Insurers are within the enterprise of assessing, pricing and masking danger—however are they utilizing danger as a lens to assist their prospects? Eric Joost from Willis Towers Watson talks about what occurs once you overlap danger, individuals and enterprise technique.
Highlights
On this episode of the Accenture Insurance coverage Influencers Podcast, we converse with Eric Joost, an government with greater than 30 years’ expertise within the insurance coverage business.
The insurance coverage business has modified in 4 key methods: velocity, knowledge and analytics, market dimension and dealer consolidation.
Expertise helps business gamers change into extra environment friendly, and shift the main focus from transactions to extra holistic advisory providers.
Amongst these holistic advisory providers, significantly for advanced dangers, there's a want for insurers to assist prospects use danger as a lever to attain different enterprise targets—and in some circumstances, to keep away from dangers within the first place.
Disruption has many insurers centered on digital experiences—nevertheless, semi-digital experiences, with human intermediaries, could also be advantageous, particularly with difficult merchandise.
Reframing danger & disruption, with Eric Joost
We’ve had the respect of interviewing a few of the sharpest thinkers in insurance coverage, and collectively they paint an image of an business in flux, whether or not meaning self-driving automobiles, synthetic intelligence or the altering face of fraud.
This episode’s visitor has greater than three a long time of insurance coverage expertise, and large concepts on the place the challenges and alternatives are. Eric Joost is the worldwide head of property and casualty at Willis Towers Watson, the third-largest insurance coverage dealer on the earth.
On this episode, Eric talks about how the business has modified over the course of his profession. Particularly, he addresses the shift from specializing in transactions to providing extra holistic recommendation, and the way conversations about danger—and managing danger—may help shoppers obtain enterprise targets. He additionally talks about the advantages and limitations of digital experiences.
The next transcript has been edited for size and readability.
Inform me about your position at Willis Towers Watson and your areas of focus there.
We do three issues at Willis Towers Watson, which is just within the class of individuals, danger and capital. We’re a merged enterprise and that may converse to a few of the issues I’ll discuss. [Editor’s note: Willis and Towers Watson merged in 2016.]
I usually focus my time within the danger a part of our enterprise, not completely. And I’m a part of our world management crew. I do quite a lot of work round technique and connectivity. So: how can we comply with world traits the place shoppers need service and motion globally?
As well as, I do quite a lot of work round consumer expertise: supply, and consistency when it’s related. What are our expertise? How do these expertise want to vary? Are we offering sufficient context for shoppers in a sophisticated world?
Related to that I take care of all our know-how, and that’s every little thing from rationalizing a few of the historic issues within the tech stack, to investing and innovating round new areas the place we’ve been fairly energetic.
After which lastly, I spend quite a lot of time in search of alternatives between our greater enterprise items within the agency, for when we have now corporations that need to mix a dialog about danger with a dialog about individuals. It’s not for everyone, however when it’s there we spend quite a lot of time doing it.
Fascinating, and positively quite a lot of alternatives for cross-pollination as this world turns into extra blended. I think about that there could be extra alternatives for these kinds of conversations.
, I believe we’re all seeing these kinds of issues––and it’s not a battle, it’s simply remembering to satisfy the shoppers the place they're. Sure shoppers need that dialog and notice that there’s nothing within the danger world that isn’t both firstly or vastly impacted by how individuals behave… and that’s an oversimplification.
For those who actually need to take care of danger, you’ve received to take care of individuals. I believe everybody makes that connection. So it’s about asking: Is their enterprise in the best way they need to run the enterprise, in a spot the place they need to act in that style as we speak? Not at all times, however we’re prepared for those which can be. And those that aren’t, we’re prepping the surroundings in order that as we get extra use-cases we are able to make the enterprise case clearer to individuals.
You’ve been in insurance coverage for greater than thirty years, at Aon, Allianz, and beforehand Willis, previous to the merger. And clearly our world has modified tremendously over that time period. I’m curious, what are a few of the greatest modifications you’ve seen within the insurance coverage business over that point?
