Innovation and digital transformation in life and health insurance with Lisa Balboa

00:00:00: Replay by Hannover Re, expert insights on life and health insurance.

00:00:16: Which areas of innovation hold the most promise for the future of life and health insurance?

00:00:21: How to cut through the hype and spot the true value for your product portfolio and what

00:00:26: successful initiatives look like?

00:00:28: Welcome to Replay by Hannover Re.

00:00:30: I'm your host Susanne Loomis and today we'll talk to Lisa Balboa about innovation and digital

00:00:35: transformation in the life and health insurance industry.

00:00:41: This podcast is for general information only, no professional advice and is subject to change.

00:00:46: You can find the full disclaimer in our show notes.

00:00:48: Welcome to our podcast Lisa.

00:00:50: Thanks Susanne, it's great to be here.

00:00:52: Lisa is head of Hannover Re's London based life and health digital business accelerator

00:00:57: and not only does she have a personal passion for adopting health technologies, Lisa has

00:01:01: also been at the forefront of thought leadership on this topic from an insurance perspective

00:01:06: for the past 10 years.

00:01:08: So Lisa, tell us what does a head of life and health digital business accelerator do?

00:01:14: Can you give us a little more insight into what your role entails?

00:01:17: Great question.

00:01:18: So with so much exciting progress in technology and medical science Susanne, in my role I

00:01:23: dive deeper into this to identify those innovations that have the highest potential to positively

00:01:29: transform life and health insurance.

00:01:32: And what does innovation mean to you?

00:01:34: To me innovation is all about solving problems in unique and novel ways or put simply we want

00:01:40: something that's both new and useful.

00:01:42: So let's take an example.

00:01:44: Last time you and I caught up we were playing shuffleboard with the teams and it's a fun

00:01:48: game that you and I were doing just sliding a small disc down the table into the scoring

00:01:53: zone.

00:01:54: Super simple, right?

00:01:55: Yeah.

00:01:56: So how could we innovate that?

00:01:57: Well, there could be a couple of ways there.

00:01:59: For example, we could have put a disco ball right above the table.

00:02:02: That could be new, could be shiny, but actually not so useful.

00:02:06: Maybe the lights would have dazzled you and you wouldn't have been able to see down the

00:02:10: table there.

00:02:11: But let's think about a way that it could be usefully innovated.

00:02:14: So we could have added a digital scoring.

00:02:16: So when we got to the end of the round, we wouldn't have had to spend time counting up

00:02:20: who got what score.

00:02:21: So that would be something that is both new and useful.

00:02:25: So real value adding innovation.

00:02:28: Got it.

00:02:29: Got it.

00:02:30: Okay.

00:02:31: So innovation should lead to products or services that improve the overall experience of the

00:02:34: parties involved.

00:02:36: And why is this particularly important to the life and health insurance industry?

00:02:40: Well, just like the shuffleboard, the origins of life insurance date back hundreds of years.

00:02:46: And the core hasn't changed so much.

00:02:48: It's still a product that pays out a sum of money on death to a person's family.

00:02:53: Even so, innovation is really important here to identify the pain points of the insurers

00:02:58: and the customers.

00:02:59: So let's think about the latest technologies.

00:03:01: We could enhance distribution.

00:03:03: We could process claims more efficiently as well.

00:03:06: So ultimately, innovation helps us to close that protection gap.

00:03:10: Ensuring life insurance remains a relevant product that reaches the people who need it.

00:03:15: And how do you identify that?

00:03:17: Are there specific key factors or indicators that you look for when assessing their potential

00:03:21: for success?

00:03:22: Absolutely.

00:03:23: So whether we're innovating in-house or whether we're partnering up, for example, with insure

00:03:29: tax that complement our core capabilities, our key objective is always to create value

00:03:35: for insurers and their customers.

00:03:37: So we horizon scan for the latest trends and we have a well-structured thorough assessment

00:03:42: process at the core of what we do.

00:03:44: So we need to explore all aspects from market desirability through to operational feasibility

00:03:50: and financial viability.

00:03:52: It's all about partnering up to really understand the core of what the insure tech business

00:03:56: does and then look into, for example, the stability of the company and dive into those

00:04:01: use cases where they've already proven success so we can scale up those cases that add the

00:04:06: most value to insurers and their customers.

00:04:08: Okay.

00:04:09: Well, that sounds pretty straightforward, but I'm sure it's not that simple.

