IAG is now in stage two of its insurance platform transformation

IAG is now in the second stage of a long-running simplification and transformation of the technology underpinning its insurance operations, with consolidation of policy and administration systems to a new platform anticipated to take “the next couple of years”.

IAG's Nick Hawkins.

Managing director and CEO Nick Hawkins told the company’s FY21 results briefing that it is making “progress on digital initiatives”, with its “efforts into the future ... underpinned by the creation of a single core insurance platform which we’re rolling out across IAG.”

IAG unveiled its intentions to consolidate its claims processing on a GuideWire platform back in 2016.

It had similar consolidation ambitions at the time for its policy processing, but hadn’t decided on the destination platform at that point in time.

The simplification and consolidation is an effort to unpick backoffice complexity in the way IAG operates, which was created as a result of a number of acquisitions over the years.

IAG's single claims system was already live when Hawkins was appointed CEO in September last year.

“After completing stage one [of the single core insurance platform], we now have a single claims platform that can be used across the entire organisation,” Hawkins told investors on Wednesday.

“Stage two, which is underway now, will consolidate and simplify multiple policy and administration systems that we have in place. 

“When we complete this work, we’ll be able to provide consistent products and services to customers wherever they are, on whatever digital platform they choose to engage with us.”

Hawkins indicated that IAG is “going down the GuideWire path” for the consolidated policy and administration system.

“That’s now in place,” he said. “Now we need to migrate multiple systems onto that. That will take the next couple of years.”

IAG said in its slide deck that it had decommissioned "50-plus legacy technology assets" in FY21.

Some of those are likely to be applications and systems that are no longer needed now that GuideWire is progressively taking over those functions.

Behind the scenes

Much of what has happened in the transformation program since it was first unveiled years ago was explained in a GuideWire ‘InsurTalk’ podcast at the start of this year.

“For the past three years we’ve been transforming our claims business, and over the last 12 months we finally turned our attention to the policy program, ultimately re-engineering our sales and services channel,” IAG’s executive general manager for insurance transformation Kylie Burtenshaw told the podcast. 

“We are weeks out from our first go-live and hugely excited about seeing the policy transformation come to life,” she said at the time.

Burtenshaw said that the organisation experienced a “false start” where it tried to do much too soon with the re-platforming effort.

“We actually had a false start and tried to tackle the whole insurance stack in one go,” she said.

“That was too much for anybody so we stepped back from that and chose to move first with the claims program. 

“It is the biggest point in which we can make improvements for our customers. There’s obviously fewer underpinning systems in the claims space so there’s less complexity for us to face into. It also allowed us to unlock scale benefits. 

“But back to that false start it really helped the organisation to build trust. 

“The belief in the work that we would be doing and the buy-in to make any transformation a success is critical. So once we gained some confidence and the transformation of our claims business had started to near an end, we then had a proven track record. 

“Our confidence had been built and now we were ready to tackle the more complex policy transformation.”

Burtenshaw noted the complexity of existing systems at IAG, with effectively many mainframes in operation, each with their own datasets and processes.

“We have grown through a mutual background and we have grown through acquisition, and so we have lots of mainframes, all of different ages,” she said.

“We have 15 [mainframes] in fact, and each one of those holds different datasets and processes, but when you peel it right back, to repair a home or car, it’s actually the same underlying process.”

As part of its simplification, IAG re-arranged claims processes from being brand-specific to being grouped into “patterns” - “a motor pattern to insure our vehicles, a property pattern to insure our assets, and ultimately a personal injury pattern.”

“The way we repair a car doesnt change ultimately in the core, but that pattern is different to how we go about repairing someone’s home,” she said.

“You align the underlying core to those patterns and differentiate through the experience layer.”

“In claims, we really focused on simplification first,” Burtenshaw said.

“We unwound all of the complexity, we took ourselves back to those patterns, and ultimately then towards the end of that journey we started to accelerate the claims experience.”

The approach to the policy and administration transformation is slightly different, with simplification and user experience changes occurring “in lockstep” instead of separately.

Other technology works

Elsewhere in its FY21 results, IAG provided some numbers around its ongoing process automation efforts, noting that it had returned "110,000 hours of efficiency ... to the organisation through robotic process automation."

Its FY22 focus would see it use more automation and digitisation, particularly across sales, service and claims.

In its annual report [pdf], IAG said that the company's board "has prioritised investments to simplify and upgrade [its] IT systems, to both improve control and increase productivity and to enable [it] to provide the digital services required by customers".

"Over the last three years, $150 million to $200 million each year has been committed to this task," IAG added. 

IAG reported a net loss of $427 million for FY21, compared to a $435 million profit the previous year.

It attributed the result to "significant one-off corporate expenses mainly relating to business interruption, customer refunds and payroll remediation."

"These are historical issues we’ve identified, provisioned for and are fixing – and we are making investments to continue to lift our risk management and operational capabilities," IAG said.