SPEAKER: You're listening to Rethinking Insurance, a podcast series from WTW where we discuss the issues facing P&C, life, and composite insurers around the globe, as well as exploring the latest tools, techniques, and innovations that will help you rethink insurance.
CHARLIE SAMOLCZYK: Hello. And welcome to Talking Technology. I'm your host Charlie Samolczyk. And in Talking Technology, we explore the wide range of technology issues facing insurers, from AI and data science through to open source solutions in cybersecurity. And we look at how we are helping our clients to tackle these issues.
In today's episode, we are going to look at ecosystems and partnerships, and how they can benefit insurers. I'm pleased to be joined by two individuals from our side. Andrew Harley is a Senior Director in our technology business. And he also heads up our global partnerships. And John Heidelberg who is our Global Lead of technology consulting. So thanks, guys, both for joining.
JOHN HEIDELBERG: It's a pleasure to be here, Charlie.
Likewise. Looking forward to discussion.
CHARLIE SAMOLCZYK: Awesome. So today's podcast obviously is focused on ecosystems and partnerships. Why don't we start actually not jumping into that quite yet. But technology is all pervasive right now. And so maybe a quick question for you guys just to open it up, what is your next technology purchase that you're thinking about making, and why? And maybe, John, I'll start with you.
JOHN HEIDELBERG: Yeah, you know, interestingly enough, I've been looking at the VR helmets. I don't necessarily know that I have a great why. I've had the opportunity to use them at friends' homes, a couple of my kids have one, and they just seemed like a lot of fun.
CHARLIE SAMOLCZYK: Very cool. We can work that into the ecosystem discussion, how headsets might impact insurance. Andrew, over to you.
ANDREW HARLEY: Well it's way, way less interesting. I'm having my house renovated at the moment. And we're getting a load of solar panels and a heat pump. That is the technology I'm actually genuinely excited about having next. So I just heard on the news today that global temperatures are going up to 1.5 degrees. So I feel I'm doing the right thing.
CHARLIE SAMOLCZYK: Yeah, very good. Excellent. Well, why don't we jump into it. And let's start with the word ecosystem because I think that's a word that gets thrown around a lot. Probably means different things to different people, I would assume, depending on the lens through which you see your role or how that comes about. But maybe John over to you, in your opinion and based on your history, what is an ecosystem? Especially as it pertains to insurance technology.
JOHN HEIDELBERG: Yeah, sure, Charlie. Like a lot of things in technology, the term ecosystem has been wildly overloaded. There are probably lots of qualifiers that you can put in front of it. When I think of the technology ecosystem for an organization, what comes to mind for me is all of the technology that goes into running the organization and helping the organization achieve its business objectives.
And that's hardware, software, and all the things that we surround that with to support the good running of it. The data management and security and integrated user experiences and the work we do about resilience and availability of that technology. So I think when I hear ecosystem from our clients' point of view, it is all of those technologies that go into to supporting the organization and helping it drive business value.
CHARLIE SAMOLCZYK: Andrew, same question to you, what do you think about when you hear the word ecosystem?
ANDREW HARLEY: Yeah, so I guess given my role at WTW is to build partnerships with different technology providers, I have-- I do have a different perspective. So I'm thinking of this more in relation to a market supply perspective. And my take on it is that a technology ecosystem is essentially a group of what might be a diverse network of different technology providers that will each typically support each other to some degree or another to benefit their own clients, their common end clients.
That degree of support each company might provide could vary. And could be as little as just simply understanding how their respective tools need to work together should a client ask for those two pieces of kits. Or it could be much more significant. So they could be sharing innovation and driving change, driving connectivity between each other.
So, I mean, you might, for example, think of an OCR software provider, a market leading OCR software provider working with an analytics solution provider so that an employer doesn't need to worry about how these two systems work together, they just do.
CHARLIE SAMOLCZYK: Yeah, interesting. So, I mean, you guys approached it from different perspectives. So, John, you talked more about the kit and the stuff and the technology. And, Andrew, I guess rightly so based on your role in partnerships, you were thinking about more of the entities that were coming together and the providers and the vendors.
