Digital Transformation

Seven Questions for Henna Karna

XL Catlin's data chief seeks not to replace underwriters, but to empower them to do their jobs better than ever before.
By: | February 15, 2018 • 6 min read

Henna Karna is XL Catlin’s Chief Data Officer and is responsible for its digital/data innovation strategy.

A recognized expert on digital strategy, data analytics and digital transformation, she has more than 20 years of experience leading innovative digital/data strategies in the insurance industry. Her skills include developing data-driven risk solutions comprising genetic cognitive learning, behavior modeling, proprietary algorithms and deep neural networks.

Before joining XL Catlin, Henna served as managing director and global head of actuarial technology and operations for AIG, where she oversaw actuarial technology strategy and operations.

Earlier, she was president of Verisk Digital, a subsidiary of Verisk Analytics. She also has advised numerous Fortune 500 companies on their digital innovation and disruption strategies.

R&I caught up with Henna recently to get her views on her role and the topic of digital transformation in the insurance industry in general.

R&I: What is XL Catlin’s data strategy?

HK: XL Catlin’s data strategy has three parts: It’s about building sustainable business impact; speed of converting data into insights; and extending our culture towards digital innovation.


Our businesses and our industry are guardians of sorts. Our goal is to help other businesses, and other people, become whole after a devastating loss. We bring with us a feelings of security, safety and stability for entities we insure.

We do that by examining risk through the lens of data — structured, unstructured, bespoke, complex, generalized and precise. Building a sustainable data ecosystem helps us to better understand not just historical risks but those that are imminent and upcoming, from cyber to natural catastrophes.

When it comes to empowering our underwriters, actuaries, claims and risk management colleagues, we measure ourselves by speed to value.

Prior to the digitization of data, our industry had disjoint pictures of risk. Many functions within our industry focus on data wrangling, data governance, and data management. It is likely that our industry spends more time connecting the data than leveraging the connected data that offers valuable insights.

A year or more ago, we had a fair explanation as to why that was the case — we couldn’t connect the dots because not all of them were available to us. Now, with digital capabilities in hand, we have the ability and capability to acquire a more holistic, real-time view of risk.

This gets to the third part of our data strategy, digital innovation. As a niche B2B entity, we deal with very complex risks. To develop this 360-degree holistic perspective of risk, we need to engage with clients and brokers in very close, collaborative relationships.

The digital world can help forge these closer engagements, not just the ecosystem we’re operating in but also the sub-tier ecosystems across the network, both internally and externally. Our strategy calls for tearing down internal and external silos that impede collaboration and creating stronger bridges across the network to encourage it.

R&I: How long have you been in the position?

HK: It is over a year now.

R&I: What have you found to be your biggest challenge?

HK: One simple answer is priorities. It is a thoughtful, iterative activity that we do. We prioritize all the time; we calibrate our learnings, changes and validate our approach constantly — that’s where we spend most of our conversations.

To be clear, how we prioritize also has to be calibrated by our constant learnings. Sometimes the initiatives we prioritize are continuing efforts or continuous improvements or strategic. Each type of initiative warrants diffident criterion for success and for milestones. Hence our way to prioritize has to be transparent and flexible. If you want to be in a world that is changing, then the traditional priorities may no longer be as important as before.

Depending on the type of initiative, what you measure as a metric for success may be vastly different and so the dimensions for prioritization would also be quite different.

Human nature is to often abide by current rules and traditions and only consider new ones if the current ones are no longer valid or useful. Now, we want to maintain what is working and simultaneously drum up new ideas.

R&I: How do you marry analytics to the professional experience of veteran underwriters?

HK: We’re very much an organization, but we’re an organization made out of people. Collectively, our people are our biggest asset. So the goal becomes how we can further empower our people.

They already have strong intuitions — more often than not they’ve assessed diverse risk-oriented trends and developed their own analysis. If we can give our skilled talent another set of lenses to do what they already do well, they will do their work even better.

For example, when we speak to our  underwriters, it is apparent their accuracy and precision in certain areas of risk is off the charts; they know the subject so well. We also have to balance holistic knowledge and expertise in a domain.  That’s a tough balance to constantly manage.

If we specialize and get focused on one thing, we may miss other pieces of the insurance value chain. One analogy would be a heart doctor who knows everything there is to know about the heart but not nearly as much as the lungs. Yet both organs function as parts of a whole.

If we look at things holistically, we risk not seeing all the symptoms.  Much like an internalist who would look overall symptom of health and any “reasons” to go deep.

Digitalization not only is good for specialization, but it also opens our eyes to other parts of the whole. It compels underwriters to consider more than what is obvious about a risk, without having to juggle so many disparate pieces. In effect, digitization does the juggling.

R&I: You’re working to create models that will help underwriters prioritize which risks to focus on. Is that process gaining traction?

