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Transformed by technology

Transformed by technology

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Today's insurance market is a crowded place with a lot of upstarts jostling for attention online – still, of all businesses it is surely one of the most dependent on trust. Royal & Sun Alliance or RSA as it has been called since 2008 traces its heritage back to the founding of The Sun Fire Office in 1710 and is the most recognised brand in the UK market, where it is the second largest general insurer. In 2014 it appointed Stephen Hester, the man who oversaw the restructuring of RBS, as its Chief Executive: his task was to turn the over-stretched RSA group round, and judging from the recently announced 2015 results this has largely been achieved. The company has enjoyed a 473 percent growth in underwriting profit, and a 221 percent growth in profits after tax.

The resurgence of the group is being achieved by a radical programme of restructuring that involved the disposal of businesses in Hong Kong, Singapore, China, India, Italy and Latin America and refocusing the group on the profitable UK, Scandinavia and Canada markets. “We see 2016 as the last major restructuring year with disposals and balance sheet work completing and the heavy lifting of core business improvement and cost reduction action continuing,” said Hester, who now wants to place customer focus and competitiveness at the front of his agenda as he seeks to restore RSA as the leader of the insurance industry pack.

The review and the tools

At the heart of the strategy to drive continuing business improvement and cost reduction stands an IT transformation programme led by CIO Darren Price. Focusing on people, partners and systems it was developed following an end-to-end strategic review of the IT function in 2014 that set the course for change. “We looked at the whole spectrum of issues,” says RSA's Chief Technology Officer Tim Skates, “including a broad analysis of our IT cost base but also ways in which we could obtain more from a reduced investment spend and at the same time meet some of the business challenges we are facing, and meet them more effectively.”

There has been a significant amount of investment in terms of collaboration and social collaboration tools, says Skates. Now employees no longer have to grapple with Lotus Notes but have been given cloud based tools that they can use to communicate with customers and one another using their own choice of devices. Migration to Outlook and SharePoint is now largely complete, as is Yammer, another Microsoft platform that works like a cross between Facebook and Twitter. Yammer has cut e-mail traffic dramatically, and increased the effectiveness of communication as employees translate the skills they use in their daily social media transactions into the business environment.

“It has been remarkable, and now we are engaging with our employees in a more effective way, and also starting to leverage the pockets of expertise we have across the group, whether in IT, underwriting, actuarial or finance. We have now provided them with a toolset which makes it much easier to collaborate across organisational boundaries,” says Tim Skates.

The point is that this new community is group wide, he continues. “For example we have now a global claims community that are sharing insights round claims best practice. Where we have global clients we are really starting to build some global communities of expertise, and they are starting to share best practice, information, analytics with one another. The same is true within IT. I have a matrix team across the globe and we are sharing IT knowledge and expertise, making sure that we are implementing new solutions the right way and that these solutions are consistent wherever possible.” It saves a lot of duplicated effort too, as best practice is shared and refined collaboratively rather than trying to reinvent the wheel constantly.

Doing more with less

One of RSA's historic problems was that maintaining its infrastructure environment was taking a long time and costing a lot of money. Accretional growth had left the company, a common problem in large organisations, with an unplanned legacy base that was expensive and unwieldy to service. The IT department started to look at how that might be addressed, bringing in new providers where appropriate.

“When you have a number of core administration platforms it is quite difficult not only to extract management information across different platforms, is it also quite difficult to digitise them as well,” explains Skates. “We are looking to simplify both our business and our application estate, for two reasons: one it helps with our cost efficiencies and two it is really a key enabler for digitising our business.”

A good example of that simplification is the introduction in the Canada business of a new claims platform from Guidewire, a claims management system that supports all lines of personal, commercial, and workers' compensation insurance. It is one of the tools and digital processes that provide simpler, faster and more consistent service to RSA's customers and brokers. Additionally it's expected to achieve significant loss control, indemnity benefits, and operational efficiency and above all create a solid and consistent operating platform to leverage future technologies.

This last point is important: technology is moving so fast that constant upgrading and reassessment is needed. The Guidewire implementation is being done with the assistance of EY, and in the UK RSA has now renewed its association with the consulting group Accenture to deliver new platforms, like the insurance industry specific software Duck Creek that is scalable and configurable.

“We are starting to invest in some major new insurance applications and getting those put into our main regions,” Skates affirms. “In Scandinavia we are implementing a product called TIA, this time with assistance from Deloitte, yet another instance of the simplification of our business and application estate using market leading platforms.”

