This a shortened version of Making Risk Flow podcast, episode: “Exploring Mobility, AI, and a Connected World in the Insurance Industry”. In this episode, Ben Luckett, Chief Innovation Officer at Aviva, joins host Juan de Castro to share how continuous internal innovation at Aviva has helped establish it as a global name in insurance. Also, Juan and Ben discuss the three core elements of Aviva’s innovation process, the importance of investing in innovation even if it does not have an immediate payoff, and the three big trends leading insurance innovation right now: mobility, AI, and an increasingly connected world.
Listen to the full episode here
Juan de Castro: Hello. My name is Juan de Castro, and you’re listening to Making Risk Flow. Every episode, I sit down with my industry leading guests to demystify digital risk flows, share practical knowledge, and help you use them to unlock scalability in commercial insurance. So welcome again to another episode of Making Risk Flow. In some of our previous episodes, we’ve heard different perspectives on the future of insurance from executives of some of the largest global insurers. And quite often in the industry, people talk about the three A’s, right? So Alliance, Aviva, AXA. I had the pleasure of having both Allianz and AXA join me for previous episodes and we had an obvious gap, which was Aviva. And today, I’m joined by Ben Luckett, who’s Aviva’s Chief Innovation Officer. He’s got a brilliant background in driving innovation from within the insurance industry. Ben, thank you so much for joining me.
Ben Luckett: Yeah, no problem. Great to be here. Looking forward to chatting.
Juan de Castro: Fantastic. So perhaps let’s start with a brief overview of who you are, what you’ve done in the past? And your current role.
Ben Luckett: Yeah, thank you. So, as you said, I’m the Chief Innovation Officer at Aviva. I’ve been at Aviva for quite a period of time, and most of that time I’ve been in the digital innovation strategy and investment space. Prior to Aviva, I spent time with Centrica running their e-commerce, and my career started with Accenture, working on the digital customer experience within financial services.
Juan de Castro: Perfect. I think you are one of the best examples of how to drive innovation from within, which is something I think every insurance company has tried, but very few have succeeded. So what’s the recipe for success for innovation from within? I’m sure there’s been plenty of failures too. So what works, what doesn’t?
Ben Luckett: Yeah, that’s a great question and you’re absolutely right. I think we’ve got to a good position now, but it hasn’t always been like that. There have been lots of lessons on the journey and I guess corporate innovation is pretty hard because it’s not always in the DNA of a large company to be innovative or change at pace. And if you then combine that with the insurance industry, which is often not the first industry that you think of when someone says innovation, it is hard. And we’re a company that has been around for over 320 years, so the starting point is pretty tricky. But I think we have learned that it’s absolutely a balance between making sure that you are helping the organisation think about the future and the things that you need to do to maintain and retain competitive advantage, but also supporting the efforts of what needs to be done now in order to change. So I think the trick is somewhere between the opportunity to work with the core business and the opportunity to kind of lead the core business. And I think if you’re doing stuff that’s too close to the core, you find it really difficult to do things that are very different and if you’re doing things that are too far away from the core it’s really difficult to scale your activity and to get buy-in and really to deliver meaningful change. So we’ve been through various iterations of innovation and have landed on a model that has three core elements and also underpinning that a way of working with our business that enables us to actually deliver some meaningful change. So on the three elements, the way we look at it and you can kind of map these really across time horizons but the things that are the furthest out we found it’s most helpful to look at through a lens of venture capital. So making investments in bets that actually may not be super relevant for the business today but we think will be important in the future. And the reason that we make investments is that you can take a small stake, you can test and learn, you can place lots of bets and when and if they’re ready to kind of link up with the core business you can start bringing those things back in. So the kind of things on the furthest innovation horizon we look at through the lens of venture capital investments. Then things that are maybe adjacent to the core business or on the horizon but do need some investment and focus. The core business we tend to do through venture building and that really means starting new businesses from scratch. But outside of the core organisation, as I said, not to distract and not to suggest that they will be too significant too soon. And then things that are I guess closest in that we need to innovate as an industry, as an organisation on a regular basis, we use a kind of rapid proposition development methodology where we test and learn new technologies, new customer propositions at pace in a kind of central way. And then if they are things that we think are really impactful we will always work with a business unit to scale them. And again, that’s the point. I think if you do everything on outside of the core business you never move the needle. If you do everything inside, you never move at all.
