PegaWorld iNspire 2023: Insurance Transformation Simplified: Zurich Santander's Journey From Traditional to Digital

Pega played a key role in powering Zurich Santander’s transformation as it set out to optimize operations, scale processes, and improve customer experiences. Watch this session to hear how Zurich Santander converted from a traditional insurance business into a completely digital company, going through lessons learned, implementation challenges, KPIs, and business outcomes.

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Transcript:

Joao Viana:
So what is Zurich Santander? It is a company formed 12 years ago with the main mission to create and sell insurance products through the Santander banking channels in Latin America. And by banking channels, I mean not only with the strong branch network that Santander has already set up but also digital channels and any type of partnership that Santander has in the region.

And talking specifically about the operation in Brazil, we are the fourth-largest bank insurance business in the country. We issue close to 15 million policies per year in property, casualty, and life, business as well. We generate close to seven billion reals per year in revenue. With the current exchange rate this should be close to 1.2, $1.3 billion per year, to give you a sense. We are a very lean company, 350 employees serving close to 10 million customers in our portfolio and processing something close to 11,000 claims per month.

So with these numbers and this short briefing of this story, I think you can realize that we are talking about a large corporation full of legacy systems that has done a great job protecting the core fundamental insurance value so far, but they are also struggling to help the company to position itself in this fast world changing with lots of shifts in the consumer behavior and lots of new technology coming in. So it was a time to reflect and find a way to move on. That's the story that we're going to talking about. And then I think it's not much different from some other stories that we have been hearing all over the rooms here in the Pega conference this year, right? It's pretty similar.

So in the beginning, as we were discussing and planning our transformation program, we already knew that it would take a long time, a long journey, it would be complex and we would face many changes along the way within the company. So it was really important for us, crucial I mean, that we could establish right away the most important goals, the most relevant goals for us in order to avoid that we could be lost on the way and fail in this project. So we sat down in the beginning and defined the most important goals to help keep us on track along the way.

So the first goal was having the full control in the real-time monitoring of claims processing. And this is absolutely critical for our operations because as I said, we are a very lean operation, so we rely a lot hiring external parts, providers, to help us handling the claims processes. So we need this full control and real-time monitoring to guarantee their performance and quality along the way.

Second, flexibility and agility to set up fast-track process are also a key for us because we understand that different situations and different types of customers might require different types and speeds for our customer service responses. For example, we'll give an example along the presentation in a catastrophe for example, we know that the claims process must be way faster than it is usual to attend the customer's needs. So this is an example of that.

And third, to leverage autonomy and convenience for our customers. We also think it's critical because we already know that a large part of our customers are independent. They don't like to rely on brand managers or customer service representatives to be guided in the claims process or to make some adjustments in their policies or to get served in a certain way. So they need this convenience to be satisfied.

We already new as well in the beginning. Some of our most important challenges, I can just list some of them here. So the first is the strong dependence on the IT Santander team, which is basically because the way this company was formed 12 years ago, in the business architecture, the Santander kept this responsibility for managing the channels, the sales channels, the service channels.

So everything that we need to do, we can do inside Zurich Santander, but we still need to develop the customer journeys and we still need to rely on Santander to do that. And why it's difficult, because it's hard to keep the partner in the same pace, with the same objectives, with the same urgency that you have in our project. So it's quite hard. And also integrate and manage providers are also a great challenge for us, especially those with more legacy systems. And that lacks some modern capabilities to connect, like API capabilities, those are quite hard to manage and integrate as well.

So our program was split in different waves and this was key for our success, in my opinion I'll talk about later in the lessons learned. So the first wave was fully dedicated to improve our claims management. To give you a perspective on that, I can tell that before the project we recognized that filing a claim for our customers could be a painful experience as they first needed to get in touch with a customer service representative, provide a lot of information on the line, and then after that, sending some documentation through email without having any type of feedback from the insurance company regarding the status of their process or if there was something missing, like a documentation missing for them to complete the process. So it was a nightmare. And on top of that, we also recognized that our lack of control of the operation gave us a hard time to manage our providers.

