Jeff Martin is an Innovation Strategist at Encova Insurance, a carrier offering insurance products including commercial, auto, home and life insurance. Jeff was interviewed by Michael Fiedel, a Managing Director at InsurTech Ohio and Co-Founder at PolicyFly, Inc in collaboration with The Future of Insurance Newsletter.
Jeff, is there a misconception that innovation and insurance is always about technology?
“I think there is; that's where everybody goes. Most people think of them as synonyms, whether consciously or subconsciously. It’s easy to do when you hear a lot about insurtech and the billions of dollars being pumped into that space on an annual basis. One thing we've done at Encova is to try and decouple innovation from technology. You want to collect ideas from everywhere, and they don't have to involve the next greatest piece of technology. One example of this is our innovation group; it works like an associate resource group who are focused on innovation, and it primarily consists of business users from commercial lines underwriting, claims and customer service.
They're practicing how to solve problems using creative and design thinking methods, and, typically, their solutions do not involve technology. Given their background, every now and then there might be a piece of existing technology they may need to tweak or modify very slightly, which is pretty easy to get done. They have solved some cool problems like how to better cross-sell life insurance through a P&C agent and increase first call resolution. I feel this group proves that innovation doesn't need to be linked to some grand technology. This type of teamwork involves workshops, education, training and process changes, which can be innovative. It has already shown proven results.”
From an Encova perspective, how are you trying to socialize conversation around innovation, and what impact has that had on the company?
“Like most insurance companies, we are fairly risk averse. That's the nature of insurance, so making innovation and creative thinking part of the culture is the key. At Encova, it started at the top down; it was with our previous CEO, Dave Kaufman, who wanted us to start working in a much more collaborative way. He wanted us to be more creative and innovative, with more grassroots opportunities. The primary example of this is how Encova created an entirely greenfield environment for our policy, billing and claims systems to start our digital transformation. The idea was to ask, ‘What would we need to stand up an insurance company from scratch, how would we do it?’
At the time, we chose Guidewire to consolidate almost 40 different legacy systems onto a single platform for policy billing and claims and replacing every ancillary system along the way. There were no systems that really made it over from legacy that preexisted. I think that's a great example of creative thinking combined with collaboration to bring about innovation. It really does need to come from the top down. People have to understand that this is now the way we are going to operate, and this is going to become part of our culture. The key was having the CEO and the entire executive team backing and supporting the initiative, it gave way to more innovative projects and even having a new role created of innovation strategist at Encova.”
What are some of the best practices that Encova has pushed or is trying to push to cultivate this culture and ensure some frequency of conversation is occurring?
“This part isn't very innovative because it's been done for decades. It's basically the old concept of business relationship management. I go out as the innovation strategist to the major profit centers or major departments. It could be accounting, claims or the various underwriting departments, and we have conversations around where they want to go. What innovative strategies would they really see themselves in? We're trying to plan these three to five years out in the future and trying to gather that big roadmap. We want to know what the problem is and what success would look like. We don't want to know the solutions and find a place where they fit. That's another very important part, not to just go chase the shiny brand new thing that's out there in the insurtech space, but to really focus on problems that you can't seem to solve with traditional methods. Let's go apply design thinking, creative thinking and problem solving techniques to these and see what we can come up with.”
How does an insurance carrier take a list of innovative concepts and work through practical steps to first prioritize them and then properly plan their implementation?
“When you figure that out, I'd love to know, but I can tell you what we do at Encova. We triage those problems previously identified through collaboration with the business areas. When you look at a problem, you look at it in a general sense. It's hard to tell what your ROI is going to be at first because you're getting problems. How do I cross sell more life insurance with mostly a P&C agent base? Well, that's a very general problem. You have very specific problems that come out of that. P&C agents don't know a lot about life insurance and don't feel comfortable talking about the products. The conversations are uncomfortable to have sometimes. You most likely wouldn't like telling the person who wrote your car insurance your medical history. You have independent agency owners who aren't backing this. Those are three specific problems that you would then come up with multiple solutions to fix. If you can get it down into those more specific problems, you can start to build an ROI. Before that, it's really a shot in the dark, and no one really knows. That at least gets you to the prioritization part, but once you're at the specific problems, it's still a hard conversation because you don't know what you're going to produce.
You're going to say I'm going to try to achieve X, but I can't tell you how I'm going to do it or what I'm going to do it with and how much it's going to cost or how long it's going to take. That's usually an uncomfortable conversation with people. Typically, you need to have an innovation budget; however you want to slice it or dice it. Sometimes it can come out of surplus, and you get X amount. You can try to obtain unused funds for innovation. We haven't done this at Encova, but I've heard of other people who take things like all the budgeted money for overtime that didn't get used and reallocate it to innovation. You have to have a budget that someone in innovation controls.”
When you look ahead to new technology, what opportunities to improve insurance from an experience and growth point of view are you most excited about?
“The power of AI combined with all of the available data that's out there, whether it's IOT devices or historical data. If we’re going to break out of the current model where the ‘good’ insureds are subsidizing the ‘bad’ insureds, that's how it's going to happen. That's what I am most excited about, seeing someone figuring out how to flip that old insurance and come up with something that more people understand and support.”
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