Episode Sixty: Data, The Energy Source Of Insurance

The Importance of Preparedness in Withstanding A Crisis

Data underpins everything. If we want to take new risks into the insurance industry and give the industry the ability to underwrite that risk and share the load, we've got to take the data in as well.
 

In this episode of the Power of Data Podcast, Julie Page, CEO of Aon UK and President of the Chartered Insurance Institute (CII) discusses how data will be key to assessing non-damage business interruption insurance in the wake of the global pandemic. Julie also shares her views on the importance of fostering diversity and inclusion in the insurance industry, supporting public trust in insurance and preparing for unforeseen events.

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The Power of Data Podcast

Episode 60: Data, The Energy Source Of Insurance

Guest: Julie Page, Chief Executive Officer, Aon UK and President, Chartered Insurance Institute (CII)
Interviewer: James Harrison, UK&I Head of Insurance, Dun & Bradstreet

James 00:00
Welcome to The Power of Data Podcast. My name is James Harrison and I'm the UK&I Head of Insurance for Dun and Bradstreet. Today, I'm delighted to be joined by Julie Page, Chief Executive Officer at Aon UK and President of the Chartered Insurance Institute. Welcome Julie, how you doing?

Julie 00:13
I'm very good, James, thank you very much. Looking forward to the conversation.

James 00:16
Julie, you've got a fantastic wealth of experience in the insurance industry, with over 30 years in the braking sector. In that time, you spent 17 years with rival broking powerhouse Marsh, before returning to Aon in 2016 and then being named CEO in 2018. You've held industry roles with the British Insurance Broker Association, and most recently, you’ve been appointed President the CII. In these positions, you've been a champion for the evolution of the insurance industry. So I'd love if we could start this podcast by you giving our listeners an overview of your career, so far.

Julie 00:44
I had an unusual beginning. Well, actually, I've discovered the more people I speak to it's quite a usual beginning, I didn't choose insurance, I kind of fell into it. I left school at 16. So unlike many of my colleagues, I didn't do A-Levels and I didn't do University. This was in the mid-80s, when times were hard, and I'm sure not unlike, although for different reasons, the difficult working environment that many of the young people have today. And having left school at 16, I found my way onto I guess what was an early version of today's apprenticeship scheme, which was the YTS, the Youth Training Scheme that existed in the mid-80s. And that was with a local insurance broker, a high street broker doing household insurers and motor insurance and motorcycles and the like - it's a fantastic grounding for insurance. And discovered as soon as I started that I really quite liked the industry, and also that my lack of education was going to be a bit of a challenge. So I went to night school and I had a teacher, a great tutor, I was completely engaged in the subjects that he was teaching, which were actually the insurance modules of a business diploma that I was doing. The teacher obviously spotted somebody with a real passion for the subject offered me a role. And the firm that he offered me a role in as a trainee, so very early in my career, was Alexander Stenhouse that became Alexander and Alexander that became Aon. So that is how I landed in the world of corporate insurance broking. And I have pretty much loved every - I was about a day, but it probably be fair to say week, they're always bad days. I've loved my time in insurance from the start to today and I expect that to continue. I think as an industry, we do fabulous things. And sometimes our ability to explain what we do, and the value that it brings isn't what it could be and should be, which is why I put myself forward for things like supporting the Beemer and supporting the CII, it's the opportunity to make sure we're conveying the real value that our industry creates.

James 02:44
Fantastic journey Julie and you mentioned there about school and education being very important and that makes sense now that you're now President of the CII. But for those of our listeners that are unfamiliar with the CII, could you please explain a little bit more about the institution, as well as your role in supporting industry?

Julie 03:00
Yeah, the Chartered Insurance Institute has a number of different responsibilities. Essentially, its foundation is in education and learning. But it also has a responsibility to support and enable public trust and insurance. And obviously, most of my foundation, a background with the institute is through the education buying and supporting the education of my colleagues who are at various stages of their own professional development, and the ongoing continuous professional development that the CII provides to the industry at large. But the CII has a truly independent and neutral voice, where they represent the whole industry, and with this objective of public trust, have the ability to be a guidewire really, both for the industry and for the public media regulators on what the insurance industry is capable of doing and should be doing, particularly with the way risk is changing. We've obviously been through a very difficult are still going through a very difficult phase with the pandemic and insurance has its own challenge within that subject and I've no doubt we'll get towards it. And the Chartered Insurance Institute has the ability to bring the parts of the industry together that can develop solutions, can bring about change in response to some of those challenges, and also facilitate partnerships because a model risk needs partnerships to be resolved to provide solutions to find a way through.

