Bitesize InsurTech: Aviva Digital Garage
July 14, 2017 Greg Brown
This week we talk to Andrew Brem, Chief Digital Officer, and Serge Taborin, Group Digital Innovation Director, at the Aviva Digital Garage.
Readers of the well-known book about LEGO’s near-fatal flirtation with innovation in the early 2000s will know that one of the errors that was subsequently diagnosed was that LEGO moved too far away from its history and core competencies.
It is, therefore, significant that the only pictures hanging on the walls of Aviva’s Digital Garage are vintage posters of Aviva adverts. As Andrew Brem says, the Digital Garage is not a “panic response” but an initiative to ensure that Aviva continues to “innovate and maintain relevance” for its customers “just as we have done many times before”.
The Aviva Digital Garage was set up in 2015 as the manifestation of one of Group CEO Mark Wilson’s three strategic pillars – Digital First. His hypothesis was simple: if digital is the responsibility of business units, it remains “side of desk”. If digital is to be done well, it needs to be led by a separate team.
Wilson went looking for a garage to house the team – and Brem notes that he surprised his property department by meaning that literally. “Mark needed to make a statement about the digital intention, it couldn’t just be an office block.” And so, Aviva planted a flag in Hoxton.
Why is Digital so critical to Aviva?
Brem outlines three reasons.
The first is defensive. “If other entities become better at pricing risk than we are, then we’re in trouble”, notes Brem. He describes a scenario where entities which are not currently insurers enter the market and are able to outperform insurers because their data is more predictive. (This is similar to the data challenge at the heart of Euler Hermes Digital Agency.)
Second, the Digital Garage is tasked with thinking more broadly about risks and uncertainties that people face. Brem notes that insurance companies are siloed and normally think in product verticals. The Garage team is thinking about the full spectrum of risk – not only how to do existing products better but also how to help customers manage a broader set of uncertainties.
The final reason is about distribution and customer engagement. “There are opportunities for companies like ours to have a much deeper relationship with customers”, notes Brem. Digital is Aviva’s tool to become a truly composite insurer at the individual customer level – in other words deliberately building multi-product, life and non-life, relationships with each customer.
What is Aviva Digital Garage?
The Aviva Digital Garage is home to three teams: UK Digital, the Global Digital Factory and Innovation.
UK Digital is Aviva’s direct-to-consumer business and focuses on digitising the customer experience for today’s customers. As Brem says “it’s incredibly important that the Garage is not just an ideas lab; it houses profitable digital trading businesses with millions of customers”. A key task in the first year was to connect the pipework of disparate systems so that customers can see and use all their products from one portal – MyAviva – and allows Aviva to engage with its customers digitally.
Global Digital Factory
The Garage houses teams with capabilities that are deployed to Aviva’s digital businesses around the world, e.g., Engineering, Digital Product & Design, Customer Analytics and Digital Marketing. The data science team is headed by Orlando Machado, who was recently interviewed for the Oxbow Partners blog. Part of his remit is to reward customers for the breadth and depth of their Aviva relationship. This is creating composite relationships “like never before” according to Brem.
Other team members are a mix of people with an Aviva, financial services and non-financial services background. The key according to Brem is the “mix”, which creates the cultural change. Asked how Aviva managed to recruit ‘outside’ people into an industry perceived as decidedly non-digital, he concedes that “many hires didn’t have insurance at the top of their list of target industries”, but that the Aviva is now sufficiently established as a digital leader that it can attract “top class talent”.
Whilst the UK Digital team looks at digitising the here and now, the Innovation team focuses on identifying emerging trends and launching new concepts, even if the pay-off may be years into the future. There are three basic models: building own propositions, partnering with startups and investing. Partnering is done either direct or through digital accelerators , with examples including Lastminute.com founder Brent Hoberman’s Founders Factory in London and Plug&Play in Silicon Valley.
Serge Taborin, head of the Innovation Team, identifies a number of early successes in his team. For example, the company has piloted an implementation of blockchain technology in partnership with Luther Systems, a Founders Factory startup and recently launched a quote-bot on Facebook Messenger under the Quote Me Happy brand, one of several Artificial Intelligence projects underway.
As Taborin notes, “having successfully delivered several pilots we are now building the capability to support a much larger and broader range of business models and propositions. This is a challenge given the number of potential opportunities in different areas of the business and, at times, bespoke nature of solutions.
To streamline the process, the company is focusing on a number of innovation themes, which helps it develop deep knowledge of emerging ecosystems.
In parallel to building capability, the next challenge for the Innovation team is similar to that identified by most of our clients – working out how to put things back into the core business and make them scale.
The Oxbow Partners view
Aviva has made genuine progress with its digitalisation agenda in the UK – pulling together all customer product information into one place is no mean feat. This will surely give the company a real advantage as it builds out its composite customer proposition in the next phase of its strategy.
The interesting question to follow will be exactly what a composite customer relationship looks like in practice.
Traditionally, insurance companies have built their strategies around cross-selling and measured success by the number of products held. However, as Oxbow Partners has demonstrated in previous project work (for the avoidance of doubt, not with Aviva), there is very little historical evidence of customers buying all their insurance products from one insurer. Our analysis showed that even where customers held more than one product with our client, this was normally accidental. This is almost certain to be more true in Britain than for our European client because life and non-life distribution is so separate in the UK.
So, we think that a composite customer relationship is likely to be more subtle in the future. The holy grail might not be cross-selling but using aggregated customer data to innovate the proposition or pricing in ways the customer does not necessarily see. This will require detailed analysis of the customer – something that Aviva is well set up to do with its new platform.