IBAMAG.COM ISSUE 9.05 | $12.95
INSURTECH 2021 How insurance technology can help meet the demands of a post-pandemic world
READY TO BRANCH OUT?
Where to start when adding a specialty line of business
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SUPPLY CHAIN BREAKDOWN
Ways to help manufacturing clients prepare for supply chain disruption
CONSTRUCTION SECTOR OUTLOOK
The biggest challenges and opportunities in the segment in 2021 and beyond
07/05/2021 2:42:17 am
UNITED
STATES
This has been a year of recovery – but the process is far from over. Insurance Business is proud to have been the voice of an industry that has refused to stagnate during such challenging times, keeping the focus on a brighter future of equality and diversity. As we enter fall 2021, we’re more determined than ever to shape a more inclusive, forward-thinking industry, where leadership opportunities are available to everyone. Our Women in Insurance series is returning for a number of virtual events, covering the topics that matter to you. Be sure to join us at:
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I took several pages of notes and will be bringing the ideas back to my team. I felt it was a very positive and fulfilling conference that promoted some forward-thinking ideas. - Lisa Strader, Medical Manager, Safety National
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T E X A S
These sessions brought many takeaways. Keynotes really made me self-assess and look beyond what is in front of me. Panelists for Tasking a Risk, Beyond Mentorship, and Making your Brand gave me so much energy and inspiration! This was a GREAT event! Thank you! - Beth Foy, Project Manager, Vermont Mutual Insurance
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ISSUE 9.05
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CONTENTS
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UPFRONT 02 Editorial
INSURTECH 2021 FEATURES
INSURTECH 2021
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As insurance increasingly moves toward a digitalfirst model, IBA explores how agents and brokers can capitalize on the latest developments in insurtech
PEOPLE
INDUSTRY ICON
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04 Statistics
Key data that should be on your radar this month
06 News analysis
FEATURES
THE DOOR TO INNOVATION
How ClarionDoor is helping both insurtechs and legacy carriers reach their digital goals
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Recent events have underscored the myriad supply-chain risks in the manufacturing sector
08 Intelligence
This month’s big movers, shakers and new products
10 Workers’ comp update
Why online-only businesses still need workers’ comp coverage
12 Technology update
The first steps independent agencies should take toward digital transformation
17 Opinion
FEATURES
BUILDING BACK BETTER
Amid the construction industry’s rebound from the pandemic, contractors are facing some major exposures – and opportunities
Michael Rice has built a reputation for rapidly growing insurance brokerages – and he’s putting his winning formula to work at CAC Specialty
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The inherent exposures in a supply chain under stress
Agile is the watchword for insurance in a post-pandemic world
FEATURES 46 The negative impact of an urgent culture
Is unproductive urgency taking a toll on your team?
PEOPLE
FEATURES
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48 Other life
Down in the mud with claims consultant and obstacle course racer Joshua Andrews
THE START OF SOMETHING NEW
Aon Programs’ Dave Zeornes offers independent agents and brokers a blueprint for moving into new lines of business
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UPFRONT
EDITORIAL
Just in time … or not?
H
ave you ever given the just-in-time supply chain a second thought? Probably not. We take the supply of consumer goods as a given. We expect the the cogs of the global supply chain to keep on spinning so that our every demand is met at the click of a button. But what if a massive container ship – one longer than New York City’s Empire State Building – becomes beached on one of the world’s key trading routes, potentially slowing the supply of essentials like toilet paper and coffee? Then you might take note. In March, the world’s attention was drawn momentarily from the COVID-19 pandemic when one of the world’s largest container ships, the Ever Given, became lodged in the Suez Canal during strong winds and a sandstorm. The giant vessel was stuck at an angle, blocking the critical trade route – through which about 15% of all global shipping passes – for six days. The blockage delayed about 300 cargo ships, and many others were rerouted, causing significant disruption to the global supply chain.
A disruption in one part of the world can have a profound impact on supply in another part of the world Beyond the immediate impacts of potential market supply challenges, there were also domino effects at destination ports and terminals due to schedule disruption, yard capacity strains and the accumulation of cargo. Final-mile delivery carriers also felt the brunt; a shrinking driver pool was expected to pick up the slack and help the market fulfill its just-in-time guarantee. The grounding of the Ever Given has highlighted the delicate nature of the global supply chain at a time when it was already under monumental stress as a result of the COVID-19 pandemic. It was proof of how a disruption in one part of the world can have a profound impact on supply in another part of the world. And these disruptions can come in all shapes and sizes: a natural disaster, political tension, war or, these days, a mass technology failure. The point is, there are risks to the offshoring and just-in-time delivery model that dominates the global supply chain – risks with more significant consequences than the caffeine jitters from a coffee shortage. The team at Insurance Business America
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UPFRONT
STATISTICS NATURAL CATASTROPHES IN 2020 AT A GLANCE
STORMS THE TOP SOURCE OF NAT CAT LOSSES Among natural catastrophes, severe convective storms inflicted the most insured losses over the past decade, according to Swiss Re. This was especially the case in North America, where the total insured losses caused by severe convective storms from 2011 to 2020 exceeded those from all primary perils put together. Swiss Re’s study revealed that insured losses from both primary and secondary perils have been on the rise since 1970 – a trend that’s expected to continue in the foreseeable future, due to increasing property values and the effects of climate change.
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CUMULATIVE NAT CAT INSURED LOSSES, 2011-2020
Total number of catastrophe events worldwide
NORTH AMERICA Severe convective storms
WORLDWIDE
$192.0 billion Floods
Severe convective storms
$16.2 billion
$217.9 billion
Wildfires
Floods
$53.1 billion
$67.3 billion Wildfires $56.2 billion
$202 billion
SOUTH AMERICA
Global economic losses due to catastrophes
Floods $1.2 billion Wildfires $200 million
$89 billion Global insured losses due to catastrophes
M&A ACTIVITY EXPECTED TO BOUNCE BACK After two years of declining M&A deals globally, Willis Towers Watson expects the number of deals to rebound sharply in 2021. Recovering confidence in the market has already led the number of M&As to surge by 21% year-over-year in the first quarter of 2021.
QUARTERLY GLOBAL M&A DEAL VOLUME 270 240 210
0.24%
Percentage of global GDP lost to catastrophes in 2020 Source: Natural Catastrophes in 2020, Swiss Re Sigma No. 1 2021
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180 150 120 90
Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021 Source: Quarterly Deal Performance Monitor, Q1 2021, Willis Towers Watson
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CANAL BLOCKAGE AUGMENTS SUPPLY CHAIN WOES The Ever Given’s six-day blockage of the Suez Canal added yet another burden to the ongoing disruption of global supply chains. According to Allianz, other issues, such as shortages in shipping containers and semiconductors, are already expected to reduce real trade growth by 1.4 percentage points in 2021; the Ever Given fiasco could add between 0.2 and 0.4 percentage points to that figure.
EUROPE Severe convective storms $15.6 billion Floods $20.1 billion Wildfires $200 million
19,000+
ASIA
Ships passing through the Suez Canal yearly
Severe convective storms $200 million Floods
1.25 billion
$26.7 billion
Tons of cargo that passed through the Suez Canal in 2019
$9 billion
OCEANIA
Daily worth of goods disrupted by the Ever Given blockage
Severe convective storms $9.4 billion Floods
$230 billion
$2.8 billion
Expected decrease in real trade growth in 2021 due to supply chain disruptions
Wildfires $2.5 billion
Source: Natural Catastrophes in 2020, Swiss Re Sigma No. 1 2021
KEY AREAS OF INNOVATION FOR INSURERS Demand for digital insurance premiums and online distribution could displace around 5% of the global insurance market’s revenue by 2025, according to a new report from Accenture, which highlighted four areas of innovation for insurers to focus on to capture this revenue.
$115 BILLION
INSURERS EXPECT HIGHER MEDICAL TREND RATES As the COVID-19 pandemic continues, the majority of group benefits providers worldwide expect higher medical trend rates in 2021, according to a study by Mercer Marsh Benefits, which attributed this to several factors, including the resumption of elective treatments, delays in care and a continuation of COVID-19-related claims.
$125 BILLION
IN REVENUE
Sharing economy, climate change and cyber threats
Source: “The Suez Canal ship is not the only thing clogging global trade,” Allianz, March 26, 2021
10% Higher than 2020
IN SHIFTING PREMIUMS
Shift to alternative distribution
$120 BILLION
$120 BILLION
IN REVENUE
IN REVENUE
Health/wellness and life products and services
Technology integration within traditional products
Source: Insurance Revenue Landscape 2025, Accenture
Same as 2020
27% 63%
Lower than 2020
Source: MMB Health Trends: 2020 Insurer Perspective, Mercer Marsh Benefits
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UPFRONT
NEWS ANALYSIS
Stress-testing supply chains COVID-19 and the Ever Given crisis have revealed the deep-rooted fragility of the manufacturing ecosystem. Where do supply chains stand now, and how can insurance companies support their manufacturing clients?
THE MANUFACTURING sector has been shaken by the COVID-19 crisis, which has buffeted the global supply chain and forced businesses of every size to rethink their operating models. While various manufacturing businesses have been impacted in different ways and thus require varying solutions, there are several cross-sector challenges that COVID-19 has exacerbated. Chief among them is global and domestic supply chain disruption, which is interrupting both upstream and downstream processes. This disruption has been building for some time, says Michael Burg, managing director of Gallagher’s manufacturing prac-
evaluate those risks and exploring the insurance solutions that are available to address those risks rather than just retaining them on the balance sheet.” The manufacturing space evolves in waves, says Riskonnect CEO Jim Wetekamp, who first noticed the new wave that came with COVID-19 when supply chains in China first started being impacted. Organizations began looking for better ways to assess their risk, understand the challenges they faced and build agility as COVID-19’s impact started to pivot from transportation to hospitality, healthcare and financial services. “What [manufacturing businesses]
“We see both supply- and demand-side challenges to the supply chain, so we’re helping our clients evaluate those risks” Michael Burg, Gallagher tice in the US, as supply chains have been getting tighter and more focused on just-intime delivery. “COVID has certainly accelerated some of the supply chain challenges and risks that we advise our clients on,” he says. “We see both supply- and demand-side challenges to the supply chain, so we’re helping our clients
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have had to do is work through the crisis to establish what continuity looks like moving forward, to think through better workforce planning, alternative inventory policies and planning parameters such as how they think about their supply chains,” Wetekamp says. “They’ve had to give greater visibility to inbound materials, and while they always had
that for critical goods, they may not have the same level of traceability for some of the more indirect goods or smaller components.” Awareness of the exposure that exists around single-source suppliers has been growing for some time now, Burg says, so it has long been a part of enterprise risk management evaluations for manufacturers. Wetekamp says that during COVID-19, manufacturers have had to understand not only their tier-one supplier risk, but also the second- and third-tier risk because of the extent to which the pandemic has challenged freedom of supply. COVID-19 was something of a black swan event for the insurance sector, but this didn’t stop insurance businesses from working to actively protect their clients throughout the crisis. According to Brian Gerritsen, manufacturing practice lead at Travelers, as soon as the pandemic emerged, Travelers’ risk control team proactively connected with agent and broker partners and customers to provide employee safety recommendations and help businesses understand the emerging risks associated with the pandemic.