James 04:25
Absolutely. And you mentioned there about COVID-19, the insurance industry, as we know is all about risk and protecting against that. And COVID-19 do more of these risks where very few of us could have anticipated that or really understood the full impact that could lead from pandemic. What has been the key impact that you and Aon have seen a result of the pandemic and how have your client's needs changed and consequently have Aon addressed those changing needs?

Julie 04:48
Everybody is utterly surrounded by this subject. It does fall into two different answers. If I start initially with Aon’s own response: We are very lucky in our organization to have obviously risk experts, it's what we do. So we obviously saw the development of the pandemic in the Far East, we're in the Far East. So our experts start to map it and track it straight away. We were getting early warnings - relatively as this happened very fast, of course - but we were getting early warnings to our own analytics about what this pandemic was potentially going to do and the impact on the health systems around the world if the pandemic were to spread internationally, which of course it did. Which helped enormously with our own planning, but also helped us help some of our clients with their planning and help with the development of some of the solutions that Aon was bringing to the table as quickly as would be feasibly possible, given the pace with which the pandemic spread around the world. Aon responded incredibly well, we, like many of the financial services sector were equipped, ready and able to move into the world that we needed to operate in. Within hours, we had colleagues all over the world working remotely, working from home, able to connect. Every day that's gone by we've been iterating our ability and our capacity and our capability in this world so that we get more resilient, more sustainable. And the longer this goes on, the more likely that these changes will become sustained through to the new better, the new way of working. And so you know, our solutions are following the same track, we're kind of understanding that our clients started out talking about working remotely working from home, and are now using the word agile in the full sense of the word. And now, thinking about what a truly agile business looks like. An agile business changes the risk profile quite significantly, from one which is invested in sort of static infrastructure. So we're changing our ability to deliver solutions, we're helping our clients understand the risks and adapting their models to that new better. And at the same time, obviously, we're learning and testing with our own business model and our own operating model. Using that as a collaborative force for good with our clients, we've set up a city coalition in London, which involves many of the largest employers, particularly in the city and Canary Wharf, where many of the challenges are common. Shared knowledge, shared experience means that we all kind of accelerate to the new, better, much faster than we might do if we were working in isolation. We're trying all of the time to prepare ourselves and to develop our future. And I know that you're aware that we use the term “into the new better”, but equally, very keen to be able to share that with our clients and learn from clients equally. All in all, I think ion has responded incredibly well. We've had internal and external task forces, pretty much since day one of this particular virus being called out as a pandemic and we've been developing at a rate of knots. Hopefully, you're doing our best to keep pace with the way the risk profile is changing.

James 07:53
I'm glad that you mentioned the New Better Report. So in preparation for this podcast I read the report that you just released - I wouldn’t be doing my job if I hadn't. And the report concluded and I thought was really interesting - the report concluded that organizations and their leaders have to come to understand to a key idea: that things cannot go back to the way they are, where they were, they need to face the perils that confront them. And the firms need to step up their efforts to prepare for these new risks that we find ourselves in today. With this report in mind, what can companies learn from in 2020, and how to better prepare for future unforeseen events?