If that's the definition-- I guess my next question is-- it sounds like they're important. And I think probably the notion of ecosystems has been around for a long time. So, Andrew, why now? I think if you look at of conference agendas and speaker topics, ecosystems is coming up a lot now. Why do we think that they're at the fore right now? And what's the importance of them?
ANDREW HARLEY: Perhaps surprisingly there is so much innovation occurring right now in the financial services sector and the insurance sector. So everyone's familiar with the term Ensure Tech. There's significant investment. I think in 2022, Ensure Tech funding was around 0.8 billion. That's not a small amount of money. And that continued a trend that's been growing for many, many years. In fact, in 2021 the figure was more like $1.5 billion. Although that does look like an outlier.
So even those figures don't include the investments that are made by established players like us like WTW who continue to drive innovation in their insurance solutions, and have many exciting developments in the pipeline. So there is a lot of innovation going on by a lot of companies. It's happening in all insurance segments, personal lines, commercial lines, life and health.
And it's happening across the entire insurance value chain. So possibly predominantly in distribution but also customer services, product design, pricing, underwriting cop management. And a lot of innovation in analytics which is, frankly, where we sit very, very firmly.
With such a lot of innovation, it's not difficult to see that insurers, NGOs, brokers, are going to have to work with many different technology providers, as John has suggested. And in this increasingly digital world, probably more than they ever have. So this idea of an ecosystem is much more important, I think, than it ever has been.
And so for me, the insurance sector probably is the innovation hub. And the innovation that insurers will tend to provide is how they successfully plug these technologies together to meet their business strategies. So that's, I think, where the innovation comes from an insurance perspective.
So why do we need these ecosystems? It's just, Charlie, the fact that you've got to work with so many different companies now. The cost associated with doing that, the risks associated with working with so many companies are enormous. So it's increasingly useful to insurance companies to have these companies working in the background on their behalf to make sure it's that much easier to plug these things together, and that some thought has gone into how that would happen before insurers select them.
CHARLIE SAMOLCZYK: Yeah. I mean, and I certainly think that technology has changed as well under the covers and under the hood. We had a discussion before this recording of this podcast. And I know we were talking about how-- and, John, you may want to weigh on this-- but previously I think technology was kind of point to point connections.
And the necessity to have broad, almost interoperable systems, like systems that can talk without having to put a ton of integration time into it, that just wasn't there previously. And now there's so much tech on the table and trying to connect all of the different elements with pieces of string becomes really complicated.
And I think you almost need to now, lean in to-- at least in my perspective-- to the idea of an ecosystem because you can't do it all yourself. And I don't know, John, if based on your background in previous roles, if you felt that same pressure.
JOHN HEIDELBERG: Well, I mean, I think, sure, at the moment I think delivering value is simultaneously the easiest that has ever been and perhaps the most complex. I mean, I think ecosystems, as resilient as you try to build them, they are inherently fragile. And if you think about the connection to the real world ecosystem or a biological ecosystem, one small virus gets into an ecosystem and can literally wipe it out. Technology ecosystems at the moment are no different.
And so we have this great opportunity at the moment where you can bring lots of little pieces of technology into your ecosystem. Bain talks about extreme modularity that where I can go out and acquire little things and bring them into the ecosystem, which is wonderful. The ability as a CIO or the ability that our clients have to assemble these very heterogeneous suites of things to deliver business value is fantastic.
And at the same time, incredibly complex. At the same time, the job of securing the company assets or-- we used to talk about securing the perimeter, there really is no perimeter anymore. There isn't a perimeter to secure. So cultivating that ecosystem, managing that ecosystem, protecting the ecosystem and the things we bring into it is significantly more complex right now. And that's probably why you're hearing so much about it.
CHARLIE SAMOLCZYK: And what role do you think that we as Willis Towers Watson and insurance consulting technology can play in that? Because I acknowledge your point about-- I think that the virus analogy is a good one. As powerful as ecosystems are, there is inherent risk and wrong if you don't do it properly. So how do we play a role in that?