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MANUFACTURING CFOs’ TOP CONCERNS ABOUT COVID-19
71% Financial impact
71% Potential global recession
64% Impact on workforce/reduction in productivity
41% Decrease in consumer confidence that reduces consumption “As part of this effort, we released a robust suite of industry-leading risk management resources for businesses to help them manage the emerging risks to people and property and, where applicable, safely reopen,” says Erika Melander, manufacturing practice lead at Travelers. “We engaged with business customers and their agents and brokers to address specific needs based on underwriting
traditional coverage. The uncertain lay of the land when it comes to supply chain risks is neatly surmised in an anecdote Burg tells of a client who was dependent on manufacturing in China, but who felt confident in their ability to withstand a loss from a key supplier because they had approximately 10 different suppliers. However, Gallagher’s tools were
“Manufacturing businesses are thinking about what it really means to fight a war on multiple fronts at the same time” Jim Wetekamp, Riskonnect and state regulatory requirements.” One tool Travelers was able to offer is a supply chain pressure test that can help manufacturers identify the links in their supply chains that might be most at risk. Melander says tools like this complement Travelers’ insurance products and services to address supply chain exposures beyond
able to pinpoint that all of these suppliers were located within a single region that faced catastrophic weather events. From his perspective, Burg believes the COVID-19 crisis has opened manufacturers’ eyes to the challenge that supply chain disruption poses to their business and their ability to deliver a product. In the example
40% Supply chain disruptions
23% Difficulties with funding Source: COVID-19 US CFO Pulse Survey, PwC
above, he says the early impact of supply chain disruption in China due to COVID-19 made the client think differently about their contingent business income exposure, resulting in a deeper conversation that wasn’t being had before COVID-19. “Manufacturing businesses have faced each of these challenges before,” Wetekamp says, “but now they’ve seen these block, bit by bit, next to each other. And so they’re thinking about more comprehensive scenarios, of the interplay of these different risks happening at once and about what it really means to fight a war on multiple fronts at the same time.”
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UPFRONT
INTELLIGENCE CORPORATE ACQUIRER
TARGET
PRODUCTS COMMENTS
Abry Partners
High Street Insurance Partners
High Street’s management and partners will retain significant stakes in the business after its sale to the Boston-based private equity firm
Applied Underwriters
Concept Special Risks
UK-based CSR provides cover for yachts, catamarans and similar vessels out of its Florida office
HUB International
IBG Financial Partners; KC Insurance Group; Wyoming Financial Insurance
HUB has acquired a trio of agencies specializing in retirement solutions, personal lines, and commercial lines and high-net-worth insurance
Kaplansky Insurance
Russ Towers Insurance Agency
Rhode Island-based Russ Towers is a family-run operation offering personal and commercial insurance
Marsh & McLennan
PayneWest
Founded in 1992, PayneWest has 26 offices across Idaho, Montana, Oregon and Washington
Odyssey Investment Partners
Strategic Insurance Agency Alliance
Private equity firm Odyssey has agreed to acquire the network, which signed 527 new member agencies in 2020
Risk Strategies
Specialty Insurance Solutions
Risk Strategies’ purchase of the broker, consultant and MGU expands its national student health practice
Tangram Insurance Services
Personal Care and Assisted Living Insurance Center
The acquisition bolsters Tangram’s business in Pennsylvania’s adult residential care segment
Tokio Marine Holdings
Standard Security Life Insurance Co. of New York
Tokio Marine’s deal for the employee benefits firm is reportedly worth $184 million
USI Insurance Services
Northwest Insurance Services
The acquisition of Northwest Bank’s insurance arm will expand USI’s footprint in Pennsylvania and New York
Starr debuts customized environmental product
Starr Insurance Companies has launched Environmental Shield, a customized environmental insurance product that covers multiple manufacturing risks through a single underwriting point of contact. Designed to help companies around the world meet a growing number of environmental compliance and regulatory requirements across multiple jurisdictions, Environmental Shield eliminates the need to deal with multiple underwriters and carriers to insure numerous risks, including workers’ compensation, commercial auto and several pollution-specific exposures.
Tokio Marine makes deal for employee benefits firm
Tokio Marine Holdings has announced plans to acquire Standard Security Life Insurance Co. of New York for around $184 million. Standard Security offers employee benefits products, including insurance for paid family leave and disability benefits coverage. The move will help expand Tokio Marine’s footprint in the US; it’s one of several overseas acquisitions that aim to spread the insurer’s risk profile amid a stagnating insurance market in Japan. In January, Tokio Marine’s Philadelphia Insurance Companies acquired the staffing insurance business of World Wide Specialty Programs. Another major overseas acquisition occurred in June 2020 when Tokio Marine purchased GCube, a British insurer catering to the renewable energy industry.
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Great American adds cover for musical instruments
Great American Insurance Group’s alternative markets division has launched a new insurance program to provide insurance for musical instruments. Offered through a partnership with Heritage Insurance Services, the musical instrument insurance program focuses on coverages for fine musical instruments throughout the US and currently supports more than 10,000 clients. The program also provides musical instrument dealers, makers and repair shops with specialized coverages under Heritage’s Workbench Policy, which was designed specifically for the musical arts trade.
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PEOPLE Aon launches initiative to protect COVID-19 vaccine shipments
Aon has spearheaded an industry collaboration to provide supply-chain protection for COVID-19 vaccine shipments. The initiative – which involves Parsyl, Ascot Group, Chubb, AIG, Munich Re and others – will provide transparent cargo insurance coverage, combined with sensor data and analytics, for vaccine shipments. The offering promises timely payment for doses that fall outside of the agreed-upon temperature range while being transported or stored. Real-time reporting of temperature deviations will also help mitigate losses and maximize the number of doses available.
Farmers expands usagebased commercial auto cover
Farmers Insurance has expanded its FairMile commercial auto insurance program to companies in Washington state. The FairMile program calculates premium based on the actual miles driven in each business vehicle insured by a Farmers commercial auto policy. According to Farmers, the policy is well suited to customers with cyclical or seasonal businesses, such as landscapers; businesses where driving is infrequent; or businesses where certain vehicles are used sparingly. Business owners also get access to the FairMile app, which can help them review and manage the use of their vehicles.
Willis Towers Watson rolls out climate modeling tool
Willis Towers Watson has launched a new global climate modeling tool, which has been fully integrated into its core analytics platform of risk assessment and quantification tools. The Climate Diagnostic tool uses advanced data and analytics to demonstrate changes in acute hazards like extreme wind and floods, as well as chronic stress factors like sea-level rise and heat stress, under multiple combinations of climate scenarios and time horizons. The modeling shows how changes can impact specific properties, enabling clients to determine the best way to mitigate risk across their portfolios.
NAME
LEAVING
JOINING
NEW POSITION
Eduard Alpin
Verisk
Resilience Cyber Insurance Solutions
Tod Austin
MEMIC
Varney Re
Chief operating officer
Steven Capace
Willis Towers Watson
Marsh
Co-leader, US government contracting practice
Lyndsey Christofer
N/A
Chubb
EVP and construction industry practice leader
Michael Cipolla
N/A
Everest Insurance
Head of excess & surplus primary casualty
Erica Davis
N/A
Guy Carpenter
Global co-head of cyber
Scott Davis
N/A
Worldwide Broker Network
Board member
Jay DePasquale
N/A
Hastings Mutual
Vice president and chief underwriting officer
Lauren Gorte
N/A
Chubb
Chief operating officer, Chubb North America accident & health
Suresh Krishnan
N/A
Chubb
EVP and head of North America specialty accident & health
Matthew Marolda
Tulco
Acrisure
Chief innovation officer
Bruce Murdock
Lockton Capital Markets
BMS Capital Advisory
Managing director
Brian Robb
CNA Insurance
Berkshire Hathaway Specialty Insurance
Head of cyber, tech and miscellaneous professional liability, US
Bryan Salek
Willis Towers Watson
Marsh
Co-leader, US government contracting practice
Chief actuary
Industry vet joins Worldwide Broker Network board
Worldwide Broker Network, a global network of independent insurance and benefit brokers, has appointed Scott Davis to its board. With more than 30 years of industry experience, Davis currently serves as president of the national specialty group at EPIC Insurance Brokers and Consultants. Prior to that, he was president and chief operating officer at Beecher Carlson and held senior leadership roles at Willis Towers Watson and Lockton. “Scott’s decades of senior broker experience will allow him to bring invaluable insight and expertise to our diverse and capable WBN board,” said board chair Alex Gilmore.
Chubb appoints leader for construction practice
Chubb has appointed Lyndsey Christofer as EVP and construction industry practice leader for its large account segment, charged with overseeing the practice’s strategic direction, leading a team of construction underwriting and service specialists, and administering Chubb’s primary casualty and excess liability line of business for large-account construction clients. Christofer has been with Chubb for more than eight years, most recently leading the primary casualty construction team. “Lyndsey has a very strong background and understanding of our construction business and the complex needs of our clients,” said Matt Merna, SVP and division president of Chubb North America major accounts. “Her broad experience, proven track record and understanding of the construction marketplace make her an ideal fit for this role.”
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UPFRONT
WORKERS’ COMP UPDATE NEWS BRIEFS Pie Insurance completes $118 million funding round
Workers’ comp insurtech Pie Insurance has raised $118 million in a Series C funding round led by Allianz X and Acrew Capital. The funding will enable Pie to invest further in technology and automation and grow its core workers’ compensation business, as well as lay the groundwork for new offerings. This latest round follows Pie’s $127 million Series B round in May 2020, which allowed it to form Pie Carrier Holdings with a $100 million equity capital commitment to create and purchase licensed insurance companies.
Key Risk expands home healthcare and hospice program
Key Risk, a Berkley Company, has expanded its workers’ compensation offerings to support home healthcare and hospice providers nationwide. Key Risk’s home healthcare and hospice program provides workers’ comp insurance solutions for non-medical home care, medical or skilled home healthcare, and hospice and palliative care organizations. “For more than 18 years, Key Risk has delivered measurable outcomes to healthcare and hospice providers within our current footprint,” said Key Risk president Scott Holbrook. “We are excited to now expand our support and commitment to this industry on a national scale.”
Matrix, TRISTAR form strategic workers’ comp TPA partnership
TRISTAR Insurance Group has cemented a strategic partnership with Matrix Absence Management to develop enhanced commercial and workers’ compensation services and build an integrated total absence platform for
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employers of all sizes. The partnership with transfer Matrix’s commercial and workers’ compensation TPA business, Matrix Risk Management Solutions, to TRISTAR. According to Matrix president and CEO Mark Marsters, “this partnership sets the stage for us to build a larger, more robust and comprehensive integrated disability management platform.”
Liberty Mutual appoints SVP for workers’ comp claims
Liberty Mutual Insurance has named Virna Rhodes as senior vice president of its workers’ compensation claims organization. Rhodes succeeds Wes Hyatt, who has been promoted to chief client officer of Liberty Mutual Global Risk Solutions. Rhodes joined Liberty Mutual in 2013, primarily focusing on commercial insurance claims. She most recently led the insurer’s Shared Services claims function. Prior to joining Liberty Mutual, Rhodes managed a range of claims teams at both Allstate Insurance and Farmers Insurance.
Texas Mutual awards more than $2.8 million in grants
Workers’ comp insurer Texas Mutual has awarded more than $2.8 million in grants to support workforce development and charitable organizations across Texas. Two of the grants went to organizations with statewide reach, while eight grants were awarded to organizations in the Dallas-Fort Worth, Houston and Rio Grande Valley areas. “We have a deep commitment to building a stronger, safer Texas, and through our partnerships with organizations across the state, we’re able to deliver on that commitment,” said Jeremiah Bentley, vice president of marketing and community affairs at Texas Mutual.