HK: We rely heavily on our team’s expertise. Their domain expertise, breadth of knowledge and intellectual rigor prepares them to look ahead at what is in store for a particular geographic region or in a book of business.

We’ve now asked them to highlight the areas where they have achieved particular success, looking backwards at the historical to unearth the best situations, risk-wise. We’re now tasking them to find analogous situations across their books.

This concept will be ongoing, despite the predictive power of machine learning and artificial intelligence. They’re basically avatars; we are not replacing the underwriter. We’re just empowering the underwriter with vastly better eyes and ears.

We’re very much an organization, but we’re an organization made out of people. Collectively, our people are our biggest asset. So the goal becomes how we can further empower our people. They already have strong intuitions — more often than not they’ve assessed diverse risk-oriented trends and developed their own analysis. If we can give our skilled talent another set of lenses to do what they already do well, they will do their work even better.

R&I: How do you share strategies between books of business?


HK: One way is crowdsourcing — for example, getting input from across the enterprise to collectively balance our book regionally, which helps prioritize certain resources within the company and with our partnering brokers. If we find successful practices in a particular book, we may recommend our colleagues to leverage these practices in their books.

R&I: Is this work helping XL Catlin get to market faster, or get products to market faster?

HK: In days past, with a new product or service, typically there will be a group of people who go off and get the data, transpose it, and think about which market is affected. All this happened iteratively from the ground up, consuming weeks if not months of time. That’s what slowed down market penetration.

What we are doing with our digital transformation is tethering all of our data and information to a tree trunk. Each time new data is discovered, it becomes a bespoke branch of the tree. Over time, the tree grows into a resplendent array of branches, each one a source of intelligence. But it’s the tree here that is important, as it represents the whole — an ecosystem and multi-sided platform.

Dan Reynolds is editor-in-chief of Risk & Insurance. He can be reached at [email protected]

More from Risk & Insurance

More from Risk & Insurance

Risk Focus: Cyber

Expanding Cyber BI

Cyber business interruption insurance is a thriving market, but growth carries the threat of a mega-loss. 
By: | March 5, 2018 • 7 min read

Lingering hopes that large-scale cyber attack might be a once-in-a-lifetime event were dashed last year. The four-day WannaCry ransomware strike in May across 150 countries targeted more than 300,000 computers running Microsoft Windows. A month later, NotPetya hit multinationals ranging from Danish shipping firm Maersk to pharmaceutical giant Merck.


Maersk’s chairman, Jim Hagemann Snabe, revealed at this year’s Davos summit that NotPetya shut down most of the group’s network. While it was replacing 45,000 PCs and 4,000 servers, freight transactions had to be completed manually. The combined cost of business interruption and rebuilding the system was up to $300 million.

Merck’s CFO Robert Davis told investors that its NotPetya bill included $135 million in lost sales plus $175 million in additional costs. Fellow victims FedEx and French construction group Saint Gobain reported similar financial hits from lost business and clean-up costs.

The fast-expanding world of cryptocurrencies is also increasingly targeted. Echoes of the 2014 hack that triggered the collapse of Bitcoin exchange Mt. Gox emerged this January when Japanese cryptocurrency exchange Coincheck pledged to repay customers $500 million stolen by hackers in a cyber heist.

The size and scope of last summer’s attacks accelerated discussions on both sides of the Atlantic, between risk managers and brokers seeking more comprehensive cyber business interruption insurance products.

It also recently persuaded Pool Re, the UK’s terrorism reinsurance pool set up 25 years ago after bomb attacks in London’s financial quarter, to announce that from April its cover will extend to include material damage and direct BI resulting from acts of terrorism using a cyber trigger.

“The threat from a cyber attack is evident, and businesses have become increasingly concerned about the extensive repercussions these types of attacks could have on them,” said Pool Re’s chief, Julian Enoizi. “This was a clear gap in our coverage which left businesses potentially exposed.”

Shifting Focus

Development of cyber BI insurance to date reveals something of a transatlantic divide, said Hans Allnutt, head of cyber and data risk at international law firm DAC Beachcroft. The first U.S. mainstream cyber insurance products were a response to California’s data security and breach notification legislation in 2003.

Jimaan Sané, technology underwriter, Beazley

Of more recent vintage, Europe’s first cyber policies’ wordings initially reflected U.S. wordings, with the focus on data breaches. “So underwriters had to innovate and push hard on other areas of cyber cover, particularly BI and cyber crimes such as ransomware demands and distributed denial of service attacks,” said Allnut.

“Europe now has regulation coming up this May in the form of the General Data Protection Regulation across the EU, so the focus has essentially come full circle.”

Cyber insurance policies also provide a degree of cover for BI resulting from one of three main triggers, said Jimaan Sané, technology underwriter for specialist insurer Beazley. “First is the malicious-type trigger, where the system goes down or an outage results directly from a hack.

