Laura Drabik Welcome to InsurTalk. My name is Laura Drabik and I'm the Chief Evangelist at Guidewire. In this episode, I have the privilege of interviewing Denise Pavlov, Chief Operating Officer at Topa Insurance Company. Denise joined Topa Insurance back in 2018 as the Chief Underwriting Officer and has held senior leadership positions in underwriting and operations with other insurers. The focus of today's discussion will be on pot. Now, that I have your attention, we will be discussing cannabis insurance, a new product opportunity for our industry. Hello, Denise, thank you for joining my “potcast.”
Denise Pavlov Hi, it's nice to be here. Thank you.
Laura Drabik Tell our listeners a little about Cannasure Insurance services and its relationship to Topa Insurance Company.
Denise Pavlov Sure. Cannasure was formed just about 10 years ago and they're based in Cleveland, Ohio. Cannasure is a wholesale broker and they're also managing general agent that specializes in placing insurance for the cannabis industry. They have an exclusive program with Topa insurance and we write that product in 22 States with them.
Laura Drabik So, Cannasure started with the single goal of helping legal marijuana businesses, secure insurance products at a reasonable cost. What were, or are some of the stigmas and challenges these legal businesses still face?
Denise Pavlov Yeah. Well, there's several. So, Cannasure spent a lot of time getting to know the different markets and that helped to form the opinion and business plan to attack certain geographies in the early days, and understand the needs and how they differed from state to state, but then also from business to business. So, cannabis is legalized at the state level for either adult usage or medical usage in 36 States now, and then the other 14 is legalized for CBD. So, that doesn't change the fact that it's still not legalized at the federal level. And that's what continues to drive many of the stigmas and challenges, especially around the banking.
Laura Drabik So, what differentiates you from other providers in the market?
Denise Pavlov Topa and Cannasure have partnered together to offer specialized cannabis insurance coverages. We offer all main lines of insurance for cannabis related businesses, property coverage, general liability, and product liability. Most of the other companies in this space only offer one of these coverages, one of these lines. So, Cannasure with their property capacity and product liability limits that they're able to offer through Topa, many of the cannabis related businesses, the CRBs can have all their insurance needs met by Cannasure.
Laura Drabik That's really interesting. It's one-stop shopping, great service and incredible knowledge.
Denise Pavlov We got it.
Laura Drabik Yeah. You serve several different segments, including dispensary's, cultivators, testing labs, just to name a few. Can you describe your most prominent segment and the coverages you provide?
Denise Pavlov The policy we offer is custom built to fit some of the unique needs of these businesses, including coverage for growing plants, as well as product withdrawal coverage, in case a special batch needs to be recalled, which does happen from time to time. Our most prominent segment is the vertically integrate businesses, that control all three steps of this process, the cultivators, the processors, and the dispensary's. So, the seed to sale, and that's our most prominent segments.
Laura Drabik This is such great information. Before we continue, listeners, if you're enjoying this podcast be sure to subscribe to ensure talk on Amazon, Apple Podcast, Stitcher, or wherever you get your podcasts. And you can rate and review this show on Apple Podcasts, it helps others learn about and discover the show. Now, this is Laura Drabik, and let's get back to our conversation. I am talking with Denise Pavlov, COO at Topa Insurance Company. So, Denise, cannabis related businesses, or CRBs have unique risk issues. They're prone to fires from both wild and internal sources, edibles, open product liability issues, and more importantly, over 70% of CRBs operate as cash only. What are some of the unique issues of these risks? And tell us how you accommodate CRBs that are cash only.
Denise Pavlov You're right. There are unique risk issues, but honestly, on the property side, these risks are better constructed and maintained than most of the other classes of business we write. And then when you look on the product liability side, everything is so highly regulated with the seed to sale tracking and all the government required testing, it's really a much better risk than the mainstream products that we insure. As far as the CRBs that are cash only, we've been lucky. We haven't had to accept a brown paper bag full of cash just yet, but seriously, cash is so risky to insure and fraught with potential theft we place a sub limit on it. So, we limit the amount of coverage that we'll offer there. But Cannasure can complement our sub limit of coverage and how they do that is by placing a cargo or crime policy in the open marketplace. And that's just one example of how our two businesses complement each other.