Workers’ comp for online businesses Even with an entirely remote workforce, online businesses still need coverage to keep employees safe Online businesses were already an established concept prior to the pandemic, but COVID-19 helped propel their popularity even further. Amid lockdown restrictions, it didn’t take long for entrepreneurs to take their businesses online to cater to a growing internet marketplace. Even insurers have gone digital to better reach clients – Next Insurance, for instance, recently partnered with online retail giant Amazon to provide Amazon Business Prime members with small business insurance. The product includes workers’ compensation coverage, which some businesses might be tempted to dismiss as unnecessary if their employees work remotely. “State guidelines vary, but if your online business has employees, you should consider workers’ compensation insurance to protect both them and your business should they experience a work-related injury or illness,” says Don Seibert, product lead at Next Insurance. “It’s important for business owners to remember that if the worker is injured while on the job, their injury can be covered under workers’ comp, no matter where the injury happens.” Seibert adds that a home office setup can still present some risks to remote workers. “In the case of a home office, the employer may not be able to ensure an ergonomic
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setup, which can help prevent issues like repetitive stress injuries and back soreness. Even home-based employees can suffer from common claims like overexertion, repetitive stress injuries, slipping, tripping, falls and back pain.” According to Seibert, courts across the US have found that the hazards in a home office indeed count as hazards of employment,
“Even home-based employees can suffer from common claims” even though the employer does not control that environment. Workers’ comp coverage can protect businesses from paying out of pocket in such cases, although Seibert offers some advice for risk mitigation. “Business owners with remote employees should be supportive of – and invest in, when possible – their employees’ efforts to create a safe and healthy work environment and home office setup,” he says. For online-based businesses with workers outside the home, workers’ comp coverage is particularly critical, Seibert adds. “If you have employees who work in a warehouse or work with heavy machinery, workers’ comp is even more important, as they will pay for medical costs and lost wages for work-related injuries. If the online business includes warehousing goods or processing goods for shipping, then workers may also have a higher chance of being hit by falling objects, injuries with equipment – e.g. forklifts – or loading dock injuries.”
Q&A
Michael Bibeau Vice president of business development, California and Nevada FORESIGHT
Years in the industry 14 Fast fact Before joining Foresight, Bibeau spent eight years at Allianz, where he managed a book worth $250 million in premium and served as team lead for Allianz’s West Zone
Protecting farms during COVID-19 How has COVID-19 affected the agriculture space in terms of worker safety? COVID-19 largely affected those working in enclosed environments like greenhouses and packing facilities, while field workers who could practice social distancing saw a slower rate of transmission. Still, COVID affected all businesses in the agriculture space to some degree. Companies that followed guidelines like prevention training, the construction of barriers indoors, social distancing and face covering saw a lower impact on worker safety. OSHA handed out a number of citations to meat processing plants, dairy farms and hatcheries in 2020, specifically in instances when the spread of COVID resulted in hospitalizations or deaths. In January 2021, the meat industry asserted that rates of COVID transmission in packing plants were lower than in the general population. Hopefully, this indicates a mass movement toward worker safety as a whole in these environments, including but not limited to COVID prevention. At Foresight, we partner with a number of broker partners who focus on agriculture. They’ve committed themselves to diving into COVID prevention practices and being an active resource. COVID-19 propelled brokers to add more value, often via video conference calls. It deepened an already strong awareness of worker safety.
How has the industry helped agribusinesses with their workers’ compensation needs during the pandemic? Insurance companies have provided COVID-19 prevention plans and assisted with the development of protocols based on detailed guidelines like those put forth by Cal/OSHA. In addition, the Workers’ Compensation Insurance Rating Bureau of California responded to COVID’s impact on claims by adjusting its recommendations and even excluding COVID claims from ex mod calculations as far back as December 1, 2019. At Foresight, every policy includes our risk management platform, so our agriculture risks had access to customizable inspection and meeting templates based on local and federal guidelines from policy start date. Our policyholders were able to track their COVID prevention efforts and monitor trends in order to respond early.
Do you have any risk management tips for farms in this new normal? Farms should continue to abide by state and federal guidelines, including social distancing, mask-wearing and temperature checks, where applicable. If they haven’t already, agribusiness stakeholders should surround themselves with great resources. Legal and risk management advice is still important, even as we see vaccine distribution rise. Memberships with local and state agriculture associations provide access to critical resources as well.
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UPFRONT
TECHNOLOGY UPDATE
Where to start a digital transformation Two key questions can help independent agencies develop a roadmap for going digital
will be successful,” he explains. “Agencies that are new to digital should start with the fundamentals – capabilities such as social media, e-signature and texting. These tools have a low barrier of entry and provide a foundation for future digital investments.” For those with the fundamentals down pat, Asher recommends modernizations such as self-service portals, a live online chat function and video communication. The latter area is one that Liberty Mutual and Safeco identified as having plenty of untapped potential.
“There’s no one-sizefits-all approach that will work for everyone”
Independent insurance agencies with high digital adoption saw their revenues grow around 60% faster than their less digital counterparts, according to new research from Liberty Mutual and Safeco Insurance. That might prompt some independent agents to immediately shift their digital adoption into high gear, but according to Tyler Asher, president of independent agent distribution at Liberty Mutual and Safeco Insurance, they first need to consider two questions: What is the business value of going digital? And how do I
NEWS BRIEFS
know what tools and tactics I should be using? Liberty Mutual and Safeco’s Rise of the Digital Insurance Agency report separates insurance agencies into three groups based on their level of digital adoption: low, medium and high. For those considered low digital adopters, Asher recommends they start by assessing their needs and resources. “An agency only has so much time and financial capital available to invest in new digital capabilities, and trying to introduce too many things at once often means none
Zywave acquires risk management firm Enquiron
Insurance technology firm Zywave has announced plans to acquire risk management provider Enquiron. Based in Boston, Enquiron provides on-demand risk management services in the areas of human resources, healthcare, retirement, cyber and more, revealing risk management patterns and trends based on aggregate employer events and actions. Zywave plans to leverage Enquiron’s proprietary service offering to further enhance its customer experience and expand its risk management offering.
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“Things like video quotes and policy reviews can bring a more personalized touch to client interactions, all while allowing agents to reach customers in new geographies and freeing up time in their schedule,” Asher says. “Even if it’s just a short recorded video, clients appreciate seeing an agent’s face and getting to know them on a more human level.” He also reminds agencies that while going digital can lead to revenue growth, it’s not a magical process. “Digital transformation doesn’t happen overnight, and there’s no one-size-fits-all approach that will work for everyone. The Rise of the Digital Insurance Agency report was created to help agencies take steps to evolve over time, rather than attempt to undergo major transformation.”
Archipelago raises $34 million in Series B funding
Archipelago, the developer of an AI-powered risk data platform for commercial property owners and insurers, has raised $34 million in a Series B funding round led by venture capital firm Scale Venture Partners. Archipelago said it plans to use the funds to further build out new product capabilities and scale the organization, including expanding beyond North America. Launched in August 2020, Archipelago’s platform currently serves more than 330,000 commercial properties with total insured values of $2.3 trillion.
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Q&A
Pranav Pasricha Global head of P&C solutions SWISS RE
Years in the industry 16+ Fast fact An industry thought leader, Pasricha has held multiple board positions, has been a keynote speaker at various industry events and has served as an advisor to multiple insurtech startups
Keeping a closer eye on flood risk Swiss Re recently partnered with ICEYE to leverage its satellite technology. How can realtime flood monitoring from ICEYE help insurers? Insurers will benefit from flood footprints and portfolio analysis, which will be part of Swiss Re’s Rapid Damage Assessment [RDA] offering. The flood footprints are available around 24 hours after recording the image. Swiss Re can then generate tailored maps and statistics to guide clients in their event response. By helping clients quickly assess the impact of a flood event on their portfolio, RDA can improve the claims process efficiency of its clients and, ultimately, the end customer.
Apart from assessing flood damage, are there other applications for this technology? The list of potential applications of satellite imagery is indeed long, and Swiss Re constantly evaluates stateof-the art technology to build both risk knowledge and internal capabilities. Though we are of course thinking ahead in terms of potential expansion to other perils, the Swiss Re-ICEYE partnership will start with focusing on flood monitoring because we see the important combination of stateof-the-art tech with strong business need. Thus, the impact on the industry can be immediate.
Does ICEYE account for climate change? How can insurers prepare for climate-related risks? Flood is a secondary peril heavily impacted by climate change. Flood losses have increased in the last decade, and we see a massive protection gap globally. As an
WTW launches new underwriting software
Willis Towers Watson has unveiled new software to help front-line underwriters make better decisions quickly. WTW’s Radar Workbench is designed to harness a broad range of internal and external data assets to deliver configurable, rich, contextual analysis in real time. It allows case underwriters to make well-informed decisions about the pricing and underwriting of risks, supports better communication with portfolio managers, and is easy to configure for connection with internal systems and external data sources.
industry, we must continue to invest to understand, assess, price and respond to this challenge. The ICEYE partnership is an excellent example of Swiss Re’s commitment to this effort. However, ICEYE’s work focuses on observing floods and not modeling them; therefore, it’s not directly impacted by climate change. But Swiss Re’s risk view for climate-related risks is constantly reviewed, including analysis of trends in the past, the loss experience, etc., but also including forward-looking methodologies, including climate forecasts and projections. In terms of future events, we also actively engage with the insurance sector, as well as the public sector, to develop a range of solutions that help both prepare for and effectively respond to climate risks.
Can this technology be used to solve the issue of outdated flood mapping in the US? The technology focuses on monitoring flood events as they happen. As such, the flood footprints are not a replacement for flood risk zone mapping. Event information can, however, improve our knowledge of flood risk, thus making us better prepared for the future and for protecting communities against flood. Swiss Re is continuously investing in its flood modeling capabilities and helps its clients build flood insurance offerings based on its fully probabilistic US flood model – combining detailed hazard, vulnerability, value distribution and insurance conditions. This allows insurers to differentiate risks based on their individual exposure, even if they are in the same flood zone.
AXA teams up with Microsoft on digital health platform
AXA has cemented a partnership with Microsoft to build digital healthcare platform that seeks to widen the reach of healthcare globally. According to AXA, the platform will aim to break down health service silos and link the company’s digital health services to support customers at every stage of their e-health experience. The services offered will include a selfassessment and prevention tool, a medical concierge, a virtual consultation interface, a digital document vault, home care services, and a directory of healthcare professionals.
Cryptocurrency firm gets backing from insurers
New York Digital Investment Group (NYDIG), a provider of Bitcoin tech and investment solutions for insurers, banks, corporations and high-net-worth individuals, has raised $100 million in additional capital with the help of P&C insurers Starr Insurance, Liberty Mutual Insurance and other strategic partners. In addition to securing additional growth capital, NYDIG appointed former TransRe CEO Mike Sapnar to the role of global head of insurance solutions and Matt Carey as US head of insurance solutions.
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07/05/2021 2:48:40 am
PEOPLE
INDUSTRY ICON
BIG RISKS, BIG REWARDS CAC Specialty CEO Michael Rice has helped two different insurance brokerages meet aggressive growth targets. He talks to IBA about the challenges and successes CAC Specialty has uncovered during his two years at the helm
MICHAEL RICE knows a thing or two about founding and growing an insurance business. In his last role before becoming CEO of CAC Specialty in 2019, he was the founding CEO and executive chairman of JLT Specialty USA, where he was responsible for overseeing the company’s operations and expansion into an entirely new market, which was no small feat. An insurance leader like Rice isn’t formed at any old organization. He gained much of his industry and leadership expertise during more than two decades at brokerage behemoth Aon. That’s where his insurance career started – in the summer of 1988, the year before he graduated from Boston College, Rice had the opportunity to be part of the first-ever internship program at Aon. Once he was done with school, he returned to join Aon’s management training program, where he was able to build a foundation in underwriting and gain a solid background in broking and reinsurance, mainly focused on the E&O and D&O lines of business. “The training program was built on learning a product and following it through the underwriting cycle, the brokerage cycle and the reinsurance cycle so you could see all aspects of the product,” Rice explains.