Juan de Castro: Those three models make total sense, and each of the three of them has a different, as you said, engagement model. You start with the one which is farthest away, venture capital investment. You can totally do that on the side, I would imagine, right? The second one you mentioned, which is the adjacent one, which is venture building that’s probably you can still, I would say most of it do it beside or kind of the regular business. But the third one, which is the one that I would assume requires the highest engagement with the business units. What does that process look like?
Ben Luckett: Yeah, it’s a great question and I would say just on both of the other two venture building and venture caps. You’re right, you can pretty much do those, I guess, independently. However, we do take the view, particularly on venture building, to work quite closely with business units quite early, to at least pave the way for the opportunity of either scale, acquisition, integration, et cetera. But you’re absolutely right on proposition development. So we go through an ideation phase, as you might imagine, which is quite common in this process. And ideas are generated from right across the piece, both internally and externally. So we will work with business units in that phase to think about some of the core challenges that they’ve got and how technology or new propositions can help solve that. So, from the start, there is quite a high level of engagement from the business unit. And when we speed right to the end, where we do find an idea that’s worth investing in, we always have a business unit sponsor and often the CEO of the business unit to support us on that. And the process is we go through a process where we look at customer desirability as the first lens. So when we’ve ideated and come up with ideas, we will go into a rapid phase of iterative testing, where we might test six or seven ideas over an eight-week period. And each week will be a cycle of building a proposition, putting it on the market, testing it with customers, getting feedback. And we use a concept, what we call smoke testing, which effectively is launching something digitally that is a front door. Here’s a proposition, if you’re interested, sign up for type methodology.
Juan de Castro: It’s a landing page type of proposition.
Ben Luckett: Yeah. And then we look at viability and feasibility, whereas sometimes the more traditional way is to look at feasibility and viability first. But we always focus on customers, customer needs and a desirability lens. And then if there’s an idea that we want to go through what we call our refinement process, which is taking it from concept into something that could look like a proposition that we could work with again, we’ll have a multidisciplinary team drawn from our resource, sometimes external resource, and the business units to work that up. And then if we are scaling it, that business unit engagement only increases because it needs to find a home and ultimately be funded to scale. So one of the challenges is innovation is often this kind of them and us, some group team creates it over there and then throws it over the fence and runs on to the next exciting thing. That’s one of the biggest lessons that we’ve learned is that you just can’t operate in that way because you need that buy in and that co-creation and that excitement about a new proposition right from the start, from all the people who are involved, not just a kind of team who are sitting in the middle doing all the cool stuff.
Juan de Castro: In your experience through that early engagement with the business units, and if the idea goes successfully through the process. In your experience, do you have examples of such ventures or ideas that have been successfully driven all the way to market?
Ben Luckett: Yeah, so we launched something about a year ago now called Aviva Zero, which is a great example of where from the off, the innovation team and the general insurance team were working together to build a new proposition. And this is our Aviva Zero is what we call our carbon conscious car insurance proposition. But there are two core innovation elements of it. One is the proposition that enables you to offset or we pay to offset your driving miles and turn them into carbon credits. And secondly, the technology stack on which we built that proposition is completely new and greenfield and takes all the best technology that we can see on the market in order to make that a more efficient and more importantly data driven and machine learning backbone to the proposition. So that’s an example of where we started. And that idea came from the business unit itself. But we recognized we needed a model in order to create that in a different way at a pace, not distracted by the core business. And that’s where the innovation methodologies and team can help. And we effectively created that proposition with a very small and focused internal and external team in the way that I’ve described. And what you are looking for as a corporate innovator is to leverage our unfair advantage. And where you can become a real winner is where you have a combination of I guess you’d call it, a kind of startup mentality in how you work, a new technology stack generally, and a new proposition on kind of one side and then on the other, a level of data and insight that only a kind of large insurer could bring. And a distribution network to bring in customers. And for me, that is the absolute where innovation works in a corporation where you can successfully marry those two sides for success. And Aviva Zero has been a great example of that and that business has been growing. I said 100,000 customers in the first couple of months, we had a handful of customers and the trajectory has looked very much like a startup pitch deck. It’s a real hockey stick success story.