Laura Drabik So, because of federal laws, insurers and brokers do not formally advertise their services to see our base. How do you get the word out to the cannabis community that you offer coverage?
Denise Pavlov Well, Cannasure has launched an extensive branding campaign and they do this through various memberships. So, with the NCIA, the National Cannabis Industry Association and the CCIA, the California Cannabis Insurance Association, their sponsorships, like the Nevada Dispensary Association and the Washington State Craft Cannabis Correlation. And then, Cannasure writes articles in various publications like in the Insurance Journal, Business Insurance and Rough Notes, and all of those have a special cannabis edition. And then there are interviews and podcasts like the one we're doing today. And Patrick McManaman, the head of Cannasure, has also been a featured speaker at risk management webinars and virtual events that have targeted CRBs.
Laura Drabik Yeah, it really sounds like you're doing a great job of getting the word out. Denise, you spent over 25 years working for CSAA, a standard lines carrier. How do cannabis claims differ from standard line claims and what are some of the unique challenges of adjudicating cannabis business claims?
Denise Pavlov Well, we've been very fortunate and we've had very few losses in our cannabis book. It performs very, very well, but the losses that we have seen are very similar to what we see in the other lines of business we insure, like the typical slip and fall and property damage claims. As an example, we had a claim where a large office copy machine fell down some stairs while it was being moved and it caused property damage. So, this is something like you would see from any other business. Now, one area where we do see a difference is when we ensure the live crop, the cannabis plants. If they're damaged, it can set a business back six to nine months. So, we offer extensive business interruption coverage to protect the CRBs from the possibility that they could lose up to 50% of their crop due to a single bad light bulb, and a single bad light bulb could take out the entire room. Because of our deep knowledge in this industry, there really isn't any unique challenges when we're adjusting these claims, we're able to do it just like we do our other lines of business.
Laura Drabik We'll, that sounds interesting. I was expecting to hear something almost salacious from you, but I'm glad to hear that it follows very much in alignment with standards line guidance.
Denise Pavlov Right?
Laura Drabik Yes. We need to take another break. If you're enjoying this podcast and would like to review more of my thought leadership, please see evangelists.guidewire.com. Now, let's get back to our conversation with Denise Pavlov, Chief Operating Officer at Topa Insurance Company. It's predicted that by 2022, the US cannabis edibles market is projected to reach $3.4 billion, with cannabis beverage sales expanding roughly tenfold to 374 million. And I have to tell you, I didn't even know cannabis beverages was a thing. So, what are the other product opportunities for cannabis, Denise?
Denise Pavlov Well, we're starting to see a concierge level of servicing coming from the dispensaries and that's going to make them stand out from their competitors. There's also much more home delivery of product than what we've seen in the past. And who's to say that this concierge level of service doesn't blend into other related areas? So, we've been hearing of the CBD and cannabis infused gourmet meals, and this is coming from semi celebrity chefs. So, will they begin partnering with the dispensary's to have a four-course meal that includes all sorts of cannabis products for an indulgent evening? I'm sure we can allow our imaginations to run wild. And we're just going to continue to see all of this growing into various areas.
Laura Drabik That is so interesting, cannabis infused gourmet meals. It gives a whole new image to what's going through my mind with the hello fresh food package we get every week. Due to legislation, federally insured banks are unable to do business with CRBs, but many expect the market to explode if banking legislation passes, enabling cannabis operators to do business with banks. What are your thoughts on this? Will legislation pass? Will the industry grow exponentially?
Denise Pavlov Well, I think change at the federal level is inevitable, but I also think it's going to take some time. Now, that there's democratic control in both houses and with the presidency, I believe it's going to start moving, but it's definitely not going to happen overnight. So, I think we'll see the Safe Banking Act be the first to be approved, and then maybe some potential changes to the tax codes. The industry is going to continue to grow regardless of how quickly legislation moves, but of course, anything that happens at the federal level will definitely speed all of that up.
Laura Drabik It makes sense. What advice would you give a carrier looking to enter the cannabis insurance market?