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“I had this opportunity to learn from a firm that was one of the fastest-growing insurance intermediaries.” After the training program, Rice was placed in Aon’s D&O practice, which, at the time, was one of the most prominent in the world. He took on roles with Aon in London,
brokerages in the world but had no presence in the US – a challenge Rice thought was worth taking on. “JLT was historically a fast-growth broker with lots of very aggressive goals,” he says. “The leader of JLT was fantastic when it came to acquisitions, and I learned a tremen-
“We’re building the foundation of something great, along with a group of people who aren’t afraid to take on big goals and attack them – and the only way we can attack those goals is to go out and win with our clients and win with the markets” Chicago and eventually Denver, running some of the brokerage’s global practice groups from 2001 onwards. After 24 years at Aon, it was time to make a career change.
A new chapter In 2014, Rice moved into the leadership role at JLT, which was then one of the largest
dous amount from him and his team on how you grow a broker by finding good partners and building strong cultures together.” Five years later, another opportunity arose that would give Rice the chance to put those lessons to good use. Building JLT’s US operation gave Rice a taste of what it felt like to grow a business from the ground up, and he
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PROFILE Name: Michael Rice Title: CEO Company: CAC Specialty Based in: Denver Years in the industry: 30+
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PEOPLE
INDUSTRY ICON
was ready take on a similar challenge. “I became addicted to the thought of building an insurance broker,” he says, “so when Cobbs Allen came calling and said, ‘We’re looking to build something, and we know you have experience doing this – would you be interested in joining?’, it made me realize that I wanted do that all over again.” The two years since Rice took the reins at the new brokerage have been interesting, to say the least, as the risk landscape has shifted beneath everyone’s feet. Coming into a position like this, he says, first required setting a big target. Similar to JLT, CAC and
and put entire business models under strain, firms started turning to CAC for its expertise in the field of bankruptcy and turnaround, which set it apart from competitors. Looking back on his time at CAC so far, Rice says the most satisfying part of growing the brokerage has been the response from clients, who have appreciated having a seasoned and aggressive team advocating for them in a hard marketplace. “We’re building the foundation of something great, along with a group of people who aren’t afraid to take on big goals and attack them – and the only way we can attack those
“Our goal is not to become the biggest broker in the United States. Our goal is to be the best wherever we choose to play” sister company Cobbs Allen had aggressive growth plans. “We had a group of people who were motivated in our first year to [say], ‘We hope we can do $35 million in revenue in the first year’ – and that’s on an organic basis, when you’re not making acquisitions of companies,” Rice says. “That’s unheard of in our industry … and I loved the fact that we had a lot of people who were willing to challenge themselves to figure out how we could do it.”
Above and beyond Do it, they did – in the span of a year, CAC attracted 100 professionals and blew past that lofty revenue target, eventually reaching $53 million. And it accomplished this while dealing with a global pandemic that upended the way we all live and work. In fact, CAC was able to stand out during this period of social and economic upheaval because it was one of the only brokerages with a practice devoted to turnaround situations. As COVID-19 wreaked havoc on companies
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goals is to go out and win with our clients and win with the markets,” Rice says. “The group of people that I work with are always looking for next best alternatives to the way that things have been done forever, and it’s working very well for us.” While it’s hard to maintain the same growth trajectory that took CAC from $6 million to $53 million in revenue during 2020, the company’s leaders still expect to grow in the double digits for the foreseeable future, Rice says. A bulk of that will come from growing organically by hiring best-inclass individuals who bring in diverse ideas, he says, but mergers are also on the table. “If there’s another broker out there that likes what we’re doing and we like what they’re doing, and we think that we can grow together better, we would absolutely consider [partnering up],” Rice says. “Our goal is not to become the biggest broker in the United States, though that would be nice. Our goal is to be the best wherever we choose to play.”
CAC SPECIALTY BY THE NUMBERS
2019 Year CAC Specialty was formed
9 Offices in the US
500 Combined years of experience on the team
$53 million CAC Specialty’s revenue during its first year in business
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UPFRONT
OPINION
GOT AN OPINION THAT COUNTS? Email iba@keymedia.com
Staying agile post-pandemic Following the massive disruption of COVID-19, the insurance industry will need to embrace new agile operating models, writes Vijay Pahuja LAST YEAR brought the insurance market increased competition, changing consumer expectations and agile opportunities, thanks to the pandemic’s working models. As COVID-19 bleeds into 2021, traditional insurers are increasing their investments in digital, agile and partnerships. The certainty of these investment decisions is likely to be with us long after the pandemic fades. We will continue to adapt to new agile operating models – likely at a pace that we historically have never experienced. Insurers are increasingly comfortable with experimentation, a ‘fail fast’ attitude and quick partnership explorations with tech startups to scale their business. Agile is a matter not just of resources or market reach, but also of creating new bedrock business platforms and processes. Carriers’ ability to work with multiple partners simultaneously enables the quick movement from pilot to market to business as usual. The apparent winner will be the one that innovates, creates and can scale. Claims processing, for instance, has always been conducted by an insurance adjuster. This model worked well in the past, but today the average insurance company can expect to have hundreds or even thousands of claims submitted in a single day. The quantity of information on a single claim has also skyrocketed to include information ranging from telematics to property sensors. Despite this surge in data, only 5% of insurance companies currently depend on process automation to review claims. Why is that? Well, it could be as simple as vocabulary. It’s been documented that most
adults have a vocabulary range of 30,000 to 35,000 words. The experts tell us that to be conversationally fluent in a foreign language, we need to know 1,000 to 3,000 words. Applying this logic to insurance, the NAIC terms glossary contains approximately 600 definitions, the Construction Design catalog approximately 500 terms, and let’s add a 1,000-word vocabulary used by every adjuster communicating with agents and insureds. Tools are being built today with that 2,000-plus-word vocabulary and the ability to ingest large amounts of data, including
of the game – not only could a machine grasp the complex techniques and abstract aspects of the game, but it was becoming one of the greatest players of it as well. Practical AI has been born. Insurance executives have long struggled to assess the business value of AI. They understand the potential, but the general lack of institutional AI knowledge has made the evaluation process somewhat uncertain. Despite the uncertainty, executives remain undeterred from doubling down on their AI investments: 71% of AI adopters plan to increase their spending by an average of 26%, according to a recent Deloitte study. The reason for the flurry of investment is that insurance C suites envision several operational benefits too exciting to pass up. • Machine learning to determine repair costs and automatically categorize the severity of damage to vehicles involved in accidents, whether the damage is from a collision or hailstorm • Internet of Things (IoT) sensors to mitigate risk and reduce losses, plus the use of home and industrial IoT data to build operational intelligence on the frequency
“Insurers are increasingly comfortable with experimentation, a ‘fail fast’ attitude and quick partnership explorations with tech startups to scale their business” unstructured text, and to parse and learn from that data. My favorite example of this type of deep learning is Google’s AlphaGo. Google created a computer program with its own neural network that learned to play an abstract board game called Go, which requires sharp intellect and intuition. By playing against professional Go players, AlphaGo’s deep learning model learned how to play at a level never seen before in artificial intelligence and did it without being told when it should make a specific move (as a standard machine learning model would require). It caused quite a stir when AlphaGo defeated multiple world-renowned masters
and severity of accidents and feed into underwriting and product pricing • Process mining techniques to identify bottlenecks and improve efficiencies and conformance with standard claims processes • Increased transparency for all parties, faster claim settlements, and better customer experience and CSAT scores Agile insurance could be the new AI. Vijay Pahuja is corporate SVP of client services for WNS, a provider of global business process management services.
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FEATURES
INSURTECH 2021
INSURTECH 2021 How will insurtech transform the insurance ecosystem in 2021 and beyond? IBA spoke to the leaders of four innovative companies to find out
FOREWORD FOR DECADES, the insurance industry has been riddled with paper-driven manual processes, often creating inefficient workflows and poor customer experiences. And then, almost overnight, COVID-19 changed everything. For many agencies and carriers, the pandemic amplified inefficiencies in their existing business, forcing them to take a hard look at their processes and the technologies that underlie them. In fact, the adoption of new technology, driven by remote working, grew at a tremendous rate, with years of digital catch-up happening in mere months. In this rapidly changing environment, the insurance ecosystem must embrace technology like never before to become more productive, intelligent, simple and valuable. For these reasons, we at Applied felt it was important to support and promote the
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following report, which is focused exclusively on technology in the insurance industry. This report examines all aspects of insurtechs – where they’ve been, where they currently are and where they’re going – and provides valuable insight for our industry. Agents, brokers, carriers and software providers should use this resource to learn the landscape and decide what kinds of technology to adopt to create greater value for their business and enable a more efficient and connected insurance ecosystem for all stakeholders.
Taylor Rhodes CEO Applied Systems
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IN LAST YEAR’S insurtech report, IBA predicted that the COVID-19 pandemic would force the industry to adopt new technology to deal with lockdowns and remote working arrangements – and it did. As a result, insurtech investment surged: By the end of 2020, insurtech had gathered a record $7.1 billion in global investments, according to Willis Towers Watson. “While our industry is facing extreme issues [relating to COVID-19], we also have an unprecedented level of access to technology and technologists who can help us
solve these problems,” Dr. Andrew Johnston, global head of insurtech at Willis Re, wrote in Willis Towers Watson’s Quarterly Insurtech Briefing for the fourth quarter of 2020. “Many insurtechs probably feel vindicated that our industry has been forced to realize the value of technology; their issue now, however ... is to survive months (possibly years) of market uncertainty.”
What’s ahead in 2021? With $2.1 billion in funding from the last quarter of 2020 alone, today’s insurtechs find
As COO for QBE North America, Dan Moore serves as head of claims, technology and operations and oversees communications and branding, with the goal of strengthening QBE’s customercentered approach as an integrated specialist insurer. Moore has more than 20 years of experience in the insurance and consulting industries. He was appointed interim COO in January 2020.
Taylor Rhodes CEO Applied Systems
As CEO of Applied Systems, Taylor Rhodes is responsible for the company’s overall strategy and operational execution. Rhodes joined Applied in 2019 after serving as CEO of SMS Assist, the leading cloud-based software platform for multi-site property management. Prior to that, he was CEO of Rackspace, where he led the company’s growth from a cloud pioneer to an industry leader.
• shifting to digital channels for everything from writing signatures to identity recognition to meet high consumer demand for remote services • using no-code or low-code development tools to facilitate the rapid launch of new user interface features • leveraging AI software to automate processes such as risk assessments, fraud identification and underwriting
MEET THE EXPERTS Dan Moore COO QBE North America
themselves in the driver’s seat, able to meet traditional needs while pushing the boundaries of innovation. As IBA recently reported, tech leaders have identified several emerging trends in insurance technology this year, including:
Amy Zupon CEO Vertafore
The CEO of Vertafore since 2016, Amy Zupon has two decades of experience in the B2B software industry and a passion for providing an exceptional experience and products that deliver real value and performance for Vertafore’s customers. Her approach drives Vertafore’s vibrant company culture, which inspires employees to innovate and be creative to solve customers’ ever-changing needs.
