“It’s still very early days with IoT and the impact on insurance but it is having some impact.” - Kenny Leitch, Global Connected Insurance Director, RSA

Before Smart Summit begins on the 19th of September at the Business Design Centre we sat down with Kenny Leitch at RSA.

As Global Connected Insurance Director, Kenny heads up RSA's Connected Insurance Centre of Excellence, leading on how RSA leverages value from motor telematics, connected home and pet tracking technology, as well as heading up RSA’s involvement in the autonomous car space.

Kenny, who will be talking about ‘Harnessing Technology to Provide Genuine Value’ and discussing ‘Using Technology to Get Closer to the Customer’ took some time to talk about IoT and the Insurance Industry:

How is IoT transforming your Business?
I don’t think IoT is transforming our business but I think it’s impacting our thoughts and making us think about how elements in the outside world are changing what we need to deliver to customers; and it’s changing the nature of risk.  It is also changing what we need to offer to customers in terms of insurance propositions and solutions.

It’s still very early days with IoT and the impact on insurance but it is having some impact. 
In which ways are you adapting business models to leverage IoT behaviour?
My team is probably a good example of that.  I run our Connected Insurance team which is a standalone business unit within the organisation.  We can think and act like a start-up within a large corporate which is not an easy thing to do but I think we’re quite successful.  It means I have a team of people who are much more tuned in than the rest of the organisation to what’s going on in the outside world. We are looking for opportunities to partner, to test propositions cost-effectively, and ultimately to take new products to customers. We are leveraging the opportunities that come from technology and data.  Organisationally you have to think about how you create headroom and space to allow innovation to happen, and then ensure you have the processes and the capability to be able to do something with it.  Responding to opportunities and challenges is doesn’t work if it’s just a project to pick up for 2 hours on a Friday.
How separate is your organisation from the rest of your business?
We are separate but connected into the business.  Most insurance organisations have concluded that to make progress with all this new stuff you have to have a satellite organisation – something set up separately away from the mother ship to allow you the freedom to get on and test new things. That’s the route that most organisations have gone down with garages and accelerators etc.  Having an internal start up is hard because we sit in a corporate office and are part of the ecosystem, but it has some advantages.  We are really well linked in to other business units internally so there are advantages in being able to more easily test, learn and launch with other parts of the organisation.  Ultimately the big challenge is – we can go and test and create stuff, but to make a difference, you’ve got to bring it back into a core product, or create new products and bring them back into the business to do something with them.  We try to balance the advantage of being an autonomous business unit with the advantage of being part of a big corporate.  We’ve got a unique model.

A big part of my job is to ensure that the corporate doesn’t crush the agility and innovation from my team and the way that we do stuff.  A big corporate has a culture and systems and processes that are very different from a small startup.  If we comply with the corporate norm we will just behave like the rest of the organisation and won’t move forward, so we’ve got to make sure we are allowed the freedom to be a bit different.  The idea is that we turn the corporate into an asset for us and the corporate has the experience and capability that we want to tap into.  If we do it well we can accelerate what we are doing with their support, rather than being crushed at the start. 
Where have you seen the key benefits of working with this model?
We started with telematics (black box insurance) and our main focus is still young driver telematics.  That was the technology and business line we got involved with in 2012.  We realised there was something in this technology.  We have grown our business dramatically at a tremendous pace and there is no way we could have grown at that pace without the full support of the corporate.  We had infrastructure already in place in Sunderland and experienced staff whom we could transfer to our team; in fact, we begged and borrowed capability from across the organisation.  If I look at ourselves as a standalone business, I think of RSA as our 100% shareholder. ..and they’ve been  the best possible shareholder we could have had. 

What do you think is the best example of IoT being used in Insurance?
I think young driver telematics is the most advanced use case there is.  It is probably getting towards a £700m market out there of young driver telematics business.  We use the driving data generated to then feed back personalised messages to educate, incentivise and try to shape the young person’s driving.  That is the most advanced use case in the market.  In the home space it’s still embryonic but there is a lot of activity and interesting propositions.  For example Neos is probably the fullest end to end solution anybody has come up with; their challenge will be distribution and scaling up but it’s a very good proposition.  There are other examples like Roost who have come up with a way of changing a smoke alarm from a dumb device to a connected device via a smart battery.
Where do you think challenges lie for Insurers?
A key challenge for[CB1]  insurers is to remember that we are insurance companies!  Insurance history is littered with insurance organisations who thought they could go off and seek opportunities in adjacent markets.  Almost invariably there has been a retreat and disposal and a lot of money has been lost.  RSA had a foray into Estate Agency in the past but insurance companies don’t run estate agencies and it ultimately wasn’t successful.  It is important to focus on your core competency and there is a danger of getting distracted by things outside insurance opportunities.  It is so important to remember you are an insurer and what you can do around your insurance proposition.  Don’t get carried away with all the shiny things elsewhere. 

How are new connected services transforming insurance propositions?
My team’s particular angle on connected insurance (and this is what I will talk about at Smart Summit London) is the customer proposition; how we harness the technology and data to change insurance outcomes.  The customer version of this is – using technology and data to stop bad stuff from happening.  For example, with young driver telematics people our customers will drive differently because of our embedded product.  We will feed back to customers every day, information about how they’re driving; information they can take action on and reduce risk.  We try to make them safer and on average they will drive better. We will use technology to create a different outcome and prevent things from happening.  In homes the interest is in water as the specific area to focus on.  Water damage is c.25% of claims costs and there we believe that there will exist technology to enable us to “see” claim events before they happen.  For example that a pipe is about to leak or burst, rather than waiting for things to go wrong and be discovered by the policy holder after significant damage has been done.  We are trialling a product called Leakbot, made by Homeserve Labs.  We are testing the reaction from customers and how it works for them and in due course, if we can turn it all into a product at a price point that customers will buy.
What is the impact on customer retention?
It will make customers think twice about changing.  We are still at the test stage and we need to turn what we’re doing from a device we are testing into a viable proposition but that is absolutely the intent.  When the customers believe they’re getting value from messages that are relevant to them, you keep the customer interested.  Telling a customer they haven’t got a leak is good but not that interesting, especially in month 3, 4, 5, etc.!  It’s important to be engaging. 

How are insurance providers leveraging data?
There are huge opportunities for us to be more personalised and relevant.  This means by definition we need to be timely for the customer.   It has to be something that is happening or that the customer would be able to take action on.  Blanket text messages are no longer sufficient!  It must be about you and what can make your life better.
What are your predictions for IoT transformations in the Insurance industry over the next few year?
It will be small steps over the next few years.  We need to find solutions that provide genuine value to customers.  Saving time and money and making people’s lives more convenient and easier.  Technology will help us to stop the bad stuff from happening – prevention will be key.

About Smart Summit London

Smart Summit is a 2 day conference and exhibition covering the Internet of Things (IoT) ecosystem and its impact on the digital society.

Now in its 3rd year, the event features Europe's leading Smart Home Summit and a further 5 tracks all designed to compliment each other.

With over 180 visionary speakers, gain a unique insight from industry heavyweights and hear case study examples from major contributors.

Make sure you are present in London on the 19th and 20th September for THE Smart IoT event of 2017.