The Future of Connectivity: The Insurance Innovation Lab of 2022 and Beyond

The COVID-19 pandemic rapidly transformed the way insurers and policyholders relate to one another, with digital interactions that were once not thought of now front and center in customers’ everyday lives. For insurance companies, this means pressure increases to ideate and implement new connections quickly. We’ll evaluate how the ideation process is adapting to the post-COVID world.

Transcription:

Cory Isaacson: (00:10)
So, I want to introduce everybody. I'm Corey Isaacson, I'm the CEO of reThought Insurance. I'm gonna be the moderator today. And essentially we're gonna be talking about connectivity and insurance and a little bit about the innovation lab of the future. So, we have a great panel today. We have, first of all, Dogan Kaleli from Stere. So a very interesting company he'll have a lot of opinions on connectivity, I know given what his business is. We have Prashant Nema, he's from Arch, he's the Chief Information Officer there and then we have David Fountain from Foresight as a Worker's comp MGU. I'm sure we're gonna have lots and lots of feedback. We may have time for questions at the end. We'll see if we do and if so you can hold your questions till then and we'll make it work. So, what I'm gonna do is just have everyone introduce themselves first and tell a little bit about what you do so Dogan you wanna start.

Dogan Kaleli: (01:05)
Sure. So good to be here. I am the CEO of Stere, which is a digital capacity marketplace for all sorts of insurance programs. My background is really property underwriting. I worked more than 20 years in insurance companies in Turkey actually, where I'm originally from in Brazil and last 10 years in New York. So New York became home to be here.

Cory Isaacson: (01:33)
Prashant.

Prashant Nema: (01:33)
I'm Prashant Nema, I'm the Chief Iinformation Officer for Arch Capital Group. Been with the company for around seven odd years. I was in banking for roughly around a decade or more prior to that out of California and in a lot of engineering companies prior to that. So I have been on the demand side, supply side, by the large bulk of the last 15 audios in the financial services. Good to be here.

Cory Isaacson: (02:01)
Great, David.

David Fountain: (02:03)
Thanks, David Fountain, CEO and Co-Founder of Foresight Commercial Insurance. We're an insuretech workers comp MGU to that focuses on the core industries across the country, construction manufacturing, agriculture, and we have a novel innovative workers' comp product that connects safety and compliance performance to pricing and savings of workers comp. So basically, rewarding companies for improving their workplace conditions for workers by lowering their premiums and on a real time basis.

Cory Isaacson: (02:38)
Great! Well, welcome to all of you. So anyway, let's go ahead and get into it. So when we talk about the connectivity and insurance, insurance is in my opinion, very disconnected from my experience. A lot of companies are still revolving around things like FTP sites, which is maybe not the most innovative technology, so, but it can mean a lot of different things. And so I'd love to get each of your opinions on what connectivity means to you, what areas you think need to be improved, what things you think will be more, most important because it could go in all sorts of directions. So Prashant why don't we start with you.

Prashant Nema: (03:13)
Sure, so the connectivity is, I look at from the inside-out and outside-in in the insurance ecosystem. So the outside-in is something which we have talked more about and it's got the spotlight in the last few years which is the whole broker ecosystem and how they work with each other and the carriers and they ensure and how that is changing how people want to do business versus how they did it. With the advent of digital connectivity and various channels opening up for that in that ecosystem. In the last couple of years, for all the obvious reasons, there's a inside-out connectivity in terms of how the employees who work at these companies and the ecosystem, how they are getting connectivity, to be able to have the operational excellence of doing their job and doing it well for each of the representatives in the ecosystem, and that has taken a whole new meaning and one has started affecting the other.

Prashant Nema: (04:19)
The one they're affecting each other as employees work from home, they work from the road. Occasionally they come in the office, they want to be able to do everything they do the same way they do it. And more as the external digital ecosystem is operating, opening up new challenges and opportunities for the ecosystem to allow for that. At the same time as the ecosystem, the insurance ecosystem is enabling the broker network to do what they are doing. Having said all of that, we are still in its infancy, right? As this connectivity framework is starting to take new shape for the future, I would still say we are infants in that journey. Still email is king email connects everybody within the company and outside that's where I think the land share of most of the business, which is still done and that we all understand has its ineffectiveness, inefficiencies and how that needs to change if we need to be where some of the work which happens in banking and high tech it's almost certain the next decade, we are gonna see a lot of change happening in that.

Cory Isaacson: (05:28)
Fascinating. So Dogan, you have a marketplace, your company. So you're very concerned about connectivity.

Dogan Kaleli: (05:36)
Absolutely.

Cory Isaacson: (05:37)
I'd love to hear your perspective.