That’s an excellent query. And I’m smiling a bit as a result of it after I was youthful, I used to ask that query loads––significantly after I noticed those that mentored me retire, you already know, “What have been the most important modifications you’ve seen?” And so now I’m feeling a little bit aged at this level by the truth that you requested the query the best way you probably did, which is totally positive.
I imply, I consider it in 4 classes:
Pace
Knowledge and analytics
The scale of the market
Dealer consolidation
Expertise actually influences velocity, and knowledge and analytics. Once I got here into the enterprise, it was letters, it was faxes. Now it’s web, now it’s e-mail. There’s quite a lot of good issues that that’s introduced. However by the identical token, what I've seen that I don’t actually get pleasure from, is that once you have been utilizing a letter, the writing and the thoughtfulness that went into that letter was very deep.
To some extent, so far as the velocity is turned on within the business, there’s been a lower in thoughtfulness to a point, and a lower in context. Info’s transferring, however nobody’s placing it collectively for individuals in addition to they used to. And so a change that’s very useful for effectivity, transferring info and making selections is terrific. However I’m unsure that we’re at all times good, as an business, at serving to our shoppers see by that complexity.
As the quantity of content material info will increase, the chance we face is that the context goes away. And I believe a few of that’s occurring. We’re working actually arduous and we received’t be good, however to try to get individuals to decelerate, and to actually problem one another with, “What's the message within the narrative you’re delivering?” and never, “How briskly are you able to reply?”
On the constructive facet, the know-how has actually helped on the information and analytics. And it’s not that we didn’t have knowledge and analytics earlier than, however the velocity, the information of the obtainable datasets, the entry to info extra shortly, has been terrific. You’re now in a position to deliver nearly any scenario––to nearly any danger scenario––higher quantitative outputs to measure the chance and measure the alternatives than we’ve ever been in a position to do earlier than.
That doesn’t imply that the insurance coverage world’s being run by machines or every little thing is quantitative. Thirty years in the past, the mathematics, the quantitative enter actually wasn’t there, and there was simply an excessive amount of weight on expertise and battle tales. All this quantitative output and perception is getting complemented by expertise, constraints corporations have, what friends do. It’s very complementary.
So I believe that’s actually useful. I additionally suppose that the information and analytics that we’re constructing as we speak—and we’re getting higher round how we set up that knowledge—that may drive innovation the following 10 years. It’s a essential part to get different members out there, so I’m very optimistic.
The final two issues are the dimensions of what's insured nowadays, and we need to insure extra. We will look post-disaster and go, “There ought to have been extra insurance coverage bought.” But it surely’s simply the dimensions of how the market’s grown, together with the world economic system. It’s wonderful to me.
After which the very last thing which in all probability has some good and unhealthy in it, is I work for a really giant dealer. We’ve been a consolidator. Aon, the place I labored earlier than, is a consolidator of brokers. A whole lot of issues have come out of the massive quantity of dealer consolidation that’s gone on during the last 20 years, and the consolidation that continues.
What have been the highest 20 brokers is basically concentrated, nearly within the high three or 4 now. There are various nice issues in regards to the scale we’re in a position to deliver. It brings many extra specialists to bear than we might ever probably afford prior to now. It brings know-how and leverage throughout the entire enterprise.
On the unhealthy facet, I don’t essentially suppose consolidation is unhealthy, however it creates perceptions round lack of alternative or market energy, which could be difficult for us to…not defend, however discuss and articulate round. My sense is that if I discuss to shoppers—and I do very often––they’re not quick on alternative. There’s loads of alternative, there’s loads of competitors. However I can see the place this focus of energy could be positioned in a different way in individuals’s thoughts and that’s not at all times an excellent factor.
Definitely. And people 4 modifications actually have modified the business, and I think about, the dealer facet of issues. There’s this old-school image of insurance coverage, that it’s purchased and offered on the kitchen desk. And to some extent that’s in all probability nonetheless occurring, however in what methods has the position of the dealer modified over time?