Julie 08:25
It's really interesting this one, because I've had a number of conversations where people have said to me, “You can't possibly have seen the pandemic coming, nobody could have prepared for it”. And you know, those conversations start there. But it doesn't take you very long to move from that to “you may not have seen precisely this event, you certainly won't have seen precisely this scale of impact, but you will have seen the potential for risk on your own firm and you will have seen the potential for being caught up in a systemic risk”. And the best firms are prepared to that. They have undertaken the what if scenarios, they have looked at potential external forces, they have understood that systems can be disrupted, properties can be disrupted, colleagues can be disrupted. The cloud technology can be disrupted. They've kind of understood these things and played out scenarios, it may not have been this one, but if you are risk prepared, you have muscle memory, and that muscle memory serves you well, when the crisis lands, whatever the crisis is, and there are some organizations, some trades in this particular crisis where any amount of preparation could not have seen them through without significant loss and impact. But for many organizations, the muscle memory of preparedness will have paid off. Now it certainly has with our own organization. We did understand what it would take to return all of our colleagues to work from home. We did understand what it would take to communicate on a global scale with our clients about the way we would work and be accessible to them. We did have continuity plans that would enable us to shut down a contact center and find a new way of working. And I know from my conversations with many clients around their own preparedness that they likewise, were, let's say 65-70% prepared. And then they only had 30% to find in light of the novel, unique nature of this particular set of circumstances. If you had no preparation, then you've got no muscle memory to call upon. There is tons of data that supports this, you know, pre COVID, we did some work with Pentland Analytics to look at, you know, what's the delta between a well prepared crisis response and a poorly prepared crisis response. And they pulled together about 40 years of data, and there is a 44% delta in their analytics. And that 44% is like something in the order of 22% positive outcome from excellent preparation and there are five things that drive that. And a negative 20% for the opposite end of the spectrum. So there's a massive premium in preparedness. And the five things that they called out were, obviously the preparation around risks. So that muscle memory, you know, in terms of what you do, and how you do it, when the crisis hits. Leadership, so clear, strong leader who stands in front and leads in front of the issues, and is able to call the organization to arms in response to the challenge. Communications, clear, consistent all stakeholders involved, aware, informed. Action orientation, so move quickly into action, once you've identified what needs to be done. And then their commitment to change, you know, learn from it, understand how you prepare yourself for a future crisis. There's obviously a lot of detail behind that. But the premium of preparedness is worth the effort. You don't realize what that effort is worth until the crisis lands because there's no value in it, and there's no perception of value in it until you have to call upon it. So that would be my call out what do you learn from 2020. That is, if you found yourself ill prepared, then build the muscle memory up for the next time because sure as eggs is eggs there’s going to be something else that has the potential to do this kind of damage to the human world.

James 12:10
COVID-19 I think is very much accelerated modernization across different organizations, and the insurance industry is evolving in an unprecedented pace. COVID-19’s accelerated that now. Staying with data, how is a on harnessing data to strengthen innovation? And how can data support the industry moving forward? In your opinion, how can the insurance industry utilize data to the benefit of your clients as well as provide enhanced ways to manage and mitigate risks?

Julie 12:34
Data underpins everything, it is the kind of the energy source for our industry. We have hundreds of years of data around physical risk, property damage, physical damage, loss of life or injury to individuals. We understand those risks, and we have the data, we understand the exposures and we can model those exposures. So insurers taking risks and intermediaries bringing risk to the market, we are able to provide our marketplace with the information that it needs to effectively underwrite and take that risk and sharing the load that our clients experience. When you think about these new and emerging risks, you've got to think about what's the underlying data source. There is this oft used phrase at the moment, which is we really need to get on top of non-damage business interruption. And yes, we do. But let's think of the size of that obligation, non-damage business interruption. If we talk about damage business interruption, we know what causes damage to buildings, there's nothing new under the sun in that category. We know what causes damage to buildings, to assets, we know how to factor in location, structure, surroundings, we know how to factor all of that in the data is there. When you're talking about non-damage business interruption, there are so many unknowns with that particular phrase. It's cyber in all of its various shapes and sizes can cause an interruption. A pandemic, which has cost the world way more than the insurance industry could ever have afforded and is continuing to do so causes non-damage business interruption. We have climate change, which in its weather form is becoming predictable, you can forecast events with climate change. So some things are still insurable, other things become harder to insure, because of that ability to predict, which is where the partnership conversation needs to come to the fore. But data underpins everything and if we want to take new risks into the insurance industry and give the insurance industry the ability to underwrite that risk and sharing the load, we've got to take the data in as well. And if I think about some of the things that Aon is doing, recognizing this new world of risk, I mean, the Global Risk Management Survey that we do every couple of years shows that five out of the top 10 risks that clients face are either not insured or any sort of partially insured. For us to start meeting that unmet need, we've got to fuel it with data and we've got to be able to use the data to analyze trends and create some level of predictability or forecast, so we are investing in the sources of data. Our acquisition of Stroz Friedberg, the organization which is now Aon cybersecurity is not involved in insurance, but involved in the protection of systems and post-loss consulting activity will enable us to inform the industry and inform our clients better around losses, because we'll have better data about consequences and the environment which can create loss or accelerate loss. And we're doing the same thing in the intellectual property space. Again, an acquisition that we've made, now Aon Intellectual Property Solutions is enabling us to value intellectual property in a way that we have never been able to do, which increases our ability to drive a transaction that an insurer can put some capacity behind. So you know, we're very much interested in the circle of life. And the circle of life really starts with understanding a risk, putting data around it, translating that data into a transaction that enables insurers to share the load.

