Digital transformation lessons: how Liberty Mutual's 110 year journey led to the cloud
The insurance industry is undergoing a significant transformation, transitioning from traditional agent-based models to a variety of hybrid and self-service options as well as moving from paper-based transactions to digital ones. However, in such a heavily regulated industry, rife with complex legacy systems, digital transformation isn’t a simple process. Liberty Mutual, one of the industry giants, tackled the challenge using a variety of best-in-class solutions and tailoring them to meet its unique needs.
Meet Liberty Mutual
Liberty Mutual Group is an American diversified global insurer based in Boston that ranks 71st on the Fortune 100 list of largest corporations in the United States. The company offers a variety of insurance products and services including workers' compensation, homeowners, automobile, commercial automobile, group disability, fire, general liability, and more. It owns or partially owns local insurance companies in 18 countries and employs over 45,000 people.
The journey to digital transformation: tackling complexity and legacy systems
Liberty Mutual has been a global leader in the field of property and casualty insurance for over a century. However, as mobile use skyrocketed in recent years, conversion rates weren’t what company leaders wanted them to be. In other words, what had worked in the past was no longer doing the trick. Therefore, in 2019, they decided that it was time to integrate a variety of siloed systems, adopt a digital mindset, and develop a coherent customer journey that could address all the complexities of the insurance industry. Rather than developing the new system as yet another legacy platform, Liberty Mutual looked to enhance agility by utilizing existing, best-in-class solutions and tailoring them to meet its needs.
They faced several challenges in the process. Many of the company’s legacy solutions were 20-30 years old and they needed to find ways to run old workloads on new platforms as well as rebuild them as cloud-native applications. Another challenge was translating existing data, including data that goes back decades, into formats that can be utilized by modern platforms and AI. Last but not least, it was important that everything be API-enabled so that Liberty Mutual systems could seamlessly integrate with other technologies and platforms.
Cloud technology was key to increasing speed and agility in all of the company’s activities and enabling visibility in their operations. Liberty chose to use Amazon Web Services (AWS) with its leading cloud technology to speed up the implementation of a strategic state-of-the-art single business platform, and enable innovation in various business units. Using AWS CDK and AWS architecture practices, Liberty Mutual’s tech team was able to simplify coding and reduce the training that its developers needed during the transition.
Focus on employee experience
With tens of thousands of employees on multiple continents, speaking different languages, and using various systems, it was critical to find a way to include everyone in the digital transformation process. That meant, among other things, speaking each team's language to illustrate the benefits digital transformation offers. Therefore, Liberty Mutual chose outcome-driven business metrics such as improving operational efficiency, increasing retention, or decreasing call deflection that spoke to the teams and created buy-in.
For example, Liberty Mutual integrated self-service options and virtual agent technology with human service agents, allowing the company to utilize employee time where it had the most value. "We find the vast majority of customers love the self-service option, which alleviates the instant pressure on the call center, reducing wait times dramatically," says Matt Coulter, Senior Portfolio Architect, Liberty Mutual Insurance. Employees could see that firsthand, and understand how they were better able to address customer needs with less pressure on the phone lines.
Although Liberty Mutual began the digital transformation process before the Covid pandemic, finding ways to communicate the transition and involve all employees became increasingly important as the company transitioned to remote and hybrid work models after it hit. In addition, the company leveraged its digital platforms during the pandemic to check in with employees, make sure that they were ok, and keep them engaged when working remotely.
How Liberty Mutual is using AI and ML
Liberty Mutual has leveraged advanced technologies like artificial intelligence and machine learning in a wide variety of company use cases. For instance, it used AI to convert unstructured company documents into standardized data that can be easily extracted and shared with various team members, including underwriters. With easy data access, Liberty Mutual can now write commercial insurance policies quickly and accurately based on the individual loss histories of companies.
As a leading insurer, Libery Mutual also has a unique focus on employee experience and safety. It is now leveraging AI to help its commercial customers keep their employees safe and prevent workplace injuries. The company’s ErgoValuator app uses AI and IoT to capture different parameters of workplace tasks and assess their safety risks, making the workplace safer for its customers.
And that’s not all—Liberty Mutual is also using AI for car inspection. The company partnered with Inspektlabs, a developer of computer vision technology platforms that automate the inspection of physical assets, to build a mobile app that customers can use to take videos and photos of their cars for claims assessments and policy renewals. Once the images and videos are uploaded to the cloud, they are assessed with AI and a claim and damage assessment is issued automatically, making it much easier for customers to renew policies or settle claims.
Liberty Mutual isn’t stopping there. “We have hundreds of machine learning models in various stages of operation across Liberty Mutual,” says James McGlennon, CIO “There's hardly a part of our business where we're not deploying some new machine learning models.”
Benefits of digital transformation
The benefits of the transformation have been significant.
Easy access to data
It’s now easier for both employees and customers to access the data they need when they need it. One of the key KPIs the company tracks is how easy it is for customers to connect with the information they need, and Liberty Mutual has seen a major improvement in that KPI as the result of the digital transformation. And they strive for ongoing improvement, they continue to measure every interaction to identify where customers are confused, and better understand how they can make the process easier for them.
Customers can connect with the company in a variety of ways, from self-service to hybrid, to connection through agents, and the results speak for themselves. In 2019, J.D. Power’s U.S. 2019 Insurance Digital Experience Study, ranked Liberty Mutual eighth in overall customer satisfaction. But in 2020, after implementing key elements of its digital transformation, the company was ranked first among national carriers in the United States.
Managing the talent crunch
Like many insurance companies, Liberty Mutual has struggled to recruit employees with the coding expertise needed for the transformation. However, by utilizing existing technologies, no-code solutions, and simplified architecture, the company was able to achieve more with existing employees.
Lessons other insurers can learn from Liberty Mutual's digital transformation process
Liberty Mutual’s strategy of utilizing existing, best-in-class solutions has allowed the company to reach and even surpass its goals. It wasn’t a given—engineers and developers often prefer to create hyper-specific solutions, even when there is an existing solution that meets the large majority of their needs. However, in a large, global company like Liberty Mutual that has a lot of movement between teams or even organizations within its network, it’s critical that knowledge not be siloed with micro-optimizations.
To prevent that from happening, Liberty Mutual architects worked with developer teams to drive a reuse model that is much more efficient, especially in such a large company. They also used constraints and automated metrics to help teams to understand the direction that the organization is aiming for, and have a way to measure their progress on an ongoing basis.
Tackling the complexity of the insurance industry and transitioning from siloed legacy systems isn’t an easy process. But digital transformation is the key to the future of insurance, reducing costs, improving efficiency, and driving the trends in the coming decade. When insurance companies like Liberty Mutual leverage existing best-in-class technologies and build an agile framework that isn’t dependent on in-house legacy solutions, they can stay ahead of the curve and reap the benefits of digital transformation.
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