00:04:13: Can you unpack that a little bit for us?

00:04:16: You're so right.

00:04:17: Innovation isn't such a simple task and there's often a lot of hype when it comes to the

00:04:21: latest trends.

00:04:23: So if you think back a couple of years ago, Metaverse was one of the biggest hypes and

00:04:28: we looked into it to see, is there any value for life and health insurers?

00:04:32: Is it going to fundamentally disrupt what we do?

00:04:35: And what we concluded was that beyond opening up perhaps a new distribution route, we don't

00:04:41: see a significant transformative potential for the Metaverse when it comes to life and

00:04:46: health insurance.

00:04:47: But if you fast forward to today, AI is now the biggest hype, especially GenAI is the

00:04:52: latest hot topic.

00:04:54: So having assessed this in detail, we do see potential for AI to transform not just distribution

00:05:00: but also operational processes like underwriting and claims.

00:05:04: So now we've identified that potential.

00:05:07: We're focused on designing and implementing projects in partnership with our insurance

00:05:11: clients to drive forward this transformation.

00:05:14: So instead of jumping on the hot new thing, you see past the hype and the glitz to make

00:05:19: sure that there is a value add to the insurance overall offering.

00:05:23: Lisa, I'd like to go back to the early stages of your career that led you here.

00:05:28: You're an actuary and you didn't study mathematics at university.

00:05:33: Is this rather unusual?

00:05:35: You're right.

00:05:36: I study pure mathematics at university.

00:05:39: But despite this, I've always loved maths and there's always been some element of statistics

00:05:43: or quantitative methods shaping what I do, both in my academic studies in life sciences

00:05:49: and business analytics.

00:05:51: And now day in and day out in my work as an actuary in a non-traditional actuarial role.

00:05:56: Tell us a little bit more about your background and what experiences or influences have shaped

00:06:01: your approach to innovation in our industry.

00:06:05: So I started my career in pensions, which was highly valuable to learn robust actuarial

00:06:09: principles.

00:06:11: And onwards from there, I worked for life and health insurance primary carriers as a pricing

00:06:15: actuary.

00:06:16: So that helped me to get close to lots of product innovations and see firsthand how new products

00:06:21: and propositions can transform the lives of customers at the same time as creating value

00:06:26: for the insurer themselves.

00:06:29: So then when I joined Hannover Re just over four years ago, I was working in our UK business

00:06:33: development team as an actuarial manager.

00:06:36: So I got lots of exposure to the pain points and daily challenges faced by our insurance

00:06:40: clients.

00:06:42: And now leading our life and health digital business accelerator, I can draw on what

00:06:46: I've learned from my academic studies and my past career experiences in my approach

00:06:51: to problem solving to help create valuable new insurance solutions.

00:06:55: What do you get most excited about in your role?

00:06:58: Oh, that's a tough question because there's lots I love about my role.

00:07:02: I think what I love most is collaborating with my team members and our colleagues across

00:07:06: the globe at Hannover Re to create those solutions that can help insurers and customers to better

00:07:11: manage and be protected against risks.

00:07:14: And really every day is a new challenge.

00:07:17: I find it so interesting to get to know more about the life and health insurance markets

00:07:21: around the globe.

00:07:22: So each market I visit is different.

00:07:25: Every insurer within that market has its own philosophies, its own ways of working.

00:07:30: So just to take a topic I'm particularly excited about, it's the progress we've been seeing

00:07:35: in digital health data over the past few years.

00:07:38: This has evolved drastically since a decade ago when I first started looking into the

00:07:41: topic and I see lots of potential here.

00:07:44: Yeah, what changed?

00:07:45: Yeah, if you think back then maybe 10 years ago, we were quite limited in terms of the

00:07:51: digital health data available for us.

00:07:53: I don't know if you had one of those first wearable trackers.

00:07:55: Oh, I did.

00:07:56: Yeah, those step trackers and you would try to hit those 10,000 every day.

00:08:00: Yeah, I remember.

00:08:02: Yeah, exactly right.

00:08:03: So it was really quite limited.

00:08:04: We could track steps, but not much else, right?

00:08:08: And not that many people had them.

00:08:09: So maybe you and I were early adopters, Susanna, but if you looked around, not many people

00:08:14: back then had wearable trackers.