James 16:02
That's really interesting, because data analytics, we talk about it sometimes if it's a new trend, but really in the insurance industry has been using data analytics ever since the days of Edward Lloyd's coffee shop where, you know, merchants and underwriters were first looking for some sort of semblance of a single version of the truth when it came to shipping data. So it's really interesting to see your approach now to the new types of recipes, intangible recipe theft, and cyber, so thank you for that. Looking ahead now to 2021 it's highly likely that we'll still be feeling the impact of 2020, from the pandemic to the economic crisis. And then one of the most prominent social movements of the 21st century, Black Lives Matter. How do you hope the insurance industry will respond to these key events both over the next 12 months and beyond?

Julie 16:43
The two issues are obviously so materially different COVID-19, and the underlying issues that have led to the Black Lives Matter movement. But the thing I think that brings them together in a new and interesting way, is empathy. The pandemic has opened people's hearts up in a way that only something of this kind of scale, and global spread could achieve. And within this, we get the, you know, the horrifying events that we saw around George Floyd in the US, sparking off the Black Lives Matter movement. And it's landing in an environment where people are feeling naturally empathetic, and societal in the way they're looking at the world. So I think what we have now and thank heavens is a very fertile environment for things to change for the better for our societal outlook. And I think what we have now is a bit of a collective responsibility. I feel it very strongly in my own organization, not just in the UK, where diversity and inclusion and the value of diversity has been understood for a very long time. But globally, our interaction on a global scale to make a difference. It's a societal ambition. Yes, there's a business case of diversity, which is unquestionable, and we could get in into that, James. But the reality is, there's a societal need to be more inclusive, and to understand and have empathy with the cause and effect of everything that we do on other people and other parts of the world. And I'm hoping that not only is that going to be a sustainable change through this crisis, through the Black Lives Matter movement, but all the way into the response to climate change. The thing that the pandemic has done is, it's kind of said, now all these things that are out there, we were aware of them, we can even describe what they are. But human nature is to put things that are so unpalatable, that you don't want to address them to put them way back in your mind or you know, just not take them in at all. And I just think that the pandemic has made us take them in whatever they are, wherever they come from, one of which is the drive to make a difference that has been motivated, or at least accelerated by the Black Lives Matter movement. But I feel it in my own firm, top to bottom, and I feel it in the industry. I know we're not alone, in the way we're responding to the momentum that there is around the subject and around diversity in general. Not only the ethnically diverse challenges, or the diversity that we need around ethnicity, but also in general. And I just hope that it's sustainable. I hope that the learnings that we have as a result of the environment that we're in right now stick and we don't just revert to business as usual, when the vaccine has enough coverage and we can all start to feel normal, I really do hope that the new normal is a new better.

James 19:25
Yeah, and then you normal you mentioned there but and fear thing that's critical, you know, it's been a significant year, understatement of the year and a spark some long overdue and necessary conversations around diversity, inclusion, and equality of across society and business like you mentioned. It'd be great now talk about that business case on diversity that you mentioned, and maybe talking a bit more about your role with the CII, while the approaches that you're seeing in the industry to ensuring that new talent is entering into the industry from different areas and different backgrounds, and how is the industry helping to level the playing field for passing to senior leadership positions?

