Digital Transformation in Insurance: Data Driven Insights and Privacy

Robert: Global Chief Compliance Officer & Deputy General Counsel at Marsh LLC 

The best time to fix the roof is when the sun is shining. And it’s much better to be able to draw on relationships that you’ve already established than when something 

Ash: you’re tuning in to the InsurBreak podcast. It’s a podcast about the latest and greatest trends in insurance. I’m your host, host Ash and I invite you to join us as we interview experts and executives at Insurance, covering innovative practices, technology advancements, and insight into the future of insurance. 

This podcast is sponsored by Zelros. Zelros is an AI software solution for insurance to hyper-personalize the customer buying experience with insurance recommendations across all channels, boosting client acquisitions, cross-sell, and upsell. 

 We are joined today by Rob Easton. He is the Deputy General Counsel and Chief Compliance Officer for Marshall, LLC, a global professional services company of 43,000 employees that specializes in insurance brokerage, risk and strategy solutions. Rob, thank you for joining us today. 

Robert: Thanks for having me. It’s a pleasure to be here. 

Ash: So, to begin, can you give us some insight into your background, maybe how you got to where you are today, and then a little bit about your current role and responsibilities at MMC. 

Robert: I’m a lawyer by training, and I’ve toggled between the public and private sectors. Over the course of my career, I sort of stumbled into insurance when I was working in the public sector in New York, and I was representing state officials and agencies in the federal and state appellate courts. I was an appellate litigator, so I was arguing in front of panels of judges, and my client, among others, was the New York Insurance Department.

And over time, I handled more and more cases. And then when there was actually a change in governors in the state of New York, I was asked to join the client, the Insurance Department, as its general counsel. So I was at the New York Insurance Department during the financial crisis. For the past decade, I’ve worked as a regulator, I, post-financial crisis , oversaw New York’s Insurance, arm of its then combined financial services regulator. It was both banking and insurance at that point because it had been combined post-financial crisis.

And I went from there to be the global chief compliance officer of what was then known as McGraw Hill Financial, which is now SMP Global. It’s a Fortune 200 company that has a number of constituent businesses, the largest of which is S Amp P ratings. And then, from there, I went to Marsh. I knew Marsh from my days as a regulator. Marsh had reached out to me and asked me if I was interested in coming over to be its global chief compliance officer.

I made the move in 2016, and I’ve been the Chief Compliance officer and the Deputy General Counsel ever since. 

Ash: Very cool. So what’s your day to day like now?

Robert:  I’m responsible for making sure that we’re complying with our regulatory obligations, our internal policies and procedures, that we’re delivering appropriate client service in ways where hopefully we’re not making missteps. I’m responsible for sourcing management information about how we’re operating.

I’m responsible for managing regulatory relationships around the world. The legal hats that I wear often involve working to try to mitigate any issues that might potentially rear its head with regard to professional missteps, every day is different. 

Ash: Very cool. I think we’ve had we’ve had residents of companies, we’ve had CFOs, but I think it’s the first time we’ve had like, somebody with the legal hat on maybe. What are some transformations you’ve seen from your lens?  What have you seen? 

Robert: I’d say two things. One, with regard to the insurance industry generally, just the last decade or so has been a time of great transformation, in the tech it was maybe a little late in getting to insurance, but there’s been an explosion of activity in the last ten years and that we’ve seen both on start of the insurance side and on the distribution side. Just the number of market entrances, the number of product offerings, the means by which product is distributed.

There has just been an exponential amount of growth, which is great for an industry that for a long time had operated in much the same fashion as it might have in decades prior. I would also say, very much like a number of other financial services sectors, the digital journey has been a significant one for the insurance marketplace. And we as an insurance intermediary are awash in information. And so the challenge is how to harness that information in a meaningful fashion to ensure that colleagues and clients alike are benefiting from the insights and knowledge that we have at our fingertips but haven’t always been able to easily organize. 

Ash: So with the major digital tech transformation insurers, what do you see the impact on legal?

Robert: I’d say their impact on both legal and compliance. Certainly as digital comes to the fore, one of the things in compliance that we’re working on is really just trying to distill better data-driven insights to inform actions that can better serve the client experience and protect the company from risk.  Another thing that we look to do is try to devise better controls with whatever information we have and as much as possible to make the controls so that they don’t feel compliancy to our colleagues that they’re just embedded in the workflow. And nobody is stopping to say this is a compliance controller. I am doing this because it’s delivering a better client experience or protecting the company.

