Challenging the perception that insurance is a low-tech industry, AIA Group has updated its offerings and processes to become more accessible to millions of customers in Asia.
In this episode of the McKinsey on Insurance podcast, Biswa Misra, the group chief technology officer and life operations officer at AIA, spoke to McKinsey senior partner Anand Swaminathan about how he helped chart a course for change, the importance of strong teams and leadership during transformations, and where he sees the industry heading. The following transcript has been edited for clarity.
Anand Swaminathan: The insurance industry has historically been perceived as low-tech and face-to-face. As a leading global insurer with a hundred-year-plus legacy, how has AIA challenged this perception?
Biswa Misra: I think of AIA as one of the bellwether companies leading the market, not just in terms of digital experiences and digitalization but also in terms of efficiency. The pervasiveness of technology in Asia, where we operate, was something that we experience as consumers and financial services cannot be in isolation from that macrotrend. A lot of the foundations we put in place were centred on how to modernize a hundred-plus-year-old company to make sure we tap into the mindset of consumers and provide them with a high-tech experience.
Anand Swaminathan: At McKinsey, we have found that, in Asia, a good deal of innovation in marketing and distribution is being driven by insurtechs in the life and health space. AIA’s transformation focused on three pillars: technology, digital, and analytics. In some cases, organizations struggled to do all three well at the same time. What was your approach?
Biswa Misra: We found that companies often developed a tech strategy and a business strategy, and eventually the tech strategy supported the business strategy. As part of our transformation at AIA, we focused on bringing in technologies to augment, supplement, and embellish our business strategy. We made a strategic call to run all technologies that we could on the cloud, which helped us create a solid foundation to move everything we needed to a new space and be more efficient. When we started to move, we got rid of or modernized dated systems and tools that we would’ve otherwise left untouched if we hadn’t changed. This step helped us build the infrastructure, security, and hygiene factors to have a good foundation. In terms of efficiency, today’s technology is a lot leaner and greener. Technology became a proxy for automation for us. We built straight-through processing, which now handles more than 70 percent of our transactions. Seven out of ten claims transactions go straight through without human intervention.
Anand Swaminathan: How did you measure the value of these technology transformations?
Biswa Misra: There is a cost advantage, but only if you complete the transformation at scale. Not many companies can be at the level of cloud adoption that we have achieved because of the breadth of coverage we have as well as the modern technologies that came in as a part of the cloud. We have an internal rate of return of more than 10 percent. The business case for moving to the cloud spoke for itself. Some softer benefits included a mindset shift to that of an omnichannel company.
Anand Swaminathan: How do you attract, retain, and motivate talent at AIA, and how do you continuously develop people once they’re at the company?
Biswa Misra: Talent is an important aspect of any company. We are a purpose-driven company—we want to make Asia healthier and help our customers live healthier, longer, better lives. It’s a powerful axiom. The first part of our talent acquisition and retention process is to give people a purpose to help them stay on course. Our attrition at senior levels is quite low on the technology side. I believe the innate reason for that is our people’s desire to change the face of life and health insurance in Asia.
Insurance is a low-tech, low-touch industry, and these efforts are changing the face of it forever. From a change management perspective, one of the things we try to do is infuse people who are coming from different industries and from different segments within the insurance industry step-by-step into our existing workforce. It’s been a learning opportunity. The only way this story will succeed is if [our current workforce doesn’t] feel left out. So we brought in executive leadership programs that helped to skew people’s perceptions toward learnability. Can a business analyst be a data scientist? Can a traditional infrastructure guy become a cloud specialist? Who knows? But unless you make a concerted effort, you’ll never know.
During the transformation, we invested in four areas: agile, human-centered design, cloud, and analytics. Internally, our understanding of these concepts has developed immensely, which has been a key foundation for us to retain talent, integrate people into that journey, and make sure that new people and established people who understand our existing applications can coexist, collaborate, and prosper.
Anand Swaminathan: Our research shows this talent gap is still quite significant in organizations, especially when considering technology, digital analytics, and skill sets. There’s not a vast supply of talent from which we can pick and choose whoever we want, whenever we want. Getting the best technology talent or digital talent takes real skill, effort, and patience—and then it’s important to develop people’s capabilities and keep them motivated.
Let’s switch gears, Biswa. Fundamentally, technology is ever-changing, and there are new capabilities being introduced every day. How do you see the future for the insurance industry when it comes to adopting technologies? How are you preparing for that future?
Biswa Misra: The nature of technology is that it always changes, so it’s no surprise that it keeps evolving. The best companies try to look at technologies that are relevant and integrate them into end outcomes, such as productivity, experience, or, in some cases, efficiency. So far, we have built a lot of performance systems with basic intelligence. The next phase of our tech journey is to build more intelligence into these performance systems using the power of AI and data analytics. Our effort will be focused on harnessing the tons of data that we have available, structured and unstructured, and matching them with our performance systems so that end users can start to see the alpha for themselves.
They will be able to interact with AIA through their super app. We can use facial recognition to allow them to switch funds or nudge them about completing their annual health checkups based on their health history. AI is a very powerful tool when it’s used ethically because it can help people live healthier and longer. For example, if someone submits a claim, AI could suggest a specialist who handles the condition that the person is dealing with. It becomes hyperpersonalized. We have talked about personalization and hyperpersonalization for a long time in the financial services industry, but now is the time when the real potential will start to come into play when we consider a customer’s vitality. We can look at their profile and make suggestions based on how they’re doing. Then we can tap into our wide ecosystem of hospitals, healthcare providers, and wellness providers. We can use data and AI to integrate AIA into customers’ lives. It’ll be fascinating to see how these things evolve and how we can use conversational AI and cognitive computing.
Anand Swaminathan: What advice do you have for insurers outside of Asia based on what you’ve learned from this journey?
Biswa Misra: Two key things inspired me during our transformation journey. It became clear to me what “voice from the top” means. We have a group CEO who believes in using the power of technology to change the insurance landscape and build something to help with efficiency, customer experience, and distribution. That tone-setting from the top is important to set the right direction. The second one, which is equally, if not more, critical, is the team. The vision of the executive team is important, but it must be backed by a team that believes in this vision—a team that is dedicated, committed, and passionate about the purpose. And a committed executive team further drives the value for your stakeholders.
Anand Swaminathan: Were there any inspiring moments in your life that inspired your passion for technology? What defines your leadership today?
Biswa Misra: My leadership is tied not to my personal story but rather to the story of my team, our people, and our leadership team. This transformation has been a team effort, and we couldn’t have gotten where we are now without everyone working together.
What shaped my own interest in technology and playing a role is perhaps more of a side story to that. Throughout my life, I’ve known many people who needed help from a health and well-being perspective, and insurance was a natural domain for me to see that technology could help the people that I grew up with—the general fraternity that we serve—and make their lives a little bit better.
I have never worked in other industries. I’ve been in life and health all my career, and I have seen in the past three years especially, and for my duration at AIA, that technology can play a key role in achieving that childhood dream—to use technology to make somebody’s life less painful—and that’s what I will continue to pursue.
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