That’s the stereotype, you simply described it. And to a point I’d agree it’s nonetheless on the market and I believe in some circumstances that’s an excellent factor. Once I first got here within the business, there was quite a lot of stress round what as we speak are extra basic items––which is, shoppers wanted insurance coverage to guard them. Even with very giant prospects, company shoppers, the stability sheets weren’t so fortress-like as they're as we speak.
So it was once about truly simply putting insurance coverage and the method you went by. In some circumstances, is insurance coverage even obtainable? And different circumstances, how a lot insurance coverage can I purchase? As a result of the market wasn’t totally developed and clearly there’s at all times “How a lot does it value?” There was quite a lot of effort across the placement and getting individuals to know the method they’re going by. That meant bodily bringing individuals around the globe to completely different insurers to strengthen, “I’m severe about this. I can inform you a extra nuanced story about why I handle danger higher,” and so forth and so forth.
Now if I transition to as we speak, it’s not that that work doesn’t exist––it does––and all these issues nonetheless do matter. However to a point or one other, we’ve introduced as an business quite a lot of effectivity to that. I imply, I can actually have a dealer in the course of the US as we speak and put them into the worldwide market inside a matter of minutes, whether or not it’s by electronic mail or certainly one of our broking platforms. From the time they begin to consider, “OK, right here’s a strategy to describe what the consumer’s doing, right here’s what I’m in search of.”
That isn’t related for each single certainly one of our prospects, however that’s an incredible shift from after I needed to try this 30 years in the past, that was a four- or five-day piece of labor. I used to be assembling large binders of data that wasn’t essentially structured technologically. And I used to be delivery it in FedEx and UPS containers everywhere in the world after which following up with faxes and telephone calls.
So we’ve made that a part of it very environment friendly. It’s nonetheless very helpful, worth transparency, worth arbitrage, issues like that.
What we’re doing extra of is the advisory facet of our enterprise. Too usually after we discuss it, we are likely to say, “Properly, the world’s transferring to advisory and due to this fact the broking or alternative a part of the enterprise goes away.” And it’s not. We’re nonetheless doing all that transactional work. As well as, we’re doing issues now—and this could be a subset of it—round straight-up danger administration for our shoppers, serving to them get inside the issue and take into consideration the chance of the issue they’re making an attempt to resolve.
I see. Are you able to share an instance of this method to danger administration, both out of your insurance coverage apply or from different elements of Willis Towers Watson?
Issues like undertaking administration within the building house––very, very giant, huge tasks. We tackle quite a lot of the logistics round undertaking administration, all of the subcontractors and all the opposite sort of elements of insurance coverage and associated points.
By means of instance, 20 or 30 years in the past we have been simply speaking about getting undertaking insurance coverage positioned. As we speak we’re speaking about, “How can we bend that value curve and that danger curve from what was once perhaps 7, eight, 9 % of undertaking prices, and now we’re speaking about 2, three %.” After which listed here are the mechanics you'll be able to undergo to truly drive that additional down.
After which we do tons of contract evaluate—not insurance coverage contract evaluate. It’s such as you’re signing an enormous consulting association with, let’s say, clearly a consumer––what are the method implications round the way you write that contract collectively? How does that knit along with, for instance, your skilled legal responsibility insurance coverage? For corporations of a sure scale, these are monumental selections they’re making after they’re doing, say, a number of hundred-million-dollar tasks.
After which, what I'd say––and I’m seeing this within the building house and it stunned me as I’ve walked into it within the final couple years––we’re truly speaking to the entire ecosystem of enormous infrastructure tasks. And that’s every little thing from the financing, to the sponsor, to all of the completely different attorneys and consultants. It’s about saying, “hear, the best way we’re constructing infrastructure on the earth is a little bit bit damaged proper now, and the issue is it’s maintaining cash from attending to needed infrastructure. The funding return’s not there, there’s an excessive amount of danger, and the margins are means too skinny.” And thru consensus with all these members, we’re on the desk speaking about, “How can we orchestrate this course of or run the undertaking higher, in order that we are able to de-risk these tasks? We will make the returns extra dependable, and in consequence we deliver extra capital into the development enterprise.”
