Solmaz Altin is in charge of the digital transformation of Allianz, a 127-year-old insurance company with customers in more than 70 countries. He recently spoke with the Innovator about the firm’s strategy.
Manfred Knof, chief executive of Allianz Germany, was quoted in a press interview as saying “We feel the threats to our business model in two instances: the customer interface and the use of data.” In what ways does Allianz’ recent strategic investment in insurtech startup Lemonade help solve those issues?
— S.A.: We invest in startups we think we can learn the most from. Lemonade is taking a very focused approach, applying different kinds of business models and harnessing the current potential of AI in both underwriting and claims management. One option for the future is developing joint business models that benefit from both companies’ experiences.
How does the investment in Lemonade fit in with Allianz’s overall digital transformation strategy?
— S.A: Our Single Digital Agenda is a portfolio of change initiatives with five pillars. One is cooperation with startups and business development in any area driven by new technologies like AI. Second is The Factory, a place where people from all areas of the company work to try and improve our customers’ end-to-end experience. The third is analytics. Our data scientists are helping us increase customer satisfaction and the effectiveness of our business by using our data. The fourth is partnering with global tech companies on building new initiatives that will bring in new revenue streams. The fifth is building shared economy and other types of direct-to-consumer models.
Allianz now has its own venture arm. When was that created? How big is the fund? And how many startups has Allianz invested in so far?
— S.A.: Our fund, Allianz X was founded two years ago. About two years ago, we started as an incubator and in parallel, the group invested in several startups. Last year we decided to put these activities on a new footing. With building a fund structure under Allianz X, we will be able to invest We make minority and majority investments. We have set aside €430 million over the next four years. We want to invest primarily in seed and early stage companies and put some of the money into fund of funds and venture funds so we can get access to further deal flow. We are not yet at full throttle. Under the previous setup, we have made investments similar in terms of strategy to the Lemonade investment ed in 7 startups so far and we are monitoring around 1000 a year. What interests us is building strategic partnerships with startups and launching pilots. We want to use the five pillars of our single digital agenda to get this really transferred into our core business.
What types of startups interest you most and why?
— S.A.: We want to use the fund in a way that makes strategically sense for our core business’ relevant ecosystems: connected property (which includes homes, retail shops assets and or industrial sites), connected mobility, health, asset and wealth management as well as and cyber security and data intelligence.
What about digital identity services? I see that Allianz, along with Deutsche Bank, Postbank, Daimler, HERE and Axel Springer, has launched an effort to curb the data industry dominance of Google and Facebook, with a joint platform for online registration and data services aimed at making access simpler and more secure.
— S.A.: We see digital identity is not only as a means to ease access for our customers. It also opens up new business opportunities for service providers. The big U.S. tech companies have gained a lot of ground. Together with other European industry champions we want to attempt to bundle our current customer bases, create a digital ID and ideally link it to citizen ID going forward. In Germany we have an electronic ID card so we could give German consumers the ability to log in once, in a secure way and distinguish and control which kind of data is released and who gets to see their data. We (the partners in this project) think we could build a platform for secure transactions with trusted actions and use this to provide more and more online services. Concerns about data privacy are significantly higher in Europe than in the US. I think it is critical crucial for European companies to engage in (brokering consumers’ data) to stay relevant. Our success will be judged not on the digital ID technology but by how good is the customer experience. This is where the tech giants are one leap ahead so we have to focus on a really great customer experience.
Outside of Europe you have a partnership with Chinese Internet giant Baidu and Asian investor Hillhouse Capital Group. According to press reports the joint venture has applied for a nationwide digital license to distribute insurance solutions online. The three partners will design innovative approaches in travel, ecommerce, Internet finance, short-term health, lifestyle and potentially also motor insurance in the future.Can you tell us more about that and how that fits in with Allianz’ overall strategy?
— S.A.: The joint venture will use a new business model putting the needs of individuals and companies at its center and offer affordable protection whenever and wherever customers desire it. We have applied for a nationwide digital license and are awaiting approval of the Chinese regulator. This is a direct attack digital model. We want to use it to play a more significant role in China and of course to apply the model to other geographies, especially in Asia.
How much is Allianz investing in its digital transformation and over what period of time?
— S.A.: We started last year when I came in as the inaugural Chief Digital Officer of Allianz Group. We have said we will invest $650 million annually. Given that the speed of transformation is getting faster and faster I don’t see our efforts to reinvent our selves stopping at any point in future.
Obtaining access to new technologies and business models is only part of the equation. There is no off-the-shelf operating system for innovation. What, in your opinion, is the best way to work with startups and funnel their disruptive thinking and disruptive technologies back into the heart of the organization?
— S.A.: Of course, it is hard work transferring everything new impulses from outside of Allianz into Allianz. We are still continuously learning. But if you get it right you gain a competitive edge. We do it by actually opening up and informing, for example, a relevant business units about what a startup does before actually investing. We check what the business units’’s appetite and interest is, then we do a review of the business potential. If it makes sense we start a pilot with the one or two business units. Another way is to simply build an MVP (minimally viable product) with the startup and test that in a ring-fenced way in certain markets. After the testing phase the business units sometimes ask Allianz “Can you transfer the stakes the company group owns in the start-up to us?.’ Then you clearly know it was a success. It is a more direct way of engaging with the startups and helps scale up the businesses.
In addition to bringing in innovation from the outside Allianz is also trying to innovate from the inside, especially through its Global Digital Factory. Please tell us how that works.
— S.A.: The Global Digital Factory is located in Munich, outside of our headquarters. It is a startup-type hub. It is very open in design. When we have startups over for a visit, we bring them there and theythey often say think ‘this is a cool place to work.’ It allows us to recruit digital talent such as user experience designers because they are impressed and surprised about the unexpected setting that we have there. It also has a clearn impact on Allianz- employees. When they see this space many of them were surprised and excited ‘ok great, this is also our Allianz now’.
But the Global Digital Factory is definitely not just about design. It is also aa new working place to bring about real change. The people working here are from different business units. We have 10–15 teams from different divisions and different countries. They have six to eight weeks to completely rethink a customer’s journey –for example a motor claims incident — and together we look at every part of that experience, — from filing to processing to resolving a claim. The focus is on the customer.
Where are the pain points for the customer and what do we have to design differently to reduce them and also what do we have to do to increase the delight points? At the end of the day the goal is to create faster, superior customer service and to be more efficient and effective. We are working on about a 100various customer journeys from across all business segments. Once we built these journeys we will have business units test them in actual markets, look at the market impact and look at how these models could scale globally.
What are the biggest challenges in turning around a 75 year old insurance company?
— S.A.: To change a mindset of fear to one of hunting for opportunities and to get this new mindset adopted by all of the business units and get buy-in at scale.
Zurich Insurance CEO Mario Greco, the former CEO of Italian insurance giant Generali, said in a widely reported interview that the insurance sector is “on the verge of a revolution. Either you understand it and you move towards the forefront of change . . . or this industry will disappear. “ Do you agree?
— S.A: I don’t think the traditional insurance industry will disappear. I believe we can survive and actually thrive from adapting new technologies. The fact that we will have to adapt is totally clear but no one can say how fast this will go or how much time we have in today’s dynamic digital environment.
