Markel: Turbocharging growth through productivity - breaking the cost/growth link

by Juan de Castro, COO, Cytora

This is a shortened version of Making Risk Flow podcast, episode 5. You can listen to the full episode here

In this Episode, Juan and his guest Lyn Comerford, Director of Operations for the retail business of Markel International talk about driving growth through operational efficiency and the use of technology.

Juan: Hello, and welcome again to making risk flow. This is a podcast that reveals everything you need to know about digitising risk in commercial insurance. I’m Juan de Castro and in each episode, we will walk you through how to make it work in your organization. Today I’m joined by Lyn Comerford from Markel.

Lyn I’m super excited to have you join me today. Perhaps you can start by sharing a bit more about your background?

Lyn:  Of course. Thank you very much for having me on your podcast. I’m the Director of Operations for the retail business of Markel International, this means my remit covers commercial insurance in the UK, Canada, and Europe. In my role, I work at the intersection of business and technology. My goal is to drive process improvement, deploy new technologies, and build data insights in our business to help drive growth. 

Juan: that sounds like quite a broad role but a very exciting one. So what are your strategic priorities in that intersection of using technology to drive operational efficiency?

Lyn: It would be useful just to take a step back and just give you a brief overview of Markel’s growth ambitions. Markel is a fortune 500 company that’s headquartered in the US and we have ambitious targets to double the size of the business by 2025.

This is particularly exciting from an operational perspective as means we need to rethink how we do things. To answer your question, some of our priorities are around trying to grow our premium, but not grow our cost in proportion to that premium. So how can we enhance our scalability? There are three areas that we’re looking at from an operational perspective. First of all, we want to simplify the process and remove repetitive, tedious tasks. Secondly, once we improve the processes, leverage technology to make it better for our employees, but also deliver superior experience and service to our customers. And finally, the last point is around using predictive analytics. So those three areas build on each other for our strategic operational priorities. 

Juan: It’s fair to assume then you’ve got high ambitions in the next two or three years.

You’ve mentioned the focus on driving operational efficiencies. How do you see the role of operational efficiency in supporting your goals? 

Lyn: I see it as being very important in our growth plans because operational efficiency provides a solid foundation for us to grow on. Sometimes efficiency can be a loaded term. Sometimes you’d think of manufacturing production lines and needing to get the most out of the capacity that’s available. Or you hear about companies trying to be as efficient as possible by restructuring and getting rid of people.

When we think about operational efficiency at Markel it’s not like that at all. We are focused on using technology to automate repetitive and tedious tasks so we can work smarter and get the business outcomes that we want. I think that higher operational efficiency creates that foundation for us further grow the business. 

Juan: That makes total sense, I assume that’s the main objective to remove the dependency between growth and cost. To do that you need to be able to do more right with your existing underwriters and your existing operations teams. By driving productivity you can start writing more business per underwriter or renewing more business per underwriter. 

Lyn: That’s exactly it. We’re trying to think about the productivity by employee, ie through metrics like GWP per FTE. But I think it’s really important to think that it’s not just about getting the most out of employees, it’s also ensuring that they get the right mix of tasks that they’re doing. It’s really about removing tedious and repetitive tasks so that they can focus on more impactful and interesting parts of their job. That in turn should help drive that productivity gain, which can be measured by GWP per FTE.

Juan: Absolutely. Can you tell us perhaps a bit more about the top two or three initiatives that you’ve got planned for this year or next year in the business, and give us a bit more insight into how you’re going to achieve some of those objectives?

Lyn: Definitely. To start with one which is sort of the name of this podcast, making risks flow.

That’s one area that we’ve been looking at, how do we make the risks flow? To start on the new business side, what we found is that submission processing is very much a manual process. Submissions can be thought of as intake of the submission, assessment, and then routing of that submission.

Some of the problems that you’ve identified with the process Juan are also things that we were finding too. We have one person looking at the inbox, making a quick assessment of those submissions and then routing them to the team. Sometimes there is some back and forth which elongates the process. This is the workflow that we identified as something to look at and review in order to make it fit for purpose as the number of submissions increases and we naturally want to maintain the service levels we provide currently. That’s why it’s one of the key projects – to move from a manual process to something more digital and streamlined so it can help the teams and our employees to continue delivering the service to our customers. 

Juan: Yes, that’s very relevant. I think this is also the case in your teams, which we see quite often, it’s the most experienced underwriters who are doing that inbox traffic control activity. On one side it’s frustrating for them because it’s probably not the most exciting thing to do, but on the other, it’s an opportunity cost – having really senior managers during this type of activity. 

Lyn: Exactly, yes. If we can move that activity away from our senior underwriters it would be very helpful as they wouldn’t need to be triaging the emails to the team. One of the reasons why they are currently doing it is because they have all that knowledge ingrained through their experience of where the best places to place or route that submission. We want to codify that knowledge into a process that can be automated so the senior underwriters can focus on writing the risk and providing the quote. 