So we didn't know how well they were performing. And also we didn't know if they were making mistakes that could be compromising the overall satisfaction of our customers. So to address those points, Pega was key, Pega was key. And why it was key, because Pega helped us to create a layer to orchestrate an end-to-end solution that started beforehand with the development of a web-responsive front page, very friendly, in which the Santander customers could have the convenience and the autonomy that I talked before. In which they could file a claim, upload documents, and most importantly, they could get access to status notifications of their processes. So it was a start.

And then Pega connected to our legacy systems and to the providers, which allowed us to do two important things. First, we were able to, like I said, improve the management of the performance of our providers so we have a better idea the providers that were performing well, not only about productivity but also about quality. And secondly, we could split our track processes in different ones according the different needs that we have, for example, catastrophe.

So with all this new architecture, we were able to, which is very key, to start driving the process, more process for providers that were performing well, not only like I said in productivity, but also in quality and driving less process to the worst performing providers. So with that, we were able to reduce, to improve a lot substantially the customer experience as a whole and not at the same time we were able to improve productivity and efficiency levels as well.

Well the second wave of our program transformation was regarding product management and quotation capabilities. And I think there are some important features here that were developed. I would say that the first one was the ability to customize products and offerings for our customers. We were not able to do that before in the legacy systems. With Pega applied to this model, we were able to personalize offerings, which were key, for example, considering this shift in customer needs that we are going through nowadays.

Second, I would say that the reduction in time to market was key as well. It took us a long time to develop a product in our legacy system. When we shifted to Pega, it took us half of the time to process that, to develop that. So we were able to come from product discussions to product implementation in a very fast way after Pega implementation.

I think the third thing that is important is that we were able also to simplify our product shelf. So we were working because of our legacy gaps. Every time that we needed to develop a different offer or a different product, we needed to come up in the legacy and develop itself a product. But with Pega, we just developed one product and this product was customized to different types of customers or segments or different types of offers that we would like to come up with.

And the last, I think it's very important as well, with Pega, we developed a capability to apply data to our product pricing. So we were able to collect some data in our lake, make a lot of studies to find the data with highest correlations to the product pricing for each product, and then put them together, mix it in and and include them in this product pricing machine that we have. So it was very important.

And then lastly, in the third wave that is going in progress right now we are talking about the digitalization of our back office, which is basically reducing the amount of paperwork that we have been applying all over the years using some taxes and of course in the future with more power, the concept of AI OCR and machine learning and so on to analyze documentations and reduce the work of their increasing efficiency and productivity as well. It's been in work in progress, I hope to come back here and tell you later how successful we were in this third wave. So with that said, I will pass to Renan and he will go through some of the details of the business architecture and the results that we have been achieving those time.

Renan Rodrigues:
Perfect, João. And making an overview about architecture. Our main objective was to make a decoupling process from our legacy system. So the idea is basically reducing the functionalities that we have on our old BPM system and put it into the Pega platform, giving for example, more flexibility and agility for developing new features.

So we have a target of having an architecture a hundred percent event-driven, what's already given us possibility of making real-time dashboards for monitoring and helping us making better and faster decisions in claims, quotations, system availability. And we are using cognitive services and in-memory database for having these faster processes.

And about this first. On our claims process, we receive thousands of documents on a monthly basis from our clients. And we are using these cognitive services to check the document's quality and also to gather, to capture information from data from the inputs of our clients. And about the second. On our quotation process, we are, sorry, I changed the...

Joao Viana:
You can go ahead.

Renan Rodrigues:
Yeah. And about a second, our quotation process as we do pricing using several variables and also the client has all the customization, not only the client, but our sales force has all the customization of including new covers or removing covers or changing the sum insured. We show in the front end the price change on every change the client is doing on the customization we are using a in-memory database to make this process faster also. And the last highlighted architecture key point is that we are making more efficiency connections using streaming APIs. Sorry.

Joao Viana:
There you go.

Renan Rodrigues:
And we brought... Sorry. We have achieved great results making this transformation and we brought the five more representatives. The first one is that 65% of our clients migrated to this digital claim service where they can follow up all the claim process, they can see the status, they can receive messages from the insurance company, they can also see which documents are pending to send.

And as we are generating less friction to the client and giving more convenience, what we are observing is that our reduction of 30% on our claims time to payment. And if we have lower friction and we have more convenience, the client tends to be more satisfied, more loyal. And in our surveys, we are observing also an increase of 20 points on our claims net promoter score.