Dogan Kaleli: (05:39)
Our very first day of the idea of a marketplace, it's it cares a ton by the way, launching marketplace resilience model is a tough job. Huge obstacle is exactly that connectivity because supply demand and other stakeholders in the marketplace as well. So to be specific, we work with MGAs insurer, MGAs on the demand side. We actually work with embedded insurance partners as well because they need capacity. We work with wholesalers back to your point. Everybody's used to having processes managed by in-person meetings or zoom lately, but now it's switching to in-person meetings. Again, emails, it's a process of nine to 12 months to secure capacity, kind of like very old fashioned. I will call it process trying to disrupt that, trying to educate people that there's actually, your time is better spent on the distribution and underwriting and other more business related, more efficient things that you really should focus on the connectivity side of things.

Dogan Kaleli: (06:46)
Why don't you let us automated or semi-automated kind of opportunity is what we have but we have been creating and we will grow that business model with additional features. But that's also the obstacle itself because it's not easy. There's that resistency of, no, I want to talk to the person that I've been talking to for 30 years without knowing that there are actually five other options because the connectivity is not there between the supply and event in terms of capacity sourcing. So therefore, they're not even aware but there are so many mechanism being created like it's not a new development, but ILS funds have been very, very active in this field, especially the portfolio level capital markets are coming to in some occasions bypassing the reinsurance layer and everything.

Dogan Kaleli: (07:38)
So all these things are happening. It's good to know everybody knows them, but really when it comes to your, if you're an MGA, when it comes to your particular program, and if you need capacity, do you really consider a digital marketplace to get connected with insurance facilities? Or do you really knock on the door of your person or your buddy for the last 30, 40 years. Unfortunately the first go to is really go with the person that you have been talking to for 30 years, but the markets, it's not only insurance or financial services, but the entire world is based on the runs on data now. So there's thanks to that. There's a lot more options out there that unfortunately is not being explored or even known because of the lack of connectivity. So that's how I see it in terms of capacity.

Cory Isaacson: (08:35)
Very, very interesting. So, David, in your business, you have like you said, you're really encouraging safety in the workplace and those type of practices. So connectivity must be very important to what you do.

David Fountain: (08:48)
Yeah, it certainly is. We're definitely policy holder centric, we're inside-out, as you mentioned before. For us, it really is about connecting the engagement of the workers and how they're performing their daily duties and how the company's thinking about compliance and safety with the pricing of the premiums. If you look at a typical nationwide, if you look at companies in construction, agriculture, manufacturing environments, where you think safety and health and safety worker wellness is really important because they're naturally more hazardous, OSHA compliance is at a all time low, it's less than 40%. So that's on a national basis. So what's crazy about that is most incumbent carriers. You talk about connectivity and being connected to the policy holder. You can tell if a business, it's common knowledge within carriers, whether a business has had an infraction, if there's been an a serious event where I just had to come in and they're like, Hey, these people died because, you know, a crane fell on a bunch of people or just a random event of compliance failure that led to a really unfortunate circumstance outside of that.

David Fountain: (09:57)
Most carriers don't understand what's going on a day to day basis, or even if this business that they're underwriting and ensuring the wellbeing of the employees through the workers' compensation policy, if they're even compliant. And so for us, it's really about connecting with the business on a more granular level, understanding what they're doing on a day to day basis and not just monitoring, but engaging and helping those businesses become better businesses and create better environment for the wellbeing and safety of the employees. By being the insurance company and having that connectivity in this value proposition, we're able to obviously benefit the business and the employees by improving their risk profile and help lowering their premiums. Then obviously we look to profit on the underwriting side by writing a bunch of good businesses where, are they good or are they bad and are things going on that should be going on? So, yeah, it's huge in our our business and what we're looking to achieve.

Cory Isaacson: (10:58)
Fascinating. So, we know this is a big subject and we know that insurance is not always the fastest moving industry. I think that's safe to say we have a standard joke that I've learned in developing my business was which as we say, it moves at the speed of insurance. So given that and we know we're at the infancy of this, what sort of technologies can be used today, what things can be used in the future to really make this better. Because, I don't think we're just talking about having zoom calls. We're all kind of tired of that anyway. Now, after the pandemic. Yes, so what is it really, that's gonna really open this up and really make it to where we have better data from interconnected operations across the ecosystem from the insured all the way back to back office systems. So, Prashant I'll bring it back to you. Sure.

Prashant Nema: (11:49)
So, I think this is also opening up opportunities for everyone in the ecosystem to make every contact every engagement, more richer, more fulfilling and hence the end result of when you are ensuring someone or when they need protection during a claim filing, make that experience also that engagement's extremely rich. But this connectivity, it is offering the opportunity for doing that. At some point it'll be a level playing field, right? Everybody will have all the needed connectivity, cause in five years that's gonna be table stakes. You all have to be able to connect in all the possible ways in the ecosystem because of the connectivity information will start moving faster, more richer information, which will be expected and soon will become the norm and that's where we have to get to right.

