By Russ Banham
Carrier Management magazine
The announcement that Dr. Henna Karna, formerly global chief data officer at insurer AXA XL, had been retained by Google to lead a new insurance initiative was greeted by the insurance and InsurTech industries with a mixture of awe and alarm.
For the past three decades, Karna has been a leading voice in reinventing insurance through technology to become more customer centered. This objective guided her leadership of AXA XL’s digital transformation and her work previously at data analytics firm Verisk and in AIG’s actuarial organization, where she served as global head of data and technology for personal and commercial insurance.
Karna’s roots are in analytical modeling, artificial intelligence (AI), and behavioral and advanced analytics. At AXA XL, she designed and implemented an award-winning data and technology ecosystem, called DEEP (Data Ecosystem & Engagement Platform), that delivered analytics capabilities at scale across the enterprise. Her insurance expertise and visionary approach to making data the center of everything an insurance company is and does explains why Google reached out to her.
Google’s newest insurance initiative, a cloud-based SaaS (Software-as-a-Service) data and analytics platform for insurers and reinsurers, is revolutionary in its broad enterprise scope, several industry participants and observers maintained, making the offering highly disruptive for InsurTech firms that provide single-point technology solutions.
Many people who have crossed paths with Karna commented on her unique skillsets, mission-driven focus and iconoclasm. “We recognized Dr. Karna’s brilliance at AIG and later at AXA XL with DEEP, which was so ahead of what other insurers were doing,” said Mike Fitzgerald, principal insurance analyst at CB Insights, a market intelligence firm that follows the InsurTech space. “When I read that Google had hired her, I took note that something extraordinary was in the works for the industry at large.”
“Henna is one of the few people who understands how the insurance industry can be positively disrupted with the right technologies,” said Maik Taro Wehmeyer, co-founder of Taktile, a platform provider of machine learning tools to insurance markets.
Karl Hersch, national insurance consulting sector leader at Deloitte, agreed. “She’s super bright and a really broad thinker,” Hersch said. “She’s never been shy challenging orthodoxy when it’s best for a company or an industry.”
It has been rumored for the past two years that Google would re-enter the insurance business. In 2015, the tech giant launched Google Compare, an online auto insurance portal, only to pull the plug the following year. The venture failed, industry insiders said at the time, because Google did not understand the insurance business.
The hiring of Karna flattens this learning curve. As Wehymer put it, “She brings a much-needed mix of insurance expertise and technological savvy to Google.”
Computing on a Much Grander Scale
Having been profiled in Carrier Management in September 2018, Karna agreed to an exclusive interview to discuss her remit at Google, what it specifically means for insurance carriers and how far along she is in this journey. “My overarching role here is to help Google partner with the insurance industry,” she said.
In executing this responsibility, she has drawn up an insurance road map for Google’s cloud-based data and analytics platform, which runs on the same infrastructure as its end-user products like Google search and Gmail. Chiefly, the platform’s full suite of leading-edge cloud computing services will be brought to bear to assist insurance company data and analytical needs.
And what a suite it is. Solutions include advanced data analytics, content delivery, AI and machine learning, video classification and recognition, 3D visualization, custom models that detect emotion, workspace productivity and collaboration, natural language processing (NLP), and a fully managed environment to run containerized applications. That’s the short list.
“Google’s value proposition is to move insurance carriers from mere transactional proficiency to become analytical powerhouses,” said Karna, who has an MBA from MIT and both a masters and doctorate in applied mathematics from the University of Massachusetts. “We’ve got what it takes to achieve this aim.”
A Model Partnership
When it was announced that Google had hired Karna for an unnamed insurance initiative, scuttlebutt in the industry was that the tech giant had plans to compete directly with insurance carriers or disintermediate insurance brokers and agents. This is not the case at all. What Karna and Google Cloud have in mind seeks to change the basis of industry competition by reshaping and refocusing the insurance narrative on the end customer.
“Today, the basis of competition for insurance companies are things like price, claims experience and policy wordings,” Karna said. “Tomorrow, those fundamentals will be table stakes.”
