GNP: Innovation strategies for the new world of insurance
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GNP: Innovation strategies for the new world of insurance

Kenny MacIver — March 2019

Mexico’s GNP has set a goal of leading the insurance industry in innovation. Enrique Ibarra, its director of systems, describes the journey, the challenges and the early results of a digital transformation.

• To read a Spanish version of this article, click here

Businesses across every sector are positioning themselves to take advantage of the opportunities presented by wave after wave of digital innovation — while also confronting disruptive threats. But few sectors are bracing themselves for as much change as the insurance industry.

Driverless vehicles, wearable health monitors and IoT-enabled homes are just three of the many applications that will bring dramatic changes to the traditional business of insurance, sounding the death knell for some activities but also fostering whole new markets and product areas.

The scale and scope of the industry-wide transformation is not lost on one of Mexico’s largest insurance companies, Grupo Nacional Provincial (GNP). The company, where annual sales hit MXN$60.3 billion ($3.1bn) in 2018, has a stated goal to be “leading insurers in innovation” by 2022. And driving the technology-enabling strategy behind that ambition is Enrique Ibarra, GNP’s director of systems.
New mindset

Ibarra is relatively new to the insurance sector, having joined GNP in 2015 after a career in telecoms and financial services IT.  In contrast to those dynamic and fast-moving industries, he says, the insurance industry has traditionally been conservative and a late adopter of new technologies. However, the digital forces that are already reshaping parts of the insurance sector are forcing a change in attitude towards embracing advanced technologies. And Ibarra is seeing that shift firsthand.

“The mindset of the company has changed sharply in the past three years,” he says. “In response to new opportunities and potential disruption, the board of directors wants to spark an environment that promotes how we can innovate in our space. Part of the new philosophy is understanding just how well new technology can be leveraged to create a better company.”

The agenda for change is coming right from the top of the organization. “The board is fully conscious that technology is going to be the enabler for what we want to achieve with our Vision 2022 [plan], which is to provide the kind of excellent service our customers expect, increase our market share and be recognized as an innovative brand in the market. All that requires rethinking intelligently a lot of aspects of the business and understanding what technology can contribute to that,” says Ibarra.

The appreciation that the IT organization can deliver such value has been hard won through the delivery of a growing number of cutting-edge projects that have provided tangible benefits to specific areas of the business, says Ibarra. Those have ranged from the transformation of internal processes to applications that differentiate its services in the market.
Renewed faith in tech

For many in GNP’s senior management that has also required a leap of faith. As at many organizations, the failure of major IT projects in the past had undermined confidence in the positive impact of technology. When Ibarra arrived at GNP, one particularly large investment designed to transform the company’s operational efficiency had failed to yield the expected results. “That was very painful for the company and created a mindset that technology was ‘a necessary evil’ rather than an enabler,” he says.

But the experience of the past few years has begun to change such a sentiment. “We have regained much of the company’s trust and the main stakeholders are happy with the results,” he says. “Consequently, we have earned the right to ask for investment money.”

Part of that investment has been an aggressive move of applications and processes to the cloud and the application of IT to streamline processes. “We have incorporated what we think is best of breed in terms of cloud technologies and for the automation of all of our workflows where Fujitsu’s RunMyProcess has been used extensively.”

“GNP”

Ibarra points to a favourite example of process optimization and enhanced customer experience in its car insurance business. “We now give our end customers an omnichannel experience through state-of-the-art mobile apps and a web portal. That means that customers can start a claim, relating to something like a car accident, by just opening an app on their phone and pressing a red button. We immediately know where they are, can reach out to them immediately and send an adjuster. Alternatively, if the accident isn’t that serious then they can just shoot a couple of pictures, send them through the app and they’re done.”

Historically, when a customer has made a car insurance claim, dispatchers would manually figure out which of the company’s adjusters was closest and might be sent to assess the claim. That deployment of resources has now been taken over by an algorithm that automatically assigns an adjuster based on their availability, real-time location and local traffic information. Moreover, the system automatically informs the customer about their assigned adjuster and then, through an Uber-like interface, shows the adjuster’s progress towards the site of the accident.

Such applications are reputation-enhancing — both externally and internally. “When the business saw how the IT organization was not only able to propose a new way of doing this but that was also able to build it right the first time we switched it on, that was an important point. Examples like that have basically made the company regain faith and excitement in technology,” says Ibarra.

“These new technology-enablers can relaunch the business’s value proposition, allowing it to create an opportunity that hasn’t existed in the market before.”

But the application of new technology is not just about improving the way the company operates or providing a better customer experience. It is about responding to emerging threats and opportunities in insurance.

