March 18, 2024

The Importance of Leveraging Data and Analytics to Elevate the Customer Experience

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Pursuing Better Together with Jay Rajendra Transcript

Arch Insurance International Pursuing Better Together Podcast with Jay Rajendra

Arch Insurance International

Hello and welcome to the latest in Arch’s Pursuing Better Together podcast series where we speak to leaders from within and outside of the insurance industry about how they’re continually raising the bar. Today I’m joined by Jay Rajendra. Jay is the Chief Strategy and Innovation Officer at Arch Capital Group Limited, responsible for pursuing new business models and technologies while also leading Arch’s analytics capabilities to improve profitability and growth. Jay joined Arch in 2016 in the role of Chief Analytics Officer, and prior to that was Head of Business Solutions for XL Catlin’s strategic analytics team. He has also worked for Towers Watson in both North America and Europe. Jay is a fellow of the Institute of Actuaries, a fellow of the Casualty Actuarial society, and a member of the American Academy of Actuaries. He holds a combined Bachelor’s and Master’s in mathematics from Oxford University, and an MBA from MIT.

Jay, welcome to our podcast.

Jay Rajendra

Thank you, Nigel.

Arch Insurance International

I wanted to start by asking you to give me a sense of how your career path led you to this position of Chief Strategy and Innovation Officer, and I suppose just what that role entails?

Jay Rajendra

Sure Nigel. So, I’ve got a mix of quant and strategy background. I started my career off, as you said, in consulting, both in Europe and then in North America. And the thing that’s always excited me, the thing that has always kind of driven me is being at the points of change in the industry. That could be anything from the use of data and analytics, new digital technologies, M&A, alternative capital, and that’s the place where I’ve really spent most of my time and interest. And that’s how I got here. When Marc Grandisson, our CEO, first approached me about a role at Arch, he said, Come here and bring new ideas to the company. We sat down, and we talked about it a lot and we agreed that the primary thing and the first, most important thing that we needed to get to do, and the biggest opportunity we had was around the use of data analytics throughout the company. So, I came on in this role as Chief Analytics Officer, a very specific, very defined role. We built out the data science team in a few years, it was very successful and still is successful, and then expanded my role into a broader remit for strategy and innovation that now encompasses quite a few things. So, we have a few different goals of the group, to be a first-choice digital partner, to be a leader in analytics adoption, a smart user of automation to improve efficiency, and those are the places that I spend a lot of my time on.

Arch Insurance International

How would you describe the extent to which the sector is embracing new technologies and that more data rich processes that were that we’re talking about?

Jay Rajendra

It’s an interesting one, and you can take it in in two ways. I think it has been easy to characterise the industry as being a bit of a dinosaur, but actually, the industry has always been a big user of data. What’s been really exciting across all industries, across the entire economy is the bigger opportunity to use technology, the opportunity has just expanded massively to use technology and analytics, in very, very new and different ways. I think pretty much you go to any boardroom of any major insurer or broker, and they’re talking about the value of data analytics and digital experiences and things like that. Now, it’s really about execution.

Arch Insurance International

I suppose that there is that sort of question mark over whether the industry is moving fast enough?

Jay Rajendra

If we go back 10/20 years and looked at people’s predictions as to where the industry would be, people have made some pretty bold claims as to where we might be by now. Reality is it’s a complex industry, it has lots of regulation, there’s behavioral things, there’s habitual things, there’s really important things that we have to do to protect our clients and our brokers and things like that. Those changes happen. They take time they take time to adopt, but there’s a whole ecosystem that you need to change to make some of these things happen.

Arch Insurance International

I wanted to look at one particular aspect of that ecosystem, perhaps one of the most important aspects which is this idea of the customer experience. How would you say access to greater and perhaps more importantly, more immediate data insights is changing or enhancing that experience?

Jay Rajendra

Two main ways, Nigel. First way is that now with access to richer data, we can ask fewer questions, it just makes it easier. You know, if you think about the insurance industry before, the idea of buying insurance, whether you’re an individual or a company was a pretty painful experience. You know, here’s an application form, you have to fill out, it’s 10 pages, 100 questions. If we can use external data and other sources to pre-fill some of that information for our customers, for our brokers, it just reduces the friction significantly. The second way is time. So, another massively important part for me of customer experience, and I think ease of doing business is often synonymous with speed of doing business. If you can get a policy and get a quote, instantly, in a few minutes, then that makes a big difference to a customer or broker. So now with new technologies, whether it’s digital, whether it is data enrichment, it just means that that process is a lot quicker for people.

