Doing the Right Thing

We are living in interesting times.

Insured global natural catastrophe losses topped $100 billion for the fourth consecutive year in 2023, according to Swiss Re, and the reinsurer expects climate change to further increase those losses in the future. Cyber risk continues to rapidly evolve as more and more of our modern infrastructure becomes digitized and the emergence of generative artificial intelligence has enabled attackers to create personalized phishing emails much more efficiently.

In the face of all of this uncertainty, the insurance industry plays a crucial role in mitigating and managing risk. For Julie Wood, CEO of QBE North America, good customer service is an inextricable part of this role because it aligns with what the industry exists to do, she says, which is serve businesses and communities by rebuilding them and making them more resilient.

The events of Hurricane Katrina in 2005 put the primacy of good customer service into sharp relief for Wood. “At the time, I worked for Zurich, and I remember watching the devastation that hit the community in New Orleans,” she says. “We could have debated how this loss occurred and what the peril that caused the loss was, which would have obviously affected the coverage, or we could adjust claims in a very fast fashion to get money into the system. Zurich took the risk at the time to do the right thing and not debate coverage for a very lengthy period of time, and it proved to be a very good decision. It helped a community that was in a desperate scenario. It got money into the system. It avoided lawsuits. It closed out claims. It helped a city rebuild and recover.

“The insurance industry is relatively risk averse, so we end up indexing to a very mathematical formula. But Zurich took a courageous and bold position in response to Hurricane Katrina. They were innovative at the time of a crisis. I believe it was a great decision and a grounding experience for me to be a part of, and one that I can pull forward.”

Doing the right thing and making clients whole is important—but Wood points out that bringing that same robust customer service demonstrated during Katrina also leads to better organizational performance. “From my vantage point, good service obviously leads to a good brand reputation. Good service also impacts your own profitability.”

And Wood makes the important point that good service doesn’t just mean providing the same level of service to every client; it requires deep understanding of your customer segmentation. “There’s a danger of either overservicing clients that don’t value it or underservicing the clients that do value it. If you decide you’re going to give everyone the same level of service, and you have a client that really doesn’t care about service and just wants quick, fast products and capacity, then you’re overservicing them and probably overcharging them.

“If you understand what your clients want, you can tailor a better product,” Wood concludes. “You can create a better experience and consistency of offerings year over year. And most brokers and clients out there in the commercial industry want consistency.”

But Wood thinks the commercial insurance industry is still lagging behind in providing good service. “I’ve seen a lot of improvement in trying to understand clients and not just underwrite them according to a mathematical formula, but there’s still more progress to be made.”

Talent and Service Are Deeply Entertwined

The first step towards improving service is building a robust talent base with the right skillsets. With one of the most concerning issues facing the industry today being the looming talent crunch from too many retirements and too few new hires, that may be easier said than done. The U.S. Bureau of Labor Statistics projects that not only will the insurance industry lose approximately 400,000 professionals by 2026, around half of the workforce will have retired by 2028.

“This issue of attracting talent is one of the biggest risks we have—we are just not attracting enough talent,” Wood declares. If the industry wants to understand and serve its customers the best it can, she continues, “we need people who are good problem solvers. We need English majors, math majors, risk managers. We need a diverse group of people.”

But a barrier to bringing on the new, younger talent the industry needs is the current reputation of the insurance industry among young professionals: conservative, slow to change, and profit-driven to the point of fighting tooth-and-nail to avoid paying any claims at all.

“When I joined the industry, there was a lot of apprehension about the fact that it’s not the most popular dinner party conversation,” Wood says. “‘What do you do for a living?’ And we say insurance, and everyone turns the other way or tells you about a horrible claim experience that they’ve had.”

Nevertheless, Wood believes there is a case to be made to the younger generations about working in the insurance industry.

“I do think we can attract more and better talent. Insurance has a reputation of being resilient during times of economic stress, with job security. That will be attractive to people,” Wood says. Companies will always need insurance, and as Wood acknowledges, the insurance product is typically a regulatory requirement.

But more importantly, the case Wood wants to make goes back to her experiences during Hurricane Katrina. “The heart of what we do is rebuild communities and provide resiliency,” Wood explains. “There was an effort I was involved in years ago where they filmed people delivering the check of the payment for a claim, and the claimant was just so relieved. That is what insurance does when it’s doing it right.”

For her, centering the insurance industry value proposition on this kind of tangible good will be key to attracting the talent the industry needs to reach the better customer service goals she envisions. “The insurance industry really is an effort for good, and now we need to use that to bring people into the industry. If we don’t invest in an improved brand that represents better service, we’re going to lose good talent to other industries, and that is super critical as we go forward.”

Innovation in Technology—and Beyond

Technology innovation also plays a critical role in providing the good customer service Wood believes is so important. But Wood cautions that in order to successfully improve customer service using these shiny new tools, you have to determine not only the scope of what a tool can do, but also in which area of your business it can have the greatest effect. As an example, she walked through QBE’s recent implementation of a generative AI-based solution to assist with underwriting cyber risk.

“There was this expectation that it was going to do everything right,” Wood says. “It’s going to help us resolve so many problems. We’re going to be able to underwrite risk faster. We’re going to understand what the risks are and get to a much better pricing output more quickly. And this is all going to happen in record time.”

Of course, Wood points out, that’s never how it starts with a new tool. Instead, based on what the generative AI solution could do and the characteristics of underwriting cyber risk, QBE made the choice to initially deploy it to support their cyber business. As Wood puts it, “Cyber is great, because there are a lot of people who are buying cyber for the first time, and there is a fair amount of correlation between loss and whatever controls the insured has.” That allows underwriters to determine a relatively simple baseline for declining a risk or offering a quote—do you have minimum cybersecurity controls?— and thus the generative AI solution “allows us to expedite initial decision-making on underwriting risk, streamline the questions asked of clients, and improve the initial quote process—another bottleneck in the industry,” says Wood.

Introducing efficiencies like these leads to a better and more consistent experience for everyone, from brokers to carrier employees, by “getting rid of the areas which are more time consuming,” Wood says. And when brokers and carriers get back the time they would have spent on the initial quote versus decline aspect of underwriting, they can spend it on understanding the client’s needs instead.

Wood also cautions that innovation in customer experience isn’t solely confined to bringing new software on board. “Not all innovation requires something super expensive,” she explains.

“Sometimes innovation is as simple as agreeing to bring a process into one department instead of doing it under four different departments. It doesn’t sound innovative, but it is because it’s process improvement. It’s gaining in efficiency. It’s not just the technology, it’s collaboration.

“I’ve always been a believer in trying to connect with everybody, whether it’s somebody who is brand new in the company, someone who’s very tenured, people who are in different areas and have different functions,” Wood says. “Everyone has a different experience. Understanding ways of working leads to areas where we can innovate and improve and allows us to simplify our internal processes.”

And “everybody” includes not just employees at the insurer, but brokers as well. Ultimately, emphasizes Wood, customer service is something every part of the industry can collaborate on. “Agents and brokers and the insurance companies—we’re building the same solutions to service and meet needs. Tools, analytics, modeling. There’s somewhere we could come together and get to better outcomes for clients.”