And once more, I couldn’t have imagined speaking about that 30 years in the past after I broke into insurance coverage, and was making an attempt to position administrators and officers legal responsibility for financial savings and loans in the US.
That’s fairly the story arc and what I’m gathering from our dialog to this point, Eric, is that whereas perhaps earlier than the insurance coverage world and brokers have been rather more centered on the merchandise and on the transactions, issues have change into extra holistic.
It’s nearly like utilizing danger as a lens to have a look at a enterprise and offering not simply advisory providers—what insurance coverage merchandise do you want—however how can I, as an adviser, higher provide help to use that danger in different elements of your enterprise.
That’s an excellent means of expressing it. , I wouldn’t describe it as a lightweight swap modified and we determined, okay, now we must be advisers. There’s completely different nuance of this in all of our companies, however with a purpose to be aggressive, as we have been looking for the transaction enterprise, we out of the blue grew to become advisers. We began to appreciate that recommendation was an important a part of the dialog––for somebody to belief you with the transaction work.
And the early phases of quantitative work got here in as a result of competitively, with a purpose to take a posh scenario to market or a mid-sized scenario to market, you wanted extra instruments to clarify to a consumer why they have been dangerous, or why they weren’t dangerous. And that sort of stuff has at all times been across the enterprise, however making it approachable for shoppers is typically harder and we’re simply getting higher and higher at it.
For instance, we have now a safety enterprise and it offers with kidnap ransom in elements of the world. And as a lot as we promote insurance coverage and providers within the occasion any individual is likely to be kidnapped, somebody mentioned, in wry means—we realized our shoppers would a lot moderately by no means get kidnapped than have to fret about insurance coverage.
On the finish of the day, greater than doubtless you reside in residence or a home. On the finish of the day, you simply don’t need the issue of a hearth in your home––and never as a result of the insurance coverage received’t reply, however as a result of every little thing else round it's actually sort of a ache. You simply must undergo this huge undertaking by yourself. So it’s essential to assist individuals keep away from issues and make them really feel such as you’re doing that in a means that’s helpful to them.
There are examples now of extra subtle knowledge and analytics that may permit us to take two kinds of danger and correlate them in opposition to one another, extra just like the monetary markets do as we speak. Perhaps that may permit sure shoppers a capability to offset danger, wash it in opposition to one or one other after which perhaps additional out the mindset portfolio. However you already know that’s a 10- or 15-year trajectory. I'll or will not be on this podcast by that point, however I’d wish to see it occur.
We’ll have you ever again in 10 or 15 years and wax reminiscent about this episode. For now, I’d love to check out…we’ve type of hinted on the disruption that’s happening within the insurance coverage business as we speak. I’m questioning what meaning for brokers particularly. You’ve talked about velocity and this want to reply shortly, however perhaps at the price of context or narrative arc. You’ve talked about entry to knowledge and analytics which may allow an innovation, however may be actually overwhelming for those who’re not ready to take care of it. What are a few of these present challenges and alternatives throughout the dealer facet of issues?
I believe you describe it fairly nicely. It’s an excellent alternative for us. In additional circumstances it’s like the instance I gave you earlier in regards to the final 30 years: what we have been doing in placement and broking by no means went away, whilst we’ve moved to extra of an advisory position. I see quite a lot of similarities in disruption for us, which means for essentially the most half this truly creates new markets and new locations for us to specific ourselves, and work for shoppers to deliver worth—however it doesn’t essentially get rid of what’s occurring as we speak.
When individuals focus on disruption, it’s attention-grabbing to speak a few less complicated message: to speak about insurance coverage and look to banking, and say we’re each in monetary providers and disruption will have an effect on us each, and it’s in all probability these items. (And I'd say banking has gone by that course of earlier than insurance coverage.)