She explained that carriers have a treasure trove of internal data largely housed in discrete silos and data marts. Accessing this data in real time for underwriting, pricing, reserving and other business decisions on an enterprise basis is difficult if not impossible. Google solves this dilemma by providing carriers a place to put their internal structured, semi-structured and unstructured data—in a secure cloud environment outside the public Internet. The data can now be instantly accessed for analysis and decision-making using Google’s suite of computing solutions.
Physically time-consuming data management tasks are effectively replaced by automated processes to access data across multiple divisions, functions, markets and geographies for wide-ranging analyses using AI, machine learning and so on. More refined computations can be performed at much greater speed and accuracy.
Hersch said the value proposition for an insurer “is a heightened ability for an underwriter or a claims specialist to rapidly access the company’s internal data, trusting that it is properly cleansed and governed and conformed in ways that make it highly consumable. This makes tasks in underwriting, claims, actuarial, reserving and so on faster, easier and more efficient.”
But the point of the Google offering is not just greater speed and efficiency. Rather, it is to make a carrier’s products more customer-centered, competitively differentiating an insurer against its peers in areas like loss prevention, risk management, coverage breadth, financial limits of protection and pricing.
“The new basis of competition in the industry will be things like the ‘percentage of every dollar that a carrier returns to a policyholder,’ or ‘which carrier best understands customer needs and proactively responds to them,’” said Karna. “By modernizing and merging a carrier’s historic data and functional skillsets with Google’s digital expertise and innovative and analytical know-how, the opportunity exists to alleviate the systemic and structural limitations that inhibit the impact of the industry on the economy and on human lives.”
This altruism directly ties into Google’s corporate mission to “organize the world’s information and make it universally accessible and useful,” she pointed out. It also aligns with its corporate vision to provide information “in one click” and its founders’ commitment to “significantly improve the lives of as many people as possible…even if the near-term financial returns are not obvious.”
These statements were crucial, she said, in her decision to join Google to lead the insurance initiative. “The possibility of working in an environment that intrinsically values people ignited my own passion to help the world become safer, which I believe insurers have the opportunity to do, by sharpening their focus on the end customer’s loss exposures,” she said. “We can help them do that.”
Does the Industry Need Google?
To be fair, dozens of InsurTech startups also can help carriers reshape traditional insurance processes to make carrier functional processes faster, cheaper, better. Many large and midsize insurers also employ highly skilled chief data officers and have tasked them to digitally transform their underwriting, claims, reserving and other processes. Is Google needed?
Hersch believes so. “Few industries are as data intensive as insurance,” he said. “Inside the four walls of an insurance carrier is the most data-rich environment I can think of, but this information for the most part has been underutilized.”
Wehmeyer concurred. “Insurance is all about generating business insights from data, but the industry is old and, in some cases, controlled by people not open to change,” he said. “This impediment has limited investments in AI, advanced analytics and other solutions. In some cases, it has guided inferior technology choices or resulted in a hodgepodge of fragmented solutions, making it very difficult to build modern data-driven applications. That’s where Google Cloud fits in. What Google brings as a partner to carriers is the opportunity to create an ecosystem where insurers leverage its cloud services to competitively differentiate themselves.”What do insurers think of these prospects?
“Data is at the heart of being an insurance company, but the problem is that it’s all over the place,” said David Cummings, senior vice president and chief actuary at USAA. “We need to have a view of data that is bigger, broader, more visionary and more revolutionary. You need technology [to obtain this view], and we’ve all tried to build these capabilities in-house, with less than stellar results. Moving to a cloud-based set of solutions is key, but until now it has been wanting.”
He’s referring in part to the cloud platform’s SaaS-based subscription model. Previously, a carrier had to make large, upfront capital investments in different technology solutions like RPA or image recognition, which typically were provided by different InsurTech firms or developed in-house. SaaS models replace these large one-time expenditures with small, iterative fees to use, in the case of Google Cloud’s product suite, a full range of enterprise solutions. “Technology has now caught up to make things easier for insurers, opening the aperture on remarkable possibilities,” said Hersch. “That’s where Henna is headed.”
A New Direction
Added up, Google’s partnership model is a compelling value proposition for carriers to consider. In this regard, Karna is the linchpin, Wehmeyer said. “The challenge with Google’s previous involvement in insurance in the past was a lack of industry expertise; Henna takes care of that,” he explained.
