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Fast Fast Forward

XL Catlin innovations rise to help clients navigate sea of changing risks

Lets Talk_Sarah Street_Innovation

Setting sail from Punta Del Este, Uruguay on October 4, 2017 Sarah completed two legs of an 8-leg journey which took her almost over a quarter of the way around the world and a total of 9,500 miles, landing her and her fellow crew members in Fremantle, Australia, two months later.

What does racing through the South Atlantic and Southern Ocean have to do with her role as Executive Vice President of Strategy and Innovation Initiatives for XL Catlin? It turns out quite a bit. 

Enduring great challenges, relying on solid teamwork, and capitalizing on the diverse experiences and skills of each crew member to safely wage a winning battle against Mother Nature.  Sarah quickly learned, ‘unless you go out into the ocean, you don’t get the ocean experience. You learn when you’re out there!’ How true that is in life, in business and in innovation! 

Q: What makes innovation a business imperative for the insurance industry?

Our clients’ needs are changing. Just look at the composition of the value of the market capitalization of the S&P 500 companies. Twenty years ago, approximately 80% of the value of that market cap was represented by physical assets sitting on company balance sheets -- think plants, property, buildings and other assets that insurance companies have been very happy evaluating and underwriting for decades. Only about 20% of their value was represented by intangible assets such as intellectual property, brand value, etc. Fast forward to today, and it’s flipped. Only about 20% of the market cap of the S&P 500 is now represented by physical assets, and the rest are intangible assets. As our clients look for risk solutions, they need insurance products that will safeguard those intangible assets. To date, insurance companies have not been very responsive to those needs and if we are remain relevant to our clients, that needs to change. 

Q: What’s influencing innovation in the insurance industry?

Not so surprisingly, a lot of externally driven innovations led by entrepreneurs have started in the personal lines of our business and are focused on improving customer experience. Add to that the fact that, these days, as consumers, we want everything to be faster, cheaper, better. So over the last three years, we have been seeing new business platforms or approaches that are fueled by how we use technology in our personal lives to change that experience in our insurance buying. 

We are also now seeing an increasing number of opportunities in the commercial P&C insurance sector. We are leveraging data analytics to rethink the way we underwrite risks. The industry is moving from a “rearview mirror type of approach that uses historical data to compiling real time, third party sourced and individualized risk data about the actual insured. It’s also important that our industry transforms our own operational platforms to significantly reduce the cost of delivering our products. Just think: today, over 30 cents of every US dollar are premiums absorbed in the cost of doing business. In some markets it is even higher.  That is not sustainable. We need to use technology to transform our platforms and make them much more productive. 

Q: How are data & analytics sparking innovation?

With the availability of new data we can underwrite new markets. A great example of this is flood insurance in the US. It is a market supported by the government through their flood program, which has historically used very outdated and inaccurate zoning charts that are driven by a structure’s distance from shore. Now, we can use satellite imagery to zero-in on an individual building and be much more specific in deciding whether it’s risk or flood exposed, leading to more appropriate underwriting. 

Q:  What’s XL Catlin doing to spur innovation? 

We have embraced the insurtech community as we view it as a helpful catalyst for the innovation we know needs to happen in our industry. We don’t believe just one model of operation wins, however. We think there will be insurtech companies that are successes by themselves. There will be insurtech companies that will partner with incumbent insurance carriers and be successful. And we strongly believe that insurance companies will also do innovation by themselves. We are positioning XL Catlin to be involved in all three areas of these areas of innovation, for example:  

  • XL Innovate is our venture capital initiative, where we invest equity in promising startups; 
  • Accelerate, our internal innovation team, makes sure innovations are pushed through our entire organization, and works with our business groups to help them with experimenting in innovation, and this often involves identifying start-ups that we can develop business partnerships with to accelerate the process; and our
  • Business as Usual innovation makes sure we have a constant stream of innovative activity taking place that’s part of what we do on a daily basis, which our business units drive as they seek to solve their clients’ needs.  

All of these areas look to data analytics, machine learning and artificial intelligence as central components to what we do and are helping us transform our own platform.



In this innovation world we now live in, we all have to get more comfortable with the lack of answers, a little more chaos and find a way through it all."


Q: XL Catlin’s VC initiative XL Innovate has vested in some 9 startups to date.   Which ones do you find most interesting?  

They are all quite interesting and each highlights a different approach to harnessing innovation and the great potential of insurance. In particular: 

  • Lemonade is reinventing personal insurance transactions and addressing the customer service experience. It is a very streamlined front end and a chatbox-enabled claims process that boasts being able to settle a claim in seven seconds. 
  • New Energy Risk is a great example of how we are finding new ways to approach the renewable energy marketplace, which has historically had uninsured risks or a low penetration of insurance coverage. New Energy Risk is using more sophisticated data and analytics on the underlying technology being built into these projects and providing a performance warranty insurance product that insures that once the technologies have been constructed they will run as expected. That gives banks and investors a much higher level of confidence in providing financing for the project.
  • Stonestep combines insurance, innovation and technology to benefit emerging market. This insurtech firm provides microinsurance for developing countries, serving underserved populations in South America, Asia and Africa. 

Q: Investing in innovation is great, but how does XL Catlin keep itself at the forefront in a competitive marketplace?

XL Catlin is very proud of our track record in innovation. In fact, we believe we have innovation in our DNA. For the second year in a row, we’ve come out on top of Advisen’s Annual Pacesetter Index, an annual recognition of product innovation in the P&C insurance industry, having introduced 26 new or enhanced property, casualty, professional and specialty insurance coverages or risk management services in 2017. That’s our business as usual innovation, which is critically important to us as we explore new products, new geographies, new coverages, and the day to day responding to the needs of our clients. 

My recent experience ocean racing underscored for me just how critical it is to have a diversity of experience and backgrounds working together, and how each person brings a unique perspective to solving critical issues. From the skipper who’s experienced sailing the ocean, through to the engineer who can fix the fresh water maker when it stops working at sea and keep the generator working for our power. Each individual on the team is absolutely critical to making it to the next port of call successfully and safely. That’s a huge lesson in innovation: You need to listen and engage everyone to get to the right solutions. 

Q: Given your experiences in the C-suite, and at sea, what advice do you have about embracing innovation to successfully navigate opportunities and challenges ahead? 

A lesson that was reinforced for me during the race, and that I had also learned while serving as Chief Investment Officer for XL Group during the credit crisis, is to focus on the things you can do right now, and avoid getting distracted by the things you can’t control. 

Sailing in the middle of nowhere, with a group of people I didn’t know very well, and with no control over what Mother Nature was going to throw at us impressed upon me the fact that you have to adapt to the conditions you face, decide what needs to be done and then do it!. 

In this innovation world we now live in, we all have to get more comfortable with the lack of answers, a little more chaos and find a way through it all. You have to steer the boat to safety and enjoy the ride along the way!


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AXA XL is the P&C and specialty risk division of AXA.