Denise Pavlov Well, like with all insurance, writing business successfully is dependent on a deep understanding of the product that you're going to ensure from all perspectives. So, I would say that understand and prepare for deep commitment that it will take to be successful, you'll need to support the trade associations and invest your time and resources to the cannabis industry.
It's also important to understand the various operations, ones that are superior to others, and then why. Then finally, understand the current state laws because they vary significantly in the terms of requirements for the CRBs to obtain and maintain their business licenses. So, it's very important to remember, not all states are created equal, so you have to do your homework.
Laura Drabik Great advice, Denise. Thank you very much for your time today and for your incredible insight into providing the high lights of cannabis insurance. You have showed us, it's not just about ideas, it's about making ideas happen.
Laura Drabik Welcome to InsurTalk. My name is Laura Drabik and I'm the chief evangelist at Guidewire. In this episode, I have the privilege of interviewing Irene Bianchi, president and CEO at Peel Mutual Insurance Company. Irene has an impressive career in insurance. Before transitioning into the CEO role at Peel, Irene held senior leadership positions in claims out of Aviva and RSA Canada. Irene was recently featured in Canadian Underwriter Magazine, describing how Peel was able to leverage AI to eliminate phone tag. In today's podcast, we will dive deeper into this topic. Hello Irene, thank you for joining my podcast today.
Irene Bianchi Oh, hey Laura. Great to be here.
Laura Drabik Tell our listeners a little bit about Peel Mutual and your role there.
Irene Bianchi Sure. Well, Peel Mutual is the fourth largest mutual insurer in Ontario, Canada. We sell property and casualty insurance through independent brokers. My role here is president and CEO and I was brought here about three years ago now to really turn Peel Mutual from a sleepy mutual owned by its policyholders into a viable and ongoing insurance company that was fit for purpose to really start to dominate the market going forward in the mutual space.
Laura Drabik Well, I'm glad they brought you in because clearly that is what you are doing. You used artificial intelligence to support staff with text messaging. What was the business problem you were trying to solve?
Irene Bianchi It was like many insurance companies, we have lots of issues with getting a hold of people. Phone tag was just crazy. You would get people's cell numbers and call them, but they wouldn't pick up because they didn't recognize the insurer's number. It was getting frustrating for customers and frustrating for claims handlers as well, in terms of trying to set expectations, give people some empathy and say, "Here's the process we're going to be following," just so that everybody would understand what was going to happen. I talked to the folks at Hi Marley, who I've known for several years in their prior capacities and started to talk about, could we have the Hi Marley solution help us with our perpetual phone tag and trying to take that frustration out of those conversations and make sure the customers knew exactly what was going to be happening with their clients.
Laura Drabik That sounds really interesting. And I'm really happy to say that Hi Marley is a valued Guidewire partner and they've created a text messaging integration to our solution. How does your use of AI support existing teams and free up that human to focus on other activities like delivering empathy that better serve the consumer?
Irene Bianchi If the customer elects to use Hi Marley and we ask them that because some people aren't comfortable texting. We give people the option and if they want to be communicated with in this way, we sign them up and we start the process and we give them all of their information via text and we set the stage for them. That frees up the claim handler to actually get working on the file. It enables them to organize appointments for the insured and then tell them about it right away so there's no sort of drag time and it really gives people a sense of understanding what the process is. The customer is content that their file is being managed. They can see how it's going to progress and the time that normally people in the office would be spending trying to get in touch with customers is better spent in dealing with the vendors who are going to be say, repairing the vehicle or looking at the fire damage, things like that to really move the file along.
Laura Drabik That makes a lot of sense. Have the human focus on those activities that only a human can actually deliver. How has the policy holder responded to these AI directed processes?
Irene Bianchi Well, They just love it because it takes the unknown and the dread out of the claims process. Most people don't have an insurance claim in their lives, but when they do, they just don't know what to do. This gives people a real sense of understanding the process. And most fear is because you don't understand what is going to be happening. We try to take that fear away. And after the interactions that we have with customers, we give them the option of rating the service on a survey, and we've gotten fabulous, 4.8, 4.7 out of five responses because people really like to have that security and they like to have it in a text format that they're really comfortable with.
Laura Drabik What about those internal employees? How have they responded to this?