Jason Liu CEO Zywave
Jason Liu joined Zywave as CEO in 2018, charged with overseeing daily operations and driving the company’s long-term vision and strategy. Liu has more than 20 years of experience leading organizations across the world, from the US to central Europe and back. Prior to joining Zywave, he served as CEO of SAVO, UC4 Software and Univa UD.
• using the Internet of Things (IoT) to gauge policy pricing • forging new partnerships between insurtechs and insurance providers to leverage strategic advantages • deploying blockchain technologies to protect against cyberattacks • providing tailored digital services to increase policy sale probability At this point, confidence in digital capabilities has grown, and nearly all companies have implemented a business continuity plan that relies on advanced technology. Both insurance companies and consumers have seen the benefits of the digital world as a vast majority maintain some level of remote living and working capabilities. Employees recognize the importance of even a basic content management system (CMS). Agents and brokers have embraced the latest technology, such as streamlined commercial quoting systems, to survive. And consumers expect the best digital experiences. All of these factors combine to make for a bullish insurtech market over the next few years. But what’s in store for the next 10?
Science fiction to science fact According to a recent report from McKinsey & Company, many of today’s emerging technologies will have fully developed by 2030. The report envisions “Scott,” an imaginary
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FEATURES
INSURTECH 2021 character who leverages the latest advancements in technology to optimize his return on insurance. Scott hops in a self-driving car, where his personal digital assistant and mobility insurer map his route and recommend a path based on accident likelihood and car traffic distribution, instantly revising his monthly premium accordingly. At the same time, his pay-as-you-live life insurance policy recalculates as well. Both adjustments are debited or credited to Scott’s bank account. After a minor accident, the car’s internal diagnostics determine the damage. Scott’s assistant recommends he take pictures of the area. Almost immediately, the claim is approved, and a mobile response drone is dispatched to the site for further inspection. “While this scenario may seem beyond the horizon, such integrated user stories will emerge across all lines of insurance with increasing frequency over the next decade,” the report’s authors wrote. “In fact, all the
landscape and the impact of technology on the insurance industry at this point in history.
Insurtech funding bounced back in the second half of 2020 after a rough start to the year. Where does the landscape sit now, and what are the key developments in the space? Taylor Rhodes: While insurtech funding was low for the first half of 2020 due to a variety of reasons, with the pandemic as a major one, the second half of 2020 and the beginning of 2021 have shown that investors are becoming more confident again. Now that businesses have put their business continuity plans in place and are operating in the new normal, investors see that the insurance market is ripe for opportunity. As more
“Insurtechs that control and enhance distribution are the kinds of companies that investors will be investing in” Taylor Rhodes, Applied Systems technologies required above already exist, and many are available to consumers. With the new wave of deep learning techniques, such as convolutional neural networks, artificial intelligence has the potential to live up to its promise of mimicking the perception, reasoning, learning and problem-solving of the human mind. In this evolution, insurance will shift from its current state of ‘detect and repair’ to ‘predict and prevent,’ transforming every aspect of the industry in the process. The pace of change will also accelerate as brokers, consumers, financial intermediaries, insurers and suppliers become more adept at using advanced technologies to enhance decision-making and productivity, lower costs, and optimize the customer experience.” With the full capabilities of the future in mind, IBA spoke to a panel of insurtech experts to provide an overview of the current
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people work remotely and need digital technology to connect to their organizations and their customers, the appetite to invest in technology rises. According to Deloitte, insurtechs that control and enhance distribution are the kinds of companies that investors will be investing in. This makes sense, as we have seen how remote working has exacerbated challenges caused by traditional paper-laden workflows of agent-insurer distribution. To this end, insurtechs, insurers, investors and software houses, such as Applied and IVANS, have come together to digitally transform the agency-insurer distribution channel to increase connectivity, reduce expenses and enhance end-customer experiences. Dan Moore: COVID-19 posed an initial challenge for the insurtech marketplace. While there was a slight decline due to the
pandemic, the second half of the year hit record levels of investments, and we are seeing an increase in investment, M&A and, more recently, SPAC activity. With significant capital still on the sidelines, and given the size of the insurance prize, there will continue to be significant activity surrounding firms that are seeking to enable better decisions, improve outcomes and enhance customer experiences. Amy Zupon: There’s no question that the first half of 2020 was rough all around, for just about every industry and business sector. But in the second half of the year, we saw a truly remarkable shift in the insurtech funding landscape. It didn’t just defy the circumstances of the pandemic – in some ways, it even outpaced what we’ve seen in previous years. In the latter half of the year, a number of
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opportunity insurtech represents, the appetite of customers – both agency and carrier – and the interest of investors in this space. COVID-19 ultimately highlighted a few things to those investing in the insurtech space. First, it accelerated the push for agencies and carriers to invest in the right digital solutions to meet customer and employee expectations. After the initial contraction, many independent agencies and carriers quickly turned to technology to ensure business continuity and to continue to service their clients. That being said, 2020 also showed that there’s still a lot of opportunity for technology innovation and adoption for both carriers and insurance agencies. When it comes to agencies especially, now that many of them have gotten a taste for modernization, we’ll see more openness to change – and even excitement about emerging solutions. That’s going to continue to drive opportunity for investors who bring solu-
number of players looking to find innovative ways to streamline the current tedious manual processes and connect agents and carriers. Another key development in the space is integrations. Insurtech companies are finding ways to work together to enable brokers to use the solutions they want but keep their tech stack connected to help eliminate redundant data entry and improve efficiency.
How has the mass shift to remote working impacted the insurtech landscape? Jason Liu: The abrupt transition to remote work has positively impacted the insurtech landscape by requiring many more agents and brokers to embrace technology. Many insurance professionals, prior to having to work remote, relied on old-school methods to
“Now that many [agencies] have gotten a taste for modernization, we’ll see more openness to change – and even excitement – about emerging solutions” Amy Zupon, Vertafore marquee insurtech carriers received some very large infusions, and that was coupled with some big rounds on the back of successful IPOs. In addition, we saw a lot of investment in seed-stage companies that are looking to bring new solutions to the insurance industry – particularly around data and analytics, artificial intelligence and machine learning, and sales and service technology for brokers. As we look to 2021, that’s a dynamic we can expect to continue. Investors and entrepreneurs are really interested in investing in ideas. The caveat to that trend is that the industry will look for concepts that really bring value and efficiency to the distribution channel and then get behind them with the dollars to enable them to come to fruition. Ultimately, the surge in investment we saw in the second half of 2020 is a testament to the
tions with real value to the channel. Finally, the pandemic really proved out the stability of the insurance industry. Many players in the insurance channel reported strong outcomes – and even substantial growth – in 2020. Investors saw that and responded in kind. Jason Liu: Insurtech proved to be very resilient to the challenges created by the pandemic. As agents and brokers pivoted to remote work, they looked to technology to help with this transition. Those who quickly embraced and adopted insurtech solutions were more successful. Currently, investment is high, with carriers, VCs and PEs pouring money into the space to help drive growth and innovation. Many of the developments are centered around commercial quoting, which has a
perform their jobs. This included in-person meetings, which now can be conducted remotely, anywhere, any time. That flexibility has enabled many brokers to write new business outside their typical geographic areas. The adoption of technology due to remote work has also positively impacted agencies by requiring them to implement other technology like content management systems to enable employees to access all their required resources in one centralized platform. Previously, the content agents needed lived in various disparate locations. In general, the shift to remote work has increased the adoption of insurtech by many agents and brokers. Technology is now seen as essential by many more insurance professionals. This has led to growth for insurtech providers, and insurance profes-
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FEATURES
INSURTECH 2021 sionals are looking to insurtech as more of an essential partner. Dan Moore: While insurers have traditionally been viewed as slow to adapt, COVID-19 required firms to quickly adopt new processes and technology in order to continue serving customers and support partners and employees during this period. Many insurtechs were well positioned to assist the industry to step out of its comfort zone and leverage technology in new ways and at a pace they had previously not thought possible, which bodes well for the future of change. Taylor Rhodes: Remote working has accelerated digital transformation for the entire industry, especially insurers. Insurers have looked to insurtechs to fuel their innovation and accelerate efforts to modernize technology infrastructure, improve data capabilities and create digital experiences for their employees, agency partners and end customers. Agents, too, have fast-tracked their digital strategies to adopt technology that will enable better connectivity throughout their organization, such as hosting their business in the cloud. As customers were no longer
able to meet with their agents in person and digital-first interactions became a mainstay, agents turned to insurtech to create digital customer experiences to better serve their policyholders. According to KPMG, the insurtechs in the ‘enabler’ category – those that provide B2B point solutions that are designed to improve an aspect of an insurer’s or broker’s value chain, such as data algorithms or mobile apps – stand to win if they closely align with current priorities. An insurtech like Indio is a good example of an enabler insurtech that saw a need in the market – to digitize a traditionally paper-laden manual task like application management and submission – and found success through acquisition. Another type of insurtech laid out by KPMG that is expected to do well thanks to remote working is the ‘partner’ insurtech – those that typically go to market together with traditional insurers. As insurers are investing heavily in their digital transformations to enable a more connected experience for their employees, agency partners and policyholders, partner insurtechs that are focused on accelerating digital transforma-
tion efforts will be successful. Amy Zupon: Each year, Vertafore surveys independent agents about the state of the insurance workforce, and this year, upwards of 70% of agency employees said they transitioned to some amount of remote work during COVID-19. The good news for agency owners: Most employees said they had the technology they needed to be effective while working from home. That being said, the almost immediate shift to remote working forced every agency – but especially smaller agencies – to speed up their adoption of technology and modernization strategies to find new ways to stay engaged and connected to their clients. For
“Many insurtechs were well positioned to assist the industry to step out of its comfort zone and leverage technology in new ways and at a pace they had previously not thought possible” Dan Moore, QBE North America some, the transition was seamless, and for others, it has been a real challenge. The abrupt change to working from home also highlighted that the best, most valuable technologies are user- and client-centric as well as interconnected. No matter how innovative a new technology might be, it is ultimately worthless if it is not intuitive to its intended user and does not connect with the other systems agencies rely on. In many ways, the pandemic increased the tempo of business and fundamentally changed the expectations of consumers. For
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insurtech providers, it is more essential than ever for us to build solutions that reduce friction in the distribution channel to facilitate that new speed. But just as importantly, technology providers need to ensure users have the resources they need to make the most of their solutions, no matter where they are. Early on in the pandemic, we took a look not only at our product development, but also at our customer success program to determine how to best assist our customers through new needs and challenges. Regardless of a customer’s size or where they are on their path to modernization, it is on us to ensure they are able to get every ounce of value out of their solutions. That means having support staff dedicated to and really invested in our customers’ success.
