Zurich has allocated US $1.8 billion for its digital transformation in the last three years.

By José Caparroso at Forbes Colombia on July 12, 2024. Read original in Spanish here.

In an interview with Forbes, Ericson Chan highlighted that Zurich has allocated US $1.8 billion for its digital transformation in the last three years.

From Switzerland, Ericson Chan, the global chief information and digital officer at Zurich Insurance Group, is in charge of the digital transformation of the insurer that operates in more than 200 countries and territories. The challenge of staying ahead of the curve is that the technological advances they implement have to go hand in hand with firm commitments they have, such as sustainability.

Balancing Sustainability with Business Travel

"We cover pretty much every corner of the planet, but I don't travel that often," Chan said in an interview with Forbes, in which he highlighted the company's cautious approach to business travel. "We focus on our sustainability efforts, balancing the carbon footprint with our business needs. With technology, we can conduct meetings effectively, but we continue to prioritize occasional face-to-face meetings." Latin America, and in particular Colombia, represents a significant opportunity for Zurich Insurance, according to Chan.

"People are very eager to try new things," he said. "In Latin America, digital engagement is very well received. For example, our fully digital insurance coverage is popular, and the low insurance penetration in the region means there is a lot of room to grow."

Revolutionizing Insurance with AI and Technology

Zurich hired Chan in late 2020 to accelerate its digital transformation. The former CEO of China's Ping An Technology has more than delivered, scaling technologies along the insurer's value chain and, more recently, integrating artificial intelligence into claims data analysis, patent investigations and risk modeling.

It has also created an integrated data platform to drive better decision-making, and One Zurich, an application to help employees, visitors and contractors navigate the insurer's operations, as well as a global API marketplace, facilitating integration with Zurich's products and services. This is in addition to acquisitions such as Alpha Chat, an AI platform for messaging and chat automation, and Office Samurai, which specializes in process improvement and automation.

Zurich's main goal is to help its clients not only by providing financial coverage, but also by actively working to reduce risks. 

"Traditionally, insurance provides financial coverage in case of unpleasant incidents," says Chan, who was one of the global executives featured in The Forbes CIO Next List: 2023.

"Nowadays, our goal is to prevent these incidents before they occur. We want to improve the quality of life for our customers, both in retail and commercial." Digital investments have been multimillion-dollar. Chan says Zurich has allocated $1.8 billion for its digital transformation in the past three years. 

"The company's leadership is fully aligned with our vision for digital transformation," Chan said. "Even before the advent of generative AI, we had already put a lot of effort into digitization. This significant investment reflects the attention and focus we have on building a robust technology workforce, with a particular emphasis on AI, data science, cybersecurity and cloud engineers." 

Driving Innovation Through Startup Collaboration

The strategy is based on what he calls the "ABC" approach. This acronym represents the three fundamental pillars of their digital transformation: Artificial intelligence (A), big data (B), and cloud (with a multi-cloud strategy through which they work with different providers) (C). 

"First, we migrated to the cloud to achieve scalability and speed in our operations. Then, we focused on data management and quality, through data cleansing, data security, and proper governance. With a robust cloud infrastructure and well-managed data, we can then leverage artificial intelligence to develop innovative business cases and increase productivity," he explains. 

This methodical approach has allowed Zurich to have the foundations to implement technologies, such as the most modern artificial intelligence models. "Every area within the organization is seeing a significant improvement in productivity, with a potential increase of up to ten times in efficiency," he details. "We're using AI to forecast risks like floods and fires."  

According to Chan, Zurich has been using AI for many years. But the emergence of generative AI has opened up new possibilities and is a game-changer for knowledge management. 

"We have built a secure platform to ensure data privacy, allowing us to use generative AI for various business applications, from underwriting to claims adjustment," Chan said. "Generative AI represents a new frontier for us. Unlike classical AI, which focuses on structured data and numerical modeling, generative AI focuses on information and knowledge management. This allows us to do things that were impossible before." 

Zurich has taken a meticulous approach to integrating this emerging technology. In May 2023, the company deployed a platform to use multiple AI models, including OpenAI's, but in a private environment.

Chan explains that this configuration ensures that all data traffic is monitored and secure, protecting the company's sensitive information.  

In addition, Zurich has developed various business applications to optimize internal operations. These include Zurich Chat, a global chat feature for employees that facilitates daily tasks such as summarizing documents and extracting information. In addition, generative AI has been used to create risk engineers and claims adjusters to compare policies and analyze claims with significantly improved efficiency. 

