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Direct Line built an insurtech it can tweak a thousand times a day

Insurance group Direct Line has added a new business to its portfolio, designed to let it act as a sandbox for its digital journey

Insurance company Direct Line Group is using a standalone insurtech business in the public cloud to enable it to continuously test and adapt ways of serving customers.

The new business, known as Darwin, was set up earlier this year to provide a digital platform that could be quickly adapted to changes in demand. The new business sits separately from traditional businesses such as Churchill, Green Flag and Direct Line.

It kicked off earlier this year in the motor insurance sector. Sumit Bahukhandi, director of corporate ventures at Direct Line and founder of Darwin, said the business currently only sells through price comparison website Moneysupermarket, but will expand to other price comparison sites. “We wanted to start small and test our way in.”

He told Computer Weekly that the strategy is to build Darwin as a fully digital business. He said that although insurance can be bought online, any issues later on often requires a phone call. Things like changing address, changing car and adding people to insurance all require contacting the insurer, and often include extra charges. “We want to use technology to let people do that easily and not charge,” said Bahukhandi.

He added that although the new unit could cannibalise some of its core business, the company knew it “had to be brave.”

Darwin is built in the Amazon Web Services cloud and only a handful of people are employed in the unit. Bahukhandi said it uses the Amazon “two pizzas concept”, where if a group cannot be fed by two pizzas there are too many and nothing will get done.

The digital end to end service from Darwin is only an example of what the business can do. Direct Line’s plans for Darwin are not set in stone, but rather its very purpose is to enable Direct Line to react quickly to changes in the market.

Read more about insurtech

Who would have thought a few years ago that you could use a mobile telephony device to add your friend to your car insurance for a day in near real time? This is the kind of services people want today and this is where extra revenues will come from for insurers that are capable of doing it.

Bahukhandi said the business needed something that constantly evolves to meet these new demands. “There is a direction the insurance industry is going. Today price comparison websites are a big thing, but we don’t know what is coming tomorrow,” he said.

“In the past we used to think a lot about what tomorrow might bring and then start building for it. This worked because back then it took a long time to build things. But if I do that now, by the time I build something new, tomorrow will be very different.”

He said companies in insurance today, like in many industries, need to build something that can be changed a thousand times a day without things falling over and disrupting customer services.

And the work goes beyond improving how insurance is delivered. Darwin will be used as a platform that will experiment with ways to better understand customers as individuals rather than just a group of similar people. “Why don’t we use machine learning to understand people better and offer them customised insurance?”

The use of AWS from the word go has made Darwin possible. A large insurance group like Direct Line would struggle to be agile enough using its existing infrastructure.

“We focus on providing insurance and technology is a means to an end. Today we can just consume services that are in the cloud,” said Bahukhandi.

The location of the technology

For example, in the past, if you wanted to build something such as an application to check customer details you would first have to buy a server, which at an insurance company would take six months, said Bahukhandi. “But does it matter where the technology sits? You can just consume a service.”

If successful, Darwin’s methods could spread across the Direct Line Group of companies. “We are looking at everything to see how we can do things better as part of a transformation. Darwin helps us to take something, try it out and prove that it really works and it is safe and secure,” he said.

All the technology is in the cloud with no links to the legacy systems of its other insurance businesses.

Direct Line is currently looking at how to transform its Green Flag breakdown recovery service in a similar way. It is currently updating the Green Flag app to make it easier for customers. This includes making getting help easier. “We are looking at how we can make it easy for customers to get help quickly via the push of a button on a mobile app. We will know where they are and through a signal we might know what is wrong with the car.”

Insurers like Direct Line need to take advantage of the latest technologies if they are to retain customers. Young people today expect different service levels to those traditionally offered by insurers. A survey last year of 8,000 people globally, carried out by Salesforce owned MuleSoft, found 62% of 18- to 34-year-olds said they would be happy for insurers to use their internet of things (IoT) and social media data if it meant lower premiums and a more personalised service.

There is clear demand, but insurers are currently struggling to provide what customers want. As a result, the opportunity for insurtech companies to win business in the sector is huge.

For example, the MuleSoft survey found that 58% of consumers believe insurers provide a disconnected experience, and 56% would consider changing insurer as the result of receiving a disconnected experience. In the 18- to 34-year-old age group, a massive 61% would consider changing insurers for a more connected experience.

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