How can insurtechs help insurers compete in terms of the digital experiences they offer customers, and what are the operational priorities insurers should be turning to insurtechs for? Dan Moore: The opportunities are endless. At QBE, our QBE Ventures arm invests in and builds alongside early-stage technology companies that we believe have the potential to reshape the insurance industry. We leverage QBE’s market strength and expertise and augment these with emerging technologies to create new value for our customers, partners and the communities in which we operate. We like to look for insurtech opportunities that will instantly enable us to provide efficiencies and/or enhanced customer experiences. A great example of this is TextQBE, which was developed using HiMarley. The artificial intelligence-based conversational service platform provides an alternative channel of communication to improve the customer experience, reduce cycle time, and reduce expenses and indemnity dollars. That directly improves the customer experience. An example on the efficiency side is our
investment in RiskGenius, which applies artificial intelligence to insurance policies so we can evaluate an entire portfolio of insurance policies for emerging risks in seconds. Amy Zupon: So often in the tech world, someone will build a really slick, exciting new technology – a shiny new object. And the technology could be great and the design beautiful, but ultimately, is it creating value for the customer? That’s a question we invoke often at Vertafore to make sure we’re developing solutions that really meet the needs of the insurance distribution channel. And insurers need to posit that same question in relation to tech experiences for both their end insureds and independent agent partners. We know carriers need and want to know their end insureds better. They have traditionally relied on their agent channel to provide information about their end customers, and while this view is important, it can also limit their ability to develop the unique, tailored experiences that consumers expect. Insurtech can harness the power of data analytics to help insurers better understand their insureds and use that understanding to build better customer journeys. When we talk about insurtech, people tend to think first about the direct-toconsumer model. The reality is that with 36,000 independent agencies in the US servicing millions of clients, the agent role in insurance distribution is absolutely essential. So carriers also need to understand their channel partners and how they can better support the agencies they work with – how can they be more responsive, provide better agency experiences and be easier to do business with. Insurtech is key to facilitating the agent experience to help carriers better connect with their channel and to solve the common headaches around compliance, onboarding and compensation. When carriers solve those issues, they become a partner of choice and get more bites at the apple when it comes to new and renewal business in the agency channel. In addition, the right technology solutions can equip insurers to provide more insights into tracking and process management for
WHAT IS INSURTECH, ANYWAY? First emerging around 2010, insurtech is the software/IT/ technology ecosystem that’s focused on optimizing services and solutions for the insurance industry. Examples of insurtech solutions include online policy comparison services, AI-enabled claims processing and digital platforms that are modernizing legacy insurance companies. There are more than 3,475 insurtech companies globally, 44% of which are located in the US More than 1,500 insurtech companies have emerged in the last five years Insurtech companies raised $5.4 billion in venture capital funding in 2020 VC funding for insurtech companies in the last decade has grown at an average of 89% yearly There were 81 insurtech acquisitions in 2020 – the highest number on record Source: Porch Research
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INSURTECH 2021
submissions, more insight into the claims process, and help agencies upload information into the carriers’ systems more easily. Ultimately, insurers should be looking at insurtech that can enable them to move faster, be more agile in terms of the products they deliver to market and be more responsive to
business. These portals can be a competitive differentiator if they leverage them to offer valuable information on topics like safety or regulatory updates. Creating a digital platform where policyholders can self-service and educate can be a great area in which insurtech can help.
“Leveraging technology to support remote/ digital work will be essential for the foreseeable future. Many buyers of insurance will remain remote or hybrid indefinitely” Jason Liu, Zywave agents – all of which goes to enabling agencies to meet the expectations of their clients and making insurers a partner of choice. Jason Liu: Policyholders expect a digital experience when conducting business with their insurer. They pay premiums, file claims and review their policy digitally. To support this, carriers must offer a robust portal or mobile application where their customers can engage with them and perform any insurance
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On the broker side, insurers need to enable their agents to sell and service more efficiently and effectively. Offering a robust distribution management system can help streamline the way agents and carriers exchange information. Insurance requires a lot of documents and data, and providing a way to make these seamlessly flow between the two parties can be assisted by insurtech. Taylor Rhodes: The pandemic has accel-
erated insurers’ digital strategies, directing their attention to insurtechs for support as they enhance distribution with their agency partners, in commercial lines particularly. Historically, commercial lines distribution methods have been extremely manual and time-consuming for both insurers and agents, requiring back-and-forth communications to complete and submit applications and then requiring the agent to potentially wait weeks to receive a quote. Insurtechs like IVANS, Indio and others are working together with insurers to create more effective and efficient workflows for all stakeholders. Through a single point of connectivity, insurers can connect to the largest network of agencies and other distribution partners to market and distribute their commercial lines products. The distribution platform automates market appetite communications directly to agency management systems, digitizes submissions for both simple and complex risks, and then sends the submission data to underwriters. This ultimately increases the ease of doing business and creates new business opportunities for both agents and insurers. While it’s important for insurers to work together with insurtechs to enable this seamless distribution experience, it’s also critical for more insurtechs to take part. Distribution workflows are only as effective as the technology they connect to and enable. The more connectivity partners that sign on to provide access to markets and integrate with management systems and policy admin systems, the more agents and insurers can participate and efficiently distribute the best products for policyholders.
How can brokers use insurtech to their advantage? Are there any key solutions they should be paying attention to? Jason Liu: Leveraging technology to support remote/digital work will be essential for the foreseeable future. Many buyers of insurance will remain remote or hybrid indefinitely.
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Being able to support and sell to these audiences will be critical – and leveraging insurtech is vital for growth. Solutions that can support the commercial quoting process will be essential for the success of brokers. The commercial submission process is still too manual and time-consuming, and customers are starting to expect quote comparisons faster. Insurtech can help, with a number of solutions being made available to connect agents and carriers directly to facilitate customers’ quotes faster and more efficiently. Dan Moore: Much like the carrier world, brokers have a host of opportunities to leverage insurtech through technologies like AI and automation, blockchain, and robotic process automation to more efficiently process data, and Internet of Things devices and sensors to improve risk assessments. Amy Zupon: For brokers, it’s clear that in many ways, the pandemic further validated the key insurtech trends we’ve been investing in for a number of years: robust and efficient agency management solutions, improved connectivity between agents and carriers, advanced analytics to unlock the power of the industry’s vast pools of data, and dynamic digital experiences for the end insured. At their core, these trends are intrinsically linked to the outcomes most likely to improve an agency’s performance: increased efficiency, higher client satisfaction and the ability to find new business opportunities. And the advantage of these outcomes is clear: Data from our thousands of customers shows agencies that invest in these insurtech categories grow faster and see higher profitability year-over-year in comparison to industry averages. Brokers can expect innovations in all these areas in 2021 but may want to especially keep an eye on emerging solutions in two areas: the client experience and analytics. Clients have long expected outstanding service with maximum efficiency, which is at the core of what insurtech helps agents provide. And the events of the past year have only accelerated and deepened consumer expectations of being able to do business when and where they want. We’re also seeing more agencies leverage communications platforms that allow them to deliver relevant,
just-in-time information and content to their clients. These technologies are helping agencies of all sizes take client relationshipbuilding into the digital realm. When it comes to analytics, insurance has always been a data-driven industry, and the most exciting developments in insurtech almost always revolve around new and better ways to leverage that data to serve customers and manage risk. Over the past few years, insurtech providers have delivered tools that can proactively predict which clients are at the highest risk of leaving, sift through vast pools of data to create coverage recommendations, automate personalized client communications and more. These tools are harnessing some pretty advanced technology to make independent agencies of all sizes faster, smarter and nimbler. Taylor Rhodes: Agents should be taking advantage of those insurtechs that are designed to work with agents to make their business processes more effective. It’s important to make sure agents are working with a management system that is open and able to quickly integrate with third-party applications. The days of closed systems are coming to an end, and technology must become more open and integrable, creating flexibility for agents to harness its power to support their business as it evolves and changes over time. Software built on componentized architecture with open APIs creates simple ways to integrate the management system with other critical business applications and quickly get information in and out of the system of record. Indio is an example of an insurtech for agents with commercial lines business that enables more effective and efficient workflows. Instead of having to pull specific applications and supplemental forms from each insurer and then send them over to the customer to fill out, agents can use Indio, which has digitized more than 10,000 insurer forms, to digitally collaborate with customers to fill out a single online form. Indio uses information stored in the management system to auto-populate the digitized insurer form. The agent can then share the document with the customer
INSURTECH’S PRIMARY AREAS OF DISRUPTION Mobile platforms Selling insurance on smartphone devices Connected home/office Accessing data to understand energy consumption or consumer behavior Connected car Developing usage-based insurance products Sharing economy/ peer-to-peer Covering new risks, developing temporary coverage and providing new assistance services Blockchain Using blockchain-enabled smart contracts to create a more seamless insurance process Connected health Increasing access to healthcare services through advanced cloud technology Source: The Digital Insurer
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INSURTECH 2021 through a portal to fill out the rest of the fields. Once the digitized form is filled out, the structured data is submitted to the insurer through IVANS, and the underwriter can begin the quoting process. This automated commercial lines solution shortens the typical data-gathering and submission time from two weeks to mere minutes, freeing up agents to service customers and delivering a premier digital customer experience.
How is insurtech developing in the claims space? Are there any key developments that have helped reduce claims leakage, limit fraud or otherwise offer assistance? Taylor Rhodes: A shift in customer experience demands, brought on by large, digitalfirst companies like Amazon and Uber, has driven insurtechs to transform how agents and brokers serve their customers in claims. Using technologies like machine learning and artificial intelligence, insurtechs have redefined what was possible in placing and tracking claims. For example, Applied has collaborated with Google to create an artificial intelligencepowered chatbot, allowing policyholders to walk through a series of simple questions to answer. This is simulated to the customer as a chat message with a virtual claims assistant, ensuring that all necessary information and photos are stored within the management system and then sent to begin the claim. This allows the customer to start a claim at any time of the day, without having to call and wait for their agent to help. Not only does this strengthen the agency/customer relationship, it also saves time by shifting interactions that have been historically facilitated by agency employees to self-service. Because of these efficiency gains, customer self-service often delivers a return on investment in less than one year. Jason Liu: Traditionally, the claims experience for customers has been risk management, notification of loss, assessing the claim and settling. This process is often confusing
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for customers and costly to the carrier. Claims handling and settlement is the largest cost for carriers and is often the only time a customer deals directly with their carrier. Changing customer expectations make this process obsolete, since many customers want 24/7 service, and they want to file claims virtually. Technology is helping with this, and some digital insurers offer claims payments instantly, but this is typically for small routine claims like home and auto. Complex claims still require a great deal of manual effort. The use of sensors in your car or home, using drones to assess property damage, and using AI and photo apps to review claims images are just some of the ways technology is improving the claims process. Insurers are also using rule-based claims submission forms and virtual assistants to help claims get filed faster and more accurately. Amy Zupon: Claims are a key area of concern for carriers, and insurtech advances in this space exemplify how the industry is increasingly leveraging data analytics to both improve efficiencies and uncover areas of opportunity.
HOW INSURTECH CAN BETTER PROTECT CONSUMERS Using advanced technologies such as blockchain-enabled smart contracts, artificial intelligence, autonomous driving technologies and new cybersecurity methods to protect consumer identity and cover new risks Delivering personalized and tailor-made coverage via engagement with IoT, data analysis and mobile innovations Leveraging the expertise and scale of strategic partners to anticipate changing consumer behaviors Providing customers with added services through their smartphone Source: The Digital Insurer
“Using technologies like machine learning and artificial intelligence, insurtechs have redefined what was possible in placing and tracking claims” Taylor Rhodes, Applied Systems Many large carriers have already upgraded their claims management platforms, but we’re seeing a number of insurtechs investing in platforms to meet the needs of mid-sized and small carriers in particular. The goal is process automation, efficiency and using analytics to get claims in the door, triaged – identifying if a claim is high-risk or simple – and routed to the right adjuster as quickly as possible. The second area of insurtech and digital investment in this space is in fraud detection. Research shows that especially in commercial insurance, the profit difference between the top and bottom performers can be upwards
of 10 points. Fraud can account for up to 10% of a carrier’s claims cost every year, so better fraud management could potentially close that gap. A number of insurtechs are using predictive modeling and advanced AI to help carriers fight fraud. Analytics can spot anomalies and identify claims that require additional investigation, and integrating data from telematics devices can help quickly corroborate the details of a claim. Third, we’re seeing analytics and Big Data at work to address claims leakage. Carriers are developing relationships similar to healthcare providers, with pre-negotiated reimburse-
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ment for repairs. Analytics are enabling them to better predict the cost of repairs while accounting for variables like geography. That predictability and cost control obviously has benefits for both carriers and the end insured. All of these advancements reinforce the ways that the industry is increasingly leveraging data and analytics and predictive modeling.
