For those of you who don’t know IAG, it is one of the leading insurers in Australia, with household names such as NRMA insurance, CGU among their market facing brands. They have business operations in New Zealand, Thailand, Vietnam and Indonesia, and joint ventures in Malaysia and India. In total, they underwrite over $11 billion in annual premiums.
Being so large, well known, and successful, means IAG must continually meet the changing needs of its customers. These days meeting customer needs translates into innovation. James Orchard (JO) is IAG’s Executive General Manager for Innovation and is responsible for driving the innovation agenda across the whole group from its centralised Customer Labs function. I (TDI) was fortunate to catch up with him earlier in the year to discuss IAG’s program and the InsurTech scene in general. The following are sections from our conversation.
What’s with all this insurance “innovation”?[TDI] What do you think has caused this massive focus on innovation in insurance over the last few years? [JO] Customers are much more empowered today. They are better informed and are exposed to experiences from other industries. Often those experiences are qualitatively better than those the insurance industry provides. Consequently, customers have heightened expectations.
Additionally, the cost of technology continues to decline, so things that would have been technically too expensive to achieve a few years ago are now readily affordable.[TDI] Tell me about the establishment of Firemark Labs? [JO] We had a mandate from the business to go after real disruption. We felt the need to create a space where co-creation was possible – where we could bring in entrepreneurs, start-ups, universities and have them all work side-by-side with our people. We always wanted to keep our work grounded, so we place a sharp focus on business issues, rather than technology for technology’s sake. We have two hubs – the Firemark Labs in Singapore and the soon to be launched Firemark Labs in Sydney. Rather than being identical, they are designed to be complementary.
Singapore is more of an emerging tech hub, looking at things like Blockchain, AI and how these technologies can be applied to the problems of the business.
Sydney is an incubation facility connecting the outside with our business and enabling our collaboration partners to connect and understand our business.
Yet another Lab?[TDI] We’ve seen a number of insurers set up innovation labs and the like, what lessons have you applied in setting up Firemark Labs? [JO] We took 12 months to initially set up Firemark Labs in Singapore. There was a lot of consultation involved in the design. We met with industry players, people from outside the industry, start-ups, universities and we took away many learnings from them – both in their successes but also in their failures.
We found a key to success was the ability to deliver real change into the organization. We needed to effectively connect a Start-up into our core business. To do this, we worked out all of the organizational processes required to make it happen. We made sure this heavy lifting was completed before any announcement of Firemark Labs, so we could be successful from day 1.
Why Singapore?[TDI] What was the attraction of setting up Firemark Labs initially in Singapore? [JO] IAG has been present in Singapore for over 10 years. It’s our Asia Head Quarters and our Reinsurance hub, so it’s sort of natural for us to establish Firemark Labs there. We have a strong relationship with the MAS and the Singapore government. They have created a very favourable environment for innovation. We see many global insurers there, large tech companies and big financial services companies, all with a focus on innovation, which creates a very robust ecosystem. The Singapore government has helped by providing networking opportunities and collaborative spaces, where innovation and co-creation can take place.
In a very short time, we’ve established partnerships with education institutions and some big tech players there.
A message for the big SI’s and Tech vendors[TDI] What role do you see for traditional enterprise tech suppliers in the overall FinTech/InsurTech mix? [JO] We believe that enterprise tech suppliers will be instrumental in executing the consolidation and digital transformation of the many core systems insurers have out there. They definitely have their place in the whole innovation equation. The key is that they need to change their mind-set from long SoW’s and multi-year programs. They need to adopt business models that enable them to participate in co-creation with their clients and partners.
The role of Culture[TDI] In aligning the innovation lab with the greater insurance enterprise, what role does culture change play in making innovation successful? [JO] We know we simply can’t say “we want to be innovative” and expect it to happen. It’s about creating the culture, systems and processes to foster innovation across the organisation. We’re achieved this by embedding innovation in our ways of working, and using it as a means of delivering on our business purpose and vision.
We’re also embracing self-disruption by drawing on innovators both inside and outside the organisation. We want to build and connect with innovation ecosystems that bring together universities, entrepreneurs and businesses, along with the regulators and government, to evolve our products and services.
By taking this open approach to innovation, we’re both strengthening our internal culture and building new and improved experiences for our customers.
Measuring success[TDI] What does success look like for Firemark Labs? [JO] We have a range of metrics that we are tracking, that are both objective and subjective. For example, we track the number of new products incubated. We also track the level of customer advocacy – ensuring that the needs we are filling are real and important to customers.
Our aspiration is that we will be recognised as an innovation leader within the insurance industry; seen as the partner of choice for start-ups and universities, and an employer of choice for talented people.
The bottom line
It seems nearly every insurer has some sort of innovation / incubation strategy in a desperate attempt to maintain or gain leadership over the rest of the market. I find it refreshing that IAG has centred its program around their customers. Indeed, the formal linkages from the Firemark Labs into IAG’s core business seems to be a great way to ensure that the innovation sticks. Only time will tell if this model is a winner. In the interim, I wish James and the IAG team every success and hope their launch on the 26th of July in Sydney goes well.
By the way, for those of you interested in history, here’s the Fire Mark story, reaching back to the 1660’s and the time just after the Great Fire of London when the first fire insurance companies were established.
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The author, Andrew Dart, is an Insurance thought leader, telematics practitioner and editor of “Insurance Connected”monthly column for The Digital Insurer.