(Ian Macartney, Head of Innovation and Digital, Argo Group. Image source: Argo Group.)
Ian Macartney, Head of Innovation and Digital for specialty insurer and reinsurer Argo Group (Pembroke, Bermuda), is a 35-year veteran of the insurance industry. He began his career with the U.K.’s Prudential and later worked for AIG as head of operations for businesses on both the life and property/casualty side. He ran operations for Marsh for several years, and he arrived at Argo to run operations in late 2019. In addition to operations and his Innovation and Digital role, Macartney has responsibility for data and analytics globally, as well as the company’s facilities and real estate team. Insurance Innovation Reporter had an opportunity to talk with Macartney about his role as Head of Innovation and Digital in the context of the current state of technology and the influence of the COVID-19 pandemic.
Insurance Innovation Reporter: How did Argo react to the pandemic from an operational perspective in 2020?
Ian Macartney, Head of Innovation and Digital, Argo Group: When I took over operations, we quickly recognized we needed to do a bit more work on our BPO side. We have a large vendor in India and, I spent quite a bit of time in January there. When the pandemic struck, whether through luck or fortitude, we quickly got ourselves in shape ready for a full-scale lockdown because we could see some things coming. In fact, we had done some prior work during the 60 to 90 days prior to the lockdowns. In the event, we were able to be remote within two weeks, with 200 people in India working with laptops at a time when many large institutions in India were struggling to find laptops. That was helpful because many of our competitors weren’t stood down as quickly as that, and it resulted in get an uptick in submissions and new business.
We found that our digital team in New York didn’t like working remote, as they live in small apartments. We also had families with young children who struggled. People initially thought the remote work would be short-term, but we pushed it out long-term because we had a sense it would go on longer. We did several surveys to gauge associates’ preferences, and we gave them the opportunity to move from small apartments or we gave them desks and chairs or other equipment. We did a lot to say we wanted them to be safe.
IIR: What has changed as a result of the pandemic that you’ll be carrying over through 2021?
IM: During this period, people’s mindsets changed. Across our global businesses, about 40 percent of our workforce decided they didn’t want to come back. They enjoyed the experience of working from home because they had to travel less and see family more. We’ve given them the digital tools they need, so they’re comfortable and productive. Fifty percent of the workforce does want to come back for a variety of reasons, including camaraderie, training, meeting clients or producers—or just to be able to get out of the house for a couple of days a week. We’re adjusting our real estate footprint accordingly, and it’s saving us a lot of money.
IIR: How did changes in Argo’s digital strategy dovetail with the rigors of the pandemic?
IM: The digital strategy was very much aside and we brought it into the mainstream. We now have a full enterprise digital strategy over the next three to five years. People can see things like a workflow system, automation of submissions and building out digital distribution. Salesforce and Duck Creek [Boston] will all make it easier to work from home and focus on the things they should be. Digitization is going to help underwriters focus on what they should be focusing on. AI and machine learning will give them more information. What I would say is that that we’re proving the case through COVID, and I think it would have been harder prior to Covid. If we hadn’t had COVID, there would be a lot more doubters. As you know, this industry is not very good at changing. So, I think digitization and the pandemic actually helped.
I think the organization has realized that we needed to speed up our digital progress. Consider that we didn’t have a workflow system across the company. I brought in a head of operations quickly and we were able to select a provider for a workflow system—Appian [McLean, Va.]—that’s tied to our submission automation. A lot of the work done by our company in India was for submission. We’ve now taken that off them, we’ve automated that using AI.
IIR: So, the pandemic has been “silver lining” in that regard?
IM: Yes. If you’ve been an underwriter for 30 years you really don’t believe that automation of submission can work, but when you can deliver the tool to do it and prove that it can be done, it really helps. In general, people are seeing the benefits of digital because they’re not running about the office in 10 different meetings. For us, the strategic thinking is more around getting people used to the fact that digitization can help them. Just to give an example of us today, people do a lot of Zoom calls now. They’re seeing that you can do so much on these calls: you can share documents, you can record them. There’s so much that you couldn’t do if you were in the office.
