Andy Hutter is the Director of Strategic Initiatives at Noyo, an API infrastructure provider that aspires to replace today’s status quo (cumbersome legacy formats and inconsistent standards) with a powerful API platform that enables faster, more accurate data exchange between employee benefits platforms and their carrier partners. Andy was interviewed by Michael Fiedel, a Managing Director at InsurTech Ohio and Co-Founder at PolicyFly, Inc.
Why has insurtech exploded over the last decade?
“Well first, there's just a lot more institutional capital making its way into venture, but insurance is starting to experience the shift to a consumer-centric approach that has been happening in other sectors for decades. Twenty+ years ago, all carriers thought they were at the center of the insurance universe. They were the sun, and the planets were all revolving around them. To some degree, that was true. They carried all the risk; they mostly controlled all aspects of the customer experience, and the distribution machine was a lot less complex.
Things have started to flip. There's a consumer-centric shift that has taken place, and now, traditional carriers are just one of many entities that must compete for the attention of the consumer. Consumers are now the sun with everything revolving around them. We saw this happen in other industries first (ecomm & fintech most recently and notably). Investors see this paradigm shift happening with insurance and invest big in companies that can harness that momentum.
That's one of the reasons why, in my opinion, digital MGAs (managing general agents), MGUs (managing general underwriters) and other types of fronting companies have taken off so quickly. They take some of the risk and can move faster with less bureaucracy. There's incredible value for investors in this simple formula; make it super easy for consumers to shop for and purchase your product, create a fantastic customer experience and own the customer data and relationship.”
As this paradigm shift takes hold further and further, where do carriers need the most support?
“If you can nail that formula (simple to say, hard to execute), the next step is hyper-personalization. The consumer has come to expect personalization in the recommendations they receive, the ads they’re served, the products and services they buy. We have all come to expect this because of the behaviors we have learned from the best ecommerce brands over the last 10 years. That standard to quickly spread to fintech. Insurtech is the next industry that's ripe for disruption in this way.
If it's hard to shop for and buy insurance, people just won’t do it. Insurance still has some ground to cover to bring true personalization to a self-service buying experience - at least with the more complex products. If you’re shopping for life or disability coverage that fits your financial plan needs and isn’t cookie-cutter (as I recently did), the process is honestly pretty painful. You have to be a motivated person to finish it. The process of going through a phone interview, doing a physical medical screening, working with a broker all along the way - then actually applying for the coverage with the carrier (through the broker), completing additional forms and questionnaires… The whole process can take months! And that’s if you’re healthy, have your documents in order and are on top of your email. That process just doesn't seem tenable for carriers in the long run who need to meet the new expectations of today’s consumers (myself included). One area where innovation would improve this problem is more instant connectivity between the supply side of the market, the demand side of the market and the data sources that empower the market. If data is more interoperable, the speed, accuracy and customer experience can become more personalized, streamlined and instantaneous.”
What technologies stand out as opening up that level of customization and speed?
“There are a lot of exciting advancements. Web3 and DeFi is a new frontier that’s getting a lot of attention from investors and innovators hoping to fundamentally improve the way financial and insurance systems can talk to each other. Time will tell how these new technologies will impact the customer experience inside fintech and insurtech. But, that's the bleeding edge of the frontier — there's still plenty of work to be done with what I consider the core of modern insurtech. It comes down to two primary areas: better user/customer experience and better insights from the vast amount of data that these traditional carriers have on hand. And they are linked together.
It's not hard to understand why consumers want personalized product recommendations and the ability to purchase a product with a couple of clicks, but few traditional insurers have been able to figure out how to pull insights from their vast data troves. They are data rich and insight poor. Some insurtechs have created value by helping traditional insurers leverage their data, and some newcomers have decided to take a more direct approach by leveraging their own customer data. One area in particular that is already seeing dramatic disruption (and improvement) are underwriting models. They can be, and should be, powered by living and dynamic data sets that enable the model to get smarter every week or month, not every three years.
Data interoperability should be directly improving the customer experience. When was the last time you went through an automated phone screen and entered some personal info to validate your account, only to have to repeat all of that same information again to the human that eventually takes your call, just so they can look you up in their system (again)? How are these systems not connected? This is basic stuff and maybe a bad example - but it happened to me last week, and I couldn’t understand why.
The last example where data and tech can help advance things is innovation in the insurance products themselves. Products aren't evolving all that quickly. There's some innovation around the fringes, but modern carriers are still, for the most part, a better UX (user experience) skin and higher-touch CX (customer experience) resources stretched over the same underlying products. I think savvy consumers can generally sniff that out. True innovation is hard, but it’s also what our industry needs the most. Maybe the best and most famous example of true product innovation in the last few years is in the auto insurance space; usage-based pay-per-mile coverage. Metromile made this famous, and Nationwide and Allstate have followed. Most of the major insurers also have “safe driver” discounts informed by basic telematics from the physical behavior of the car.
I’m waiting for health insurance to truly innovate on the product front. Why can’t we see premiums that reflect the real health of the individual instead of based on a massive risk pool of very different individual circumstances? I don’t mean like HealthIQ. I mean truly, individualized premiums based on real health data - maybe even updated annually. Why can’t individual disability coverage be dynamic and adaptable based on life events and activity level? If my phone is sitting at the location of a skydiving company, why can’t my disability coverage proactively ask me if I want to pay $400 for some extra coverage for the next 2 hours? Insurance should be personalized by being predictive (detecting problems before they occur), and prescriptive (offering specific and actionable choices in real time based on the predictive data).”
How is Noyo influencing the evolution that you think the industry both needs and is excited to see?
“Noyo represents one layer of IaaS (Infrastructure as a Service) for one section of the insurance industry; Employee Benefit payers and the BenAdmins. I point that out because insurtech is so huge and so fractured, with so many areas of specialization. What's ironic about the surge of insurtech investment over the last 10 years is that a very real consequence is greater complexity. This necessitates connectivity solutions, which can also be provided by insurtech. When the supply side (carriers, digital MGUs, TPAs) becomes more complex, and distribution tech on the other side is more complex, the ecosystem is more convoluted than it ever has been. Thus, more infrastructure is needed to hold it all together. It’s a cycle; the jury is still out on whether it’s a virtuous cycle or not.
Noyo exists in that infrastructure layer to attempt to (re)connect the network. We aspire to be the essential plumbing for the industry. Where the industry used to be smaller, less complex, and connected by paper and fax machines, it has exploded into a multi-faceted beast of people and process and tech that needs a lot of wiring to continue to function. Noyo lives in the employee benefits slice of the ecosystem right now. We hope to be the infrastructure layer that ultimately connects the consumer and the distribution nodes to the supply side in a way that is API-based and empowers an acceleration of the consumer-centric shift we are all looking for and expecting from modern insurance.”