“Technologies are enabling many new models,” says Ibarra, citing IoT as just one. “The potential use cases for IoT are extremely interesting for auto, medical and property insurance. There are lots of different services and models that can be enabled with IoT that would be unthinkable without the technology. In auto insurance, for example, we can now know exactly how well individual drivers drive.”

Such knowledge will allow GNP to be much more precise with its risk-assessment models and to reflect that in insurance premiums. Ibarra regards medical insurance as one of the most exciting fields in terms of potential change. “Now, based on [precise] evidence, you can know the level of risk. You can know if a certain population set has a specific risk and if that risk is growing or deteriorating. You can lower the risk, lower the cost of claims and, essentially, improve people’s quality of life.”

There will also be great opportunities in property insurance with sensors able to detect events such as a pipe bursting or a burglary and alert the insurance company or authorities so their impact can be minimized. “So all of these enablers, if you know how to assemble and use them, can basically relaunch your services and your value proposition, allowing you to create an opportunity that hasn’t existed in the market before,” Ibarra says.
Diving into the data lake

And IoT is just one enabler. “The barriers of entry today for adopting technologies such as machine learning and natural language processing (NLP) are now extremely low. With all the major vendors offering access to cloud-based NLP via APIs, we can create an application in as little as a week,” says Ibarra, who has a PhD in computer-aided engineering and robotics, as well as masters degree, from Carnegie Mellon University.

GNP has, however, seen even greater potential in data analytics. “The company produces a ton of information but up until a few years ago it didn’t even have enough space to store that, let alone processing it,” says Ibarra.

The result was an ambitious project to build the GNP Data Lake. “Since getting rid of all the limitations of space and processing power we’ve been working diligently with the business to make sense of all the information we have — assembling it, cleaning it, ordering it, so we now have more than 15 years of historical operational data to work with. And that’s a huge asset,” he says.

“The challenge is now turning that asset into actionable knowledge that can enhance the company’s operations and deliver a tangible competitive advantage,” he says. In the area of medical insurance, for instance, knowledge about how customers subscribe can allow GNP to rethink its processes and customer acquisition. “Analytics is definitely one of the fields where we want to excel. We have the raw material which is good quality data; our aim now is to encourage the business to change the way that it works so it leverages that data.”

“GNP”
Overcoming challenges

Such ambitions are not without their challenges. “The challenges are many and varied but the most important is getting access to the right talent,” says Ibarra. “To make this a reality you need to have great people who have experience in these new types of technologies. For example, we’re all very excited about the potential uses of machine learning for changing some of our processes and leveraging the data we have. But there are simply not enough people in the market to start writing code and running all the projects that we would like to take on.”

Another major challenge is to ensure that the business understands and is receptive to some of the possibilities that new technologies bring. “The business has not been used to the IT organization proposing things that are actually disruptive or innovative within the business,” he says. “When you have people that have been doing the same task, the same way for the last 20 years and you propose innovation it’s often hard for them. You can explain that we have a natural language processing box as part of our cloud-based systems and ask what kind of NLP services they would like to provide customers with — and many really don’t know where to start.” So it’s up to the IT organization to be torchbearers for such innovations, he says.
Hard thinking

But Ibarra is realistic about the speed of take up of new digitally driven processes and services  — whether for use by the business or the customer. There is always going to be an element of persuasion to encourage mass adoption, which is different from the situations he encountered in telecoms and banking.

“One of the problems with insurance is that we sell products which our customers buy and hope they never have to use: nobody buys medical insurance with the hope that in a few months they will have appendicitis and get to use a hospital,” says Ibarra. “With a bank people check their balance, transfer money and make payments, so they are constantly interacting with the product. When assembling a digital value proposition for an insurance customer — even a functionally rich, compelling offering that gets customers involved in your digital experience — you have to think really hard as they hope to never actually interact with your product.”
Trusted relationships

The scale and speed of digitally driven change underway — and the paucity of suitable talent — means many IT organizations are increasingly looking to trusted technology suppliers as sources of expertise.

“We tend to choose technology vendors that can truly become partners,” says Ibarra. “When you need to build solutions you really want to have a company that can help you become successful and avoid mistakes. And if there’s any sort of problem, you want to make sure that they will work with you to find a solution.”

That becomes even more important when the IT is being bought as a service. “That has changed the relationship with suppliers. If you want to use the product in a certain way, then you expect the supplier to understand your needs and help devise a solution. So rather than a technology partner being a provider of boxes or software for us to do whatever we needed to do, we are moving into a type of co-creation relationship with them.”

Two years into its transformational journey, Ibarra feels the progress has been good and the results solid and tangible.  “That has built confidence in the transformation journey. We have demonstrated to the business that using the right, advanced technologies can provide real benefits to the company. And that’s satisfying.”

First published March 2019
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