JOHN HEIDELBERG: The way that I approach it or how I think about it, and really a big part of the role that I play for the organization is thinking about how our assets are going to live in a client's ecosystem. How do they connect, how are they managed, how can they be good organisms in the ecosystem, participate well integrate well, play well with all the other things our clients are trying to do to bring value to the market.
ANDREW HARLEY: So, yeah, just to add to that, John. And, again, in terms of building out our partnerships and our own ecosystems without all, so we're super lucky at WTW to have a bunch of different leading technologies that service the insurance sector. And they work in both life and P&C. And we've got capital, financial modeling tools. We've got preserving tools, pricing analytics tools. And we've got tools that help orchestrate complex financial processes in all of these different areas.
And we recognize some time ago that, really, to help clients we needed to either build connectivity from some of our tools into other leading technologies. Or just to ensure that there was enough implementation and integration knowledge such that when we were asked to do so, we could do it. And that we would promise to do the right thing, we wouldn't overpromise. But equally we'd the art of the possible.
So that's what we tried to build out. We were often asked during sales discussions, we were told that our technology was good. And the question then came, can it integrate with, for example, my policy administration system? And we designed-- we've designed our tools to integrate very easily. And so, of course, we would answer yes to those questions.
But I understand from a client's perspective that they want something more than just a yes, it can. They want to have real confidence that our tools will be able to integrate with these other tools if they were to choose them. And so we took on that front foot, and we've been working with these other companies. We've been building connectivity into them. We've built out our partner network as a result.
So in that way, we're trying to build out ecosystems that can just give our clients the assuredness that we definitely can work with these companies. They can do it quickly. They can do it cheaply. And they can start to benefit from the tools and the innovation that we're building out for the insurance sector.
CHARLIE SAMOLCZYK: So we've talked about strong ecosystems and partnerships certainly drive business value, but I'd like to explore maybe a little bit what's on the other side of the coin. John, again, your point about viruses coming into an ecosystem, there is inherent risk. And I think probably if not done correctly, an improperly built ecosystem can actually destabilize or add risk to the organization.
I think there's an interesting bit to explore around where people partner or buy versus build, especially as what we're seeing, I think, a different kind of building happening now with low code and open source. Well, that's up to both of you guys and so you can jump in. But let's look at the other side of ecosystems, maybe the risks and how does that affect the build versus buy decision.
JOHN HEIDELBERG: Charlie, I'd love to jump in on this one. As I think about the build versus buy decision-- and day to day, one of the things my organization does is help clients evaluate our solutions and tools to understand if they're the right fit for them. If I think about the arc of the build versus buy decision, it used to be we would build these very, very large monolithic systems.
And then we got to the place where we could buy certain software, but they were still very big monolithic systems we were buying. And those evolved to the space where we would buy and customize. And I think many of us that have been in the industry for a while remember the debacle of buying a big system, customizing, and not being able to upgrade it. We transitioned to the idea that you could buy and configure these infinitely configurable systems.
What I think we're seeing now in this world is the buy an extent. So you mentioned open source. More and more you're seeing tools that are frameworks that come with some level of functionality and come with the ability for our clients to build a model, for example, or to build a Python calculation in a very unique and complex way that plugs into the tool.
So just like we're talking about the large ecosystems and how we string things together, I think we're also seeing now that applications and pieces of applications are participating in these sort of micro ecosystems where an application can be extended through building pieces of logic and plugging them in.
ANDREW HARLEY: It's funny I'm hearing you say that. Essentially you're describing an evolution of the way in which companies not just the insurance sector, but any company, is working with technology providers. And the breadth of different offerings they provide them with, and the way in which they're chunked up.
And I wonder what the next innovation is because open source is wonderful. In some sense that's the perfect example of an ecosystem of smart people getting together and innovating, and allowing the rest of the world to benefit from their thought leadership. Wonderful. However, there are massive risks to using open source. And it needs to be governed appropriately.
