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InsurTech Ohio Spotlight with John Kellington

John Kellington is Executive Vice President and CIO at The Cincinnati Insurance Companies, which markets business, home, auto and life insurance products exclusively through independent insurance agencies. John was interviewed by Matt Workman, Senior Client Partner at Persistent Systems.

John, what does speed to market mean, and how can you measure its velocity over time?

“Speed to market is how quickly you can get something new that's desired by your business partners into the market or your system environment. It’s virtually impossible to determine a universal way to measure or improve it because every company is a bit different.

But, I will say one thing. I rarely hear that our implementations are too fast, so when people want something, they tend to want it quickly. A good goal is to try to get it in by the time you get the product filed and approved by the regulatory bodies. That can be a difficult goal because sometimes things come back pretty quickly, so speed to market and managing expectations internally is quite a task.”

What are some of the impediments that get in the way of speed to market?

“The complexity in our environment is the largest impediment; it's rarely the system itself. If people want a change in a policy or claims system, we can do that quickly. It's just that there are many things linked to those systems. For example, within our claims system alone, we have about 70 or 80 system interfaces. Policy and Billing systems are the same. It's a lot to manage, and if we were doing one change, we'd be able to do it quickly. But, on average, we're doing about a thousand changes a month. Every one of those changes has a request, requirements defined and signed off on, proof of testing and a signature from management approving the change.

We live in a highly regulated environment, and as a result, we have to dot our i's and cross our t's for everything. To manage one change amongst, potentially, thousands of others is where it gets complex. One of those changes in a thousand could be a major policy system change. That change could be two to 300 changes in itself. It's an immensely complex environment, and when you manage complexity to that scale, that's where impediments are. Our goal would be to not make it so complex, and that can be tricky.”

What are some opportunities to improve speed to market?

“We have to take the complexity out anywhere we can. It's easy to say, ‘We have a new business partner who needs a system, so we'll just build or buy one.’ The reality is you've just added to your complex environment; you're layering on top of it. We firmly believe that the more we can do to step back and look at how the system architecture should work, the better. Based on that, we start building a foundation. That's the enterprise architecture of what I just described. You have to step back and ask, ‘How should the architecture of your environment be at an insurance company? How can we get there? How do you streamline the environment to make it quicker?’”

How does enterprise architecture set the tone for Cincinnati or any insurance company for that matter?

“Enterprise architecture is the key to making work less chaotic. For example, if we were to build software that can manage a person or an organization and the roles they play, then that one piece of software could be used in multiple systems (policy, claims, billing, etc.). When any changes to that one piece of software are made, they’re made everywhere. You upgrade everything. That's why enterprise architecture is so important.

If I'm collecting data from a claims, billing or policy systems, I can see a 360-degree view of a person or organization and how they relate to us or others. Now, portals can be built, and systems we never thought about can be designed. That's the basis of Customer Relationship Management (CRM). It all starts with the foundational elements of system design, and enterprise architecture is the pinnacle of it.

Insurance systems are dauntingly hard, but starting with an enterprise architecture doesn’t make it harder. Any fork in the road you take is going to be difficult. People often wish they’d taken the other direction, but that direction could turn out to be every bit as hard, and usually is. There are no easy buttons here in insurance. Since that’s the way it is, you might as well do it the right way because at the very end of the day, you'll be in an environment that’s less complex, easier to maintain and more effective.”

Do you see opportunities for insurtechs or startups to support the insurance industry in Cincinnati and across the United States?

“I always ask insurtechs to try to recognize our mission, which is to produce a legal agreement that's binding across the US. Every legal agreement we produce is unlike the one before it, so we have a mass change complexity and a volume complexity. Understanding that is essential. Our mission for the agreement is to make sure that you can write a claim against it, it’s able to be built and there are laws around all of the guidelines you have to follow. It's a highly regulated environment that we deal in. Most insurance companies enjoy new insurtech solutions that streamline our processes. Disruptive solutions are also fine, as long as they align with the regulatory boundaries that we operate within.

Oftentimes, people think it’s as simple as coming up with a really cool product that everybody in the insurance industry will want to sell, and companies will make boatloads of money on. It's a hard thing to ask for because we write insurance for everything in this world. It's hard to think about one product; it’s easier to think about the process we have to go through in order to get it out. Insurtechs that focus on process improvement can really move the needle.

The other thing I'd ask insurtechs is to think about the constant change we're dealing with in our environment. We have a standards organization called ACORD that helps us with interfaces we build toward. We're trying to build APIs for our environment aligned with ACORD standards.

ACORD is good at taking input for changing standards, or if they’re not effective, helping us change them to make them better. But, it's going to be easier for an organization to implement your new solution if it’s aligned with our industry standard - if there's something we can start from.”

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