Bruno Sardinha is in his sixth year as the Chief Innovation Officer at Travelers Insurance. Before joining Travelers, he spent 25 years in innovation, strategy, business development & transformation in the insurance and financial services industries.
We talked with Sardinha about leveraging new technologies, adapting to market dynamics, and building a diverse talent pool. Sardinha also shared how he thinks about the four dimensions where his team can create value. We spoke with Sardinha as part of our research report, Creating New Value in Large Organizations: What It Takes.
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How has your experience influenced your perspective on the insurance industry’s future?
I have been exposed to distinct market dynamics in various countries and territories. That diversity of experience has shaped my vision about the industry’s future, its opportunities, and its challenges. Actuary tables are part of the “secret sauce” for every insurance company. The knowledge that you have built over time in certain areas of expertise. The better you can segment that risk and price it, the more you can get out of everything that we underwrite.
But we are an enterprise innovation division across the organization. We collaborate and we support, but some things are very embedded into our product and pricing. What is going to be the underwriting of the future with all the GenAI capabilities? What are the better risk prediction tools that will change how we look at actuarial tables? I don’t have the answer as to what is going to happen. But I do have the right questions about what is worthwhile for us to understand and what might be the impact.
How do you now define value creation in 2024 in your position at Travelers?
I see value creation in four dimensions:
- Top-line growth: Revenue coming from new products is one example. Whatever we know in terms of new products or innovative solutions services that were created to generate top-line growth. That is a way to measure value creation.
- Engagements and work that drive bottom-line enhancement: Productivity, efficiency, better risk tools, or data, new solutions that help us achieve better risk expertise. And pricing also drives a better bottom line for us.
- Experience: Different experiences with customers that help us improve and create more traction and longer engagement. It is the Lifetime Total Value (LTV) metric for each customer.
- Number of recurring requests to support a certain initiative: From doing a market assessment to understanding an ecosystem, how we can play there, what capabilities we need, and the potential to partner with companies within our ecosystem.
Has there been a significant pivot in your organization’s priorities in terms of the working definition of value since 2023?
The shift since last year has been looking for opportunities to pursue growth in certain markets. With all the changes (technology, society, environment, regulations), we are looking at risk mitigation and leveraging those trends into opportunities.
We have to be very careful and thoughtful about how we apply AI.
COVID transformed the way we work and engage, collaborate, and organize ourselves. Now, with generative AI, pushing AI within the organization is going to transform the way we work. We have to be very careful and thoughtful about how we apply AI.
The biggest transformation is moving to a service-based model, versus just being a pure indemnification and underwriting company. One trend is the ability to leverage Capabilities-as-a-Service (CaaS) in multiple areas of the value chain, combining different offerings in the platform economy and different marketplaces. Achieving the concept of a “One-Stop Shop” requires us to think about how distribution is going to change and opportunities to partner and offer our products and services through partner platforms.
Many managing general agents (MGAs) can offer traditional expertise and technology solutions in certain areas, quickly putting together CaaS offerings. We see unbundling of the traditional value chain in the insurance industry, offering different capabilities along the value chain that customers can rent instead of buy.
Players owning data or certain capabilities can develop industry solutions quickly. Carriers offer solutions based on data, knowledge, or expertise developed over the years. For example, Allstate created a separate company, Arity, the telematics provider, with different offerings to the market. The unbundling of the value chain gives opportunities for big players to monetize with lower capital requirements or balance sheet requirements, providing services without being at risk.
How do you view emerging technologies in terms of value creation? What are you looking at?
We are looking at everything. The great thing about the job is tuning into different technologies and experimenting. There are always hype cycles about new capabilities. Blockchain is a great example. Five or six years ago, everybody was talking about its potential, but in the insurance industry, it was hard to transform that hype into reality. Then there was the interest in the metaverse with AR and VR. We tested it and tried to find use cases in risk control and claims.
In the insurance industry, telematics is here to stay.
In the insurance industry, telematics is here to stay. It’s more advanced in personal and commercial auto. Other sensors, like IoT for property insurance, are less mature but have potential in certain areas.
The time to market and evaluate new ideas is another measurable outcome for value creation. Because the world is changing so fast, we are also thinking about how innovation can help the organization understand new opportunities. Where should we be placing some of our bets, and how we should be doing it in innovative ways? Some challenges are driven by emerging risks, new technologies, changing society, and changes in the environment that require us to adapt. We consider strategic foresight to be a source of value creation for the organization as well.
What has been the response to the hype cycle and or real business impact of AI in the last two years?
I would say imagery when coupled with AI. You can bring in AI and get to the next level of insights and understanding of certain risks. It is hard to pick one, but we are looking expansively at the different technologies. We are always open to experimentation… But you have to be excited about the problem you are trying to solve, and then you scan the market for the different technological solutions. I talked to an AI engineer about this recently, and I realized that AI is not the solution for everything.
Alan Schnitzer, the CEO and Chairman of Travelers, talked about our work with AI and generative AI during a recent quarterly earnings call. He talked about the efforts that we’ve been making in AI, specifically in the last five or six years. With GenAI, everybody wants to take a deeper look in terms of the potential use cases. The difference is GenAI democratized the use of AI, because before AI was restricted to certain people — programmers and computer engineers who really understand how to use these tools. Now, pretty much anyone can be an AI Prompt Engineer.
As we democratize the use, it brings several opportunities, but also some risks. We have to be thoughtful about using AI responsibly. We have guidelines in terms of how we use AI, what are the tools, and the dos, and don’ts. This is something that we are doing carefully, but definitely, no doubt, it has accelerated the number of pilots and [experimentation]. We are experimenting with piloting and leveraging AI capabilities into different platforms — from Microsoft Copilot and other tools that can help our employees day to day.
What is the role of talent in value-creation efforts?
It is a mix. It is healthy to have people coming from inside with deep expertise in what we do. Having business acumen is important for value creation, especially in an innovation group. We are considered generalists because we work with all lines of business and functions, but we need some expertise — understanding insurance, complexities, challenges. And if we’re truly innovating — regulatory impacts.
We also need people from other companies that bring fresh and innovative concepts and ways to tackle problems. If you look at the tenure of the team, it is a few years for people doing innovation [and] people with deep expertise who have been doing insurance for many years. So it is a good balance, which is important for value-creation. Talent is extremely important, and diversity of talent is even more important.
We need people who can translate technological terms, understand how they’re going to impact business, and then how we are going to impact people. What does change management require? If before we were talking about document creation, now the thinking is about “How do we prompt and how do we review”? It is a different skill set. Critical thinking is an extremely important skill.