It just is part and parcel of what we do as insurance brokers and risk advisors. On the legal side, there are a lot of different ways that technology is changing the way we work. New tooling is enabling us, for instance, to better respond when we get requests from third parties for information that often may require us to sift through quite a bit of email and other information that we have and to be able to limit the amount of manual work that we’re asking of our colleagues. Because the work can be done and information can be sourced behind the scenes is a huge time-saving and creates great efficiencies for our colleagues so that they can work on what might, in some instances, be higher-value projects. We’re working to improve the systems that we have to onboard clients and make sure that we’re not, as a global company, subjecting our clients to requests for information from different countries at different times.

This death by 1000 cuts kind of approach isn’t super client-friendly. It’s much better to get any information that we need from an onboarding perspective for KYC or AML purposes in one fell swoop and then to really get on with the client relationship instead of having to go back and get that information. So to the extent that we are able to do that upfront and in a relatively painless fashion, that represents the march of progress. But as part of that, we’re undertaking an exercise where we’re improving the inventory of our client engagement documentation so that documents aren’t going to necessarily reside in somebody’s email, but may be accessible through a centralized system or portal to colleagues globally. So there are real opportunities to improve the way we’ve done things historically and it’s really exciting because it both benefits our colleagues internally and provides a better client experience.

Ash: Interesting.  What do you say from a legal perspective between five and ten years ago?  How has all this transformation shifted your priorities as a CCO? 

Robert: So I would identify three things that come to mind right off the bat. 

One is sort of keeping up with the pace of regulatory change and in particular in the realm of privacy and data protection. The United States doesn’t have a single privacy and data protection regime. But we’ve seen a number of states develop a more robust framework. California, Utah, Connecticut, Virginia, Colorado have been at the vanguard. And they have, in some ways, are drawn on what other countries south Africa, Brazil, and in particular, the EU, with its General Data Protection regulation, have done, and essentially giving more rights to consumers to understand how companies use their data, what data they have, and in some instances, to even ask for the data that relates to a particular individual or company. And so it’s really altered the landscape and to just try to keep up with where the requirements are, what our systems can accommodate, what needs to change, understanding the information that is in our ecosystem.

The second thing, which is maybe a subset of regulatory change, is brexit creates complications for us. And so this may be more of a European and UK issue, but we’re a global company and certainly London in particular is an insurance hub trying to address and reconcile expectations from regulators both on the Continent and in the United Kingdom. You would think many years after brexit, it would be fully settled, but it continues to evolve, particularly since there were some sort of transitional arrangements that were put in place. But those are now being revisited because the view is transitional arrangements shouldn’t be forever arrangements. So that’s something that we’re dealing with right now.

And then just maybe a slightly bigger picture. Over the last 5, 10 years, and I alluded to this earlier, we’ve really seen new methods of distribution and new products and innovation alters and in some cases upends the insurance marketplace. A good example is through the outlet of managing general agents. This is a means of distribution where often an intermediary has underwriting capability and delegates certain authority from insurers to write a degree of business in a particular space or geography. And I think as regulators get a better understanding of what’s going on in the marketplace and  see these Mga structures, they may start to question, not that there’s anything wrong with them, but regulators have a healthy curiosity and they’ll want to understand and keep pace with the pace of innovation.

Ash: I have a figure for just a second, would it be fair to say, I think this would be really good for our audience. Would it be fair to say that red states are more business friendly when it comes to legal compliance and blue states are more consumer friendly? Would you say it would be fair to say or how would you kind of categorize the different states when it comes to that? 

Robert: I think it’s hard to characterize, to be honest. And in some ways that’s what makes the space really interesting  because it doesn’t always split along sort of traditional political lines.