However you already know, insurance coverage, even within the company and mid-corporate house the place we’re in, for essentially the most half operates in a whole bunch, if not 1000's, of segments. And quite a lot of the place the disruption happens is at these permutations of a whole bunch and 1000's, not on the business stage. And that occurs before everything.
Nothing’s going to be disrupted except a consumer thinks it’s a good suggestion. And it occurs first after which the consumer units the business. What I imply by that's disruption [in different microsegments happens at different paces]: the development business of insurance coverage will disrupt at a unique tempo than the banking business of insurance coverage will disrupt, or the know-how.
After which thirdly, geography issues in our house, and it’s not simply because it’s a property insurance coverage and a property is a bodily location, that does matter, it does change by geography. However you use in several regulatory environments and international locations and issues like that. So the best way we have a look at it's actually making an attempt to interrupt these items right down to the related sufficient section that disruption can happen after which make that work at that stage.
It sounds such as you’re describing disruption not as this nebulous market power, however as one thing that occurs on the intersection of enterprise segments. Are you able to share an instance of what this appears to be like like in apply?
You concentrate on vehicle insurance coverage––you'll be able to say in North America, you see within the US––it’s a really digital enterprise as we speak. The US statistic is one thing like nearly 80 % of these things is completed by the web now. Now, what you may miss in these statistics, is the time for auto insurance coverage to vary within the US, with largely the identical mechanics to a point and talent to be digital, has taken nearly 10 to 15 years.
OK. In order that’s the deepest-penetrating, fastest-moving piece of this disruption within the US––and there’s numerous attention-grabbing tangents to this, with automated automobiles you get sort of the sharing economic system, automation, automated driving and stuff like that.
However for those who simply moved from the auto house in a client surroundings, you go to the small medium enterprise (SME) house, what you’re going to see there may be individuals, shoppers––they’re often entrepreneurs––they’re not doing work simply between 9am and 5pm. They need easy, quick entry to, “Hey, I want insurance coverage. Right here’s my info. Can I get a solution instantly?”
Some individuals have mentioned, “I’ll make that utterly digital and I’ll simply destroy the insurance coverage agent.” I’ve seen individuals stroll again from that as a result of ultimately shoppers desire a semi-digital expertise. That's, as a lot as I desire a easy provide and to know what my choices are, I’m essentially coping with sort of a sophisticated product and I need any individual, at that final second, to stroll me by a little bit context.
However what is going on in that house is quite a lot of these things goes digital. After which that forces some reset in the way you put money into know-how—for those who’re centered on an SME section versus, perhaps, the massive and sophisticated section the place we play. But it surely does can help you begin observing how your shoppers work digitally, or how they work together with you. Which means there’s numerous wonderful issues that Google can see, and Fb can see, and Amazon can see in regards to the buyer habits. And for those who get out of a few of the darker rhetoric that pops up, that knowledge provides you fantastic methods to enhance the consumer expertise. And so that you’re seeing a few of these teams getting fairly good at that.
And for those who flip over to the place we’re at, we’re in a extremely customized house––that doesn’t imply it’s not being disrupted, it’s simply a few of this new know-how is permitting us to extend our skill to serve digitally. And concurrently, we’re in a position to get higher and deeper on… for those who consider a Fortune 50 firm and the way they need to take into consideration danger, and actually take into consideration how they have an effect on that, we’re in a position to get into that a a lot completely different means than we have been 10 years in the past.
We will see worth arbitrage between the an identical product in two completely different markets in a short time now; earlier than that was rumored to exist. We will make the most of that for our shoppers. We will deliver transparency to our shoppers. That was tough 10 years in the past.
After which, by the best way, quite a lot of the disruption helps the executive facet of our enterprise get extra environment friendly, whether or not it’s by being extra technological, utilizing much less individuals or simply being simpler, much less error susceptible. Issues like that.
However, once more, we use that assemble to speak about insurtech and know-how, and the way all that is affecting us, as a result of till you’re at that sort of section intersection, you’re in all probability speaking in regards to the concern in means too a macro context that doesn’t apply very simply to any a part of the business.