“Second is any incident involving negligence — the so-called ‘fat finger’ — where human or operational error causes a loss or there has been failure to upgrade or maintain the system. Third is any broader unplanned outage that hits either the company or anyone on which it relies, such as a service provider.”

The importance of cyber BI covering negligent acts in addition to phishing and social engineering attacks was underlined by last May’s IT meltdown suffered by airline BA.

This was triggered by a technician who switched off and then reconnected the power supply to BA’s data center, physically damaging servers and distribution panels.

Compensating delayed passengers cost the company around $80 million, although the bill fell short of the $461 million operational error loss suffered by Knight Capital in 2012, which pushed it close to bankruptcy and decimated its share price.

Mistaken Assumption

Awareness of potentially huge BI losses resulting from cyber attack was heightened by well-publicized hacks suffered by retailers such as Target and Home Depot in late 2013 and 2014, said Matt Kletzli, SVP and head of management liability at Victor O. Schinnerer & Company.


However, the incidents didn’t initially alarm smaller, less high-profile businesses, which assumed they wouldn’t be similarly targeted.

“But perpetrators employing bots and ransomware set out to expose any firms with weaknesses in their system,” he added.

“Suddenly, smaller firms found that even when they weren’t themselves targeted, many of those around them had fallen victim to attacks. Awareness started to lift, as the focus moved from large, headline-grabbing attacks to more everyday incidents.”

Publications such as the Director’s Handbook of Cyber-Risk Oversight, issued by the National Association of Corporate Directors and the Internet Security Alliance fixed the issue firmly on boardroom agendas.

“What’s possibly of greater concern is the sheer number of different businesses that can be affected by a single cyber attack and the cost of getting them up and running again quickly.” — Jimaan Sané, technology underwriter, Beazley

Reformed ex-hackers were recruited to offer board members their insights into the most vulnerable points across the company’s systems — in much the same way as forger-turned-security-expert Frank Abagnale Jr., subject of the Spielberg biopic “Catch Me If You Can.”

There also has been an increasing focus on systemic risk related to cyber attacks. Allnutt cites “Business Blackout,” a July 2015 study by Lloyd’s of London and the Cambridge University’s Centre for Risk Studies.

This detailed analysis of what could result from a major cyber attack on America’s power grid predicted a cost to the U.S. economy of hundreds of billions and claims to the insurance industry totalling upwards of $21.4 billion.

Lloyd’s described the scenario as both “technologically possible” and “improbable.” Three years on, however, it appears less fanciful.

In January, the head of the UK’s National Cyber Security Centre, Ciaran Martin, said the UK had been fortunate in so far averting a ‘category one’ attack. A C1 would shut down the financial services sector on which the country relies heavily and other vital infrastructure. It was a case of “when, not if” such an assault would be launched, he warned.

AI: Friend or Foe?

Despite daunting potential financial losses, pioneers of cyber BI insurance such as Beazley, Zurich, AIG and Chubb now see new competitors in the market. Capacity is growing steadily, said Allnutt.

“Not only is cyber insurance a new product, it also offers a new source of premium revenue so there is considerable appetite for taking it on,” he added. “However, whilst most insurers are comfortable with the liability aspects of cyber risk; not all insurers are covering loss of income.”

Matt Kletzli, SVP and head of management liability, Victor O. Schinnerer & Company

Kletzli added that available products include several well-written, broad cyber coverages that take into account all types of potential cyber attack and don’t attempt to limit cover by applying a narrow definition of BI loss.

“It’s a rapidly-evolving coverage — and needs to be — in order to keep up with changing circumstances,” he said.

The good news, according to a Fitch report, is that the cyber loss ratio has been reduced to 45 percent as more companies buy cover and the market continues to expand, bringing down the size of the average loss.

“The bad news is that at cyber events, talk is regularly turning to ‘what will be the Hurricane Katrina-type event’ for the cyber market?” said Kletzli.

“What’s worse is that with hurricane losses, underwriters know which regions are most at risk, whereas cyber is a global risk and insurers potentially face huge aggregation.”


Nor is the advent of robotics and artificial intelligence (AI) necessarily cause for optimism. As Allnutt noted, while AI can potentially be used to decode malware, by the same token sophisticated criminals can employ it to develop new malware and escalate the ‘computer versus computer’ battle.

“The trend towards greater automation of business means that we can expect more incidents involving loss of income,” said Sané. “What’s possibly of greater concern is the sheer number of different businesses that can be affected by a single cyber attack and the cost of getting them up and running again quickly.

“We’re likely to see a growing number of attacks where the aim is to cause disruption, rather than demand a ransom.

“The paradox of cyber BI is that the more sophisticated your organization and the more it embraces automation, the bigger the potential impact when an outage does occur. Those old-fashioned businesses still reliant on traditional processes generally aren’t affected as much and incur smaller losses.” &

Graham Buck is editor of He can be reached at