Irene Bianchi Well Laura, like most things that I do, I always go to the folks on the front line and say, "Can you spare me an hour? I want you to see something." That's what we did with Hi Marley. We had our folks in claims who are principally on the phone dealing with customers and we had Hi Marley do a demo for them and said, "Okay guys, what do you think?" And to a person, they just loved it. They thought it would be great for customers. And they thought it would be great for them too, in terms of freeing up time that normally they would be spent just trying to track people down. It was an effort that we wanted to make sure that people could get on board with right away, because if the claims handler doesn't think it's a great idea and isn't going to help them, I don't think it's going to help the customer.
Laura Drabik Before we continue listeners, if you're enjoying this podcast, be sure to subscribe to Insure Talk on Apple Podcasts, Stitcher, or wherever you get your podcasts and you can rate and review this show on Apple Podcasts. It helps others learn about and discover the show. Now, this is Laura Drabik and I'm talking with Irene Bianchi, president and CEO at Peel Mutual Insurance Company.
Irene, customer journey mapping, role observations and surveys help insurers identify areas for improvement in the insurance life cycle. How did Peel identify the appropriate areas for improvement where AI could help streamline processes?
Irene Bianchi Well, first of all, we went to our employees. Where are their real pain points for them? We then survey our brokers, who we sell all of our products through. We have broker councils twice a year where we invite our biggest and most supportive brokers and say, "Okay, tell us where the pain points are. How can we help solve some of your issues?" And then we also go to the competition. What are people doing that seems to resonate with customers? We can't sit here and think of everything by ourselves so we take a look around, look at the industry and see what the competition is doing. And then also with different partners in the insurtech space. We're open minded so what's new out there? What can we try? Because we want to try different things that are going to help our customer. And the best thing to look for is where are those pain points? What's driving people crazy? And where are the solutions to resolve that?
Laura Drabik Where do you plan on leveraging AI next in the enterprise?
Irene Bianchi I think probably our next view would be to look at loss control. We write a variety of different types of risks within the province and loss control really helps you understand the risk, helps you see it, helps you really look at what are you insuring? I think to look at the next phase is, what can we find that will help us with the loss control and truly understanding of risk better so that we can manage our overall risk portfolio more appropriately.
Laura Drabik You were the first carrier in Canada to launch Hi Marley. And congratulations.
Irene Bianchi We're happy to be the first because we know it works. It's just one of those things where as long as you've got the confidence in the solution that's going to be helping your customers, I really don't think you can go wrong.
Laura Drabik Pricing, claims automation and fraud detection are all current use cases for AI. Looking five years into the future, how do you think insurers will be leveraging AI in their enterprise?
Irene Bianchi The key to AI is using it to deal with the mundane issues, deal with the process so that you can then free up the time of your adjusters, your underwriters, to really concentrate on the business and letting the AI get through the stuff that is just the everyday. I don't see AI as a complete solution. I think it's complimentary to the business. I think you always need to have people and knowledge base because not every situation is going to fit some algorithm, but I think there are enough processes and procedures that can be automated, that we really need to start looking at that in a big way so that we can keep up with customer demand. People want things very quickly and they want it right and they want it done the first time. And I look at AI as being a part and parcel of helping with that so that the really super quality time that you need to spend with insurance or customers, you've got the time to do that because all the mundane stuff has already been taken care of.
Laura Drabik That's sage input, thank you. Do you think it's important to integrate empathy into your AI models?
Irene Bianchi I think it's absolutely critical. You can have a fast, slick process, but if you don't have that empathy, people will struggle. As I said before, most people don't have claims. They don't expect to have claims. They don't know what to expect when they have a claim. You need to have that human touch or certainly any kind of application in claims and same in underwriting. Artificial intelligence is great when there are no issues, but when you have something that's bespoke, when you have a problem, you need to have that human factor, the empathy and the trust really to make sure that everything resolves for the customer.
Laura Drabik What new role needs to exist within the insurer to ensure AI and interactions remain humanized, if you will?
