How does a large, globally diversified Fortune 500 insurance group like Liberty Mutual Insurance ensure it can innovate at scale to enable strategic risk-taking, accelerate growth and continue to stay relevant to clients & brokers?
InsTech London Partner Matthew Grant talks to Premal Gohil, Head of Innovation Partnerships at our newest corporate member, Liberty Mutual Insurance Group, to find out more.
Tell us more about how Liberty Mutual Insurance approaches innovation?
As a globally diversified Fortune 500 insurance group, it’s critical we’re able to approach innovation in a way that leverages our global brand, reach and scale to bring innovative new risk services and products to our worldwide client base. Whether through one of the biggest and most established syndicates at Lloyd’s, which has long been an environment to write innovative covers offered nowhere else, or one of our other strategic business units, Liberty Mutual harnesses innovation to bring even greater value to our clients and distribution partners.
Our clients are seeking trusted partners that can better manage current and emerging exposures through holistic risk transfer solutions and the unique perspectives only available from advanced analytics, industry insights and thought leadership.
We therefore take a global and strategic view to the way we innovate here at Liberty, with a company-wide innovation structure that shares best practices, and a number of data scientists and innovation experts. The centralized innovation group that I’m part of - which supports our global commercial insurance operations - touches all of our underwriting businesses and specialty/commercial/reinsurance product lines around the world.
This approach and structure is fuelled, in part, by Liberty Mutual’s long and storied history. We were founded in 1912, so our 108-years in business gives us a strong heritage and history in the P&C insurance space to draw upon.
We are probably one of the best-connected teams in the business, and those relationships built up over time are crucial to innovation success. We work together with our colleagues to address client & broker unmet needs, enabling strategic risk-taking and accelerating growth.
Why do you think this is important?
Staying still is not an option! Our industry is often looked at by outsiders as lagging when it comes to embracing change and we want to be at the forefront of challenging that notion.
Take a step back at our collective history, and you can see how the commercial insurance industry was born of change, delivering on unmet needs that sprung from human invention. With its inception backing maritime ventures at Lloyd’s Coffee House, to protecting workers during the second Industrial Revolution, where Liberty Mutual got its start, the industry has been intrinsically tied to the development of the future.
Take the motor insurance market, one of the largest global risk pools, that began with Lloyd’s Marine underwriters. Using first principles, they wrote the first policy considering it a ‘ship navigating land’. Flash forward to today, the 4th Industrial Revolution, and we’re now insuring ‘computers on wheels’. As Mark Twain once said the future may not repeat itself but it often rhymes.
As we continue to learn from our past, we also need to sharpen our focus in times of rapidly converging trends and exponential change. Our clients are creating the future today in their Labs and Board Rooms, so we need to be there for them and our broker partners with novel risk solutions. We’re doing this by harnessing the same trends to reinvent insurance, providing smarter products and services to remain relevant for the years to come.
Tell me a bit more about the levers you have at your disposal to pull
We use the tried-and-tested PIBB (Partner, Invest, Buy and Build) model when it comes executing innovation here at Liberty. Our partnership model utilizes our global brand and reach by working with our traditional partners, like our clients, brokers and reinsurers, and via our scouting process to bring the very best InsurTechs, academic institutions, technology partners to our core business.
For example, we recently signed a five-year deal with the Massachusetts Institute of Technology (MIT) to collaborate on artificial intelligence that can support our business as well as those of our clients. MIT is arguably the world’s greatest institution when it comes to R&D and innovation and being able to tap into their world-class academic research and faculties is a tremendous advantage.
We also utilize our corporate venture capital arm, Liberty Mutual Strategic Ventures, to help make equity investments into start-ups of strategic value to us. On the commercial side, we’ve made a number of bets in the future of risk, insurance, commerce and mobility. We also have a dedicated team on the buy side for strategic acquisitions, of various shapes and sizes. Liberty also has a network of innovation labs.
This enables us to bring colleagues from across the group, clients and brokers into our labs to help ideate and co-create risk solutions from the ground up. In these challenging times, we’re continuing this work in a virtual environment. We’ve had some success to date with intangibles and parametric risk products.
What this demonstrates is that here at Liberty we really do have a wide range of ways and methods that we can make innovation happen depending on the situation and what will work best.
Can you provide us with some examples of successful innovation at Liberty Mutual?
Several years ago we invested equity in REIN, an InsurTech platform that specializes in using artificial intelligence (AI) and machine-learning (ML) capabilities to build digital insurance products from the ground up for corporate clients. Since then, REIN has been a successful partnership on a number of levels. They align well with our focus on areas of emerging risk and new business models within the future of mobility & the future of aerospace. The firm underwrites on-demand commercial drone insurance in the US via an app and are exploring ways to broaden the platform into new product areas.
Another example of successful innovation comes from the Mobility Pod that Liberty Mutual setup last year. This is a group of senior professionals across Liberty, bringing together both our personal and commercial lines businesses, which studies the latest trends in the mobility space and looks to make bets to support Liberty's growth in this area. We insure large programs like Uber, Care by Volvo, Turo and Outdoorsy. We’re also leading autonomous vehicle safety to support our clients and the industry. We’re a member of PAVE, supported the development of safety standards like UL 4600 and are partnering with Edge Case Research (ECR), who use AI to make AV systems safer. We're also an investor in ECR and are in the middle of a fascinating pilot of their technology.
We’ve also had a number of successes as we look to build the future of (re)insurance. We’ve enhanced the business model of today with new data, AI and digital tools for smarter prospecting and underwriting with partners like Intellect SEEC and Groundspeed Analytics, offer new digital service platforms like Risk Reduce, leverage a suite of remote property adjusting tools and employ Robotic Process Automation (RPA) solutions that have reduced processing time from days to seconds.
Looking at the business model of tomorrow, we’re expanding our existing parametric offering, leveraging partners like Praedicat for emerging risks, active in consortia such as B3i and RiskStream and developing new risk solutions for intangible asset risk.
Covid-19 is throwing up a number of challenges and opportunities for corporate innovation functions. How is Liberty responding?
Obviously there is a lot of information coming out every day about how the Covid-19 pandemic is causing untold economic damage as well as the rising human cost.
As a corporate innovation group, we’ve looked at our current portfolio and assessed which initiatives can be paused or pushed back to free up capacity to support the business, our clients and brokers with responding to the current shifting landscape.
How can businesses and society at large become more resilient in the face of unforeseen shocks such as the one we’re experiencing? This is a question we’ve been asking of our ourselves and our colleagues. It’s led to some great thinking around how we might support our clients and brokers through 2020 and in the years to come. Expect to see some exciting developments and news soon.
Covid-19 has brought existing challenges into sharper focus, such as the need for the industry to modernize and move to digital. It has a similar look and feel to other systemic events on the risk register, such as cyber and climate, which are big focus areas for us with a number of ongoing initiatives here. So it’s important we don’t take our eye off the broader trends & themes occurring today and which will become even more important in the years to come.
Whilst responding to the Covid-19 pandemic is on everyone’s top priority list, as it should be, Covid-19 will eventually pass and therefore we are still focusing on longer-term thematic areas in order to continue to provide exceptional risk solutions to our clients and broker partners.
For more information on Liberty Mutual Insurance, go to https://www.libertymutual.com/