And now talking about the part of product management, as we now have more agility and have more autonomy to make change on our products, we observed a 50% reduction in time to market for new products and new release, such as including new coverage on our products or making price change for some promotions, some campaigns. And talking in terms of IT development, actually this percentage is even higher, but we are considered the time to market considering our governance process for approvals and also all the ceremonies that we have that take time. So this percentage in an IT perspective is even higher.

And finally, on our old legacy system, as João has already said, when we offer a variation of product structure such as different package or different price strategies, we had to set one product code for each one of these structures. And now with Pega, we have a layer that basically we can in one product, make all these changes. So we are observing a reduction on an efficiency gain in our product modeling.

And we brought a case that occurred in February of the present year when we made something that we couldn't imagine five years ago before all this digital transformation that the weather forecast indicated a massive rainfall on the region of the shore of Sao Paulo state. So we scheduled and sent messages to our clients, to our homeowners and our SMEs property clients before the event to let them know our contacts and everything in case of any necessity. And about this time we didn't have the idea of the proportion of this tragedy, but it was the record rainfall in Brazil with more than 600, no six, it's correct, 600 millimeters of water and what represents about 26 inches of water in a period of 24 hours.

So it was a huge event. In the middle of the carnival season. That is a time that this place is really, really crowded. And with the transformation that we have, and also thanks to Pega flexibility and the quantity and quality of data that we can manage now in just a few hours, we could develop a real-time monitoring dashboard about only for this event, the example that we have below.

And we created also a workflow, a claims workflow with our regulators that were in this region. And also the assistance providers to give the customer faster and efficient response for their claims. And what resulted in claims being paid and services being provided in between 12 to 48 hours after the notification. So it was really fast. And to have an idea of the impact of this action to our clients and also our sales force, we received a message from a general sales manager of the Santander branches in the version of San Sebastian City that is a city that was hugely impacted by this event that he said that in 20 years work on the bank he never saw any mobilization like this. So it was amazing for us.
 
And in my personal opinion, I think this is what moves us. This is what make us proud of all the work that we are doing. We are giving tranquility to our clients, we are giving confidence to face this type of adversities. And doing this was only possible after this digital transformation that we made in Zurich Santander, Brazil. And now I'm going to invite João again to say the final statements of our presentation.

Joao Viana:
Sure. So just talking about the most important lessons learned, just to list a little bit some of the lessons. I think the first is that the way of working put together the business people and the technology people in the same room, the same table. And working agile model was key because it avoided most of the goings and coming back of the information. So it was a very agile way to work.

And on top of that, executive alignment was key as well, because like I said, we already knew that during this program we would face many changes in the corporate management along the way. So if we didn't have this well-aligned as a program with different phases and a clear roadmap with small deliveries in each phase, it was very likely that in this management changing new people will come, would abandon the project. Probably we wouldn't give the importance relative to this project.

So this alignment was really, really important, especially to align the expectative of the people, especially the management, and the deliveries that were coming along the way. Complete process testing is quite obvious, but in our case, as a retail bank insurance business, we have very little space to make mistakes, very little space. So before going live with our new functionalities, we basically, I don't know, work our asses off. Testing, testing, testing, testing. It was an endless process, but in the end of the day we were able to go live with very few mistakes, which is quite impressive for an operation full of legacies like Zurich and Santander together, like I said.

Prioritize, continuous improvement. This was key, like I said, I mean doesn't face this as a project, but as a program was really important. If you face just as a project, people will think about the short-term and the delivery as a whole, not a set of deliveries in the same project. So setting this as a program with different waves and each wave with its set of deliveries was really important to keep this project moving on until now, and we're still not finished. Like I said, there's still so much to do in the digitalization of the back office, but also on the claims and product management part there are many projects building new capabilities on top of what was already done.

Monitoring and controlling process is essential. Our part in technology, like to say that the COE that was built to manage our operation with Pega team and the Accenture team that help us along the way was key to give a deep control of everything that's going on in the operation. And if there is a problem, just to detect it really fast and correct fast as well.