Juan: This initiative has already been in flight for a bit right? What’s been the impact of that initiative so far, what are the main sources of value?

Lyn: There have been a few sources of value. Before all of the submission emails were coming in through numerous channels, now we’ve managed to consolidate it all into one. The assessment of that can be automated and routed to the right underwriter or it can be routed to a probable decline process.

Since implementing it, the underwriters have more transparency on what is coming in and what the team is working on. The work that they pick up is prioritised based on the likelihood of success of that submission. With this in place, there’s been a number of beneficial outcomes.

First of all, the same team of underwriters is able to manage a higher volume of submissions and so that’s increased the GWP per FTE that we mentioned. It gives better MI so they can have more informed conversations with brokers about the submissions, why they are being declined or clarifying the appetite. This leads to an enhanced engagement with the broker.

Juan: Exactly, looking at how automation and digitisation make teams’ life better. I think this is a good example where automation is not about getting rid of people, but about enabling them to be more effective and write more of the business you want to write.

Lyn: Exactly, because data and automation can’t make the decisions it can only facilitate the process, and that’s really what we’re trying to do here. As the business grows, helping that process and getting the aspects those decisions need to the right people then is really valuable. Not only our employees have easier lives, but also the customers because we can provide a better service.

Juan:  Very exciting, these opportunities, as you said are very aligned with this concept of making risks flow. You mentioned this was one of the top initiatives, perhaps you can talk about another one?

Lyn: Definitely, as I mentioned at the beginning, there were three areas we are focusing on: process simplification and removing some tedious tasks, leveraging technology, and, applying predictive analytics. 

The leveraging technology, here we are looking at how can we improve the interfaces between applications, the APIs. Those improvements will help us get our pricing or questionnaires to brokers to help facilitate the engagement with them.

Juan: I know that you use pre-priced proposals for your German business. Is this the type of initiative you’re thinking about?

Lyn: It’s leveraging some of that, but not quite. It’s where we actually don’t have the pre quote model in place, which is basically a list of predefined questions that a broker can populate and you’ll get the premium at the end of a structured PDF. What we’re trying to do here is actually feed that information directly to a broker. So it’s a little bit different, but it would drive the same outcomes as a pre quote model. 

Juan: Understood, and then the third area that you mentioned. Predictive analytics seem to be a very hot topic at the moment?

Lyn: Yes, and actually some of the predictive analytics functionalities can only be built once objectives one and two are in place because it’s bringing in the teams and underwriters on the journey. If you go in too fast with advanced technology it can be a bit too much of a change.

Actually, the predictive analytics in relation to the first area I was talking about in the submissions is how we are looking at opportunities to automate and manage the workflow. There are factors in that piece where we had prioritised submissions and assigned the highest priority for the underwriters to work on. Once that process is in place, the idea of predictive analytics is to feed outcomes into the process through a continuous feedback loop and update the factors we are using for prioritising submissions. That’s how we see ourselves using predictive analytics around submissions, but also in other areas ie. in loss expectation. So when we see claims coming in, how does that inform the future business that we want to take? 

Juan: That’s fantastic. I’m wondering how do you deploy these quite innovative technologies or processes innovate in a way that is embraced by the underwriters or whoever is impacted? 

Lyn: That’s a really good question and a good thing to think about. I think you have to have a very pragmatic approach to how to do it. So there are a lot of new technologies that we are we’re trying to implement. The most important thing is to understand what the key pain point is for the team and then start to drive change by addressing the initial pain point and then build on that. To me, this approach has been very helpful in embedding and bringing underwriters on that journey.

Juan: I think that resonates really well, the combination of showing value to the users early on. That and avoiding big bangs, because those tend to scare everybody, right from the executives all the way to individual contributors. Those two things go hand in hand, showing incremental value over time in a way that the users feel in control, understand what’s changing and come on board the change process. 

Lyn: Exactly. I think it’s really important. Just when you were talking I was thinking it’s almost modularizing the project into distinct pieces that deliver an outcome and then building on that. Also, what we were finding, particularly when we were looking at the submission process, is that once you’ve got the team involved in that first phase/module or they often have really good input and insights and they see the opportunities to build on. It’s almost becoming like a snowball effect.

Juan: Absolutely, in the end, it’s all about getting the users to be the advocates of the change. If you’re really driving change for the benefit of the users, they should be providing feedback inputs to the process and driving the process themselves. From my perspective that is the key driver of a successful transformation.

Lyn, it’s been an extremely insightful and helpful conversation, understanding your goals and how you’re thinking about driving those three areas of transformation. Sounds like you’ve got a fantastic plan. Thank you so much for joining me, Lyn it’s been a pleasure having you.

Lyn: Thank you.