Juan de Castro: Which I think what you mentioned really resonates around if you want to avoid this, us versus them. I mean, you don’t want to be the cool team that drives innovation and then the core teams doing the more boring day to day. And I think the model you’ve described, which sounds like you guys are very much the facilitators of innovation, but it’s being driven by the business unit.
Ben Luckett: I think ultimately you want to be able to transfer the skill set and have that level of innovation just as part of how you do stuff. So ultimately I think my success will be that the business units are innovating in this way as a matter of course rather than having to have a separate group team, although I don’t want to do myself out of a job too soon. But also organisation, you need different structures and processes. So one of the early projects that we worked on was a project that was kind of getting stuck in the business unit because the business case didn’t match the more traditional way of looking at things. And this is the same as venture capital. When you look at a startup and how you fund it, you’re not immediately assessing the P&L and revenue because there isn’t necessarily revenue, you’re thinking about the market opportunity, the product-market fit, the team and so your metrics are different. And I think if you have that mindset internally for innovation you can kind of unlock new ideas in a different way but they need to be funded in a different way so they’re not ideas that have to have an immediate payback. I liken it more to R&D where you’re making multiple bets, you’re investing in them because you know some of them will come off. And as you said in your opening, we’ve had lots of things that haven’t worked, but we tend to try and keep that investment budget centrally and to invest it on behalf of the group so it doesn’t get mixed up into standard change budgets. Because then innovation always gets deprioritized because it’s always the thing with the most uncertainty. And therefore that’s the value of having a kind of group innovation budget and an agenda is that you can, as you said, facilitate, fund and from stuff that is uncertain. But, you know, you need to test.
Juan de Castro: One of the things you’ve mentioned a couple of times is working with startups, leveraging the Insurtech ecosystem out there. What’s the model that you think works best in the way you work with those types of companies?
Ben Luckett: I’ve always said, and always been a firm believer that partnerships are really the way forward from an insurer tech perspective. So we love working with and investing in the startup ecosystem because often again it’s that perfect combination of a startup that can bring a new way of doing something, a new technology, something that can really accelerate the insurance industry but hopefully we can also bring enterprise growth opportunities for that startup. We tend to look for startups to partner with that can help us test and learn about new ideas. So we do a lot of proof of concepts and trials and a lot of them come in from commercial partnerships. But often I think we look for almost all components that help us with a particular problem or challenge that we have across the value chain. So that could be fraud detection technology. So we work with a startup called Carpe Data which is a US startup. It could be testing parametric insurance, we’ve been working with a startup people have heard of called FloodFlash or it could be in corporate commercial lines looking at how we digitise exposure data. There’s a company called Big Ticket Platform that we’ve been working with. I could go on with lots of examples but I think the point is we like to find companies that can solve particular problems that we have where it’s better to work with the startup than try and build it ourselves or invest from scratch. Then how we work with them, I think what we try to do is manage expectations of what it’s like to work with a big large organisation. We try to support each other in the best way we can and try to move at pace. And what we have been doing most recently is simplifying and trying to streamline some of our onboarding processes. Now I hold my hands up and say it’s not been easy and over the years we’ve often not been as good a partner as I would hope, but we’ve been learning and I think it’s all about how you learn to interact with the startup community and for startups it goes the other way. Learning how to interact with a large corporate organisation that needs enterprise ready solutions is not straightforward. So hopefully I think it is a way of looking at it as a true partnership, learning and supporting each other and hopefully delivering mutual benefit and value.
