EXCLUSIVE: “Driving Change” – Sasha Jory, Hastings Direct in ‘The Insurtech Magazine’

Hastings Direct has transformed its internal processes, using automation and AI to collect and identify information that allows it to deliver optimal premiums and services to its millions of customers. CIO Sasha Jory unpacks the strategy

Hastings Group has a simple strategy: to become the best and biggest digital insurance provider in the UK. Its retail businesses – around 90 per cent of whose policies are directly underwritten by Advantage Insurance Company (part of Hastings Group) – specialise in the very large UK private car insurance market, where the focus is on digital distribution through price comparison websites, as well as direct online distribution through its six brands.

Among them, Hastings Direct, which offers car, home, van and bike insurance, has been particularly proactive in adopting new ways of allowing customers to engage with it. It was, for example, one of the first motor insurance providers to let them use what3words to describe where an accident or breakdown occurred.

“Probably one of the advantages we have is that we’ve been able to free ourselves from legacy technology,“ says CIO Sasha Jory. “Over the last three years, we’ve spent quite a lot of time taking out legacy, and bringing in a Cloud-enabled platform with modern software. And that really is a big difference, I think, from some of the larger and older players in the market.”

SPEED IS OF THE ESSENCE

Since it was established in 1996, Hastings Direct has rebuilt its line of business applications by embracing APIs. In November 2022, it moved all its operations onto Microsoft Azure.

“We are the only insurance organisation I’m aware of in the UK who has all of its Guidewire platform working in the Cloud,” says Jory. “We did that in partnership with Microsoft, and with EY, and with our own internal people. So that was a two-year journey, with about 145 people working on that. Fantastic and exciting.”

It has also designed and implemented a micro-service architecture for new enrichment platforms, and completed the shift from waterfall to agile ways of working – all part of executing a complete data centre migration strategy. Finally, it has introduced Cloud-native engineering, reduced major incidents, and transformed customer login and quote times. This now allows the firm to leverage AI and machine learning in ways it never could have envisaged before.

“A lot of the areas we’ve focussed on have been around processes,” says Jory, “trying to take out some of the manual activities, to speed up our ability to service our customers, and to respond faster to the market.

“We’ve used automation in some of the fundamental things, like our testing activity. This means our change is much faster; we can adapt and adopt different things much quicker. We’re also looking all the time to bringing in machine learning and artificial intelligence – particularly around data, and the large volume of data we deal with, so that we can respond to market trends, and to customer needs, in a more agile way.“

This means also being able to add value for policyholders, a case in point being Hasting Direct’s YouDrive, which focuses on data it gets from its customers regarding their driving characteristics.

“Good data enables us to give our better drivers a really good price, and reward them for their driving behaviour,“ says Jory. She continues: “Also being able to use automation and machine learning around large quantities of data, enables us to bring better pricing, better underwriting and risk decisions into our products, so that we can adapt to the market, but also to our customers’ trends, and price them more accurately, based on their risk assessment.“

Having the data is one thing, using it optimally – in terms of providing more accurate, actionable information – is entirely another.

“Good data enables us to give our better drivers a really good price, and reward them for their driving behaviour”

For Jory, it’s a question of balance. “We need to be very careful in the way that we use our data,“ she says. “Hence, we must be diligent when we’re using technology, that we test it, that we validate it, and that we continue to challenge ourselves around any of our models, or any of our automation capabilities.

“But I do think that it brings huge capacity to be able to look through large volumes of data, and find those nuggets that will make a big difference.“

This is based on the idea that Hastings Direct can ingest data much faster, meaning it not only has new enrichment sources for its information but is also able to play with it to determine what usefulness there is in the data, before it’s actually brought into the company’s ecosystem in a strategic way.

“One of the things we’re driving towards is much more digitisation of all of our products and services for our customers, giving them a significantly broader opportunity to choose the channel in which they want to work with us,“ says Jory. “Technology enables us to respond much faster to their needs, and one of the areas we’re starting to examine is sentiment analysis – understanding our customer pain points, understanding how we’re servicing them.“

No one organisation has a monopoly when it comes to information and how to use it. Indeed, given innovation and the speed of change in technology, it’s important to partner with other organisations, according to Jory.

“We very much use a partnering mentality. We share our strategy, our ideas, with our key strategic partners, (including the likes of Microsoft, EY and Snowflake).

“Often we work with all of them together on particular problems. What I like about partnering is that we actually work with them to improve knowledge transfer, so we’re constantly upgrading and offering our people the opportunity to learn new skills, and to develop their technology capability,“ she says.

THE RIGHT TIME FOR AI

The relevance of Cloud migration and partnering with third parties is self-evident and indeed has never been clearer, given the perfect storm currently buffeting the insurance industry. July 2023 data, from the WTW/Confused.com Car Insurance Price Index, for example, showed comprehensive car insurance premiums soared by a record 40 per cent (£222) during the previous 12 months, with UK motorists now paying £776 on average. That’s the highest since the index was launched in 2006.

The surge in premium rates reflects insurers continuing to grapple with a myriad of rising costs, with high levels of claims inflation being driven primarily by the sharp rise in used car prices, amplified by rising vehicle theft, spare part delays, longer repair times and higher wages. These have all pushed costs above premium income and forced insurers to play catch-up by increasing prices, according to WTW.

Rapidly coming up on the inside rail, meanwhile, has been implementation of the Financial Conduct Authority’s (FCA) Consumer Duty initiative – effective July 2023 – and the longer-term role AI is set to play within it. At its core, the regulator’s new rules comprise an overarching Consumer Principle that firms must act to deliver good outcomes for retail customers – including those who may not even be direct clients. These relate to products and services, price and value, consumer understanding and consumer support.

In addition, they also require firms to ensure consumers receive communications that they can understand, products and services that meet their needs, and offer fair value and the support they require. The FCA has previously put up red flags regarding Guaranteed Asset Protection (GAP) products and how they may be failing to provide fair value to customers. GAP insurance is an add-on to motor insurance and covers the difference between a vehicle’s purchase price and its current market value. According to FCA data, only six per cent of the amount customers pay in premiums is paid out in claims when it comes to GAP insurance.

Indeed, the regulator claims to have seen examples of some firms paying out up to 70 per cent of the value of insurance premiums in the form of commission to parties in the distribution chain, such as motor dealerships. In a wider context, there is obviously a significant role for AI to play, through protections from potential imbalances that may impact the integrity, price discovery, transparency and fairness of markets. AI will enable firms to better provide access to financial services for consumers who may have non-standard histories – allowing large volumes of data to identify specific consumer needs while providing better product matches for these (and other) consumers.

The major elephant in the room, though, remains whether regulators and governments can strike the necessary balance between promoting the benefits of AI and not undermining it through over-regulation. It may prove to be a fine tightrope to walk.

For Sasha Jory, meanwhile, there is no room for complacency – either in her own industry or, indeed, others. As she puts it: “There are always going to be challengers that come into the market, and we’re always scanning to see who those new players might be, and what they will do.” Clearly, there is a lot to think about.

This article was published in The Insurtech Magazine Issue 10, Page 31-32