Julie 19:59
There are so many wonderful things going on at the moment. But just to step back a moment and just take that kind of heading talent, the need for talent is immense. Before we even get into an argument about why you should have diverse talent, the appetite to have talent is so big that the basic question is, why would you exclude any talent that's available to you?

James 20:20
Absolutely.

Julie 20:21
Then when you kind of step back from all talent, I want all talent in the firm that I work for, I want my firm to be an organization within which all talent wants to be for their career, that's your base point. And then you say, what kind of mix in the talent do you need to be effective. And diversity makes such a major difference to the way you see things your perspective, it strengthens insight, it ensures that the solutions that you develop are relevant and meaningful for broader audiences, and that you don't miss tangents. Groupthink is such a limiting place to be. And again, the pandemic will sit down, it's told us loud and clear, this is a global world ever being physically an island, we're not actually an island in the world of risk. As a result, we need to understand different cultures, different ways of thinking, different solutions that are out there. And we'll only get that by enabling a diverse set of perspectives. So I think the business case is made, the data that supports it may not be as robust and evidential as some people might seek but I think there are enough proof points out there now to point to the business case having been made. And the only thing getting in the way, is that glorious phrase unconscious bias, and understanding how that influences the way you think. It's that which remains as the barrier to ensuring that we have true diversity, and an inclusive environment for all talent.

James 21:45
Thank you. And I totally agree the business case has been made and diversity of talent leads to diversity of thought, which could only help support the industry as it evolves. To complete our discussion today, it'd be great if we could end on a piece of advice or a lesson that held you in good stead for your career. Something that a listener, whether at the start of their career or already in a senior role would benefit from?

Julie 22:07
I got a couple of things that I always say an answer to this question, which is good, because it's obviously true, because I am consistent, whoever I'm talking to. For myself, probably my number one word is, I am insanely curious. If there's something going on, and there's a buzz about it, I really want to get into whatever it is, you know, I want to understand it. If it's interesting, I want to learn and be involved. I understand every now and then that it's either not appropriate that I do or I can't some reason be involved. But I remain ever curious. And I've had that in my DNA, I think forever. I can remember even when I was 17-18, and I could feel a buzz in the office around something that had nothing to do with me, I wasn't very good at staying away, I was a little bit like a bee in a honeypot. I would say to anyone who is at any stage in your career, you know, be curious, go and inquire, you may you know, learn something or find an opportunity that you never anticipated. And the other thing I would say, which has come to me in later years, in the early years, curiosity was my fuel. But in my later years, it's the understanding that as my role has developed, and I have more responsibility, I need to understand what I'm good at. And make sure that I work with people who are good at things or better at things that I'm not so good at. And once upon a time sort of earlier on in my career, I found it really difficult not to have the best understanding in the room of everything that I had responsibility for. I have learned that doesn't pay off in the long term, you need people around you who understand things better than you do in certain areas of expertise. And you need to give them the freedom to do their job well. Empowerment, permission, all of those kinds of things. And the better I get at that, the more I feel capable of achieving. It took me a little while to figure that one out. But having done so and obviously keep refreshing my innate curiosity without actually trying to take over, the more fulfilling I find work. And hopefully teams around me are free and enabled and empowered to grow also. I actually love watching talent develop a take-off, and I'm sure many of the people around me are going to go past me in the passage of time and I get a real kick out of seeing that happen. So two pieces of guidance, curiosity, at every stage in your career.

James 24:21
Yeah.

Julie 24:22
Understanding the power of diversity in your team, diversity of skills, capability and experience.

James 24:27
Yes, almost understanding the strengths of your team supporting and then building that team around those strengths to cover those gaps.

Julie 24:34
Yeah. And it goes back to that point, James that we had around groupthink, you really don't want a room full of people that think that look like you. The meetings might be great fun, everybody's in glorious agreement that you're unlikely to get the best outcome.

James 24:47
So let's be curious and enable diversity of thought. That's a fantastic key takeaway from this podcast. Thank you, Julie. I've really loved hearing your insight. And I'm sure our listeners will do too. Thank you.

Julie 24:57
Thanks very much, James.