How Aon added technology to serve coverage of smaller businesses

June 26, 2023 6:38 AM

A Post-Covid Office As Corporations Prepare For Employees Safe Return — Aon Center, the company's U.S. corporate headquarters in Chicago, Illinois.

Five years ago, management consulting firm Aon, known for advising large insurance carriers on risk and technology, named Kieran Stack, who had joined in 2008, as operations leader for digital products. Digital Insurance spoke with Stack about how Aon has added services for small business insurance clients, what changes have been effective and what insurtechs must do to get funding support. In this conversation, edited for brevity and clarity, Stack also discusses Aon's 2020 acquisition of small and medium size business insurance distribution platform CoverWallet and how it's become a key part of Aon's added scope.

In the past five years, what has Aon accomplished with developing technology?

Kieran Stack_Aon-DIG-IN '23.JPG — Kieran Stack, head of managed shared services and insurance operations, Aon Digital Client Solutions.

It is certainly a massive achievement for us to bring in a talented team of product and tech engineers and developers that we continue to invest in. We initially made a big jump start on that with our acquisition of CoverWallet. With that, we brought in assets in the tech stack that we didn't have in our suite up to then. Integrating that and bringing two significantly different cultures – an entrepreneurial, young, fast moving, agile-paced team and a traditional large publicly traded corporate – enabled us to develop an enhanced specialized product that we can then distribute over the platforms; to also be able to engage with those carrier partners, with respect to our distribution strategies, and particularly engage with them in a very thoughtful way with respect to the broader roadmap, with respect to our connectivity.

We've grown, by four or five times easily, the depth and breadth of our API connectivity with the carriers. We couldn't have done that without a team, a tech stack and set of capabilities that we initially acquired and then continued to invest in. That enables us in the best way possible to actually service our clients in the way that we want to.

It's given us the opportunity to hone and fine tune our go-to market strategy which fundamentally is centered around partnerships, thinking through embedded insurance in various different types of partnerships, and through vertical strategy – being highly specialized and going deeper around a personalized customer experience, personalized delivery of products and services to customers. Not just around who they are but the industry sector they're actually in.

Being bespoke in the customer experience, gathering pricing exposure and serving products to inform the customer of their exposures, has given us the opportunity to fine tune our strategy. For example, 7-Eleven had a clunky, old, traditional, largely paper-based customer experience to service its franchisees. It was pretty wasteful and inefficient for us as a firm. In eight to 10 weeks, we transformed that entire program to be serviced through the CoverWallet platform.

What’s next in innovation, industry-wide or right now for Aon?

The next phase for traditional players in the traditional markets and also insurtechs comes back to customer servicing and retention. Thinking about API connectivity and data sharing, 90% of the API connectivity availability that both insurtechs and traditional carriers now have is focused around the customer acquisition process. Even then, it's only focused around the quote process.

Better automating and sharing data about renewals and servicing across partners will help serve customers who are canceling or changing coverages. Where you're not able to rely on API connectivity, it means your fallback position is that you're relying on pretty clunky file shares, clunky manual verification and reconciliation of those files, and manual record keeping and maintenance and correction around that. That's pretty costly.

What’s the most effective way to innovate?

The most effective innovators understand the problem that they're trying to solve. They create cross functional teams with the right necessary skill sets that can solve that problem.

They then empower them to decide the best way to solve those problems. Lastly, they hold them accountable. When you think about cross functional teams, the most successful innovators involve their engineers up front in the solution design.

When we're talking to carriers, and we're building our APIs, we want our product and tech team to talk to their product and tech team. We don't want business heads and operations team members to try to give our product and tech team a solution they have to go and actually deliver. All that's going to happen is our tech guys are just going to be shipping code. And they're not necessarily going to be outcome-focused to help us actually solve the problems.

Our focus is going deeper around our verticalization strategy, personalization within that, around our partnership strategy, but equally as well then within that, going deeper and investing with respect to that end-to-end customer servicing. It's more around how we can be effective in terms of how we innovate and we drive solutions that drive successful outcomes to those ends.

How are venture capital and private equity markets supporting insurtech startups?

There's some stabilization coming off the back of a pretty low year of funding in 2022. While it's exciting to see funding pick up in the first quarter to $1.4 billion, it's still the second lowest quarter in about four years. Exits are down still by 58%.

I picked up a shift in emphasis from the VC and PE backers of insurtechs. Investors are really looking for firms to shift gears and move beyond that initial phase, one evolutionary path that focuses on customer experience and distribution, and specifically move into customer retention. They want to see very hard line metrics with respect to customer retention. How you serve customers is a big part of retaining them. What's the broader value proposition in what that ongoing service experience looks like for customers, and how does that translate into quantifiable metrics around customer retention?

Obviously there's a lot of noise around AI. There are two camps. Some are going full speed on experimentation. A second camp is very much holding, taking a watching brief, maybe dabbling very small on one or two pieces, to see how it all plays out over the next year or two before making some significant investments. Aon and some of the assets we've acquired, like CoverWallet, fall more in the second camp.

Is the influence on what’s developed or built shifting from the backers to the insurers?

It's actually a realization. There's a push coming from investors. Some of the best players out there, the best insurtechs out there, are starting to realize it's a natural progression in their evolution, from early stage startup to running a business. It's not just all around the customer acquisition side. We also have to retain these customers. So we have to invest more and we have to think more around what that end-to-end customer servicing looks like once we've acquired those customers.