LV=, formerly known as Liverpool Victoria, is one of the UK’s largest insurance companies, with over five million customers, and a range of products that include travel and life insurance.
For the last few years, the company has stepped up its investment as part of a significant change programme; by the time the programme is completed, the company may have spent up to £100m. But while a key focus of the project is technology, CIO Richard Warner explains that it is fundamentally a business transformation.
“It’s about changing the way we go to market, the way we do pricing, risk and operations in our call centre. We’ve had to be thoughtful about how we are doing this, and how it will affect the business, and what operating model we’re going to require,” Warner explains, adding that this has meant turning business processes on their head.
As part of the programme, LV= has been building a platform that it hopes will be able to deliver the right propositions into the marketplace at speed and with agility. Warner explains that this means a shift in the way the business looks on the front-end to customers, but also in the back-end.
The company has worked with Guidewire, an insurance policy administrative platform provider, on its sales service and claims engine, and insurance software company SSP to build an intelligent pricing hub. With the emergence of insurtech, a subset of fintech, LV= has also been looking at which smaller companies it can work with to improve its offerings.
“We look at companies that play in the intersection of three areas: a company that can help us to solve customer issues in the marketplace, with the right technology and that aligns with our core principles,” says Warner.
One of those companies is online pension advice experts Wealth Wizards, and Warner suggests that LV= is working with them to help thousands of people who need advice on where to invest their pension fund, or how to receive their income from their pension if they’re about to retire. Currently, he says, financial advice is usually tailored for high net worth customers because of the complexity and regulation around financial advice in the UK, rather than the majority of the babyboomer generation that is approaching retirement.
“Last year, we built an automated advice engine for the UK market, which enables people to make direct planning decisions when coming into retirement, and there is also a version that IFAs can use,” he states.
The next opportunity that LV= is looking at in this space is helping people who can’t get insurance very easily.
“We’re asking whether we can combine our knowledge and underwriting experience with emerging technology such as medical tools and fitness trackers to find a sensible way to help people live healthier lives, as well as get them insurance and investment support,” he says.
“You see a lot of products targeting people who are healthy with money, but it’s about saying how do we help people with less money and people with health conditions such as diabetes, cancer and other long-term conditions – these types of people make-up the vast majority of the population,” he states.
While a lot of the focus is on the underlying technology, Warner says that on top of this, there is the ‘secret sauce’ of managing data, and getting the data feeds to carry out the right risk management, pricing and underwriting.
This is an area that he believes will be improved by the introduction of AI and machine learning – technologies that the general insurance side of LV= has already been investing in.
One of the areas AI could assist LV= is in fraud detection.
“One of the ways people attempt fraud is by trying to price game you, by figuring out what data to put in to get a quote, or there are fraudsters who try to get out an insurance policy and immediately claim on it – we can use big data, AI and machine learning to identify these people by using pattern recognition,” Warner explains.
The technology helps LV= to unearth patterns which suggest that one person is trying to open up multiple policies, or that they’re attempting fraud in another way. Warner says that LV= has used the technology quite successfully and it is relying on it more every day.
The use of emerging technology like AI, along with the reliance of insurance industry-specific technology vendors, and insurtech players all form part of a big change programme at the insurer. However, Warner emphasizes that LV= has invested heavily in its own people and also tends to work on many IT projects and developments internally. The key, he says, is a mix between suitable partners, personnel, internal resources and technologies.
“Given our culture, history and size, it’s about getting the right blend between partnering with third parties and doing things ourselves – this is the way big change projects work effectively,” he states.