Solaria Labs East is a team of innovators developing new digital insurance products for Liberty Mutual in Asia. Head of Innovation Justin Yiu explains how data and smart technology are inspiring a new era of tailored coverages and responsive pricing.
“The beauty of being in an innovation lab,” says Justin Yiu, Head of Innovation for Liberty Mutual’s Solaria Labs East, “is you have all this expertise sitting within the mother company that a traditional start-up would never have access to straight away.”
Solaria Labs East is the Asian arm of Solaria Labs, Liberty Mutual’s digital product innovation hub – an operation that combines the entrepreneurial spirit of a tech start-up with the blue-chip expertise, financial clout and capabilities of a major insurer, which launched in 2015.
Its mission, Yiu says, is to “develop new offerings to help our customers protect the things that they value most”. The lab’s ideas also help Liberty Mutual stay one step ahead of buyer trends, move into new product areas and target emerging customer segments – the last point, Yiu points out, “is very relevant in Asia, where you've got a huge emerging middle-income class that is about to buy insurance for the first time”.
Solaria Lab’s innovations are designed to meet future consumer needs in three broad buckets – shelter, mobility and commerce – into which the majority of Liberty Mutual’s core business fall. These ideas are, in effect, helping futureproof lines like property and motor against the inevitable disruption they will see in the years ahead.
“We have a lot of freedom in terms of the ideas we come up with, but they have to support those core pillars and help the business achieve its long-term objectives,” Yiu explains.
When an idea is incepted, Solaria Labs conducts primary and secondary research to understand customer needs and pain points. Potential solutions are proposed, which must then go through a validation process. A business case is then presented to Liberty Mutual and, if aligned with the insurer’s appetite and goals, the product can be developed.
“We handle the customer experience, technology and proof of concept, but partner very closely with the insurance operation to launch the products,” Yiu says. This includes leveraging Liberty Mutual’s extensive actuarial, claims management and policy administration capabilities and, crucially, its ability to gather large volumes of data quickly to establish whether an idea is scalable or not.
At its heart, the innovation lab is all about using data science and emerging technologies to develop more efficient, responsive products. “What excites me is greater access to data to improve our ability to price and manage risk and offer more personalized products to consumers,” Yiu explains.
Intelligent product design
One of the first products launched from Solaria Labs East – established in 2017 – was a digital life-insurance product in Hong Kong which provides coverage that changes with policyholders as they hit different life milestones, such as paying off their mortgage or children graduating. “With some basic information about the customer, we are able to tailor their coverage over time and the customer only pays for the coverage they need,” he explains.
“There are so many new sources of data that we never had access to before, from autonomous vehicles to connected home devices to wearables. Insurers that are able to figure out how to use this data to accurately price insurance will have a significant advantage over the coming years,” Yiu adds.
Some players in Asia are already incentivising insureds with rewards tied to readings returned from wearables and telematics, though Yiu describes them as “very basic”. The next step, he says, is to harness personalized data to determine pricing. “I’ve yet to see an insurer in Asia really crack that yet. Insurers are still figuring out how to gather enough data.”
Another key area of innovation is using data to bring risk mitigation into product design, driving claims costs down while adding value for customers. Solaria Labs is already doing this in the US through an app called Dwellbeing which reminds property policyholders when and how to do maintenance on their insured assets. “As well as helping manage risk over the long term, this creates customer engagement and loyalty as the insurer is doing more than just waiting for a claim to happen,” Yiu says.
And the importance of building loyal, engaged customers cannot be underestimated as insurance becomes increasingly digital, automated and self-service-led. In Asia, insurance is also increasingly being embedded as a value-add in consumer-focused ecosystems such as ride sharing, e-commerce and investment.
“Asia is arguably developing technologies faster than anywhere in the world, but there is also under-penetration of insurance in many Asian markets and a huge gap to fill. The convergence of these factors is driving the embedded insurance play,” Yiu explains.
However, he believes many Asian consumers still want human interaction when buying insurance – and that insurtechs have a key role to play in helping Asia’s intermediaries hit the “sweet spot” between digital and human customer experiences. Brokers and agents aren’t going away any time soon, he insists, adding: “You can’t build trust and relationships with a website or chatbot.”