I participated in national organizations of insurance commissioners and sure there’s the occasional case where somebody is taking guidance and advice from their governor or administration. But a lot of the commissioners out there are really expert and understand and see insurance and the provision of insurance products through a particular regulatory lens, which is focused on making sure that companies are solvent. In other words, that they can stand behind the products that they’re offering and that consumers understand what it is they’re buying. And when you kind of distill it to that basic rubric that is less about politics and less red versus blue and more about safety and soundness and making sure that the market is operating properly 

Ash: yeah, that makes sense. Just out of curiosity, can you kind of predict what’s going to happen legally, like how far in advance can companies know what regulations are going to come up or what’s happening? Is there a way to kind of be forward on that, to know what’s happening? Because I assume that impacts innovation too. 

Robert: It does for sure. Companies that are on their front foot are constantly scanning the horizon. They’re looking at what is being introduced in their state legislatures, in the states or countries in which they are operating.

And they’re engaged with their primary regulators in ways that don’t create surprise. As a former regulator, I always appreciate it when companies would come in and say, we are thinking about introducing a particular product or we’re thinking about pushing into a particular area of business. Not because it was nice to be on the front end of knowing, but it was beneficial for everybody to then be able to get some feedback and say, that sounds like a good idea. You want to be mindful of these three or five things because these are going to be things that I can tell you,  we as a regulator, will ourselves be looking at and scrutinizing fairly closely. So as you’re going off into your lab to build a better mousetrap, you may want to take account of these considerations.

And so the more that the regulatory relationship is one of partnership as opposed to adversarial, I think the better off everybody is. And so there’s real value in engaging with the regulator, particularly when the regulated entity has no real request. The best time to fix the roof is when the sun is shining. And it’s much better to be able to draw on relationships that you’ve already established than when something is fairly dire or when something is already very far along and can’t be sort of modified or adjusted because it’s going to then conceivably paint either the regulator or the regulated entity into a corner. 

Ash: I assume that’s what’s top of mind for you right now in terms of scrutiny. The level of scrutiny on consumer data privacy is probably top of mind for you. What other things are top of mind for you? What are you kind of thinking about as you do your job? 

Robert: I flagged data privacy and protection because it really touches on so many different aspects of the business. And for compliance folks,  privacy is tied up with data protection, information security, which means in order to operationalized requirements that we’re seeing in regulations or laws, we internally need to partner with operations colleagues in order to understand the implications of certain technologies, even basic things that we now take for granted, like storing information in the cloud. To then understand what the privacy implications are and the infosec implications, it means that we need to engage with our technology partners internally. So in some ways, what it’s demanded of compliance is a broadening of the skill set and understanding of these different areas of the business and being able to span the divide and connect dots across the organizations that were not working in a siloed fashion. It’s long been vogue to say that cybersecurity isn’t a tech issue, it’s a C-suite issue. But you can’t really work through these kinds of issues unless, organizationally, all of the connective tissue is being developed.

Ash: So AI right,  what is responsible AI or ethical AI? What does that even mean? 

Robert: To me? It means leveraging innovation and being upfront with clients in particular about how we’re using information. I know that when I was an insurance regulator, for instance, and there were underwriting criteria that were part of a black box, the insurance company would say we don’t totally know why, but we know that these factors have some correlation to a particular underwriting experience. And if they couldn’t articulate the why, or if they couldn’t say, this is what’s going on in the black box underwriting. There was, I know from the career employees with whom I worked, a kind of suspicion about whether or not people’s individual circumstances were being properly taken into account. And whether just some algorithm was driving a process that maybe in some ways was unfair, So I think being transparent and disclosing to clients how information is being used and sometimes that may be required by law, sometimes it may just be good practice. I know that we as a business in the United States, for instance, we’re very upfront about how we’re paid and what we stand to make from the work that we do in instances where we haven’t agreed to just a flat fee with the client. And so to me, responsible and ethical AI echoes some of that approach.

Ash:  As AI starts to be more widely used and insurance companies start to implement these technologies more and more, how important will it be for corporations to kind of adopt it in their system or for their CLO or CCO to create some kind of internal system for that?

Robert: It will be important to engage with regulators. I think it will be important for companies that are focused on environmental, social and governance issues to incorporate some of this into their ESG frameworks to make sure that clients are being treated fairly and that business partners and other market participants have an understanding of how information is being used in ways that don’t go to proprietary applications. And there are lots of things that we do with data where we think we’re really providing a huge benefit to clients because we sit as an intermediary between insurance companies and insurance buying clients. And so we have a unique window into both sides of the transaction and we can provide insights in both directions both to insurers and to insurance purchasing clients. I think that  also just as legal and compliance people I talked about disclosure, we can help with the drafting of language in ESG reports, in client notices and the like to make sure that as things evolve on the AI front that we as a company are moving in a responsible manner.