Prashant Nema: (12:44)
The connectivity part as you're solving it is opening up the flood gates in rich analytics having more comprehensive information available when the pre-buying stage where people are exchanging that information to make sure that is available to make sure the process and how the bind process is done, and issuance is done is more richer than how it was done in the past. Connectivity when the claims are happening to be smarter about there to ask for very minimal information, because you have most of it and you want to jump in and right away start helping them. Better richer information freehand knowing renewals are coming up and offering them new options, new coverages, better endorsements, that's where the richness will come, right? So all of us in the ecosystem have to start thinking about these gates are opening up.

Prashant Nema: (13:34)
Some are not open as yet. Some will open up soon and soon, those gates are gonna be wide open. If you'll not have much to be flowing through those systems, you are the one who is going to look odd one out because the others are going to have a lot of information flowing through those big fat pathways, which are not open as yet. Right? So the call is not on connectivity but because of connectivity, the call is on analytics and having rich dataset and being ready with those and start making a difference because soon connectivity is gonna be table stakes.

Cory Isaacson: (14:09)
Very fascinating, so, Dogan, any thoughts on this?

Dogan Kaleli: (14:15)
Just to compliment, I always think about this from a customer experience standpoint and David touched that point very strongly actually based on what you guys built anyway. It's great. So the way I said my expectation from us actually from the insurance professionals, right, or the inure tech or insurance world is actually much higher than what's going on today. It's just my Nirvana level that is really the goal for me, is really when the consumers or businesses, when our customers insureds really stop talking to us about what S to answer and spending really half an hour, 45 minutes, trying to fill out a form like we need to spend that time on educating them, creating awareness, and so that they actually understand the insurance and why insurance exist rather than saying the typical.

Dogan Kaleli: (15:11)
I worked in many countries, everywhere is the same thing. I'm giving you money, but I don't see the return. So yes and you know that is not why insurance exists. It's not an investment fund, right. So, really when we stop, when we allow the end users at the end customers, stop talking to us about the processes. So figuring out that requires figuring out the data piece, data analytics putting the right information of their information in front of them so that they can actually spend time on understanding what is needed, the air business risk, creating that awareness, digesting that education is a better situation for me. But we are in the early stages of achieving that like, lifetime personal goal, I guess, but that requires a lot of different technologies. Yes, data analytics AI machine learning, all the rapid automation stuff that we, as an industry went through couple of very interesting at the beginning. We didn't know what blockchain meant for insurance nowadays. We are seeing couple of examples of that, which is really fascinating especially on the reinsure side. So, yeah, there's definitely connectivity that needs to improve.

Cory Isaacson: (16:36)
Yeah. Great. So, you mentioned some technologies, but David, what specific ones are you using to encourage the safety of workers and the communication back to you as an MGA?

David Fountain: (16:48)
Yeah, so we have our own proprietary technology that we created which is a software platform called Safe Site. My Co-Founder Peter who's here is the CEO of safe site. We developed that technology over seven years. I think something like 5,000 US companies use it and that was specifically to improve, like basically empower businesses to improve safety and compliance and meet OSHA compliance levels. But in terms of connectivity tools, like there's it really depends. I think essentially what we're talking about here is like the birth of embedded insurance really, where we're talking about mass data integrations between platforms to embed insurance transactions, where, you don't need to, like traditional underwriting and things have quite arduous become very seamless. And I think that in terms of connecting insurance into other areas of the value chain I think that's gonna be massive. And I think that there's many tools involved in that I think we're witnessing right now the rise of this period, well, this next phase, which is really exciting.

Cory Isaacson: (18:06)
Yeah. Interesting. Well, I know in our business there's a lot of barriers just because there's no data standardization. We do commercial property insurance and brokers send us schedules that are all manner of forms. Right. So they're not standardized at all. And I know there's some efforts about that. So is that a problem in your industries or even standardizing between systems internally? I know Arch is a big place Prashant.

Prashant Nema: (18:34)
Yeah, I think it's more of an industry phenomena, not necessarily only at Arch. This industry has come to where it is over many decades of supporting anything and everything and do whatever it takes and get where you need to get is that gonna change anytime soon? I don't expect it. Is that going to normalize to some extent? I think so only then you can achieve some of the things we are talking about. So if you're doing one thing, a hundred different ways, we may start doing it 20 different ways or 15 because people will start seeing the economies of scale and benefits from that. But in just insurance is a broad brush world, right? From personal insurance lines to PNC insurance Lang to specialty, there's so much variation and so much of difference in complexity.

