Aviva's Ben Luckett: risk management is where some of the most exciting technologies reside

Published in: Risk, Risk management, Corporate strategy, Investment, UK, Software - IT

Companies: Aviva

Ben Luckett was named Aviva's chief innovation officer in January with a remit to propel the firm's digital development. He explains to Paul Walsh how its tech strategy has evolved and what's in store for risk management 

Ben Luckett

The creation of a new C-suite role at an organisation is a sure sign that particular function is of vital importance to its future. At Aviva, the most recent example is chief innovation officer, a role Ben Luckett was promoted to in January.

He is no stranger to innovation, having led Aviva Ventures, the UK insurer's fund that invests in early-stage businesses aiming to transform the insurance industry, for almost six years.

Speaking to InsuranceERM, he explains how his responsibilities have expanded into three main areas.

"Part of it is driving the innovation agenda, i.e. working on the development of new propositions, and another part is making investments and creating partnerships in the external ecosystem.

"And the third part of it is working with our board and executive committee on insights and trends that we're seeing and need to take notice of as an organisation."

He explains the agenda-driving is done in collaboration with the firm's other business units, but he "takes the lead" on the strategy as well as both internal and external partnerships.

Evolution

In mid-2015, Aviva's then chief executive Mark Wilson talked up a "digital-first" strategy for the company, stressing "there is a digital revolution in insurance and I want Aviva to lead it".

In the same year, he established the Digital Garage in London. Based in the trendy tech hotspot of Hoxton, the office was staffed with a few hundred people tasked with developing ideas into "real financial products and services for customers".

Nearly six years later, it is clear the company's strategy has moved away from the garage development.

InsuranceERM understands while the company continues to use the property on occasion, it now focuses on a different dynamic, particularly in the post-Covid-19 era when use of all office space is reviewed.

"We've made great strides since that strategy was launched some time ago," explains Luckett.

"The change I've seen is that digital has become embedded in the heart of our business rather than being something different."

Luckett says Aviva has made progress in embedding data science capabilities in its core offerings and embedding digitalisation in normal operations.

"When something is new it's often good to accelerate it specifically. As capability develops and confidence develops it becomes part of how we work and that's what you see."

Investments and partnerships

Aviva has made several significant investments in start-ups, among which was a buy-out of low-cost robo investment service Wealthify in 2020, having initially purchased a majority stake for £17m ($23m) in 2018.

Its investment strategy has also evolved and broadened. In January, it formed a partnership with venture capital firm Anthemis and committed to invest capital in companies "advancing the digital transformation of the financial services sector".

"We invest in a wide range of both start-ups and funds and we feel by making strategic investments, we can bring learnings back into the organisation and get early insight on new emerging propositions," says Luckett.

"We like working with different types of organisations, particularly in the start-up world where you've got different things from a technology, customer service or agility perspective."

"We like working with different types of organisations, particularly in the start-up world"

Luckett is chair of the board on Wealthify and although reluctant to disclose specific figures, he stresses the acquisition has been a success.

"Safe to say we've seen a rapid increase in assets under managements and customers since our investment," he says, adding the pandemic has had a positive impact, as many people have boosted their savings.

He says the key to such success is remaining conscious that the start-up is retained at "arm's length" and given the chance to "develop and take their agenda forward at pace".

Aviva also signalled its innovation intent earlier this week when it joined Admiral, Brit, Esure, Lloyd's and Munich Re Digital Partners in signing the UK government's Fintech Pledge.

The pledge sets standards for establishing partnerships between UK financial institutions and fintech start-ups. Upon the announcement, Luckett said the benefits of working with start-ups are "significant and not to be underestimated".

The pledge's new participants followed a spike in UK insurtech fundraising which totalled £187m in Q1 alone, more than half of the total investment seen in the UK in 2020, according to technology consultancy Tech Nation.

Investment criteria

Whether it's investing in minority stakes via its venture capital fund, making acquisitions such as Wealthify or developing partnerships, Luckett explains Aviva adopts fairly stringent criteria.

"Part of the criteria is what you would normally expect from a normal venture investment.

"So do they have a compelling proposition and problem they're solving to meet customer needs? Is it something scalable? Is it a team you can invest in and know they'll execute, as early-stage investing is as much about the team as anything.

"The other lens we apply is strategic. So from an Aviva perspective, does what we're investing in support the acceleration of our strategy and are we able to support the start-up from the assets that we have beyond capital? That strategic alignment is really important."

Insurtechs typically struggle with getting a foothold into distribution and complying with regulations, and these are often areas where they look for support from established insurers.

Luckett stresses however, insurers cannot be relied upon for everything.

"We see hundreds of different start-ups and we need to make sure we manage their expectations, as the last thing I want is them thinking just because we're Aviva it means we're going to do everything. We don't have the capacity to do that. We need to be very clear."

Innovation in the back office

In over 15 years at Aviva, Luckett has held roles including head of risk management, enterprise risk director and strategy director for general insurance in the UK and Ireland.

He notes innovation has traditionally focused on more front-end processes such as sales, claims and marketing while innovation in back-end processes such as risk management and actuarial functions has historically been lacking.

"By making strategic investments, we can bring learnings back into the organisation"

Front-end processes are "the more obvious starting position for innovation as people have looked at this industry and it's where they've seen pain points and its simpler to spin up propositions to get things up and running," says Luckett.

"When thinking about insurance there is a fair bit of complexity in the value chain that you don't necessarily get in other industries, so people have started at the front-end."

However, he stresses this may well change in the future as "risk management and actuarial processes are where some of the most exciting technologies reside".

Real-time risk management

"If I think about this from the lens of where we think the industry is going in the future, it's about real-time data. Risk management in insurance is based on historical and often static data," says Luckett.

"We were talking to a couple of start-ups in the last week who are effectively making risk management a much more dynamic experience.

"We've been talking to a start-up in Israel looking at third-party risk management and talking to a business looking at taking web data to understand emerging risk from weak signals and that's the core actuarial processes. When we move into the world of real-time data, it will enable a world of prevention and will be transformative on how we price and underwrite."

He also cites increased customer focus on contemporary trends which are adopting technology.

"Let's take mobility or the ecosystem around travel, where we're seeing moves to much more embedded data in the vehicles for example, and much more short-term usage and subscription models around car ownership.

"All these things will be part of that move to real-time data."