"The tool can now highlight relevant areas and extract key information, drastically reducing the time needed for preliminary work," Chan stresses.

Building a Future-Ready Workforce

To encourage collaboration with startups, Zurich has fostered the Zurich Innovation Championship, interacting with thousands of startups globally, which has been running for four years. 

 "This is one of our proudest programs in terms of innovation," Chan says. "We have managed to attract the interest of around 8,000 startups globally."  

The Zurich Innovation Championship has not only captured the attention of thousands of startups, but has also provided concrete opportunities for a smaller selection. 

"Every year, we work with approximately 50 to 60 startups around the world to explore opportunities for collaboration," Chan said, mentioning that between 10 and 12 startups receive awards, with the characteristic that the company does not take an equity stake. "Our program is shareholding-free, which is unusual compared to most accelerators. We ensure that startups have the opportunity to grow without our shareholding. However, we retain the right to invest when they need to raise capital, which we consider to be a fair solution for both parties."

Chan stresses that the program not only benefits startups, but also Zurich. 

"This program allows us to stay up-to-date on where the world of insurtech and startups is headed. Our executives, although very interested in digitalization, often do not have time to explore these innovations. By bringing startups into the organization, we facilitate a valuable exchange of ideas and opportunities," he says. 

To achieve this, the company is competing to attract talent specialized in artificial intelligence (AI) and data science to sustain its digital transformation. 

"We need AI engineers, data engineers, and data scientists. Although we are not currently developing our own models, we use large language models and build business cases on top of them. Therefore, we still need to augment our team with domain-specific specialists and more AI engineers, which is the most recent trend," Chan says. 

To this end, Zurich is taking a comprehensive approach to address this demand for talent, focusing on both external acquisition and internal development of its employees. "We refer to this as a sustainable workforce. We bring in external talent, but we also have programs to prepare our own staff for the skills of tomorrow," Chan explains. 

Zurich's "My Journey" program allows employees to assess their current skills and define areas for improvement and professional development. "If, for example, a project manager wants to become a data engineer, 'My Journey' provides them with a personalized program that details the steps needed to reach that goal," Chan adds. 

Once the path is defined, employees can access "My Development," a development program that includes online and interactive courses.

In addition, Zurich implemented the "My 70%" program, which emphasizes a hands-on approach. "The idea is that 70% of learning should be practical. We give our employees the opportunity to work in specific departments, such as data engineering, so that they can accumulate practical experience and successfully transition to new careers," Chan adds.

Chan stresses the importance of a sustainable workforce not only for the company, but also for the well-being of employees and the environment. 

"Although talent is a challenge, we approach it holistically. We want to cultivate and prepare our employees for future skills, ensuring that Zurich is prepared to meet the technological challenges of tomorrow," he continues.

Government Regulations and Proactive Responses

Zurich's global CIO also cited one of the biggest technological risks on the planet: cybersecurity, which has climbed from eighth to fourth place on the list of most important risks in the Global Risks Report 2024, developed by the World Economic Forum in collaboration with Zurich Insurance and Marsh. However, Chan stresses that it's not the only technology-related risk that has seen a significant increase. 

 "The risk of misinformation has emerged as number one, rising rapidly from 17th place," Chan says. "We have also seen that the concentration of technological power has gone from number 35 to 12. These technological risks are growing at an alarming rate, I think it's a natural thing." 

Chan attributes this increase to the proliferation of social networks and deep fakes, phenomena that have transformed the digital landscape and generated new threats.  "Before, we only talked about social networks and fake news. Now, the concern also includes generative AI and deep fakes. The lack of initial regulation of social media has served as a lesson, and many governments are acting proactively to regulate this new wave of technology."

This quick reaction from governments is seen by Chan as a positive trend. 

"Despite the increased risk, the government response has been more agile than in the past. Countries such as Brazil, the United Kingdom, and the United States have already implemented specific regulations to address the risks associated with deep fakes and generative AI. Most recently, the EU passed the EU AI Act, the first-ever comprehensive legal framework on AI worldwide. This proactive response is encouraging and presents opportunities that we must take advantage of," he specified. 

Zurich has opted for a multi-dimensional approach that includes both technical and policy measures to control the risks associated with AI.

"Technically, we keep our AI instances in private domains and use gateways to monitor traffic, thus ensuring tight control," Chan stated. "In addition, we have established clear policies that limit the direct use of generative AI with our customers, always ensuring the presence of a human in the process to validate and monitor the information generated."

This vision set out by Zurich is clear: a company that not only adapts to new technologies but also leads in their implementation and strategic use.