Irene Bianchi To me, it's almost like you need a customer champion who can ensure that everything that is being done is done with the customer in mind. In one of my prior organizations, when we introduced Guidewire actually, that was the test. If this doesn't work for the customer, it doesn't work for us. We need to have interactions where the customer feels like and is being properly taken care of and he is not treated like a number. Everybody wants to be special. Everybody deserves to be treated according to their circumstances. I think it's important that this humanization doesn't get lost because insurance is, and I think always will be a really people oriented business because you're dealing with people and their needs and their feelings and their security and there's nothing that can really replace that human interaction.
Laura Drabik We need to take another break. Just a reminder, if you're enjoying this podcast, be sure to subscribe to insurTalk on Apple Podcasts, Stitcher or wherever you get your podcasts. Let's get back to our conversation with Irene Bianchi.
In augmented chess, average players enabled by AI tend to do better than expert chess players enabled by the exact same AI. It has everything to do with the individual interacting with the AI, embracing and understanding the supporting tech, what is Peel Mutual doing to ensure it has the right employee mindset and skillset for the future?
Irene Bianchi We're getting them involved from the get go. They are part and parcel of our strategy session, frontline guys. We need to understand what the issues are they are facing and then how can AI help? Now again, we can't just give it to them and say, "Okay, this is how we're going to proceed from now on." We need to involve people right from the beginning. I'd say, "Okay, here's a range of options. What is going to work best?" And we have to allow people a little bit of time to adapt to the change and we have to make sure that they're supported throughout it. Change is very scary to a lot of people and until they start to see the benefits of it and until they start to see how it can make their jobs and lives easier, you got to spend time and you have to make sure that people can appreciate the positivity that's going to come from it.
I don't think anybody ever introduced any kind of new process or AI with a view of getting rid of workers. It's the opposite. We want to be able to enhance their role and give them the support that they need so that they can support customers better. And that's really what insurance companies are all about is supporting customers. And if you can give people the tools that will make their jobs easier with the customer, most people will just jump on the bandwagon.
Laura Drabik Irene, I really like that you called that out. AI is not about reducing the workforce. It is about improving the job and freeing up the human to do the job that they were actually hired to do. Thanks for sharing that. For insurers investigating the use of AI and machine learning, what critical piece of advice would you share with them?
Irene Bianchi Listen to your employees and your customers and don't be sucked into the next new shiny thing. There's lots of things out there that sound terrific and it might be great for a short period of time, but if people don't understand it and if it's not bringing true value, they're going to get tired of it and they're not going to use it. You really have to be careful in doing your due diligence around what is going to work? What problem am I trying to solve? Because we all see homes with closets full of tech and exercise gear and all that kind of stuff that nobody uses anymore because they really weren't thinking about, is this something that's going to help me long term?
Laura Drabik Are you referring to the exercise bike in my bedroom that now is part of my closet to hang clothes from it?
Irene Bianchi I think we all have one of those somewhere, right?
Laura Drabik We do. Irene, you've had a very long and successful career working in insurance. You are someone certainly that I look up to and I'm so glad I met you many years ago and you've offered me so much sage advice throughout the years, you've earned your role as CEO. What career advice would you share with your 21 year old self?
Irene Bianchi I would be bolder. When I was 21 I was not as bold, obviously, as I am now because of your age and experience, but when you're young, you can afford to be bold. You can afford to make mistakes. You've got a lot of runway ahead of you. Be bold. As long as you're respectful, as long as you have done your homework, be bold and come up with ideas and share them. Also, I would say that, you got to have to reflect and work hard at relationships because this business is very much relationship focused. It's a relatively small industry. You see the same names coming up over and over again. You have to work really hard at relationships and you can't take that for granted.
And I think the key thing that I would give myself in terms of advice when I was much younger would to really be sincere and showing your appreciation for people. For their loyalty, for their hard work and for their insights. A lot of people today are struggling because they're not getting that appreciation, it's taken for granted. I think that's one of the key things that I would give myself in terms of advice is just make sure you appreciate the people around you, work harder at the relationships and be bold.
Laura Drabik I love that. I'm going to be bold. Irene, thank you very much for your time today and for your incredible insight into leveraging AI. You have showed us it's not just about ideas, it's about making ideas happen.
Irene Bianchi Well that's great, Laura. I'm really happy to have a chat with you. Take care.
