For an industry that has often been described as a grudge purchase, Australia’s insurers have made significant strides in adopting digital technologies to improve both their operations and their customer experience.

Globally, spending on technology by insurers has been increasing steadily, with Gartner estimating growth of 9.4 percent this year, to reach US$232 billion ($272.42 billion).

Those dollars are being spent on a range of activities, from core systems replacements and modernisations through to emergent capabilities in AI, automation, and blockchain, with McKinsey & Company nominating satellites, drones, and real-time data sets as also generating interest due to their ability to provide unprecedented visibility into risk.

While much of that spending is on the backend systems and processes that are the core offering of an insurer, increasingly those efforts are directed at ensuring that while customers may not always love dealing with their insurer, they are at least much less likely to switch to an alternative provider, and maybe even begin to enjoy their interactions.

A lengthy journey

For Perth-based health insurer HBF, modernisation has involved a five-year journey that has seen the organisation migrate from its COBOL-based mainframe application stack and legacy Siebel CRM system in favour of public cloud-hosted alternatives.

According to the insurer’s chief information and transformation officer Sanjeev Gupta, the

project has involved the implementation of a new core policy, product, and claims engine, in addition to implementation of a new CRM and marketing automation suite, a new data platform, and delivered via a new app and website – all done to enhance the experience for members.

“We were really hamstrung from the perspective of customer and member experience, so we needed to make a change, and as part of that, what we agreed to do was be bold and really do a significant, overarching change,” said Gupta.

The result today is an experience that Gupta describes as being seamless for members across all channels.

“Previously when our members called us, the contact centre staff would take the call, and in some instances, they would create a case, and hand it to a back-office worker who would try and resolve that case,” Gupta said.

Ensuring staff alignment

With so much happening at once, Gupta says HBF was at pains to ensure its transformation activities remained aligned with its end goals by adopting guiding principles such as ‘simply human’ and ‘members are our reason for being’.

This has been brought to life through specific outcomes such as HBF’s self-service portal registration process, which Gupta says has been reduced from six fields down to just two. Another key focus was accessibility and inclusivity where HBF worked with the Centre for Accessibility Australia to optimise the website with screen readers that will aid the experience for visually impaired people.

“Having the clarity of rationale as to why you are doing (the change) is very important, because otherwise people will start to lose faith, because these are complex changes and are long running,” Gupta said.

“Stakeholder management and governance structures are critical, because people change, but then from a program perspective it is important to deliver in chunks that are addressable and reachable, so teams who are working on it can see the progress.”

This transformation activity also accompanied the introduction of a new scaled agile operating model, with the business leads now accountable for the management and delivery of all future changes.

“All of our new assets, like the core system and the CRM, are headed by business owners – not tech teams,” Gupta said.

“Tech teams sit as the enablers in those verticals, helping them deliver on their objectives.

“That is allowing us to deliver closer to our members, but also improve the velocity of change, and is allowing us to prioritise in every quarter what is more important as things evolve.”

Gupta says that while this transformation activity has enabled HBF to move ahead of its competitors in terms of digital capability, significant work remains in improving underlying processes and driving continuous innovation, including through the introduction of AI-based systems.

“We are picking and choosing where we can further improve and enhance, and at the same time, launching additional products which are more focused on the value that the members are seeking in a much quicker-time-to-market,” he said.

Seeking AI assistance

Gupta isn’t the only insurance technology leader with a strong interest in AI. According to Gartner, AI software spending in the global insurance market is forecast to increase 17.4 percent in 2024 to US$9.5 billion ($15.25 billion), on its way to US$15.9 billion ($25.52 billion) by 2027.

Leading that charge in Australia is the multibrand general insurer IAG, where AI’s capabilities are aligning perfectly with a long-term strategic decision to decentralise its technology function.

According to IAG’s chief operating officer Neil Morgan, late last decade IAG took a view that operating a central technology function was not the right approach for an organisation that wanted to be highly customer- and growth-oriented, and instead it should recognise that capabilities were now available to people who were less technically skilled.

“The philosophy has been to build strong, scaled, core foundational capabilities, and to bring that to a point where we can move into a new wave of innovating on top of it, deploying small improvements that add up to a different customer experience and a different business outcome on top of those transformed cores,” Morgan said.

“That happens to have been quite nicely timed for us, with a whole bunch of new capabilities and tools becoming available in the form of generative AI-based tooling.”

IAG has succeeded in bringing together 15 claims platforms and multiple pricing and policy platforms together to create an environment where it can build capability on top.

“For those types of solutions, we are choosing industrialised capability that we know will scale, where performance is something we can continue to tune over time - that is the infrastructure of the company,” Morgan said.

“And where we want to spend our time being a bit more innovative and bolder, and take risks on platforms that might change over time, is deployed on top of that.

Rapid AI-driven enhancement

IAG’s ability to innovate on top of this core platform has been enhanced significantly by the introduction of AI capabilities. While Morgan says that AI has been a familiar toolset for the IAG technical team for many years, the key difference now is that it is accessible to everyone.

“It is hard to overemphasise the fact that it is natural language,” Morgan said.

“Historically our use of AI has required deep AI specialists, in a niche capability that is highly

powerful across a wide organisation. Old AI is still a very important topic for us, but it will always be the skillset of a relatively small portion of our organisation, whereas the generative AI tools are in the hands of everybody.

“We want to deploy the capability that others provide embedded in their systems and tools, and we want to get that into the hands of as many people as possible to allow them to hunt down opportunities and problems right across the organisation.”

IAG’s utilisation of AI today is delivered over three broad streams – deploy, shape, and compose.

The first of these include IAG’s Copilot implementation, with IAG keen to get this into the hands of people who can solve problems quickly.

The ‘compose’ capability describes more traditional technology behaviours with teams of specialists building deep generative AI based capability that requires deep engineering knowledge.

Between these, the ‘shape’ capability describes a group whose function is to build tools that allow others to create generative AI bots that use IAG-specific content for IAG-specific purposes.

One of the key elements of this program is Geni, a bespoke GenAI bot-builder that Morgan says allows anyone with relatively non-technical knowledge to build a GenAI based bot to solve a specific problem.

Measurable business results

The outcome of this activity is being shown in results such as a 60 percent reduction in claims review times, with similar results being shown across the insurer.

“Our ability to respond to the customers is fundamentally different, and when you start to get some of these supporting tools enabling the digital channels, the speed of response is far different”, Morgan said.

“It is changing the way we are able to respond on the basis of having a transformed core.”

The core transformation is also paying dividends from a business perspective, by accelerating IAG’s ability to bring on new business, such as its partnerships with ANZ and RACQ.

“Without a common platform to migrate business to that was ready to go, that would have been a very different proposition,” Morgan said.

“We have been really working extremely hard to get ourselves in a future fit state from a platform perspective to take advantage of the opportunity that we think is in the market.”