Some of the legacy systems they were working with across the Group were more than 30 years old with skills and experience in diminishing supply. Simple pricing changes could take many months to complete due to complex code, in excess of a million lines, and complex testing. RSA’s new platforms allow rating factors to be changed daily if required.

Digital wins

IT is continuing to support RSA's business in all things digital. “In certain parts of our business we tend to work through brokers, especially in places like Canada,” says Skates, “while we have more direct-to-consumer business in the UK for example. We are improving our digital presence by allowing our customers and brokers to buy new products, and in the medium term to service those products themselves. It's a key part of our strategy to provide digital tools for our brokers to use. Being able to provide them a digital portal they can access as well as providing tools and management information is invaluable.”

Of course insurance is a people business and many customers will always prefer to discuss and purchase their insurance, or make claims, face to face. There will always be a multi-channel approach, Tim Skates promises, but digital tools running in the background will make even this interface more effective and quicker. So simplification equates to better customer service. The really big procurement story relates to RSA's rationalisation of its global infrastructure and its data centre estate, and who better to explain that than Chief Procurement Officer Andrew Cameron.

 “We are moving to best of breed applications. A high proportion of our expense base was fixed. Our ability to take expense out of the operational base was limited by some of the agreements we had in place. At the beginning of the strategy work we went through a process of mapping our IT spend and comparing it to industry benchmarks, and infrastructure was one area that was a real outlier for us.”

The on-demand model

20 original bidders to take on RSA's future infrastructure requirements were whittled down over ten months before finally a Global IT company Wipro was chosen to run RSA’s data centres, cloud, and end-user services, plus provide a multi-lingual service desk for the UK, Ireland and Scandinavia. CGI will be retained in Canada. At the same time the data centre estate has been cut to a single production location in each of the UK, Scandinavia and Ireland – Canada will continue to operate three, but then Canada is nearly six thousand miles across.

This reflects the increasing use of cloud capacity, a new model of provision, says Cameron. “We are moving towards a model where we only pay for the capacity we use. One of our issues was our high fixed cost base. Now it is an on-demand model, so we are realising not only cost and flexibility benefits but also speeding up our ability to provide computing capacity for our various businesses as well. We may be working with different European and Canadian providers but we are moving toward a similar model of on-demand capacity.”

Transition for UK and Ireland will complete this summer and in Canada the new on-demand contract will be fully operational by the end of 2016. It's been a fast changeover made possible by doing a lot of the due diligence ahead of contract signing, explains Andrew Cameron. “Another reason we have been able to deliver this change quickly in the UK is that we are locating into an existing data centre facility, so it does not involve major relocation.”

Though there are costs involved in coming out of existing agreements, the business case for the change was compelling, he adds. Going forward, the cost of doing business will come down considerably, and that will drive business growth. “The more cost we take out of operations the more profitable it becomes for us to write business that otherwise would have been marginal. New agreements are being put in place on more appropriate commercial terms; for example our relationship with Accenture in the UK dates back to 2003. The requirements have changed out of recognition since then. It is worth resetting the relationship and seeing that it works for both parties into the future.”

The need for a service organisation like RSA to retain a human face while embracing automation should create no conflict – quite the reverse. As Tim Skates puts it, the investment benefits brokers, individual customers and employees alike. “We are increasingly using digital approaches to improve our own internal employees' experience. A good example is that there was a lot of re-keying between systems. If you have a customer with a motor policy and a home policy, changing an address across those systems would have been a manual activity but we can now deploy robotics technologies to capture the change once.

“It refocusses our employees' day job and ensures we get it right first time for the customer. We use robotic technologies like Blue Prism to automate manual processes: it enables employees to focus on higher-value work while autonomous multi-skilled software robots tirelessly perform error-free, rules based admin transactions.”

At the end of this transformation process, if it can be said to have an end point, Stephen Hester wants to see RSA back in its historic position as the most trusted and most successful insurance provider – the leader of the pack as he put it. Ultimately that success will depend on the skills of its underwriters but the key enabling factor will have been IT.

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RSA Group

With a 300 year heritage, RSA is a multinational quoted insurance group.  Focusing on general insurance, RSA’s core markets are the UK & Ireland, Scandinavia...

http://www.businessrevieweurope.eu/company/217/RSA-Group