Laura Drabik Welcome to InsurTalk. My name is Laura Drabik and I'm the Chief Evangelist at Guidewire. In this episode, I have the privilege of interviewing Kylie Burtenshaw, Executive General Manager, Insurance Australia Group, better known as IAG. Kylie is a lifelong insurance technologist and has dedicated her career to transforming insurance processes at major carriers. I specifically selected Kylie for today's podcast because of her experience guiding IAG in their pursuit to become a digital insurer. Hello Kylie, thank you for joining my podcast.
Kylie Burtenshaw Hi, Laura. It's fabulous to be with you today.
Laura Drabik Tell our listeners a little bit about IAG and your role there.
Kylie Burtenshaw IAG is the largest general insurer in Australia and New Zealand. Yeah, we are from down under. We ride about $12 billion in GWP annually, and I think like every other insurer out there, we're desperate to become the customer-centric digital module insurer. I am responsible, as you said, for transforming IAG and its core insurance businesses, but I really see that as laying foundations for the organization so that we can grow with our customers, because let's face it: our digital transformation is never, ever finished.
And for the past three years, we've been transforming our claims business, and over the last 12 months, we finally turned our attention to the policy program, ultimately re-engineering ourselves and services channels. We are weeks out from our first go live and are hugely excited about seeing the policy transformation come to life.
Laura Drabik Well, I'm going to congratulate you in advance, and I know, and fully, expect that things will go very well. So, IAG is well on its way to achieving its goal of becoming a digital insurer. Help us to understand why you are becoming a digital insurer.
Kylie Burtenshaw I think, Laura, we hear it all the time, our customers are desperate for us to keep pace with the changing world. And if anything has shown us, our customer's behavior will change, and they will change rapidly. Customers now expect things to be faster, they want it to be easier, instantaneous, intuitive. They expect us to preempt their needs. So in order for people to stay competitive, we need to, in the first instance, just strive to at least meet those expectations, which for large carriers is a challenge. And so we need to at least strive to get to where they want us to be, and then ultimately try to beat that.
Laura Drabik I had the pleasure of watching you present on your transformation approach to becoming a digital insurer, and you cited both simplification and experience as essential components of your initiative. Can you elaborate on these?
Kylie Burtenshaw Sure. I think from our perspective, I think any organization, or industry, really, to transform those two key elements that you referred to, simplification and experience, it's just the pathway in which you tackle those that varies, and that really changes your course of your transformation. When we started the IAG transformation with our claims experience first, we fundamentally went on a simplification journey. We really re-engineered our operating models with the ultimate intent of simplifying the underlying processes and matching our claims complexity with the consultant's capability. That created organizational efficiencies for us, and ultimately the ability to leverage our scale.
But it meant we had to move away from brand solutions. We have eight brands in the market today, and we had to move more to patterns, and that is a motor pattern to ensure our vehicles, our property pattern, to ensure our assets, and ultimately, a personal injury pattern. But those patterns are all fundamentally different. That's the simplification side of any transformation. And then ultimately, at the back end of that, we started to accelerate our enhancements of our customer journey, and the integration with our supply chain, and ultimately, finally leveraging AI and machine learning. I think you have to consider both sides of that journey and depending on your strategy, and where your organization is at, that will determine which pathway you should take.
Laura Drabik So I think our listeners will understand brand centric, but could you explain to us what pattern centric means?
Kylie Burtenshaw So I know everyone gets in their organizations today and thinks, "The way I do things is unique and it's special," but we have grown through a mutual background and we've grown through acquisition, and so we have lots of mainframes. They're all of different ages. We have 15, in fact, and each one of those holds different data sets, different processes, but when you peel it right back, to repair a home or a car, it's actually the same underlying process, and that's what we mean by patterns.
So the way we repair a car doesn't change, ultimately, in the core, but that pattern is different to the way we go about repairing someone's home, and obviously very different helping someone return to health. But from that perspective, you align the underlying core to those patterns. And then again, where that experience kicks in is where you start to differentiate yourselves in the market. And that's really through the experience layer. It gives your organization agility, the ability to be brand agnostic and process agnostic, allows you to flex your workforce to where the demand really comes from, especially in those types of events that we know we all experienced.