And lastly, change is inevitable. So anticipating, proactively communicate KPI and expectations. Like I said, this is really important because all the time we were aware of the importance and the high impact that the program should bring to the company. But we are human, so we are selling the program and the project as well. So the more you sell, the more you create expectations and people start waiting for the deliveries and for things to happen. So in the end of the day, the board of directors was less concerned about the deliveries and more concerned about the results. So if the results takes long to come, the impatience starts increasing and the more complicated your situation managing the product is.

So once it's inevitable, the change, you just keep a line in the expectative and act first and communicate real well what you're delivering so that they can expect the right deliveries and the right results at the same time. Right. So that said, we are done. We are very happy to take any questions if you want to make. Feel free, one at a time. I think honestly, you don't need the mic.

Sandeep:
Excellent.

Speaker 4:
Yeah.

Renan Rodrigues:
She's coming.

Sandeep:
Thank you. Hi, is it on? Hi, I'm Sandeep. I'm from Tokyo Marine, London. So developing such magnitude of application is a big deal, particularly claim administration system. And after build, right and application is ready, change management for business side is a, I had found out earlier that users were not really adopting, adoption was really slow or having issues. So what was the strategy of your group for business change management?

Joao Viana:
The business change management, you said.

Sandeep:
Yeah.

Joao Viana:
But regarding customers, or regarding the employees?

Sandeep:
For users to adopt this.

Joao Viana:
Users?

Sandeep:
Yeah.

Joao Viana:
Actually in the end of the day, the overall product just for, I mean let's say I think the most important strategy, both in claims and in the product management and quotation changes was the communication. So for claims, we develop a strategy to contact the customers and contact, most importantly the branch network, the branch managers throughout the possible channels to anticipate the most important changes that will take place in those process. But to be honest, when it comes about claims was quite easy because it was so painful for the customers before to file a claim, they'd have to first find their policy, second, find the phone number of the contact center, third, get lucky enough to in the contact center, find the service of insurance, the insurance contact center itself. And then when he finally got to the insurance part of the contact center, he or she needs to provide a lot of information and then they didn't have feedback.

So when you apply a solution that's way easier to the customer, I think the adoption was pretty easy. We didn't have any type of friction along the way. We did have indeed, to be honest, we could apply this, I didn't say that, but we did apply this solution for 98% of our customer portfolio, but for 2% with very old products, some customers that are for a very long time in our portfolio. And they possess very, very old products sometimes we couldn't do that. And for these customers it was kind of painful because they didn't know if by any chance they received information wrong using a new channel, which for them was not possible. They stayed in this limbo. I mean, they didn't know how to manage the situation.

For these types of customers it was hard, but so little, so few numbers, the number was so few that it didn't bother us so much. And for the product management, I would say that what really changed was the hiring journey, but was not that complex as well because they were able to customize their products. So in the end of the day, we made this in a way that we could first set three different offers that was very similar to the previous one, to the previous journey that the customers were used to have. And then if they want, they could customize their product. So in this way, I think we managed to have any type of friction in the journeys.

Sandeep:
Thank you.

Joao Viana:
You're welcome.

Speaker 5:
That weather alert that you sent out, that was pretty neat. Where did you get the information to determine that this weather event was going to happen? Was that some sort of integration that came in to Pega or did you guys notice that and just did something on your own?

Joao Viana:
No, actually this part of this services wasn't connected to Pega or anything. It was quite very simple. It's basically the information from the National Institute of Meteorology in the country. It's quite precise, but we didn't know how much rain was going to happen. We didn't know it would be a strong rain, but not how that strong. So basically we collected this information and we are able to set up in communications and send text message to customers like three, four or five days beforehand. But it was useful to avoid for a number of customers, some worst tragedy. But I think it was not, to be honest, the most important part here was not the previous match, although it's quite relevant in the presentation. I think the most important part of the case was our ability to really fast set up tracks, process tracks for this specific situation.

So what happened was in hours, in a matter of hours, like two or three hours, we had already set up a track specific for the people in that location so that if some people there file a claim, we could just jump in the line and put in with the very first priority to process the claim as fast as we can. And also we were able to with this dashboard monitor in real time. And indeed the communication was good, but not with customers. But we create WhatsApp and Telegram groups with the regulators, the people that make the inspections on the sites or online so that they could be mobilized really fast and also work fast in the process regulation. So this was key. I think these two parts were way more important than the previous message, text message that we sent before.