Many believe that insurance has shifted toward an innovation-focused digital culture. In what areas does it still need to improve? Jason Liu: Insurance has definitely shifted in this direction. Insurance customers pay premiums, file claims, review policies, request changes and more online. But they are still looking to do even more digitally. The entire buyer’s journey needs to be transformed digitally, from lead generation to quoting to servicing and supporting and accounting activities. There’s still a lot of work to be done to modernize the experience. Dan Moore: It is still early days for insurtech, and there is still room for improvement across the full insurance value chain. The best results will come from solid partnerships that leverage both tech innovation and insurance industry expertise. While a lot of focus is on data, AI and technology, we have to remember that insurance helps people in their darkest hour – it is the fulfillment of a promise sold long before the loss occurs. We’ll begin to see insurtech advance supporting the human side of the equation – helping customers make better insurance purchasing decisions, providing greater access for all participants and enabling firms to empathically support customers throughout the life cycle. Amy Zupon: I think insurance can seem stagnant as an industry, but what people forget is that this is an industry that was built on the collection and leveraging of data. And data is the fuel that powers some of the most exciting new technologies – AI/ML, for example – so insurance, especially on the carrier side, is well positioned for continued innovation, and
“It is still early days for insurtech, and there is still room for improvement across the full insurance value chain” Dan Moore, QBE North America there are huge opportunities to build industrychanging solutions that analyze, manage and mitigate risk like never before. The litmus test of any new technology is “How does this solution drive value for the customer?” So, while focusing on new AI/ML engines that can better evaluate risk, monitor customer satisfaction, predict customer attrition, and create more personalized insurance products and pricing are all exciting technologies that can provide tremendous value, insurtech also needs to be sure it is focused on the basics of creating efficiencies and improving customer experience. Taylor Rhodes: While the insurance industry has made significant progress over the last year, there is still work to be done to enhance the customer experience. As I previ-
ously mentioned, companies like Amazon and Uber are setting expectations for how consumers should be serviced, and it is time that insurance accelerates adoption of these technologies as well. Agents can adopt technologies such as self-service portals and mobile apps to put the power in their customers’ hands. Using digital tools like these enables insurance customers to obtain proof of insurance, access insurance documents, make payments, report first notice of loss and track claims processing without ever having to contact their agent. This provides customers the autonomy and digital experiences that they have become accustomed to with other industries, ultimately enhancing loyalty and the agency’s competitive proposition.
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INSURTECH 2021
BUYER’S GUIDE providing exclusive data services that help insurance professionals make smarter business decisions throughout the sales and customer life cycle. We are helping our clients leverage the industry’s leading content, which is essential for keeping their organizations informed of the everchanging marketplace while positioning them as expert business consultants to their clients. We are building our solutions with an open-architecture philosophy to help create greater connections with key stakeholders throughout the insurance life cycle.
“There is so much opportunity in the insurance industry for the entire buyer’s journey to be truly transformed digitally” ZYWAVE Year founded: 1995 Headquarters: Milwaukee, WI Leadership: Jason Liu, president and CEO
Tell us about Zywave. What do you do? Jason Liu: Zywave leads the insurance tech industry, fueling business growth for partners with cloud-based sales management, client delivery, content and analytics solutions. More than 15,000 carriers, agencies and brokerages worldwide – including all of the top 100 US insurance brokerages – use Zywave solutions to enhance client services;
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achieve business growth; and promote greater health, wellness, risk management and safety. What’s your key area of focus in the insurance ecosystem? JL: Serving both carriers and brokers, Zywave provides the most comprehensive offering of sales, marketing and management solutions to fuel business growth. How are you using technology to fix pain points in insurance? JL: We are automating workflows to enable greater efficiencies and produce precise, predictable results. We are
How does your technology benefit agents and brokers? JL: Ultimately, all of Zywave’s solutions tie back to profitability and growth – from marketing automation and lead generation to the industry’s leading content library to tools for enhanced customer service and retention. What tech innovations are you most excited about for the future? JL: There is so much opportunity in the insurance industry for the entire buyer’s journey to be truly transformed digitally. We are on the cusp of a monumental shift in the way insurance organizations do business, and it’s really exciting to be a part of it.
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Tech Solutions that Fuel Growth We help you improve the entire process of how you do business. Whether it’s finding and engaging with new prospects, quoting new business with carrier-direct rates or continually educating and servicing your clients – we find new ways to grow your business and retain your existing clients.
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INSURTECH 2021
QBE NORTH AMERICA Year founded: 1886 Headquarters: New York, NY Leadership: Todd Jones, president and CEO, QBE North America
Tell us about QBE North America. What do you do? Todd Jones: QBE North America is a global insurance leader focused on helping customers solve unique risks so they can focus on what matters most. We offer a broad spectrum of specialty, commercial, program, personal and crop insurance capabilities. Customers can rest assured they are getting specialized advice from a true partner, underpinned by risk mitigation, exceptional claims and caring service. Whatever the situation, QBE is with you. What’s your key area of focus in the insurance ecosystem? TJ: We offer a broad program set spanning three major markets.
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Alternative Markets is the alternative distribution arm of QBE North America, composed of programs, personal insurance and Westwood Agency. Our crop division offers outstanding customer service to our agents and farmers and is an industry leader in innovative technology. Coverages include crop hail, livestock, multi-peril and named peril. Our specialty and commercial division provides coverages and services to support the specialized needs of a wide range of industries, including manufacturing, real estate, wholesale, financial institutions and aviation. How are you using technology to fix pain points in insurance? TJ: Communication will always remain at the heart of claims service excellence, and technology can help us stay ahead of customers’ evolving expectations. Today, many of our customers in North America want to communicate via text/SMS, so we recently added a service, TextQBE, that uses AI to initiate and carry out routine messages with these customers. Our claims team can still jump in at any time for more empathetic and complex discussions. Our customers think it’s great. We also use technology to engage with customers even before a claim occurs. For instance, we work closely with our loss control and catastrophe modeling teams to identify customers in the path of a severe storm or wildfire. We can then leverage technology to send a warning to those customers with appropriate safety and claims reporting information.
How does your technology benefit brokers and agents? TJ: Customers expect quick responses with customized coverages. We look for innovative technology to support those needs and help them to manage their unique risks. The more our innovations can influence that, the happier our partners will be. What tech innovations are you most excited about for the future? TJ: One of the most exciting advancements in recent years has been the growth of virtual desktop adjusting, particularly in the property space for first-party claims. By leveraging specialized smartphone apps, our claims professionals can direct a customer in real time to survey their property and take and upload pictures of damaged areas. This capability forms the basis of their estimate and has been especially useful during COVID-19 and created a situation where portions of our work can be done virtually. In a real-life example, we recently saw severe storm damage to the exterior of a customer’s building. On the same day the customer reported the claim, we sent instructions on how to self-inspect the damage using a specialized 3D modeling app. Where previously using an independent vendor to conduct an on-site inspection could take up to a week, our customer was able to complete the inspection the very next day in under an hour. Another example is the migration toward the implementation of a mortgagee address change robotic desktop automation solution in personal lines. The bot receives PDF information from lenders and instantly updates internal systems with this data, dramatically reducing the time to process these requests. This faster resolution for both our customers and agent/broker partners helps reduce the amount of work conducted by our employees. Technology has unlocked enormous potential, and we’re very excited about the new possibilities for serving customers better – not just in claims, but at every point in their experience with QBE.
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Programs
We’ll focus on partnerships, so you can focus on Growing your business takes a strong strategy – and even stronger relationships. That’s why QBE offers distinctive expertise, global strength and a focus on innovative technology, all backed by trusted relationships with our program partners. Discover QBE programs:
• Over $1 billion annual premium
• Deep underwriting and claims expertise
• Investing in technology for the future
• Ability to write multi-line and mono-line coverage in all 50 states
• Personal, Commercial (P&C) and Professional lines of coverage
Together, we’ll create the alternative risk, management and service solutions you need – so no matter what the future holds, you can be sure that QBE is with you. Read about some of the innovative work we’re doing or visit us at qbe.com/us
Alternative Markets
Crop
Specialty & Commercial
QBE and the links logo are registered service marks of QBE Insurance Group Limited. ©2021 QBE Holdings, Inc. This literature is descriptive only. Actual coverage is subject to the terms, conditions, limitations and exclusions of the policy as issued.
FEATURES
INSURTECH 2021 How does your technology benefit agents and brokers? AZ: Insurance is evolving, and independent agencies are feeling the pressure to change from factors like agency consolidation, evolving client and employee expectations, and emerging technologies. For agencies, the key to staying ahead is investing in the approach and tools that truly support growth and client and employee satisfaction. At Vertafore, we’re focused on building solutions that both address the industry’s core needs and that integrate and work well together. That approach ensures our agencies get the most out of their tools because their technology is designed to provide the maximum value and efficiency for their investment.
VERTAFORE Year founded: 1969 Headquarters: Denver, CO Leadership: Amy Zupon, president and CEO
Tell us about Vertafore. What do you do? Amy Zupon: As North America’s insurtech leader for more than 50 years, Vertafore is modernizing and simplifying insurance distribution so that our customers can focus on what matters most: people. Our solutions provide end-to-end connectivity; improve the client and agent experience; unlock the power of data; and drive efficiency, productivity and profitability for independent agencies, MGAs and carriers. What’s your key area of focus in the insurance ecosystem? AZ: Everything we do at Vertafore is about simplifying and automating insurance distribution for all stakeholders. For agencies, that means delivering technology that leads to better, more
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efficient processes; empowers client engagement and interactions; and facilitates connections to their carrier partners. For carriers and wholesalers, we’re giving them the right tools to be a partner of choice within the independent agency channel so they can get their products out to market. How are you using technology to fix pain points in insurance? AZ: Our solutions are solving three critical pain points in insurance distribution. First, we’re creating more efficient connections – between systems, data and stakeholders – so that agencies and insurers can work better together and better serve their end insureds. Second, we’re using technology to automate and simplify processes and workflows to give agents and carriers more time to focus on their clients and growth. Finally, through artificial intelligence and machine learning, we’re helping the distribution channel unlock the power of the industry’s data to uncover new opportunities and efficiencies.
“Everything we do is about simplifying and automating insurance distribution” What tech innovations are you most excited about for the future? AZ: Some of the most significant innovations right now are in market connectivity, especially for commercial lines. The commercial submissions process has been a longstanding pain point in our industry, and insurtech is on the verge of solving that challenge. The client digital experience is also a space to watch as the insurance distribution channel works to meet modern, real-time consumer expectations. When it comes to agency management, it is exciting to see more emphasis on openplatform, API-enabled solutions that are enabling agencies to engage with the tools they need to grow without replacing their core systems. Finally, our industry is sitting on a treasure trove of data, and we’re seeing some really remarkable advances that will enable agencies and carriers of all sizes to unlock the power of that data.
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INSURTECH 2021 core promise of productivity, intelligence, simplicity and value.