Ash: Where do you see AI in the next five years, ten years? Where do you see it as an application to insurance? What applications do you feel like could be there five to ten years from now that are not currently being?

Robert:  It’s hard to say, but I think a lot like ESG, it both is an inward-looking question to ask and it’s an opportunity to help clients on their own journey. So we can advise both on AI development as part of our risk advising profile and help clients along as they try to think through their own risk-related issues.

And I think we can look inwardly and say, how can we work more efficiently? How can we make colleagues’ lives easier? In a lot of ways by eliminating manual processes or things that are labor intensive and then either retrain or redeploy our people to do different kinds of work in some instances as more and more becomes automated.

Ash: Okay, so we always ask in the end what diversity, equity and inclusion is obviously not just insurance, but corporate America in general. What are your thoughts on that topic?And maybe if you have a personal story to share on that recent experience, that would be great too. 

Robert: Insurance as an industry maybe hasn’t always been at the vanguard of dei issues, but I think the industry does deserve a lot of credit for having raised its awareness and it feels like a time of transition and change. I know that we and I personally really value the perspective that people bring from groups that may have been underrepresented in our business and our industry historically, and that translates into better client service and better client offerings. And so there’s really an opportunity across the board to up our game. I’m particularly proud that we’ve made an extra effort where recruiting is concerned to really target underrepresented groups in different  segments of our business in different geographies, and that really takes different forms depending on where we are. We’ve recruited  women in Arab countries or in our Japanese operation and made similar types of efforts elsewhere to kind of ensure that our own workforce is more representative of the communities in which we’re operating. 

Ash: Yeah, that’s great. I always find it insightful because everybody buys insurance. And so the diversity, if you have a diverse workforce in that space,  you have the different perspectives of like, okay, people who are Indian also buy insurance, or people who are different races, people who are different sexual orientation, they all buy insurance. So if you have those people to represent that, it kind of probably helps the innovation too.

Okay, and then the last thing is the last question we ask. If you could go back 20 years, what advice would you tell the younger Rob? 

Robert: I probably would have to go back longer. I probably have to go back 30 years because as I have two kids now in college,  one of the things that I’m constantly urging them to do, quite frankly, is to build up their own personal network. I think the adage of it’s not what you know, but who you know is really insightful.

And so it’s great you’re in college. Focus on doing really well, but also really focus on meeting as many people as you can and making connections. Some of those are going to ripen into, as we know, lifelong relationships. And not everyone has to be a best friend or even somebody that you’re in forever contact with. But it’s clear insurance is a huge industry. It’s a global industry. Some countries themselves have an enormous footprint, like Japan, for instance. But interestingly, it’s also an industry of personal relationships. And that can be a huge benefit for clients.   If we’re, as an intermediary, a client has suffered a loss and we’re able to advocate effectively with an insurance company to get that loss paid and get it paid timely.

And if there’s already a preexisting relationship between the person doing the advocating person, hearing, the advocacy, that’s going to make that whole situation more beneficial for the client. I very much think that you can’t start too early on building your personal brand and your personal network. And some people know from an early age what they want to do. Other people, like I said, happened in a particular industry, I had no great designs that I was going to gravitate towards insurance, but at the end of the day, I did, and I really like it. And Ash, you were saying earlier today, everybody buys insurance. 

And it’s true, the world cannot operate without insurance and buildings don’t get built and health care isn’t delivered. And there’s really nothing that happens in society without insurance sitting behind it. And so, in some ways, it’s the lubricant, the lifeblood that makes everything go. And when you take a step back, it’s pretty cool. By the way, you said 30 years ago you have more hair than me. 

Ash: This podcast is sponsored by Zelros. Zelros is an AI software solution for insurance to hyper personalize the customer buying experience with insurance recommendations across all channels, boosting client acquisitions, cross sell and upsell. Thank you for tuning in to the Insurbreak podcast. Join us next month as we interview another insurance executive to gain insight on innovative practices, technology advancements and what the future of the industry looks like. See you next month.