Juan de Castro: Yeah, that makes absolute sense. So let’s perhaps then spend a few minutes now, looking at what are the big themes you are interested in when it comes to innovation. What are the top three areas you’re looking at at the moment?
Ben Luckett: So I think if I had to rattle off my top three, I think mobility and the future of mobility is a big one. It’s always been a question and we can come back to that. We’re spending a lot of time thinking about artificial intelligence, particularly generative AI, which is a big topic at the moment, not least because of some of the noise that we’ve had in the market from the ChatGPT piece. And then I guess I have always been a big advocate and really interested in, I guess you call it the combination of the connected world and real time data. So if I unpack that slightly, I think the future of insurance, one of the most dramatic areas that I think will drive change will be the switch from static to real time data. Data is the key, it’s the lifeblood of the industry. Competitive advantage is won or lost on your ability to access and use data more efficiently or better than the next person. But most insurance is priced and underwritten on the basis of either static or historical data. As we move into a much more connected world where there’s a proliferation of sensor technology, for example, which is capturing, creating, channelling real time data that can have a transformative effect. So I’d put those in my top three. I mean, things change from day to day, week to week, but as we’re talking today, I’d say they were my top three.
Juan de Castro: Let’s deep dive into each of the three just to understand a bit more. So let’s start with mobility. Obviously, mobility is quite a big area. Let’s start with defining what you mean by mobility.
Ben Luckett: Yeah, and it is a big area and I guess that’s its biggest definition we’re thinking about the movement of good services people across geographies. What that really means is we are seeing and have seen and people are listening to this, very familiar with this, some considerable changes in the whole vehicle landscape. And for an insurer that has a big exposure, both from a commercial perspective and personal perspective into vehicles, these changes are significant. So the most obvious EVs are the move towards electric vehicles, not just because of the complexity of some of the underlying technology, the cost of claims and repairs, but also the infrastructure that sits around being able to charge vehicles that are electric. I think, secondly, we are probably thinking about, and linked to my point around data, cars are effectively connected vehicles and 90% of new and I think 50% of the cars parked are connected. And actually, I think in commercial lines this is more significant. And I think we’ll see the adoption of some things much earlier in commercial lines than personal lines. But we can come back to that mobility. We also think about the different forms of mobility from micro right up to kind of fleets and things like that, but also the ownership models that are changing. This is more a personal line point, but to the extent to which people will own fewer vehicles in the future, than they do now, that’s changing as we move into things like subscription models. And again, this is going to be important, I think more for commercial lines first than personal lines, the whole autonomous piece. People have been predicting driverless and crashless for a long time, but we’re inevitably getting closer and technology is changing particularly related to that AI point. And then I guess there’s a whole kind of policy and regulatory stream that sits above this, where governments and policymakers are thinking about how and where regulation plays a part in mobility, which, believe it or not, regulation is probably one of the biggest drivers of innovation and change in this industry. And then, of course, sustainability is really important. So for us, it’s a key pillar of our strategy. And thinking about mobility and vehicles being some of the biggest contributors to climate change, how do we move forward in a world that is much more sustainable? So there’s actually a lot in there to unpack. I think back to my point around the kind of emergence of telematic solutions, connected solutions, safety solutions, autonomy solutions within fleets for example is really exciting. And we’re seeing that now. It’s not a kind of five year thing. This is here and now. But I can see innovation in that space just really continuing to grow. And I think we’re doing lots of stuff, but there is more that we can be doing in this space, which is why it’s kind of top of my agenda.
Juan de Castro: If I look at all the seven or eight areas you mentioned, I guess there are two big things. One is a change in customer behaviour, right? So the ownership model, the kind of customers moving to a different type of vehicle success. And the second thing is changes in the risk profile. So different types of cars, electric vehicles, different types of claims, et cetera, are those are two broad areas you’re looking at. It’s like, okay, how can innovation better adapt the products you offer to consumers and then also better understand your exposure.