Prashant Nema: (19:26)
It's a complex, broad, vertical the benefits which are going to come from is for the same reason as insurance has been done, 50 different ways internally and those processes could be normalized, right? There is no reason to say, okay, I take pride in how I do finance or how I think you need to take pride in your underwriting so that you are protecting your insured and making sure you're giving them the right pricing, the right protection. That's where the differentiation stays outside of that. There's no need to differentiate. And those processes are pretty broad and varied, and it is going to press on for everyone in the ecosystem to go through heavy normalization in those areas where the differentiation doesn't necessarily make sense, but we have a lot of differences sitting over there, and there's a huge opportunity over there.

Prashant Nema: (20:23)
The other areas are in terms of how people did insurance that is changing, right. I think people saw what is possible over the last couple of years. And of course everybody's happy to meet and greet and meet in person, but they've realized also that we always don't need to meet and greet, and some things could be done without being in person and how do we get it? It is more richer earlier when I placed this call or when I met the person, the person said, I'll get back to you and they send me an email with four pieces of data. But in the last two years now, I started getting 40 pieces of data. So I have a lot more insights, a lot more data than I ever was used to getting and now I've come to expect it and maybe that 40 needs to become 80 pieces of data.

Prashant Nema: (21:08)
So I have more richer pieces of data sets in front of me, which helps me make better decisions. And those are not going away just because we are meeting in person, they would say, oh, why don't you get that to me or send it to me prior to the meeting. So I can look at that. And that is going because people have been open to have quite open to new ways of doing things, getting additional data, expecting more data which is opening up new opportunities for several insure techs, who are working in several silos and silver trying to solve that really deep versus, where the ecosystem is working across the whole horizontal cutting through all of them.

Cory Isaacson: (21:44)
It's interesting. Well, it does bring up, we don't have a ton of time left, but it does bring up this idea of the innovation lab. My thinking on this, and my main question is where should it really happen? Can you do it inside traditional carriers? Should it be just insure tech companies that are providing data to carriers? Should it be MGAs that are smaller and more nimble? What do you think, David?

David Fountain: (22:07)
I think it just has to live everywhere. I think that it can't just be siloed in one section of the company, like for our one of company values is obviously to aspire, to be agile and innovative, in everything that we do. And, it's just one of those things that if you're going to survive and compete in today's modern age you have to be innovative. You have to be up with it because, I think the iteration cycles are becoming shorter and shorter for where these new technologies become adopted. It's the industry's changing faster and faster and you just basically have to keep up and you can't do that unless you are continuing to innovate.

Cory Isaacson: (22:44)
So Interesting, Dogan?

Dogan Kaleli: (22:47)
Like the quick answer is yes, it's like obvious answer, not quick, but it's everywhere. I always saw the innovation labs or innovation teams within the carriers or within any large organization an interesting dynamic, because you definitely need that dynamic to trigger to poke people if you will, to kind of encourage them to think differently without that kind of teams or mechanisms you did really maximizing innovation, I think is a dream. But everybody should be yes, in some sense innovating. I'll give you an example the other day and really thinking out of the box as well. The other day, we are in the capacity sourcing capacity matchmaking business, right to steer. So one of our partners actually steer created an idea because we see a ton of Insure Tech MGAs coming to market, willing to become an MGA some insurance background people, some take background.

Dogan Kaleli: (23:48)
And we saw a couple of them really crack the code or underwriting in a couple of areas. But because they're an insure tech MGA, they're very new without access to a ton of data. It was kind of impossible to satisfy the underwriter's expectations in terms of historic data. Therefore, they couldn't go to market if they did, they would've actually disrupted the entire that particular niche underwriting style. So one of our partners actually circulated an idea the other day, Hey, can we collaborate through Stere? Because it's the capacity marketplace. What if we find like 10 insurance companies, they put five, 10 million each. We just, we just create a lab in terms of capacity. So if you come up with an idea of, I can actually ensure that, just go test it. Like you're gonna lose, you're gonna lose like 2 million for five, 10 insurance companies. Two millions is nothing, but if it works that actually changes, disrupts that niche segment in terms of underwriting capabilities and data usage and everything. So I found it very interesting because we saw couple of inure takes failing with a great idea and tech failing because they couldn't have the capacity backing them. So we need this kind of outside of interesting thinking too.

Cory Isaacson: (25:15)
It's a fascinating idea, like a proof of concept engine inside your

Dogan Kaleli: (25:19)
Platform. It's Brooklyn. Yeah.

Cory Isaacson: (25:20)
I'm game. I'll follow up. We can talk after. So anyway, so I will open it up just in the little time we have left to any questions from the audience. Anyone have any questions? Well, we're just about at the end of the time now, so I want to thank all of you for attending. I hope it was informative. So I learned a lot today too. All right. Thank you very much. Thanks everyone.