Laura Drabik Before we continue, listeners, if you're enjoying this podcast, be sure to subscribe, to InsurTalk on Apple Podcast, Stitcher, or wherever you get your podcasts. Now this is Laura Drabik, and let's get back to our conversation. I'm talking with Kylie Burtenshaw, Executive General Manager at IAG, and we're talking about becoming a digital insurer. Kylie, you started your digital insurer journey by targeting claims first. Why tackle claims before policy?
Kylie Burtenshaw Can I be honest? We actually had a false start and we tried to tackle the whole insurance stack in one go. That was too much for anybody, so we stepped back from that, and chose to move then with the claims first program. And really, it is the biggest point in which we can make improvements for our customers. There's obviously fewer underpinning systems in the claims space. So there's less complexity first to face, and two, it also allowed us to unlock scale benefits. But back to that false start, it really helped the organization to build trust, right from the board down to our frontline, the belief in the work that we would be doing, the buy in to actually make any transformation a success is pretty cool. So once we gained some confidence, and our transformation of our claims business had started to near an end, we then had a proven track record. Our confidence had been built, and now we're ready to tackle the more complex policy transformation.
Laura Drabik So how did you adapt the approach you used on claims for your policy transformation?
Kylie Burtenshaw Claims we really focused on simplification first. We were unwound all the complexity, we took ourselves back to those patterns, and ultimately, then, at towards the end of that journey, we started to accelerate the claims experience, and that was through the re-imagining of our recovery journey. And it extended all the way into claims and also our supply chain, which we have now integrated. But from a policy perspective, we were well behind on our simplification journey, and we didn't have the luxury of time to be so linear. So we had to tackle that experience by simplification and experience in a much more lockstepped approach. And therefore, we turned on part simplification and part experience, as we stepped through the transformation for our policy program.
Laura Drabik You decided to digitize the entire backbone of the organization. What does this require, and what is the benefit achieved from doing this?
Kylie Burtenshaw Big decisions for the organization, but if I reflect on where we've been, we have multiple legacy platforms, all mainframes of different age. Ultimately, just integrating policy, and billing and claims center would definitely give us a step forward, but it wouldn't re-engineer us to a digital insurer. We'd still be tied to quite monolithic platforms. But ultimately, we are re-engineering not only the core insurance platforms, or our systems of record, we are also replacing our systems of engagement, and then also our systems of insight, where we collect all the data insights and then become a much more intuitive insurer to best meet our customer needs.
Ultimately, we did it through dividing our insurance target operating model. We stepped back to the enterprise level, and we actually said, "What are the core capabilities to be a digital insurer in five plus years time?" And it is that that has anchored us from both the people process and the platform perspective, and it's underpinned by our tech strategy. We're fully API enabled in this solution, so that ultimately, should we play in IAG or non IAG ecosystems, the movement between them actually is much more seamless than it is around hardwiring into core systems going forward.
Laura Drabik So what is critical to the success of your initiative and why?
Kylie Burtenshaw Look, I will say, above absolutely everything, you must remain business led. I think so many times we see programs start as tech programs. We focus on simplification, rationalization, or replacement of core systems, but ultimately, let's face it, Guidewire is a highly configurable system. We can really make it do anything, but to configure a product, you need to know the customer market to remove the pain points. You need to understand your customer experience to grow. You need to know the market segments. Ultimately, your technology needs to underpin your strategy and it's not the actual strategy. And I think we lose sight in that so quickly. So if I can recommend anything, stay business led, set your target operating model, because that is your North Star, ultimately, to give you the direction in which all decisions should be ultimately anchored back to, and execute towards that. Mitigate day your delivery risk; running large scale programs is not easy, they're not projects, so you need to make sure you've got the buy in across the end-to-end value chain.
Make sure your accountabilities are clear. And then as a program team, ruthlessly managed your critical path. If anything, slows programs down, it's slow decision-making and blockers in your delivery. Thirdly, I would say modular design. I mean, technology evolves at a rate of pace that is unprecedented. And ultimately, if we cannot end up again in a monolithic solution, we need to be modular. So that as technology accelerates and advances come, we're able to more easily decouple, or replace, or evolve component parts, rather than the whole end-to-end stack, the respond to that customer journey, and agile culture.