Arch Insurance International

In addition to the customer experience, how is that more sort of data enriched insurance environment, affecting the underwriting process?

Jay Rajendra

It is huge, the impact that data can have in underwriting. If you think about what we are doing in an underwriting process, we’re really putting ourselves in the shoes of our clients and trying to absorb the risk that they currently withstand. And to do that, the more data we have about our client, the more data we have about the external world and the risks that they’re exposed to, the better we are. If you go back in the insurance industry just 10 years ago, people were making big underwriting decisions on insurance and reinsurance with maybe like 10 pieces of information. Nowadays, we have access to a whole world of information and can bring that to an underwriter rather than having to go and hunt and gather information. Speed and the effectiveness of the decision itself is a big beneficiary.

Arch Insurance International

You talk about, where we are now, where do you think the underwriting environment goes next?

Jay Rajendra

I think it’s going to carry on in the same trajectory, I think the opportunity is just always enlarging. The reality is there’s probably been more data created in the last five years than over the previous 100. The opportunities to tap into different things, devices, sensors, all of these different kinds of sources, are now just generating continuous streams of data. We’ve got new technologies like AI and generative AI has caused a lot of buzz in the last year with chat GPT and things. They’re all things that essentially help empower the underwriting process. The wonderful thing about them is they don’t replace underwriting at all, they don’t replace the relationship we have with our brokers and our clients, how we engage with them, but they free up so much time for us to focus on those two things. Instead of doing low value, manual work.

Arch Insurance International

From where you sit, what are some of the most exciting areas of innovation that we’re seeing?

Jay Rajendra

Other really exciting areas of change in industry, we hinted at earlier was around digital customer experience. In the personal lines world, especially in the UK, if you’re buying a personal lines policy, you can go online, type in a few pieces of information and get your quotes back. A lot of the innovation industry has started with personal lines and then expanded out to more sophisticated parts of the industry. That has got a long way to go in the commercial lines space. And especially in the specialty commercial lines space where we operate. We’re often dealing with very complex risks, heterogeneous risks, very nuanced policies and coverages that people want. But we know that the tendency will be to take out some of the friction using digital experiences.

Arch Insurance International

Just in terms of our theme of Pursuing Better Together, how important is it that there is alignment of direction with that of the broker in terms of the digital journey that they’re on?

Jay Rajendra

It’s huge. One of the frequent complaints we hear from brokers about working with insurance carriers, on anything digital, is the experience sounds or feels a little bit like this: First off, an insurance carrier comes to you and says, Hey, can you please can you put my product on your shelf? Secondly, here’s my 100 underwriting questions. And then thirdly, please meet our IT team for a 24-month project of doom. And at the end of it, no business is transacted, nothing happens, right? No solution has been provided to the world. And we just think there’s a much better way of doing it. And it really starts with this engagement and collaborative model of working with our partners on a digital solution or digital experience. And we start with the end goal. We start with what we’re trying to do, we’re trying to transact some business at the end of the day, and we work out and we rigorously look at that kind of business and the opportunity around that first. And then we design the technology and the enablement to make that happen, we kind of go backwards. And we do it hand in hand with our brokers and clients to make sure every stage we’re de-risking that project, de-risking that whole endeavor for both parties, because we’re all busy people, we all have finite resources, we want to make sure we’re doing things that are valuable. And in the end, we’ll solve a real problem.

Arch Insurance International

There has been much talk about the work and the interaction and the relationship between the insurance industry and the insurtech community. How important in your view or in Arch’s view is that ability to work collaboratively with that insurtech tech community?

Jay Rajendra

It’s been a real journey. Insurtech was really generated as a term I think, maybe like 2015. When it first came out, a lot of the buzz was around industry disruption, it was about these insurtechs coming along, and disrupting the industry giants in the same way that Amazon and Netflix and Google did. After a few years, that really didn’t play out. And the conversation, especially in the last five years, has really shifted to one more about collaboration and partnership. And the insurtech community now is largely made up of people who are enabling carriers and brokers and providing services to them. Many of them are really now just technology vendors. And so that partnership is super important. And it’s really important for the insurance industry, because the insurance industry doesn’t need to be the technology innovator in everything that it’s trying to do. So, making use of it, understanding where you have a competitive advantage, where you want to build something yourself and where you want to actually partner is a key strategic choice for all carriers and brokers.

Arch Insurance International

It’s interesting as well, because Arch seems to have been very proactive on this front and has built some great partnerships and relationships. Why are these operations such a great fit for Arch?

Jay Rajendra

Sure. So when we when we think about those opportunities, we’re really thinking about companies that can do something that we can’t do ourselves. Knowing what you can’t do is just as important as knowing what you can do. And the insurtech community is out there experimenting and developing things and we can tap into it, it makes a big difference. So, three years ago, we set up an insurtech VC fund to invest directly in insurtech companies to align our interests, to create more deeper partnerships with companies that we really believe in. We also have a goal around being the industry’s first choice digital partner and that includes being the carrier that an insurtech company would want to work with on an opportunity. So, we’ve had many successful endeavors with insurtech MGAs that have some kind of niche, some kind of technology or capability that that allows them to solve a problem for a niche. Examples of that are Coalition, a cyber insurtech MGA that we work with in the US, we have a massive partnership with them. Some really cool and clever technology that helps them underwrite cyber for small customers especially. Thimble is a company we acquired last year, and they focus on that micro segment of the US small commercial market. And what’s really cool about Thimble is they have this really excellent digital customer experience for both their customers and their brokers. If you go online, you can see they have a Trustpilot rating of 4.7. out of five, they have a net promoter score an NPS of something like 72. These are like off the charts kind of metrics for anyone in the insurance industry.

Arch Insurance International

I wanted to, if I can, do a little bit more horizon scanning. And just in terms of this idea of Arch’s pursuit of better, where does this innovation drive take you next, what’s on the horizon for Arch?

Jay Rajendra

Three main goals. Leader in analytics adoption, first choice digital partner and a smart user of automation. And we’ve centered around those kind of business objectives. For us right now, it’s really about embracing the new and understanding the new technologies that enable those goals. So on the digital side, we’re going to be seeing more of our products available digitally, and in more markets, so that brokers and customers can engage with us, outside of email, outside of antiquated systems and other things like that, into a really slick digital experience that is beneficial to everyone in the chain. On the analytics side, you’re going to see us using more and more AI and machine learning. We’ve already done an amazing job at embedding that throughout the organization. The frontline love the tools that they’re using, and what we’ve built, we’re just getting started, there’s just so many new opportunities there to build and to deploy new things. And then automation is a massive one as well. I think our customers and our brokers will see that we’re able to drive a much more efficient experience by automating a lot of things that were previously done manually.

Arch Insurance International

Sounds like the future is very bright. Finally, just based on our theme of Pursuing Better Together, what does that idea of pursuing better together mean to you?

Jay Rajendra

It really means collaboration. There’s this old adage about if you want to run fast, run alone, but if you want to run far, run together. And I think that sums it up. If there’s anything really special and monumental that you want to achieve, that we want to achieve, either as a company or as an industry, it requires that collaboration. I’ll dive into it in two levels. One, in a company. In a company, I often say you have these two people speaking two languages, you’ve got these techy people, maybe they’re speaking blue, Nigel. And then you’ve got these business folks speaking red. And what you really need to make these things work, to embrace new technologies, data analytics, all these other things, automation, is someone who can speak purple. And that’s where the magic happens, is the purple place. And that’s what companies and people who are in the industry, I’d encourage them to do is to try and start speaking purple. And because that is a very special and unique skill.

The second thing is from a more holistic perspective as an industry. And this really is tied to our Pursuing Better Together brand promise. If there’s something really special that you want to achieve as an industry, digital distribution, faster response times, a great experience for our customers, new products, other innovations, it requires the whole ecosystem to work together. It can’t just be the brokers are here and the carriers are way behind, it can’t be the carriers are trying to do something clever but the brokers want to do things differently or the clients as well. It requires that all the real key stakeholders in the ecosystem all work together, put our thinking caps on and achieve something great for all of us that is mutually beneficial.

Arch Insurance International

Well I think that’s fantastic message to end on there Jay. Thank you so much for giving us a very clear insight into Arch’s technological and innovation ambitions. Thank you very much Jay.

Jay Rajendra

Thank you Nigel, thanks for having me.

Pursuing Better Together with Jay Rajendra

As Chief Strategy and Innovation Officer, Jay Rajendra is focused on innovations that will ensure Arch is a first-choice digital partner, a leader in analytics adoption and a smart user of automation to improve efficiency and service for our brokers and customers.

The insurance industry has at times been characterised as slower on the innovation uptake than its financial services counterparts. However, as Arch Capital Group’s Chief Strategy and Innovation Officer Jay Rajendra argues, the sector has recently seen a huge increase in activity as insurance entities explore opportunities to use technology in new and different ways, with board-level discussions on the value of data analytics and the digital experience.

“People have made bold claims in the past decade or two as to where the industry would be now. The reality is that it’s a complex, highly regulated industry where there are many aspects to consider in order to protect our clients and brokers. Change happens, but it takes time as the whole ecosystem needs to change,” says Rajendra.

The opportunity to tap into different devices and sensors which generate continuous streams of data, coupled with new technologies like generative AI, is already empowering the underwriting process. As he explains, far from replacing underwriters and their relationships with brokers and clients, these innovations are freeing up more time to focus on underwriting and strengthening those relationships.

Another exciting area of change is the development of the digital customer experience. Compared to the personal lines space, where customers are increasingly able to access instant quotations, the commercial lines space still has a way to go, “particularly for specialty business which involves complex, heterogeneous risks and more nuanced policy wordings”, Rajendra explains.

However, he believes commercial business will ultimately be able to leverage innovations in the digital experience to create a lower-friction process along the value chain. Indeed, closer alignment between carriers and brokers on the digital insurance journey is wholly consistent with Arch’s philosophy of Pursuing Better Together.

Success with developing digital solutions begins with deeper engagement and a more collaborative approach with broking partners and clients. Part of that collaborative approach has involved Arch building relationships with the insurtech community. Following the initial buzz around likely disruption of the traditional insurance sector, the conversation around insurtech has now shifted to one of collaboration and partnership.

“Success with developing digital solutions begins with deeper engagement and a more collaborative approach with broking partners and clients.“

“Many of those insurtechs are now effectively technology vendors, providing services to carriers and brokers to enable their digital journey. That partnership is really important for the insurance industry, because it means we don’t have to be the technology innovator in everything we’re trying to do,” Rajendra explains.

“We have a goal based around being the industry’s first-choice digital partner,” he continues, “and that includes being the carrier that an insurtech company would want to work with on any given opportunity. So, we’ve had many successful endeavours with insurtech MGAs that offer a specific type of technology that allows them to solve a problem for a particular niche area.”

Recent successes have included a significant partnership with cyber specialist Coalition in the US, and the acquisition last year of small business-focused US insurtech Thimble Insurance.

Arch’s other two key innovation targets are to become a leader in analytics adoption and a smart user of automation. The company is planning to make more of its products available digitally, across more markets, driving up broker and customer engagement and providing a slick digital experience that benefits everyone in the chain.

On the analytics side, Rajendra explains how Arch is increasing its use of AI and machine learning, having embedded these technologies throughout the organisation. In addition, its customers and brokers will benefit from a much more efficient experience as Arch automates many of the processes that were previously done manually.

His personal perspective on Arch’s theme of ‘Pursuing Better Together’ is the old adage that ‘If you want to run fast, run alone, but if you want to run far, run together’.

“If you want to achieve anything special and monumental, either as a company or as an industry, it requires that collaboration,” he says.

At a company level, that collaboration can often involve trying to reconcile the aims of two groups of people who speak different languages – the tech people, who he describes as “speaking blue”, and the businesspeople who are “speaking red”.

“What you really need to make these things work – to embrace new technologies, data analytics, automation – is someone who can speak purple. That’s where the magic happens, in the purple place. So, I’d encourage companies and people in the industry to start speaking purple.”

About Arch Insurance International Podcasts

Welcome to Arch Insurance Insights podcasts, available on Google Podcasts, Apple Podcasts and Spotify.

During our Pursuing Better Together series, we’ll hear from luminaries both inside and outside of the insurance industry about how they have “pursued better” within their chosen professions.