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Grange Grows in Three Key Focal Points: Emerging Tech, Employee Development and Independent Agents

Brent Hammer is the VP Innovation Officer at Grange Insurance, a leading insurance carrier in Ohio, providing peace of mind and protection during life’s unexpected events. Brent was interviewed by Ron Rock, Managing Director at JobsOhio, a private nonprofit corporation designed to drive job creation and new capital investment in Ohio through business attraction, retention and expansion efforts.

Brent, what recent successes is Grange celebrating?

“It’s appropriate that you're asking me that question, Ron, because I think one of our more recent successes (announced in January) is the support that we received from JobsOhio. Grange received grant funds from the corporate R&D (Research & Development) program and we're actively using this to expand our innovation practice. What I'm most proud of over the last year or two is the fact that we continue to iteratively expand our innovation capabilities at Grange. I feel like we’ve taken the right approach in establishing a crawl first, then walk, then run. We're just celebrating the maturation and expansion of our internal innovation capabilities, which are going to be further accelerated with the support from JobsOhio.”

What are some of the industry challenges that Grange is focused on in 2023?

“The first thing I would say is, and this may sound cliche, is it all comes down to talent. There’s this “silver wave” – I've even heard it called the “silver tsunami” – of retirements coming within our industry. The bottom line is you have to have people in insurance who know the business and understand the economics and financials of it, but you also need highly technical jobs, like data scientists and actuaries. You need folks who know the products and the proper coverages. Speaking to colleagues, the overwhelming majority of people in the industry did not intend to get into insurance when they were in school, myself included. So, I think there's an education challenge because of the need for talent, whether it's at the carrier or our independent agency partners. Again, this is an incredible industry. I've been in it for 20 years and it's very sticky once a person gets exposed to it. It's challenging and an incredible industry to be a part of, so talent comes first.

To address that need, Grange is specifically focused on developing a hybrid culture: embracing flexibility for our associates, work-life balance and work from anywhere. We’re leaning into development as well. We have a dedicated talent and training team that's rolling out in the form of Skill Labs for our associates. We have an Emerging Leaders program and an entire month's worth of virtual and in-person learning called ‘Elevate’.

A more technical answer to your question is the rising loss costs in this current environment from climate. If you read any of the headlines, insurers got crushed by catastrophic weather and inflation last year. It's not just the loss costs, but it's the impact that those are having on the reinsurance market, which is essentially the backstop for the insurance industry. With increasing rates online, reinsurers charge more, while also decreasing capacity, as some reinsurers exit the market. The January 1, 2023 reinsurance renewal market was the most challenging in a generation. Because of this, insurers like Grange are having to hold and retain a little more risk than they otherwise would have in a regular reinsurance market. That's going to inject a little more earnings volatility in an environment where the weather is already causing a lot of volatility. Generally, carriers will need to gradually rebuild their excess capital reserves after a challenging 2022. I'm hopeful that the current climate pattern we've seen in the Midwest and Ohio is just part of the normal ebb and flow of weather from year to year and not reflective of a new normal in our climate.”

How do you foresee technology and innovation strategies playing a critical role in the continued growth of the company?

“One thing that 2022 proved for outsiders of the insurance industry looking in is that technology companies (particularly full-stack carriers) trying to enter the industry with technology and being “born digital” as their key differentiators will not be a silver bullet for profitable growth in our industry. Consistently making money in insurance is going to be challenging in general. Underwriting discipline and experience are the gold standard for how to effectively grow, and profitably grow in our industry. But, very importantly, incumbents like Grange still have to embrace technology. We have to tinker and continue to be curious.

You also want to avoid diving into the technology deep end. With our industry being risk managers, it's never a good strategy to go all in on something. The approach that Grange is taking again is to test and learn: crawl, walk, run. We're tinkering with a few emerging technologies; ultimately, it will be an iterative process. However, as I alluded to before, you also have to be human to succeed. Our industry is all about relationships. You have to combine technology with the human experience: creativity, ingenuity, empathy and the human ability to say “yes, and” or “no, but.” Technology should be the aid. The carriers who can augment their associates' talent with the right technologies are going to be the ones who differentiate themselves. They will be more efficient, have greater insights into risk, and be adept at applying those insights to move quickly. One thing that comes to mind for me is ChatGPT. In and of itself, GPT (Generative Pre-trained Transformer) technology is going to make you slightly more efficient. If you can deploy that to make your staff more knowledgeable so they can effectively and appropriately leverage it, that's the sweet spot for me. Unlike the hype a lot of these prior technologies, like blockchain and autonomous vehicles, generated - GPT is going to move through that Gartner Hype Cycle much more quickly. It's going to become more embedded, in terms of our everyday uses of technology, much more rapidly than some of the other hyped-up emerging technologies we've heard about for years.”

How is Grange focused on supporting its agency partners in the near and long term?

“Grange is 100% committed to the independent agency channel. We don't have captive agents or direct writers. In this current environment, rates are increasing and the value of your assets – the things you need to protect – are also increasing. At the same time, it's so important to have that independent agent as your trusted advisor who can help get you the best coverage for the best price and make sure that you're adequately protected. We’re a huge advocate for the independent agent channel. Because Grange is so committed to independent agents, we've developed a “Connected Partner Toolkit,” where we look to partner and connect agents with either insurtechs or proven industry service providers.

In the work that I’m doing with insurtechs, we’re focused on three areas for agents. The first is helping independent agents activate their data. We're working with a startup that is piloting with several agents. They have a data and analytics platform that sits on top of their agency management system and is trying to collect data and leverage machine learning to help them triage their work, prioritize their renewals, prioritize submissions and make them more efficient in general. We’re very excited about helping agents activate the vast amounts of data from their customers.

The second area is education about insurance. I mentioned we're in a really hard market at the moment. I think remarketing and the cost and effort of an agent to remarket a policy when it renews at a higher rate is significant. We're piloting a solution with three agents here in Ohio that assesses the quality of a carrier. It looks at information from the Ohio Department of Insurance and goes back five to ten years to help determine how good that carrier is to work with for customer service and how good their coverage is. This allows the agent to have a conversation that’s focused on more than just getting the lowest price. That's important because the most expensive insurance policy you can buy is the one that doesn't adequately cover your losses when you need it. Cheaper is not always better. Again, helping the agent to have that discussion with a policyholder is very important and something we're focused on.

The last thing is talent. That's been a tough nut to crack. We're in conversations right now with a startup that shares that same mission and vision around recruiting and developing new and diverse talent to the insurance industry. They're trying to help both carriers and agents, so we're hopeful that we're able to do something with them in the near future as well.”

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