How Zurich is transforming the insurance industry with AI and startups

By Karin Bosshard at HZ Insurance on December 13, 2024. Read original in German here.

Joel Agard has been a driving force behind the innovation strategy at Zurich Insurance Group. He has championed the integration of cutting-edge technologies, strategic partnerships with startups and a focus on sustainability.

What are the central pillars of your innovation strategy, and how does it differ from previous approaches at Zurich Insurance Group (Zurich)?

Innovation is central to Zurich's strategy. Our goal is to improve the customer experience through innovative insurance solutions, services and digitalization. Our standardized innovation process begins with the problem or customer need. Technology solutions are often required, which we develop in-house or source from external partners. Since 2018, we have also been working intensively with start-ups, and we occasionally carry out research projects with universities. We then test the solution, gather user feedback, check the technical feasibility and measure initial results. After the pilot project, we decide on the next steps based on strict criteria. We plan to introduce the venture client approach globally from 2025. As part of this approach, we support start-ups in their early development as a paying customer and provide our expertise and network. This allows us to tackle many challenges with little financial outlay and create a globally scalable model.

In an industry that has traditionally been rather conservative, how do you manage to promote innovation without jeopardizing stability and customer trust?

It is important to involve customers in the solution-finding process in order to take their needs and expectations into account from the outset. Here are two examples: In the further development of our digital customer interfaces in the area of commercial insurance, we actively involve corporate customers, their end users and our broker partners in the further development. We also conduct active user testing with real customer panels during pilot phases with startups very early in the innovation process. When using technologies such as artificial intelligence and integrating customer data, we take great care to ensure that we handle them responsibly. We have clearly defined guidelines and responsibilities.

How do you ensure that innovation at Zurich is not only technologically driven, but also creates real added value for customers?

We always start by identifying a problem or customer need and then look for a suitable solution. More and more, technology solutions have an AI component. But sometimes simple process optimizations are also needed. Technology is an enabler and can accelerate developments, but ultimately the projects that solve the problem most effectively win out.

Many insurers are turning to artificial intelligence. How do you use AI in your strategy, and how do you address the ethical challenges associated with it?

The use of AI can improve the customer experience through targeted solutions and services, as well as more efficient and personalized processes. We now use over 200 AI solutions across the group. These include internally developed solutions, collaborative projects with partners and applications from external providers. We take a responsible approach to AI in order to promote its use while minimizing risks, such as protecting privacy and monitoring the systems. When developing projects with partners and startups, we require that they also meet our standards. However, start-ups do not see this as a hurdle, but rather as a seal of quality for their work.

What role does sustainability play in your innovation strategy? Do you see innovation as the key to a more sustainable insurance industry?

Sustainability plays a very important role in our innovation strategy. Through innovation, we support Zurich’s sustainability ambitions. For example, AI can help us better understand complex and relatively new risks such as renewable energies. This enables us to develop insurance products and services tailored to the specific needs of developers of such technologies. In this way, we can contribute to the growth of such industries and technologies and support the transition to a net-zero economy. 

Innovation often goes hand in hand with increased costs. How do you justify these investments to shareholders and customers who may be expecting short-term results?

Our innovation process does not require significant upfront investment. By focusing on the biggest and most strategic challenges and lean and short pilot projects, we use our resources efficiently. This enables us to quickly deliver significant results and create value for our customers and shareholders.

Critics might say that the insurance industry is relying too heavily on technological trends without paying enough attention to the human aspect. How do you respond to this criticism?

I can understand this view, but I don’t think it’s an industry-specific concern. Our customers are at the center of our efforts – because insurance is and remains a “people business.” We will continue to consciously emphasize the human aspect in the future. This is particularly important when customers find themselves in a difficult situation, whether it be after an accident with a rental car during a vacation or due to a business interruption in a factory after a flood. In such situations, technology helps us to respond more quickly, allowing us to spend more time with our customers to find the best solutions together.

To what extent does increasing regulation, particularly in Europe, influence your innovation strategy? Do you see regulation as a brake or as a driver of innovation?

Regulation for new technologies is important. However, it must be balanced so as not to stifle progress and innovation. In the field of AI, the EU’s “AI Act” came into force this year, regulating the responsible development and use of AI. The risks and concerns associated with the use of these technologies, such as data protection and security, are of great importance. Companies must address these concerns and ensure that their AI systems meet legal requirements in order to maintain the trust of their customers. 

How do you plan to involve employees at all levels in the innovation process to ensure that ideas from across the organization are considered?

We have created a network of more than 150 internal innovation experts that is embedded in our local country organizations and supported by colleagues worldwide from the technology, digital and strategy sectors. This enables us to validate exciting innovation topics both top-down and bottom-up, and thanks to this network we can implement best practice examples where similar problems exist. We have also created a platform that incorporates ideas from start-ups into the problem-solving process. Together with our experts, the start-ups, external tech experts and our management team, we can develop solutions to pressing issues and create added value for Zurich and our customers. 

Looking ahead to the next five years, what disruptive technologies or trends do you see as the biggest challenge or opportunity for the insurance industry?

Various technologies within AI will create new opportunities in data analysis and risk assessment, which will lead to even more flexible insurance solutions and more efficient claims processing. As digitalization increases, so does the risk of cyberattacks and increasingly sophisticated fraud methods, which is why insurers need to invest in the security of customer data and systems. At the same time, demand for cyber insurance and prevention measures is increasing, which offers new business opportunities for the insurance industry. I also see quantum computing as the next disruptive technology that has the potential to give the industry a further boost. There are various exciting options in this area, whether it’s processing claims even faster, better-assessing risks, preventing fraud or individualizing pricing even further.