IIR: Let’s talk a little about your mandate to drive progress in digital and innovation at Argo.
IM: I’ve driven innovation in other companies in various manners, and when Kevin Rehnberg approached me about joining Argo, he wanted us to create an innovation culture, but also aligning that to what A.M. Best requirements were, as well as looking at operations and all the different solutions and strategies we need around enterprise.
What we’ve created is something that is part of the culture of Argo, not separate and in addition to it. We’ve built a grass-roots innovation system called Argo Innovates. Within that we have a platform called Brightidea [San Francisco], which is a place to input ideas and track their progress. The originators of the ideas get awards as the idea progresses—we awarded over $10,000 for basic ideas last year. We had three shark tanks, and we now have three major initiatives that arose from them, and the rewards to employees involved will be substantial.
IIR: What kinds of ideas are encouraged through Argo Innovates?
IM: They range from questions like, “Why don’t Argo employees get eight hours a year to volunteer?” all the way to ideas like, “Here’s a way we can streamline our processes to take out costs,” or “Here’s a different line of business we can enter.” It’s been a huge success. A.M. Best came to use for input, and they like what we’re doing. I can’t share our score, but we’re in the top 10 percent in terms of innovation. We’re going to build an output capability so that we can look at innovation across the company. And we can track and record every piece of it. The employees have much more engaged, we have innovation committees all over the company. It’s very much part of employees’ day-to-day thinking. That’s a key piece because they can hear their voice and see the progress through Brightidea. If we decide not to act on an idea, we very quickly tell people—and we tell them why.
This employee engagement was part of the mandate. The other part was to develop an enterprise strategy around digitization. We see that as having three pillars. There’s the A.M. Best requirements part, there’s an InsurTech piece related to our ventures company—Argo Ventures—and there’s what we call our Enterprise Solution.
IIR: How do you work with InsurTechs?
IM: We identify and work with InsurTechs, we invest in them and we bring them in to address specific problems. For example, we have one that just did a proof of concept with us to reduce the claims lifecycle. We bring them in and let them learn and fail fast. With Argo Ventures we have a lot of insight into the world of InsurTech beyond seeing how they can help us solve problems.
IIR: Tell us about the Enterprise Solution.
IM: The Enterprise Solution is a set of systems and process areas we have identified to create a unified, end-to-end processing environment. It’s about things like driving business growth, how to handle more business, and reducing non-acquisition costs. We think of it in five key pillars:
- Submission automation—for which we’ve build a system internally;
- Appian—for workflow;
- Duck Creek—for policy administration and claims; and
- Digital distribution, where Evari [Perth, Australia] is our solution provider, and we also use Watertrace [London] for our Lloyd’s business and our U.S. MGA business.
Argo is formed from 18 different companies with lots of different systems of different ages. The Enterprise Solution is a way of taking into consideration systems that we can’t replace all at once and figuring out how we move forward as an organization into a single enterprise solution over the longer term.
Systems consolidation is an important part of that, but it’s much more. I think the challenge we have is making sure we’re not forgetting about what we have at the back end—and not losing sight of that—but also making sure we’re ahead of the game in terms of being ready to lower our acquisition costs and drive digitization in the future. Otherwise, you’ll have a lot of bodies and lots of historical systems. That’s not really the way to go.
For both Argo and the industry as a whole, we’re in a period of evolution. I think Bill Gates said we overestimate the change that’s going to come in the next two years and then underestimate the next ten years. The reality for us is we have to make sure we’re not too far ahead of the game but we’re managing the back end so that, two or three years down the line, we can actually sunset some of these systems because we have the proper tool in place to do it. And that will take a lot of cost out of the business. But also, we’re driving forward and through digitization we’re able to take on more business with less cost, which helps our combined ratio.