Warm or cold. Wet or dry. Windy or calm. Weather impacts everyone and almost every industry, influencing mood, sales decisions, and activities. With even the most seemingly small variation in temperature, precipitation, or change in wind speed, there is always a potential for major financial implications in sales, revenues, and losses. In fact, US$2 trillion dollars, or 3.5%, of the world’s GDP, can be lost each year due to unexpected weather variations that influence resource supplies and demand for goods and services. Approximately 90% of the world’s 570 million farms (just one of many weather-sensitive business sectors) run the risk of sacrificing up to 50% of their revenue when the weather is too cold or too mild in any given year.
Gabriel Gross, CEO of Meteo Protect, thought that it was absurd for the weather to remain an unpredictable and largely unmanageable insurance risk. Passionate about technology innovation, he decided to invest in the development of a solution that maps large volumes of weather and financial data to define how weather affects a business and test the effect that even the smallest variation from what is considered seasonal weather conditions has on cash flow, profit, and losses.
I had the great fortune to spend some time recently with Gross. We discussed how increased digitalization is changing the insurance customer experience and what role IT teams should play to drive improved predictability and insight.
How is digital technology transforming the insurance industry and the customers it serves?
Digital transformation is profoundly impacting the insurance industry. Clients are increasingly demanding customized services because they are experiencing increased competition. In turn, insurers are expected to provide accurate and thorough risk analysis, which is the key to providing better pricing. This capability is not just an option that makes clients feel good about doing business with the insurer. It’s about keeping them engaged by offering the level of value they need to stay competitive, namely real-time intelligence that cannot be obtained anywhere else.
This is why we created Meteo Protect. As a fintech company, we have captured that specific value by collecting and processing weather-related data quickly and efficiently. Banks and insurers partner with us to get these insights, which can help them become a competitive player. Without this information, assessing weather risks would continue to be complex, and proactive decision-making helps to minimize related loss in revenue, mindshare, and market share.
For example, our underwriting and pricing platform, Vivaldi, produces real-time risk assessment and hedging solutions using a global weather database. Available as a mobile app, it aggregates weather-related data, analyzes risks, and prices and underwrites policies based on clients’ specifications. This technology enables insurers to sustainably produce a customer experience that is efficient, cost-effective, and fully customized to their unique needs and risk profile. Clients are now empowered to choose their own parameters, purchase individualized products, and agree with transparent pricing terms.
More importantly, the insurance industry is changing. Insurance companies are reducing costs and generating insights that could save businesses – their own and their clients.’ Simultaneously, the role of IT is now at the center of the value that the insurer provides.
Your IT organization plays an integral part of driving digital transformation success for Meteo Protect. How has your IT team evolved to fulfill their new role?
From the beginning, we hired highly skilled, highly educated, and highly reliable technologists. Eventually, we grew to have two separate IT teams: a group of data and weather science experts and a traditional technology staff. Over time, we decided to merge them together because we felt that our data science capabilities – which is our core business – couldn’t progress without the integrated expertise of our technology workforce.
Recently, we decided to move our data, except for client information, to the cloud. This strategic move has increased security and cost predictability. Plus, it allows us to scale our IT operations as we continue to grow and handle more data.
For the insurance industry, customer experience can mean the difference between growth and decline. What should insurers – and digital startups like yourself – consider when they decide to touch this central aspect of digitalization?
The biggest challenge is defining the customer experience itself. Digital transformation journeys are long and complicated, and it’s hard to know which experiential elements are key to the client. Never is a solution created and never upgraded. It’s an evolutionary process as we find ways to improve insights, value, and overall adoption. We don’t do this daily, but I can say that regular updates are made monthly. It’s critical to operate along the fine line between the customer experience and business longevity.
It is also crucial to realign processes and business models with the client’s digital journey. Sometimes, the technology prompts a change in the market or other external players. Other times, it’s the market that triggers an update to match the technology to new ways of working and emerging opportunities.
From my perspective, the IT area is an integral part of both challenges. Often, IT is evolving with new technology that is being developed to fit the reality of ever-changing user needs and requirements. But, there are moments when it ignites a wave of transformation that adds immense value to our business, our clients, and our clients’ clients.
One last piece of advice for anyone looking to begin their digital transformation: get a firm understanding of the digital strategy. Executives must ask themselves whether the goal is to transform the entire company, modernize a particular organization, or completely change an entire industry. In addition, a general understanding of the priorities and pressures within the IT team is essential to understand the level of management and technical capacity that can be afforded to support such a change. And last, but certainly not least, it is essential that the IT leader partners with all affected business functions and engages in consistent, two-way dialogue about business needs and challenges and the possible solutions that can resolve them.