It does and it appears to me…we’ve talked about challenges and alternatives they usually are usually two sides of the identical coin. Given the velocity of modifications––and also you’ve talked about regulatory environments and geography––I’m questioning from a dealer standpoint, how does that have an effect on their skill to maintain up with the altering regulatory surroundings? Each by way of what regulates their work, in addition to insurance policies coming down from the person insurers as they struggle to reply to these shifts within the market. Are you able to touch upon that perhaps splitting between type of the buyer and SME stage versus the company stage?
I imply first, it’s an excellent factor. And we function in a whole bunch of nations and we have now to honor that very sincerely.
If I simply take the window of the final 20 or 30 years, it’s actually a costlier surroundings to function in. Simply to have that correctly managed and understood, it creates a little bit of confusion, as a result of as you'll be able to think about you’ve received quite a lot of completely different regulators, completely different places, individuals, human beings with completely different factors of view… What I do see although, which is sweet, I believe on the buyer facet, I see a increasingly of a gap of the regulators to an surroundings of safety for the buyer, however simplicity within the transaction.
Not everybody’s getting it proper, however the route of journey’s right. And I believe that if you wish to have a extremely environment friendly market, in some unspecified time in the future it could possibly’t simply be, “Hey, here's a technological comparability machine and it simply spits out a couple of issues that lets making a decision.” You want a greater sense of what you’re shopping for, what it does and the way it's good to work together with that product if one thing goes unhealthy, issues like that. So we’ll by no means get it good, however it’s moving into a pleasant place. And so I believe that’s nice.
on the advanced facet of issues, on the one hand we get quite a lot of scrutiny. The Monetary Conduct Authority (FCA) within the UK simply launched a report on the dealer and wholesale London market and usually, I believe we acquired it fairly nicely. But it surely’s additionally laid out quite a lot of issues that I'd simply distinction with after I first joined insurance coverage.
There are conflicts of curiosity once you’re buying and selling issues and simply having the ability to handle these conflicts appropriately––as a result of they do must be managed, they will’t all be eradicated––is necessary. And so how we handle these conflicts, how we discuss these conflicts, how we prepare individuals on these conflicts, and the way we clarify the enterprise, which was perhaps very un-transparent 20 or 30 years in the past, versus how we clarify it as we speak, it’s necessary.
Purchasers have completely each proper to know the way it works, how the market comes collectively, how we’re compensated and issues like that. I believe all that’s wholesome, as a result of to a point when you make that half very environment friendly and understood, it lets you will have a greater and a extra trusted dialog about your recommendation, the place else you might stretch a few of these rules. However for those who can’t get to the belief you’re going to be in a reasonably transactional place, client or company.
So I’ve been an enormous fan of quite a lot of these items, and through my profession I've been introduced into these things as a result of not every little thing works as easily and completely as you desire to it to once you’re round tens of 1000's of colleagues.
Eric, thanks very a lot for taking the time to talk with us. I’m excited to proceed our dialog within the subsequent episode.
I’m wanting ahead to it.
Abstract
On this episode of the Accenture Insurance coverage Influencers podcast, we talked about:
How know-how, knowledge and analytics have enabled velocity in as we speak’s insurance coverage market. In flip, that has helped business gamers shift from transactional providers to extra holistic advisory relationships.
The diminishing context offered by velocity—and the worth in shifting from “How can we ship this sooner?” to “What's the message that must be communicated?”
Along with masking danger, insurers can present worth in serving to prospects mitigate danger, or use danger as a lens for addressing broader enterprise aims.
Digital isn’t at all times the reply—typically, a combination of digitally and human-enabled experiences can ship extra worth to prospects, particularly with difficult merchandise.
For extra steering on danger, disruption and innovation:
Within the subsequent episode, Eric will clarify why he’s made variety and inclusion his private precedence—and why it’s each an ethical and enterprise crucial. He’ll additionally take a tough have a look at the insurance coverage business and what its failings reveal about alternative.
What to do subsequent:
Contact us for those who’d wish to be a visitor on the Insurance coverage Influencers podcast.
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