00:08:16: But of course nowadays we have much more advanced ways to measure health digitally through wearables

00:08:23: and even through simple smartphone cameras and other health apps as well.

00:08:29: And we're also seeing clinical medical data becoming available in a digital format through

00:08:33: things like electronic health records in certain markets.

00:08:38: So I'm particularly excited about how we can use this health data in the insurance context.

00:08:43: So all the way from reducing the amount of medical testing, we might need a point of

00:08:48: underwriting through to helping customers live healthier and longer and supporting claimants

00:08:52: to manage their claim and get back to work sooner, for example, on a disability insurance

00:08:57: product.

00:08:58: And help us understand how exactly can these health insights create value?

00:09:03: Do you have an example that you can share?

00:09:05: Absolutely.

00:09:06: We did an internal staff pilot with a provider to look at the value of medical data for insurers.

00:09:12: So the pilot combined health related lifestyle data, things like physical activity, heart

00:09:17: rate, also nutrition, together with blood test data and also predictive genetic data.

00:09:23: And when you say staff pilot, did you participate as well?

00:09:26: I did and I found it really valuable, Susanna.

00:09:29: So my results showed that I had a higher than average genetic risk for cardiovascular disease.

00:09:36: So it was actually only 10% elevated.

00:09:38: So I wasn't too panicked initially.

00:09:39: It's not too high.

00:09:41: But then when I got my blood test results back in the app, I saw my cholesterol was elevated

00:09:46: as well.

00:09:47: So that was a bit more worrying.

00:09:49: I have a higher genetic risk of cardiovascular disease and also higher cholesterol.

00:09:55: So for sure that gave me the encouragement I needed to make a few small lifestyle changes.

00:10:00: So a reduced amount of chocolate and cheese I eat every day, not so fun, but yet important

00:10:06: to do these things.

00:10:08: And after four months, we had another blood test and my cholesterol was back within the

00:10:11: normal range.

00:10:12: So it did really work being guided by this health data insights that I was getting to

00:10:18: make that lifestyle change.

00:10:20: And what's quite nice is this sort of proposition can already be made available to life and health

00:10:25: insurers.

00:10:26: It's already starting to be in the marketplace today.

00:10:29: And I think what's quite critical is often to offer these predictive genetic tests after

00:10:34: the policy issue.

00:10:35: So, commit clear to customers that no data is going to be used.

00:10:38: used for underwriting or pricing, it's really about supporting people to improve their health

00:10:43: in the sorts of ways that I did as a pilot participant.

00:10:46: Right.

00:10:47: In other words, avoiding discrimination based on genetics.

00:10:50: Precisely.

00:10:51: So in many markets, it's prohibited to use genetics for underwriting and pricing.

00:10:57: But beyond underwriting and pricing, insurance can still provide these sorts of services

00:11:01: as a core part of their proposition.

00:11:04: So it can help them to improve retention rates by engaging customers regularly on the

00:11:08: topic of protecting their health, which fundamentally is a reason that people take out insurance

00:11:13: to protect against ill health.

00:11:14: So there's a great alignment in this topic, not just for cardiovascular disease, but also

00:11:19: for other diseases like cancer and even mental ill health.

00:11:23: Okay.

00:11:24: Well, that's great insight.

00:11:25: Also, adding your personal experience to your professional experience is the perfect setup

00:11:30: to look for promising intro techs, I feel.

00:11:33: So I imagine that personally testing every single product might be a bit tricky considering

00:11:38: they're only 24 hours in a day.

00:11:40: So how do you ensure that a solution creates meaningful change when embarking on an innovation

00:11:47: project?

00:11:48: Yeah, we do need to be very focused in what we do.

00:11:51: So for all the projects that we undertake, we make sure to set predefined measures of

00:11:55: success up front.

00:11:57: So this avoids hindsight bias when looking back at whether or not the project has been

00:12:02: successful.

00:12:03: Yeah.

00:12:04: And we've got quite an agile approach.

00:12:05: So we will deploy the project within certain limits, maybe a few months or a few thousand

00:12:10: customers, and then we'll measure that value and we'll only then put resources into scaling

00:12:15: up the projects where those predefined success criteria has been met.

00:12:20: I mean, ultimately, it's so easy to fall in love with the solution rather than going back

00:12:25: to the problem and seeing how we actually created something to solve that.

00:12:30: So this value-driven approach really makes sure we always put front and center, the insurer

00:12:35: or the customer pain point that we're trying to solve, and then measure back to how we've

00:12:39: added value to the insurer and their customers.