“Henna’s strong suit is her ability to see the future of insurance—further over the horizon than anyone else I know,” said Cummings, a former colleague of Karna’s when they both worked at Verisk. “She knows the analytics. At Google, she now has the opportunity to pull from its suite of analytical tools to drive real-time, data-driven insights customized to insurer needs.”
At present, a handful of insurers are collaborating with Karna to do just that. She is not permitted to divulge the names of these carriers but said they are industry leaders. Google will “co-innovate” with this select group to solve their problems by delivering data-driven insights.
“The industry will pull us in the direction they need, as opposed to us pushing down products and services to them,” she said. “We want to do what is best for the industry.”
In effect, hundreds of Google data engineers, data scientists and AI experts are at her disposal to tailor the company’s cloud computing technologies to serve carrier needs. Initially, these solutions will focus on the select group of partners and then be rolled out to the industry at large.
How might the partnership reshape and refocus data-driven processes in the industry? Karna offered a few possible examples but emphasized that the initiative is at its most nascent stage.
“One example is the enormous insurance gap we have when it comes to extremely uncertain exposures like climate risks, autonomous vehicles, cybersecurity and business continuity when a disaster like a pandemic occurs,” she said. “Carriers have trouble analyzing these exposures, which affect their indemnity limits, pricing and reserving decisions, to the detriment of the end customers that need to transfer these risks.”
By leveraging Google Cloud’s expertise in AI and advanced analytics to analyze customer exposures on a more refined basis, carriers can better predict their business impact to not only transfer more of these risk exposures but also give customers more comprehensive insurance coverages priced at a lower cost.
“Right now, insurers are limited by their data architecture to understand these exposures,” she said. “An actuary looking to accumulate new exposure data on wildfires or hurricane wind speeds is limited in pulling together this data fast enough to make more precise decisions on pricing elasticity and reserving tradeoffs. We can transform that experience.”
Another process enhancement concerns the industry’s use of four-digit Standard Industrial Classification (SIC) codes to write commercial business (examples include Code 52-59 for the retail sector and Code 20-39 for the manufacturing sector). SIC codes assist an insurer’s analytical processes for underwriting, pricing, reserving and expenses, among other purposes. “The problem with binary SIC codes is their binary nature in classifying an industry that is composed of companies engaged in a variety of businesses and markets,” Karna said.
She provided the common example of The Walt Disney Company, a giant conglomerate engaged in widespread enterprises like film and television production, content streaming, theme parks, merchandising, and so on.
“Google Cloud can bring in Google Maps, Google Earth and other Google products to create multidimensional graphs and maps offering carriers a holistic view of a large customer’s risks—across different policies, revenue-producing entities, markets and geographies,” she said. “Seeing this, a carrier can structure its insurance policies to make the insurance as granular as it needs to be. The current technical limitations of doing this disappear, giving a skilled underwriter the data and insights needed to make complex, analytical decisions.”
The Fallout for InsurTechs
Assuming Google Cloud becomes a mainstay platform for the insurance industry, InsurTech firms predicated on providing discrete point solutions to carriers could suffer market share losses.
“If Google is successful from the standpoint of developing a compelling enterprise solution as opposed to a bunch of different point solutions, it certainly raises the competitive ante for many InsurTech players,” said Fitzgerald from CB Insights. “I do think Google will be successful in this regard. Dr. Karna has the background and a driven nature to effect revolutionary change management in the industry. If anyone can do it, she can.”Apprised of the comment, Karna said that she plans to work closely with InsurTechs as the initiative progresses. “I see some InsurTechs as additional partners going forward, given what I consider to be some snazzy inventions,” she said.
Hersch is impressed by the possibilities ahead for insurers looking to differentiate their customer value proposition. “By customizing the analytics and the AI to fit the industry’s specific needs, a generic cloud offering becomes an insurer-centric solution,” he said. “To do that you need technologically savvy people like Henna with industry domain expertise. Google made a smart decision.”
Over the next few months, Karna has plans to collaborate with the small group of insurer partners on their “business-specific needs,” she said, looking at their risk engineering, geospatial analytics, independent agent interactions, and exposure analyses at micro and macro levels. She is excited to dig in. “I feel privileged to help overcome our industry’s biggest hurdles in a journey steered by the industry’s best leaders.”
Russ Banham is a Pulitzer-nominated financial and business journalist and best-selling author.