states that innovation is needed because the insurance industry's relevance to the economy has halved over the past few decades. Nicolas Levillain of Exin Group discusses how they foster innovation through collaboration and idea sharing. Vincent Branch of XL Catlin emphasizes testing ideas quickly with customers and the business. The panelists debate approaches to implementing ideas, using data and artificial intelligence, and how to determine when ideas have failed.

1. LONDON MARKET BUSINESS BRIEFING
www.insuranceday.com | Friday 8 December 20176 www.insuranceday.com | Friday 8 December 2017 7
S
enior executives constant-
ly refer to the need to in-
novate, use new data and
technological capabilities
to better understand risk, develop
new product and business models.
But innovation is challenging.
Disruptive new players are waiting
in the wings, threatening radical
change. In the second panel dis-
cussion, industry leaders discussed
how their organisations look to
encourage innovation and turn
ideas into reality.
> What does innovation mean to
your organisation?
James Platt, chief operating
officer, Aon Risk Solutions
“For us, innovation is a change in
the way we do something for a cli-
ent to make their life better. Pretty
simple. What if we make a bigger
change? That is incredibly difficult;
you have to change your whole way
of thinking – and often, you fail mis-
erably. In 1980 insured losses repre-
sented 3% of US GDP. Today, insured
losses represent 1.7% of US GDP. We
as an industry have become half as
relevant to the economy. I suggest
that’s a good reason to innovate.”
Vincent Branch, chief executive,
XL Catlin Accelerate
“The question of relevance is really
important; that’s what really drives
innovation. How we use as consum-
ers and how we engage with technol-
ogy is changing. What we’re doing
now has changed massively from
three years ago and, therefore, the
expectations – as employees, as part-
ners, as customers – are completely
different now. The uestion for us is
to be able to respond to that.”
> How would you start putting
that desire to innovate into
practice?
James Platt
“We don’t have a head of innova-
tion. We need innovation in all
that we do. We need to create some
capabilities we can all use. So how
do we drive our business leaders
to think about innovation in what
they do? That’s the broad philoso-
phy we’re trying to deliver on. It’s
partly cultural. A lot of it is leader-
ship training. Then the third part
is about the client. We spend 80%
of our time with our clients, so if
we’re going to innovate, we’ve got
to fix something for our client.
“We produce a survey every cou-
ple of years. Six of the 10 risks clients
are worried about you can’t insure
today. The only people who can
work out what we need to do are the
people who spend time with clients.
What I need to do is provide the ca-
pabilities so when somebody’s got a
good idea they can implement it.
“Technology gives us to the op-
portunity to reduce the cost of doing
things and the ability to evolve rap-
idly and change. So, if I can teach
our business leaders to understand
how to go through that process, I’ve
got a chance of innovating.
“As an organisation two years ago,
our chief executive said, ‘Look, we’re
a very quarter by quarter company.
Our ability to take investment and
really innovate and take risk is actu-
ally somewhat limited, ironically.’ So
he took the executive committee and
he split it into two groups, one half
focusing on running the business
day-to-day, the other – called ‘next
horizons’ looking three years ahead.
Both groups were given funding, but
the next horizons group was able to
take more risk.
“Now we are doing some pretty
innovative things that, frankly, two
years ago we would have struggled
to fund.”
Vincent Branch
“From an XL Catlin point of view,
I head Accelerate and Accelerate is
an internal function that is focused
on driving commercial opportuni-
ties for the group through the use of
new technology.
“What’s really important about
that is actually we do it with the
business. Involving everyone with-
in the business with innovation is
absolutely critical because it can’t
be done in a separate hub, in a sep-
arate office, location, lab, whatever.
At some point, you’ve got to bring
those ideas back to the business, to
either scale those or build new busi-
ness units. We do it with the busi-
ness but more importantly, we get
the business to lead.
Nicolas Levillain, head of
data science and innovation,
Exin Group
“We are in a little bit of a different
situation because we are a new
company. Exin is two years old but
from the very beginning was fo-
cused on innovation.
“We started with the culture that
we wanted to have by gathering
people from many different indus-
tries, who can share ideas from dif-
ferent industries. We exchange a lot
of ideas. We have an innovation lab
where everybody can put ideas on
the table. No idea is a bad idea.
“One of the things we use to foster
those ideas is the idea of destroying
your business – how might the busi-
ness be disrupted or destroyed. If
you don’t do it, somebody is going
to do it.”
> How do you implement these
ideas?
Nicolas Levillain
“We try to push those ideas to their
maximum and then we collectively
vote on what is worth investing in.
Then we to try to rapidly mock-up
things and test with some custom-
ers. We should not be afraid of fail-
ing. Failing is part of the process
and we learn much more from the
failures that we have had than from
the success.
> Part of your role relates to
data and to machine learning.
How significant is that area
going to be for Exin?