Ben Luckett: Correct. Yeah, absolutely. And I think implicitly in all these changes that risk profile and consumer point are kind of front of mind. I think when we look at kind of macro themes and then delve into some of these things like mobility and AI it’s often those two lenses that we’re looking at and the risk profile of a vehicle that is completely connected to the network that has semi autonomous technology versus something that’s completely disconnected and has no, say, crash detection or semi autonomous technology. They’re very different. But you need to operate in a world in which they coexist and it comes down to, well, then how do you price accordingly for that risk? And I think we’re also quite – and have been for a long time very interested in, from a risk profile model perspective – how that then evolves into an early detection and sort of preventative model. So you’re taking it right back up the chain and saying, if this is the risk profile, how do you change this? By utilising predictive and preventative technologies?
Juan de Castro: Yeah, I think this is a good segue. I think you’ve touched on this too, which is like the third area you mentioned, which is connected world and real time data. Right. I think this applies obviously to mobility, but even when you were talking about moving from a static view of data right, so you’re underwriting risk based on the information the broker gave you or the client gave you at a given point of time into more continuous monitoring in mobility. It’s a very obvious one. Right? It’s like a car. So the vehicles are providing you sensor data, but are you also looking thinking because you could apply the same logic to liability or commercial lines type of risk? A great example would be cyber. It’s like, okay, do you underwrite the characteristics of the risk when you underwrote it for the first time? Or do you monitor the cyber exposure of the client? Are you also looking at that area?
Ben Luckett: Yeah, absolutely. I mean, there are lots of examples where there’s great crossover. Business interruption is a great example where you’re monitoring real time conditions and changes. So the BMS data that comes out of a building…thinking about employers liability or thinking about data that’s coming from a commercial organisation on wage roll or stock or all these things that actually that form part of a policy that is actually changing on a daily basis. So a warehouse is stock. You might put in your original kind of underwriting a view of the value of that stock, but that could be changing on a daily basis. And normally you only find that out when there’s a claim because actuals come in. But if you think about a world in which your insurance is priced on the basis of what you actually physically hold in stock, for example, is totally different from an annual view. It’s just one small example. Wage roll changes, payroll changes on a weekly or monthly basis depending on staff movements.
Juan de Castro: The last area you mentioned was Generative AI. Perhaps give us a couple of minutes summary of what you are interested in that space?
Ben Luckett: I think AI has always had a lot of promise in terms of its application to the insurance industry right across the piece. I think generative AI, which is AI that is in essence creative and can create stuff on the back of a large language model, probably has two major use cases and then you can delve into those two areas. One is in customer engagement and customer service. So being able to support customers at a greater scale by using artificial intelligence but also in a better way from an experience perspective. Because I think things like Chatbots to date have been okay but you never think they’re particularly intelligent. But some of the changes that we’ve seen on the back of large language models like GPT have kind of taken customer experience to another level. And for people who’ve been playing with ChatGPT can see that there’s a real “intelligence” that sits behind it. And then I think more internally focused. And again, let’s take commercial lines underwriting as an example, the ability for models to ingest, analyse and comment on or summarise large amounts of data. I think again could be pretty transformative. I always see this as an opportunity for it to augment people’s roles rather than replace them. But I think it’s an area where if you utilise artificial intelligence correctly, you can become much more efficient and humans can focus on the things that are kind of really value adding than some of the things that actually you have to do, but could be done quite easily by a machine that’s been trained on your proprietary data. So I think at a high level those are the areas that we’re really interested in.
Juan de Castro: Fantastic. This has probably been like a 200 mph overview of what you’re looking at Aviva, how you work in innovation and the areas you’re interested in, but it’s been extremely insightful. So thank you so much for joining me today.
Ben Luckett: Thanks for having me. It’s been great.
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