We run scaled agile methodology. I know there's lots of people running agile out there, but it needs to be applicable to your organization. You need to know the capabilities in your organization and you need to evolve them over time. Can't just stand up the agile methodology thinking, at a textbook level, it's going to work because it really is dependent on the capability in your organization. And you need to have the flexibility in your roadmap to respond to the changing needs of your customers and strategy, because over a five-year horizon, nothing will stay the same.
Laura Drabik Great advice! Be business led. Just a reminder, if you're enjoying this podcast, be sure to subscribe to InsurTalk on Apple Podcast, Stitcher, or wherever you get your podcasts. Let's get back to our conversation with Kylie Burtenshaw. IAG recently won a Guidewire Innovation Award on your use of artificial intelligence and machine learning to re-imagine how claims are processed. Congratulations!
Kylie Burtenshaw Thank you, Laura. It was an honor, and there's a lot of people that have gone on this hard work for IAG to transform, and they are truly deserving of the recognition.
Laura Drabik So I'm on the judging panel, Kylie. I voted for you because I was incredibly impressed with what IAG achieved. Your AI solution leverages machine learning to detect a total loss at first notice a loss, so pretty cool. Can you share more details on your award-winning initiative with our listeners?
Kylie Burtenshaw Sure. As we mentioned with, obviously being on that claims transformation, this is really where we start to see this evolution and acceleration of the experience layer come to life. Once we had finished that simplification journey, and we had a scaled core that we were able to implement AI technology, as you mentioned, including the machine learning and definitely BPA as well. The technology is one of its kind, or the first time we've used it at IAG, and it's really there to predict, within days, if a damaged car is likely to be too expensive for repair and therefore declared a total loss. Essentially, the technology uses natural language processing. Look at the details of the claim, it has a look at the dialogues between customers and our agents, as well as looking at the additional information supplied, reports, and ultimately, determines if it's the likelihood of that claim will turn into a total loss. And if it does, it means we've ultimately taken weeks out of a process back to days, and hugely increased the experience for our customers.
Laura Drabik So let's back up a bit. What was the business problem you were trying to solve?
Kylie Burtenshaw Well, let's face it: we all get quite attached to our cars, and ultimately, it's quite a traumatic experience, if you think if a car is going to be written off as a total loss, it must've been a reasonably large accident. So it's quite a traumatic and challenging time for customers. Probably one of the most challenging in an insurance claim for a motor vehicle, and what our customers told us, it just took too long to get to that outcome, that their car was going to be a total loss. They felt they were blindsided by unexpected deductions that made their situation more distressing, due to the financial impact on top of, potentially, all of the impact that it has on their lives. And this problem is then just exacerbated if the total loss decision is a surprise. Ultimately, poor experience for our customers increasing, no doubt, their frustration and anxiety. Not really what you want when we're insurers here to fulfill their purpose, and be there at their time of need.
Laura Drabik Yeah, I think you really are spot on there, Kylie, with "It shouldn't be a surprise." Many, many years ago, I started my career working as an insurance adjuster and had to deliver the bad news of a total loss, and had people, in fact, even cry on the phone. So the sooner they know, the better you're able to handle it, and improve the customer experience. Well done. So for insurers investigating the use of artificial intelligence and machine learning on any transformation initiative, what critical piece of advice would you share with them?
Kylie Burtenshaw Immerse yourself in the customer journey. Really, deeply understand the pain points and the needs. Clearly define the change and the operating model, so you make sure whatever changes you make, you really target your strategic direction. Ultimately, as I said, make sure we're business led, make sure you let the technology underpin your business, and once you've had a solid core platform, it's time to experiment in that experience layer. And remember, it's okay to fail. Fail fast, try again. But the more tests you can have in that experience layer, targeting those customer experiences, and the pain points that our customers actually have day-to-day, the faster you will evolve as an insurer, and ultimately, meet the needs of the customers, what you just said.
Laura Drabik Sage advice. Thank you very much for your time today and for your incredible insight into becoming a digital insurer. You showed us it's not just about ideas, it's about making ideas happen.
Kylie Burtenshaw Thank you, Laura. It's been a pleasure to be with you all.