Daniel Huddart, CTO of Homeprotect – a home insurance specialist and part of the Avantia Group – discusses how insurance companies can embrace technology to provide bespoke solutions for customers.
Technology has become a vital part of every business, and in our industry it’s no different. Advances in technology move quickly and have the potential to significantly change the insurance industry, which has historically been highly traditional. The United Kingdom is one of the largest insurance markets in the world and customers are demanding higher levels of service, along with the desire to combine digital technologies with traditional goods. Due to these competitive market conditions, changing customer expectations, and cost reduction goals, as an industry we’ve become highly reliant on technology to revolutionise operations.
Consequently, insurance technology has a pivotal role in transforming product development. In 2020, the global insurtech market was valued at $9,415.28 million, and it is projected to reach $158,994.52 million by 2030. Insurtech not only increases efficiency and cost-effectiveness but also empowers insurance firms to provide personalised offerings and tailor-made risk assessments based on real-time data.
Embracing technology enables us to find and build solutions for problems that help to meet specific needs and requirements – off-the-shelf solutions may not completely address the specific pain points or offer the desired functionalities.
Building your own solutions
At Avantia, a considerable number of our teams possess strong coding skills, a result of both their inherent abilities and a deliberate recruitment strategy.
We look for people who have a vision but who also want to be hands on to make it happen. Our teams trial, buy and develop their own tools, whether they be off-the-shelf, open source or internally developed. This culture naturally attracts individuals who excel in coding or are keen to learn. Though we do seek candidates with specific skills and thought processes, the open-technology approach tends to appeal to inquisitive individuals who have an entrepreneurial spirit.
In a market where enterprise tools are consolidating into very similar offerings, insurers should consider developing in-house technology if the team is strong enough to able to differentiate its service, product or operating processes from the market norms.
This also fosters innovation within teams and enables them to adapt quickly to changing market trends. Having full control over the technology means the business naturally transitions to lean, purposeful software. This way of operating can be very effective in driving a competitive edge in an industry that increasingly relies on technology for its success.
Building Cortex
We operate in a way that allows teams to decide what the right tools are to support their goals. Our flagship platform called Cortex is a great example of this in action – it was written by the teams to make intelligent real time decisions using live data from any part of our business.
Cortex operates Homeprotect’s retail pricing, risk modelling and product underwriting decisions, but is evolving to make decisions in digital marketing, customer interactions and claims where the same data and modelling techniques have proven to be effective.
The concepts behind Cortex came from within our pricing development team – they wanted very specific capabilities that they could not find on the enterprise market. After several enterprise trials they opted to build their own.
The team behind Cortex are a mixture of developers, data scientists and pricing specialists. When hiring, we deliberately seek out talent from non-insurance backgrounds as a way to bring diverse ideas and execution experience. It was really interesting how those from a non-insurance background immediately got frustrated when trying off-the-shelf pricing tools, insisting that there were better and more sophisticated solutions.
Cortex and the tailor-made solutions it provides is the result of years of collaboration from within our delivery teams, with each step being designed by specialists and developers working side by side on a common goal. This process has become our culture and has emerged as a major attraction for new talent who aspire to work with an innovative, mouldable platform instead of traditional insurance systems and IT projects.
Since data scientists favour using languages like Python, which Cortex supports in production, this strategy is also grounded in transferrable skills. Bright minds want to develop their skills and career experience without locking themselves down to one industry, and our open technology strategy means they can avoid industry lock-in. One interesting example of this has been how Cortex’s
composition has changed as the team watched the market evolve – some components which were once written internally are now served by open source components, and vice versa.
Innovating the insurance industry
Culturally we operate in a decentralised way, where the coding community is deeply entrenched in each department. By sitting and working together every day, this cross-departmental setup creates a natural learning process. For example, developers understand pricing & marketing, and product managers acquire coding skills and understand IT concepts like refactoring and how to layer functionality up from a minimal viable product. Prioritisation is far easier when everyone moves in the same direction and has a better appreciation of each other’s roles.
In the traditional insurance industry, business and IT teams work in a siloed way and often struggle to communicate or understand each other’s perspective. Every decision is seen as a negotiation and quite often both sides feel they’ve had to unfairly compromise or been let down by the other. No matter how smart and motivated your people are, they are unlikely to reach a common loyalty and understanding of obligations, constraints and possibilities unless they work in the same team with the same goal, every day of the year.
Additionally, it creates a dynamic work environment where priorities can shift quickly. A team’s ability to quickly adapt to new difficulties is supported by hiring workers with a variety of skill sets. When team members learn to code and understand its practical implications, they find ways to optimise and build on the applications and tools they already use.
Future of the industry
As the industry continues to evolve, technology will play a pivotal role in shaping the future of insurance, driving innovation and meeting the evolving needs of customers in an increasingly digital world.
Recent breakthroughs in AI are rightly receiving a lot of attention, but progress in AI has been bubbling up and developing for many years. Our Cortex platform quickly adapted to each new wave as soon as the team felt there was a way to improve performance by using a new method.
With the recent advance in LLMs, the team behind Cortex now have another set of tools to help drive performance in areas of our business including data engineering, customer service and internal operations. Where AI yields a solution that is more accurate or effective than a process we have today, our multiskilled team are free to use it within our safety policies.
Compare this to the traditional insurance models, where siloed teams may be trying to achieve the same thing. Will separate business and IT teams be able to negotiate how they can use AI to improve their business, predict the cost and project plan and then each deliver without working together? It looks likely that the effective use of AI, which needs in-depth understanding of tech, data and business processes to be effective, will only be accessible to companies who have modernised their teams and ways of working first.
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