And I wonder whether the next evolution or, indeed, whether some tools already-- I think some of our tools actually facilitate this. But whether there needs to be sufficient governance sitting over and above those open source tools to ensure that something horrible doesn't happen further on down the line. So it'll be interesting to see how that evolves in the coming years.
CHARLIE SAMOLCZYK: I think that's a great suggestion for perhaps a future episode.
ANDREW HARLEY: The other thing that struck me, Charlie-- sorry to jump in-- is this a funny question, though. So I guess when I started speaking on the first question, I was thinking, well, why would any insurance company want to innovate in technology? Why would they want to build their own stuff that's all going on? There's all this investment going on in the market. There's all these shortcuts coming out. You just need to buy that and plug it all together.
But there is actually innovation in-- as you mentioned-- low code providers themselves that make it easier for insurance companies to innovate their own technology solution. So it's not cut and dried. So smart insurance companies might very well take on some of these low code solutions and do something highly, highly innovative that makes them stand out from the rest of the market. So that's something to watch as well.
JOHN HEIDELBERG: Yeah. Well, I think we see that even with our clients, right. We see that sometimes they'll either leverage our technology and do something with it that not necessarily that we hadn't thought of, but do it in an innovative way. Or that actually do something that we hadn't necessarily intended it to be used for that drove value into their organization.
And I think, actually, giving clients the user base, if you will, or the client base or the industry, the ability to take tools and mold them and craft them and explore and use them for innovative things is part of the game. I mean that me is getting real value out of the investment you've made.
ANDREW HARLEY: Yeah, I strongly agree. I think modularization is the future even of insurance products themselves. That could be another episode for you, Charlie. And the way we see that particular innovation going.
CHARLIE SAMOLCZYK: Very good. Well, I've really enjoyed the conversation. Maybe I'll put a question to each of you guys. If there's one thing you want people to take away from this that have been listening, be it around partnerships, be it around ecosystems, or just thinking about future trends in how people are getting value out of their technology, what would you like to impart to the listeners? John, I'll start with you.
JOHN HEIDELBERG: Yeah, I think it's a great question, Charlie. As I think about my time on the other side of the table, acquiring technology, one of the things that's so critically important when you're acquiring technology is the people you're acquiring it with.
So at the top of the call we talked about ecosystems. And I went down the route of the technology and the technology stack and all the things you use to run the company. But, ultimately, what you need is the people standing behind that technology.
Andrew very rightly talked about partners and partnerships. You want people that are going to come to the table, that are going to work with you, that are going to be super aware of being good citizens or good organisms in the ecosystem that you've built.
CHARLIE SAMOLCZYK: Well done there John. So almost like good ecosystem providers are actually really good partners. Andrew, over to you. If you could impart one thing to the listeners about your views on what you want them to take away from today's discussion.
ANDREW HARLEY: Yeah, I wouldn't actually take it away from what has been said already. It's building on, but it's critical. So as ecosystems grow and the opportunities to use different services grow and the breadth of opportunity grows, there needs to be a strategy. Needs to be a strategy that supports the core business strategy in building out your ecosystem. You need to select the ecosystem providers that are going to allow you to deliver your business strategy fundamentally.
And supporting that, there needs to be a very rigorous, very robust process for selecting those individual partners in your ecosystem that, as John says, is one of the key factors a company should consider when selecting a company. But there will be many. But you're going to need a really robust and smart and slick process to select the right provider once you've decided the type of variety you're looking for. You cannot cobble together all these different technologies and just hope they're going to fit.
CHARLIE SAMOLCZYK: It's got to be intentional. It's got to be strategic. And it's got to be managed.
ANDREW HARLEY: Absolutely.
CHARLIE SAMOLCZYK: Very good. Well, I'd like to thank you both very much for your time. I've certainly found it insightful. And we'll leave it there. And I think I've got a lot to go on for some future topics for that next one. So thank you very much.
ANDREW HARLEY: You're very welcome.
JOHN HEIDELBERG: That was my pleasure, Charlie.
SPEAKER: Thank you for joining us for this WTW podcast featuring the latest perspectives on the intersection of people, capital, and risk. For more information, visit the inside section of wtwco.com.