Nicolas Levillain
“My role is to make sure we make
good use of this technology. I am the
link between the people designing
those algorithms and designing the
products in the business. Because in
the end, if you have a good techno-
logy or have good insight, but you
don’t transform that into something
which is actionable in the business
– so making your product better,
making your customer happier –
you’re dead.
“I am also looking at some of the
things that are going to be the fu-
ture of our product and the technol-
ogies that we might need to make
those products a reality.”
> What role does data play in
developing new product lines?
Vincent Branch
“We are working with our partners
to understand autonomy and how
insurance propositions can be dif-
ferent, reimagining what insurance
may look like.
“For instance, it would be mad
to have the same claims process
we have now when all the teleme-
try in the car is already telling you
what’s happening and when it’s
happening.”
James Platt
“We are starting to work with part-
ners to get the information and the
data that’s actually going to help
us create new forms of protection.
Take something like intellectual
property [IP] – you need specialist
people to understand IP.
“We bought a cyber specialist
firm last year that has a group of
people who understand IP. We
have been able to link them back
to the insurance market and start
to get real data and information
that can give markets the confi-
dence to start writing protection
in the IP space.”
> Do you think the insurance
industry can learn from other
sectors in terms of how it
approaches data?
James Platt
“I think the UK insurance industry
– and I’m not talking the London
market but the UK personal lines
market, particularly around motor
– has been an unbelievably innova-
tive marketplace. More innovation
has come out of Cardiff than ili-
cone Valley in insurance in the past
20 years.”
> How can London speed up?
James Platt
“If you really want to be here in 20
years’ time, you can’t avoid accept-
ing you’ve got to do some things
differently and you will have a low-
er return than your current busi-
ness. If you don’t accept that, I think
it’s extremely difficult.”
Nicolas Levillain
“You have to act like a software
or life science business, which is
saying ‘invest a couple of million
now for some products that are
going to bring return starting in
two years from now for the next
10 years’.
“This is a completely different
mindset from a pure service busi-
ness, where you have a need and
you match that need.”
Vincent Branch
“We’ve got a broad portfolio of ex-
periments but each one of those
ideas can be scaled across the or-
ganisation, so we always say we
want to think big but we want to
test really narrow and focused.
“Within innovation there are
inevitably a lot of ideas, of which
about 90% might fail.”
> How do you decide when a
particular idea has failed or
whether to give it another
three months or six months?
James Platt
“If you work in an agile process and
you do A/B testing right, that’s the
mentality that I think works. We do
that a little bit; we need to do that
way bigger.”
Vincent Branch
“The one key difference is in many
cases there are three main decision
points within the project, so typi-
cally we don’t run an experiment
longer than two months. We try to
get people dedicated to that project,
so we’ll have our external partner
involved, we’ll have the business
leading that and, typically, mem-
bers of my team will be involved in
doing that.”
Nicolas Levillain
“When you go to explain your idea
to the first customers, if you are not
able to convince them in five min-
utes with some very simple things –
explaining what the product is and
what it brings them and so on – it’s
a failure.” n
The innovation game
Industry leaders discuss how their organisations look to
encourage innovation and turn ideas into reality
Michael Faulkner
Editor
‘In 1980 insured losses represented
3% of US GDP. Today, insured losses
represent 1.7% of US GDP. We as an
industry have become half as relevant
to the economy. I suggest that’s a
good reason to innovate’
James Platt
Aon Risk Solutions
‘If you have a good technology or
have good insight, but you don’t
transform that into something which
is actionable in the business – so
making your product better, making
your customer happier – you’re dead’
Nicolas Levillain
Exin Group
> How big is the opportunity to use artificial intelligence in the
commercial insurance sphere?
Vincent Branch
“We very much believe AI is going to be fundamental, but
we think it’s going to be more about augmenting and
supporting our decision-making rather than replacing it.”
James Platt
“We apply some of the most advanced technology or
thinking to some of our simplest problems. Trying to
match customers turns out to be really hard. So actually,
we use AI to do that.
“We don’t use it in other places that much. We have a lot
of large datasets, the challenge is getting them together and
using them.”
Nicolas Levillain
“You can compare lots of data – such as images of damaged cars
on the web – and learn a lot from it. You can do that with AI very rapidly
and better understand if a claim is fraudulent of not.
“We are also using AI to get something more personalised and terms of the
insurance needs of our customers.
“By having much more regular contact with customers we are going to
learn much more about them and we will be able to provide them with
the right insurance at the right moment.” n
‘We very much
believe AI is
going to be
fundamental,
but we think
it’s going to
be more about
augmenting and
supporting our
decision-making
rather than
replacing it’
Vincent Branch
XL Catlin Accelerate
In association with
Insurance Day’s editor, Michael
Faulkner (left) discusses
innovation with (left to right)
Nicolas Levillain, Vincent
Branch and James Platt