00:12:42: And is there an element of competitiveness between insuretex and insurers?

00:12:47: Not necessarily.

00:12:49: So there are many insuretex that focus on providing services to traditional insurers rather than

00:12:55: competing against them as what we call full-stack carriers.

00:12:59: So these traditional insurers can partner up with insuretex to complement their core

00:13:03: capabilities.

00:13:05: So it can be quite helpful in terms of transforming their business models through partnerships

00:13:10: rather than needing to build in-house in an area where a traditional insurer may lack deep

00:13:14: expertise.

00:13:15: Yeah, good point.

00:13:17: Can you tell us more about what a successful initiative would look like?

00:13:22: Sure.

00:13:23: So let's take an emerging example.

00:13:24: We're seeing innovation in AI being channeled into improving efficiencies.

00:13:29: And the key is to do that without sacrificing the underwriting quality of the business.

00:13:35: So for example, in the underwriting space, AI is being deployed to identify and fast-track

00:13:40: decisions on straightforward cases.

00:13:43: And that then frees up time for the underwriters to dive deeper into the complex cases.

00:13:48: And it's valuable because ultimately we're living in an era where we have more data and

00:13:51: information than ever before.

00:13:53: So you think maybe just how much information you've accessed today just through, for example,

00:13:58: your smartphone, your laptop.

00:13:59: There's so much information all around us.

00:14:03: So being able to use AI to help process this information in a robust and efficient way

00:14:08: can then allow the expert underwriters or the expert claims assessors to identify and

00:14:13: spend time on those more complex cases where they can add true value.

00:14:16: Yeah, that's really interesting.

00:14:18: And where else in the value chain are you seeing AI being applied?

00:14:23: So we're also seeing a similar sort of trend on the distribution side with AI enabling

00:14:28: a digital first approach before then handing that customer off to an agent.

00:14:33: So for example, generative AI could be used to tailor communications to real micro segments

00:14:39: of customers and then track which ones appeal and scale up those messages that are most

00:14:44: appealing to that particular subgroup.

00:14:47: So it's all about using analytics to then identify those customers with high intent

00:14:52: to buy and smart match those agents that are likely to be really effective at building

00:14:56: a rapport and closing the sale with that particular customer and meeting the needs of that customer.

00:15:02: Yeah, there's a lot going on in this area.

00:15:04: And I want to add here to stay up to date.

00:15:07: Our listeners can follow Hannover Re on LinkedIn, get in touch with their local Hannover Re contacts

00:15:13: or reach out to you directly, Lisa on LinkedIn, for example.

00:15:16: And you were also recently interviewed for our recent perspectives newsletter, which I

00:15:20: will link to in the show notes.

00:15:22: Going back to the topic, what are some common barriers to innovation that you've encountered

00:15:28: in the industry?

00:15:30: So I think the biggest challenge goes back to what we were mentioning early on, which

00:15:34: is making sure the solution is not just new and novel, so not just a disco bull on a shuffle

00:15:39: table that's going to dazzle people, but ultimately something that's truly useful and

00:15:43: value adding to all the stakeholders involved in the innovation value chain, including the

00:15:49: customers, the insurers, and any insure tech partners as well.

00:15:53: So whether the solution or the process being innovated as customer facing, making sure to

00:15:59: really spend enough time to understand what are those customer needs and pain points before

00:16:05: designing the solution.

00:16:06: That's pretty critical.

00:16:08: And then once that solution has been designed, really taking time to test and understand the

00:16:12: user experience around adoption.

00:16:14: Yeah.

00:16:15: Ultimately, we could have the best solution in the world, but if the customer isn't adopting

00:16:19: that solution, then even the theoretically best commercial business model is never going

00:16:24: to be realized in terms of adding value to that customer.

00:16:28: Right.

00:16:29: And how do you strike a balance between the different customer needs and preferences?

00:16:34: So one thing that's really important is that customers need to have trust in what we're

00:16:38: doing as an insurance industry.

00:16:41: So taking time to communicate to customers about new solutions and the technology behind

00:16:46: it, that's really key.

00:16:48: So that said, some people will always be early adopters.

00:16:50: So you and I, we were very early adopters of the wearable technology.

00:16:55: There'll be some people that will prefer to stick with the more tried and tested methods

00:16:59: for their day to day to manage, for example, their exercise routine.