APPLIED SYSTEMS Year founded: 1983 Headquarters: University Park, IL Leadership: Taylor Rhodes, president and CEO
Tell us about Applied Systems. What do you do? Taylor Rhodes: Applied Systems is a leading global provider of software that powers the business of insurance. Recognized as a pioneer in insurance automation, Applied is the world’s largest provider of agency and brokerage management systems and a leader in data exchange, seamlessly connecting insured, agency and carrier stakeholders. What’s your key area of focus in the insurance ecosystem? TR: Applied enables greater access to information and streamlines workflows, allowing our customers to better connect within their business to their insurer partners and their customers. Applied’s place in the insurance ecosystem lies in equipping and enabling the independent agency channel by delivering integrated automation from the back office to the front office. We empower agents to break out of the broken processes and poor customer experiences to create simple online interactions – from application to policy binding to servicing and renewals. We expand intelligent connectivity across the insurance ecosystem to help agencies and
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insurers perform better together, all while providing intelligence that helps agents and insurers grow their business more efficiently by turning data into actionable insights. Our focus and commitment is to invest and push forward to make the digital future of insurance practically helpful for the entire ecosystem and ultimately the end insured. How are you using technology to fix pain points in insurance? TR: The insurance industry is historically riddled with paper-driven manual processes, often creating inefficient workflows and poor customer experiences. These challenges start in the internal operations of the independent agency, including back-office processes such as policy administration, accounting and the management of customer relationships. When digital technology isn’t used, the inefficiencies extend to an agent’s insurer relationships. Without the use of digital technology, agents must individually contact insurers and rely on fax and mail to complete the policy purchase process. Finally, without a customer portal, all communication with the insured must be in person, over the phone or via email, requiring insureds to contact their agent for everything. Applied technology enables agencies to reshape their businesses with three core focuses: a foundational system to manage their entire business, omnichannel customer service, and a single network for market access and service – all delivering on the
How does your technology benefit brokers and agents? TR: Applied technology automates the exchange of information and data throughout the insurance life cycle among agents, brokers, insurers and consumers, delivering a connected experience between all participants in the insurance ecosystem. This means greater connectivity with insurer partners and insureds. When the business of insurance is digitally connected, all stakeholders benefit from superior experiences, such as operational efficiency and better customer service, across the entire insurance life cycle. What tech innovations are you most excited about for the future? TR: I’m really excited to see our portfolio transformation hit prime time as we realize the opportunity to advance the core architecture and underpinnings of our systems. Applied is focused on building technology that allows for greater flexibility and accessibility for customers – and even better, integration across our own product portfolio. We aim to deliver choice and automation with third-party integrations or shared APIs, whether through our partner program or with other providers that want to tap into the system. As a trusted technology provider, we aim to create ease of doing business for our customers, their customers and their partners while achieving the highest level of security. To continue creating ease of doing business for our customers, Applied is continuing to focus on simplifying the user experience. Today’s employees come to work expecting their productivity tools to meet the same standard of user experience they enjoy in consumer tools like Google, Facebook, Amazon or Apple. We want to deliver that same easy interface that they’re used to so they can more easily train and onboard new employees, create more productivity within their daily workflows, and realize more time for revenue-generating activities.
www.ibamag.com
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07/05/2021 2:50:51 am
Your digital path forward looks bright.
Gone are the days of closed systems. The road ahead is built on open technology, creating new and exciting ways to engage your staff and excite your customers. At Applied, we are committed to delivering open innovation in all that we do. We are setting new standards for your business to have the choice and flexibility to build your agency, your way.
The choice and flexibility to innovate are yours. Let us show you how we can help.
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SPECIAL PROMOTIONAL FEATURE
INSURTECH AN INSURTECH startup based in Columbus, Ohio, Branch wanted to accelerate the process for obtaining quotes on bundled home and auto policies. As it stood, customers had to answer a long list of questions to get the information they wanted. But by using a mix of modern application programming interface (API) technologies, including ClarionDoor’s CD Rating solution – an insurance product engine that delivers precise premium calculations, rule processing and underwriting decisions in milliseconds – Branch was able to simplify the quote process to just two questions: “What is your name?” and “What is your address?”. “Branch, along with their technology partners, handles everything else behind the scenes,” explains Michael DeGusta, CEO of ClarionDoor. “Leveraging third-party data sources, they are able to fill in all of the required information, and ClarionDoor processes everything to provide accurate and precision pricing options via CD Rating.” CD Rating is just one of ClarionDoor’s suite of solutions for rating, quoting and issuance that’s helping fuel new startups and empowering existing companies to modernize legacy products.
Just buy, configure and use
The doors of innovation IBA sat down with Michael DeGusta, CEO of ClarionDoor, to find out how the company’s solutions are helping both insurtechs and traditional carriers harness the power of technology to transform the insurance process 36
Among other things, ClarionDoor’s solutions address existing issues with outdated insurance systems, which can be difficult to maintain. Many require on-site installation and maintenance, take months or even years to implement, and are difficult to integrate and upgrade. What’s more, they tend to focus on back-office needs, such as billing and claims, and have limited capacity for product innovation or empowering sales and distribution. “The bottom line is that modern insurers do not want the overhead of managing software or infrastructure,” DeGusta says. “They want – and need – solutions that are buyconfigure-use versus the traditional approach of buy-install-code-configure-use-manage. Veteran insurers are starting to move in this direction as well, but it is a much slower and tedious transition, as they already have
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one door is better than others
providing the most intelligent insurance product distribution software
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SPECIAL PROMOTIONAL FEATURE
INSURTECH
systems in place. Regardless, we definitely see the industry moving as a whole in this direction and believe that five to 10 years from now, if not sooner, on-premises solutions will be a thing of the past.” ClarionDoor provides a platform for insurers to rate, quote, bind, issue, manage and track business. It is a 100% cloudnative, API-first, low-code/no-code software as a service (SaaS) that is hosted exclusively on the highly scalable and dependable Amazon Web Services (AWS) platform, removing the burden of software management and maintenance on the client. There’s nothing to install, no infrastructure to manage, no software upgrades – and it’s also simple to use. The company’s competitors include rating engines such as CGI Ratabase and Oracle Insurance Insbridge, policy life cycle management solutions such as BriteCore and Duck Creek, and low-code/no-code platforms such as Unqork and Appian. “While our competitors claim to be cloud-enabled, we designed and built our software from the ground up specifically for the cloud and exclusively for AWS,” DeGusta says. “Every aspect of our software is first designed and built with an API, enabling our customers to integrate more seamlessly and automate processes. Through our breakthrough API technology, we are able to provide a true no-code solution that is 100% configurable by our customers. The result is faster speed to market (weeks), lower cost, operational efficiency and no customermanaged software maintenance.”
Empowering invention In addition to CD Rating, the ClarionDoor suite of solutions features five other systems. CD Quoting Portal provides an intuitive, cloud-native, API-first user interface for processing quote and policy life cycle transactions across any line of business. CD Forms Service is an API-first web service for automating the activation of forms based on quote and policy data. CD Issuance offers an API-first web service for generating policy
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documents and converting bound quotes to policies. CD Tracker is a real-time analytics application for tracing core performance metrics – such as premium, total insured value and number of quotes – against userdefined dimension buckets based on region, underwriter or agent, or any other policy attribute. Finally, CD MGA Hub offers an intuitive interface for MGAs to quote and compare rates with multiple E&S carriers in real time. The possibilities for innovation are myriad. Like Branch, Flow Insurance is an insurtech startup that has leveraged these technologies to roll out a differentiated product. Flow is an MGA that provides flood protection for commercial and residential
for diverse P&C risks, wanted to upgrade its business workflow for commercial general liability and commercial property. CD MGA Hub empowered Breckenridge to connect with more than 25 E&S carriers to deliver more competitive pricing options for those markets. And Amwins, a leading global distributor of specialty insurance products and services, is using ClarionDoor technology to boost its underwriting capabilities. “We have been leveraging ClarionDoor products and services for the last several years within our small business platform, Amwins Access, and couldn’t be more pleased with our results,” says Ben Sloop, chief operating officer at Amwins. “We see them as a
“We have been leveraging ClarionDoor products and services for the last several years within our small business platform, Amwins Access, and couldn’t be more pleased with our results” Ben Sloop, Amwins locations; with the help of ClarionDoor technology, the company was able to deliver a comparative pricing experience. “The rise of insurtechs [such as Branch and Flow] is really pushing the market in a new direction,” DeGusta says. “These newcomers are really tech-savvy and understand that in order to provide a modern solution, you need to leverage the best software available. They have realized that there is not one solution that can do it all, which is a major shift from the monolithic approach that veteran insurers have used forever. There has also been more attention on cloud-native, APIarchitected software and a significant transition from the traditional on-premises approach to cloud-native applications.” Meanwhile, Breckenridge Insurance Services, a wholesale MGA offering coverage
critical partner as we expand these capabilities into specialty programs and build out a world-class underwriting infrastructure for our carriers and capital partners.” Including these four trailblazers, ClarionDoor has 75 customers across the Western world and has implemented more than 40 P&C lines of business. Clients can go live in weeks instead of months, and they’ve had zero project failures. DeGusta says ClarionDoor plans to build on these successes going forward. “We are committed to investing in what we do best: building great insurance software technology, solving the challenges of insurance product distribution, providing an unparalleled customer experience and delivering on our promise of liberating our customers to focus on innovation, not implementation.”
www.ibamag.com
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07/05/2021 3:01:22 am
FEATURES
SECTOR FOCUS: CONSTRUCTION
Building back better IBA spoke to experts in construction insurance to find out how labor challenges and tech innovation are affecting the space BUILDERS FACED some bad times in mid-2020. Like many sectors of the economy, construction slowed down during the initial stages of the COVID-19 pandemic. Yet after being deemed essential in nearly all US states, the industry quickly returned to a more expected trajectory. “The industry took a bit of a pause last summer as developers and contractors played the ‘wait and see’ game with COVID19, but the industry has appeared to roar back in Q1 2021,” says Jett Abramson, executive vice president and national construction practice co-leader at Amwins Group. “We haven’t seen the pandemic increase risk measurably from pre-pandemic times.” Regardless, the construction insurance
market is fluctuating. In general liability, rate increases are ranging from single to double digits based on loss history, and there’s been limited market availability for both general liability and excess for unfavorable classes
such as street and road, frame habitational, and residential construction, according to Jennifer Mier, executive vice president and national construction practice co-leader with Amwins Brokerage of Texas.
“The industry took a bit of a pause last summer as developers and contractors played the ‘wait and see’ game with COVID-19, but the industry has appeared to roar back in Q1 2021” Jett Abramson, Amwins Group www.ibamag.com
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FEI-IB
FEATURES
SECTOR FOCUS: CONSTRUCTION
Carriers are also trying to limit coverage where possible – for example, with communicable disease coverage. And while capacity is abundant in primary lines, “the excess market is extremely challenging right now,” Mier says. “Capacity is limited in the lead, and we are seeing significant premium increases in the lead $10 million layer due to auto fleet size and auto losses.” According to Abramson and Mier, action over and construction defects are the leading causes of loss and need to be monitored closely throughout 2021. Meanwhile, Ben Beauvais, senior vice president and construction executive for Liberty Mutual’s Global Risk Solutions division, cites worker injury and third-party injuries as loss leaders. Beauvais agrees that capacity has been relatively stable, but rates have been hardening due to a variety of factors, one of which is labor. “Contractors still have challenges attracting and retaining talent, whether it’s qualified employees or hiring qualified and capable subcontractors,” Beauvais says. “So that skilled labor shortage is driving some of the rate challenge.”
Help wanted Help is definitely needed in the construction sector. