Innovating for the Future by Transforming Core Systems

Stephen O’Connor, CIO, CSAA Insurance Group

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Stephen O’Connor, CIO, CSAA Insurance Group

Innovation—once something that was nice to have—is now a key differentiator between companies that succeed and companies that don’t.

Those that cannot keep up are experiencing increasingly shorter life spans. The insurance industry is not immune to these threats. Insurance companies are bracing themselves for the impact of innovations like the autonomous car and sharing economy.

Adding to that is the increasingly diverse customer population, with Hispanic representation expected to grow at a high rate (from 18 percent to 24 percent by 2040) and millennials becoming the majority purchasing group. And customers today have different expectations when it comes to service and buying decisions. Social media has been a game-changer when it comes to decision-making, access to information, and speed and convenience of digital services.

All of these changes together are our collective call to action. We are having to take a long, hard look at ourselves and figure out how we can compete in the near-term and mid-term, and how to best position us to thrive for the long-term.

With a mission to serve AAA members and clubs by making insurance simple, proactive and personal, we improved capabilities in key areas: products, technology, and big data. We took on a lot of simultaneous change while we were also rapidly growing, an effort that we believe to be unparalleled in the insurance industry.

With our partners at AAA clubs, we modernized California products and launched competitive products in all other states. We launched our Usage Base Insurance (UBI)/Telematics program, which is now in 19 states, including DC, and represents 20 percent of new business. We launched a connected home pilot product, as well as a ride-sharing endorsement in California.

We took several disparate systems and integrated them into streamlined policy and claims administration systems. Today, our policy administration and claims systems are modern, scalable and operationally stable. And we now have a single phone system that connects all customers, clubs and employees on one platform, ensuring seamless service during catastrophic events.

With a mission to serve AAA members and clubs by making insurance simple, proactive and personal, we improved capabilities in key areas: products, technology, and big data

Our digital capabilities have expanded exponentially. Where before there was minimal data capability, we now have an industry-leading data and analytics platform that enables us to improve business performance and make data-driven decisions in almost real time.

We expect these efforts to enable us to achieve strong and profitable results moving forward. Since 2010 and together with AAA clubs, we have:

• Grown premium revenue from $2.7B to $3.5B (30 percent), exceeding the industry growth rate.

• Reduced loss adjustment expense ratio and underwriting expense ratio.

• Improved customer satisfaction in Competitive NPS and all five JD Power surveys and maintained a strong capital base.

• Built an innovation function that enables us to innovate on our platform, and we are investing in continuous improvement for all employees.

We did quite a bit of heavy lifting—and we know that the work has just begun. We believe we have a competitive advantage, but how we leverage these capabilities to ensure that our company’s relevance 10, 20 and 30 years from now is the ongoing challenge that we will be ready to tackle.