Jordan Martell is the General Counsel at Central Insurance, a leading property and casualty insurance carrier providing premium coverage for businesses and individuals across the country. Jordan was interviewed by Chris Luiz, Director of Solutions Architecture and Customer Success at Monitaur and Cleveland Founder at InsurTech Ohio.
Jordan, what are your thoughts on the current technology landscape in insurance?
“Overall, I'm very optimistic. When you look back on the history of our industry, it started as a grassroots, community-centered concept, often in a faith community, it's a mutual support system. Over time, the industry evolved. It became more sophisticated and larger. Along the course of that path, we lost a little bit of that community narrative, and we became more oriented toward solving challenges around data and resolving the fundamental problems of adverse selection and asymmetric information. Before that, community was one of the most excellent and elegant underwriting and claims concepts you could come up with -there's very little challenge in a close-knit community setting in terms of asymmetric information.
I'm optimistic about technology because it has the potential to revive that original dynamic by addressing asymmetric information and adverse selection. The ultimate benefits of a fully, technology-enabled industry will inure to the benefit of the people we serve but also address the insurance gap, democratizing access to these important products to Americans that don't have meaningful access to them today.
Along those lines, I won't pretend to be blind to the challenges based on my optimism. One challenge that I think a lot about is that the pace of technological advancement typically outstrips the pace of wisdom. We're getting to a point where we can do things, but we don't yet have an evolved sense of whether we should do them or how to do them safely or ethically. If we're going to achieve the promises offered by new technologies, we're not talking pie in the sky a hundred years from now. This will be something that'll happen in my career, I hope. That future is a place where our mission as an industry is singularly clear about who we serve and why we serve them. In order to get there, we need to be willing to collaborate with our regulators and consumer rights groups to embrace these technologies but do so in a thoughtful and cautious way.
This is a journey that none of us have ever been on in terms of the pace and the magnitude of change. I mean, just a few years ago, AI was a sci-fi concept, and today it's very tangible. Most Americans have meaningful access to it today. Again, overall I’m optimistic, but I'm also cognizant of the challenges that we face as we go down this journey. That's where collaboration and partnership comes in between our industry, regulators and other players in this space. That will lead us to this open period of trial and error, understanding each other and building relationships and trust in ways we haven't in the past.”
It seems you are pretty excited about IoT/personal fitness devices, can you elaborate on your thoughts and the opportunity?
“I don't want to narrowly define it too much. The Internet of Things (IoT) and personal fitness devices are terrific, but there are other similar innovations that I'm going to lump together into this broader category. One example from the life insurance industry would be affordable multi-cancer screening tests that can be effective and accurate. These types of innovations may be tech-enabled or innovative, but they have the net result of empowering both sides of the insurance equation with a mutual understanding of the data that's available. These innovations represent an opportunity to dramatically realign the needs of the consumers and the insurers.
Again, if we think back to the days of the community-based idea, we didn't have that asymmetrical information challenge we have today. Communities understood what people were doing and what their needs were in a way that many insurers struggle with today because we're so far removed from the millions of people we serve. We have underwriting and loss prevention opportunities, but the kinds of innovations that I'm really excited about, such as IoT and personal fitness devices, really do empower both sides with actionable data. That actionable data will allow insurers and the people we serve to come together and say, ‘Okay, you know this, and I know this. We don't have to try to hide it from each other. How do we take this and make the best outcome for you and for me?’
I'll be honest; the state of these innovations today is merely promising, but I think it will be truly transformational in a relatable timeframe. People often underestimate the amount of change that can happen in five years, and I think this could be on a five-to-10-year horizon based on where we're headed. We may have these devices and actually be able to understand the outputs of them in a way that gives us meaningful insights that we as an industry can share with consumers and consumers themselves can take action on.”
You are describing a move from descriptive analytics to prescriptive, how do you see that affecting how consumers will interact with insurers?
“The real victory for us as an industry and a society that's coming from this technology will be when we break down that asymmetric information gap between consumers and insurers. In other words, granting insurers the ability to ingest more accurate and specific information across their entire book of business. That comes from IoT and other related innovations. The advantage of that is as an industry, we can return to our community-focused route. We can set aside the arms race of how to get more information about consumers, so we can underwrite them better to how to get that information to help them more.
The idea is that instead of insurers underwriting a book of business based on the law of large numbers, we can provide more specific and actionable advice and assistance to individual consumers to help them live longer, safer lives, to protect their businesses and assets from loss. We can all agree that the best loss is a loss prevented, and these new opportunities presented by these technologies do provide our industry with a chance to become collaborators in our customers’ success rather than commiserators in their misfortunes.”
When you think of carriers and other industry players, how can they effectively engage their customers given the changes that you're outlining?
“We have a few challenges in light of where the industry is headed based on the technology trends available to us now. Fundamentally, one of the biggest challenges will be building meaningful relationships based on trust with our consumers and regulators. For some years now, the parties to this relationship on both sides have been somewhat skeptical of each other. In order to build that meaningful relationship, we as an industry have to go first. We have to demonstrate our commitment to creating value for our consumers in ways that will surprise and delight them, will protect them in ways that they haven't otherwise felt and help them avoid losses that we otherwise simply would've paid. Once we go first and show we're committed to this, that'll go a long way toward building trust.
The companies that build those meaningful relationships based on trust are quickly going to become the carriers of choice for the industry, whether they're an insurtech start-up today or legacy incumbents. This will be the new thing. How do you build a relationship that really means something to a consumer in the long run? But, along those same lines, we have a data challenge. We are going to need to ingest more data than ever before, use it to build actionable insights for ourselves and our customers and, critically, protect that data in a way that’s challenging when individual companies have to square off against state-based threat actors. It's a resource constraint in terms of how we protect the data from a cyber-threat actor working from a country out of our jurisdiction. We have to figure out that situation with data, and we need to make a big commitment to that because it'll go a long way toward building trust with consumers.
One of the other things a lot of legacy carriers are going to have to confront is that incumbents have spent decades and well over a trillion dollars, in aggregate, on their IT systems. Today, many of those IT systems are more of an anchor than an advantage. I've seen that across the industry, whether it's P&C or life, the companies that invest in their technology systems to get them up to date can ingest, protect and do data science on the data they’re receiving. They can convert unstructured data into structured, actionable data. That's a challenge, but that's how we build that meaningful relationship.”
As we look into the future, how do you see membership organizations leveraging technology to play a positive role in our communities?
“Community is the most beautiful word in the English language, and hopefully, it has come across during my other comments that community is the basis of insurance and why I do the work that I do. As an industry, I look at what we're capable of achieving based on technology that's evolving today and where it's headed. We can look at the people we're serving who are our neighbors, friends and the people we go to church or other faith institutions with. There are small business owners that are stewards in their community and stabilizing their livelihoods, protecting them from misfortunes and preventing those misfortunes fundamentally make a stronger, more vibrant and healthy community. The more we can build trust with our consumers, the more we can try to help them and become partners in their success. That enables us to have healthier communities, which would be a tremendous success for any industry.”
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