00:17:03: But ultimately, it's all about identifying which of those customer groups that are going

00:17:07: to be the early adopters and seek feedback from them, really honest feedback to keep improving

00:17:12: and then keep being able to roll out and scale up to more customers.

00:17:16: So it's that culture of continuous improvement, whether it's an internal innovation on processes

00:17:21: or an innovation for the end customer.

00:17:24: That culture of measuring success, getting feedback, acting on it and improving will

00:17:28: maximize the chance that innovation is going to be successful.

00:17:32: Okay.

00:17:33: And I'm curious, if you personally could invent a useful and helpful product or service, what

00:17:40: would that look like?

00:17:41: Yeah, on a personal level, I think it could be fun and helpful to create an app where

00:17:47: people just take a photograph of their food and get reliable information on the nutritional

00:17:52: quality.

00:17:53: Oh, I'd like that.

00:17:54: Yeah, that would be useful.

00:17:55: It could be really useful, maybe even allergen advice, if it could be accurate as well.

00:17:59: Yes.

00:18:00: Yes.

00:18:01: You know, we're dreaming big here.

00:18:02: And actually, we are starting to see some of the companies entering this space in terms

00:18:05: of being able to use the latest AI advances to make this sort of thing a reality as well.

00:18:11: Yeah.

00:18:12: What do you think are the most promising areas for insurance innovation currently?

00:18:17: Which areas have the most potential?

00:18:20: So I already mentioned around the exciting potentials of technology to drive operational

00:18:25: and efficiency improvements.

00:18:27: I think there's also a lot of exciting potential in medical science.

00:18:30: Yeah.

00:18:31: So, medical precision medicine is opening up more personalized treatments for conditions

00:18:36: such as cancer.

00:18:37: So product innovations that can provide people with access to the best possible treatment

00:18:44: available for them, that's a really exciting opportunity.

00:18:47: We're starting to see gaining traction in the industry.

00:18:51: And what do you expect from digital transformation for the life and health industry in the near

00:18:55: future?

00:18:56: I expect we'll go beyond the hype of AI to tangibly embed this into life and health

00:19:01: insurance in a way that delivers value both for insurance and their customers.

00:19:06: So things like more personalized customer experiences and smoother processes, they're

00:19:11: quite useful guiding North stars we could think about here.

00:19:15: At the end of the day, though, life and health insurance, in my view, it's still a people

00:19:18: industry.

00:19:19: So I expect we'll see that blend of technology into processes in a way that supports people

00:19:24: to be more efficient and effective in their work in areas like distribution, underwriting,

00:19:30: pricing, and also claims management as well.

00:19:33: And what's your advice for primary insurance to successfully position themselves?

00:19:39: So my advice is to think through who is your target customer and how do you want to stand

00:19:44: out to appeal to them?

00:19:45: There's such a rapid pace of technology and medical change.

00:19:49: So just fall in love with those problems that you're trying to solve with your customers

00:19:53: and spend a lot of time designing, testing, and then implementing the solutions rather

00:19:58: than going deep on one specific technology or solution too early on and then finding

00:20:03: it hasn't delivered the customer value that you hoped for.

00:20:07: Thank you, Lisa.

00:20:08: That was very insightful.

00:20:10: Thanks, Susanna.

00:20:11: So today we spoke about the importance of innovation in the life and health insurance

00:20:15: industry.

00:20:16: We defined innovation as not just being new, but also useful.

00:20:21: And we talked about promising developments that have the potential to enhance the customer

00:20:25: experience.

00:20:27: Thank you for listening to Replay by Hannover Re.

00:20:30: We hope you found this conversation helpful.

00:20:32: And if you would like to learn more about innovation and digital transformation in life

00:20:36: and health, check out Lisa's interview as part of our recent Perspectives newsletter

00:20:40: at LinkedIn the Show Notes.

00:20:42: Also don't forget to subscribe for more episodes, leave us a review if you like what you've

00:20:46: heard, and stay connected with Hannover Re on LinkedIn.

00:20:49: Until next time.

00:20:50: the thoughts, ideas, documents and other content discussed or shared in this podcast

00:21:06: are not intended to constitute any professional advice.

00:21:08: Hannover Re and the participants are not liable for any damages resulting from the usage of

00:21:13: the content of this podcast.

00:21:14: For further information, please see the show notes.

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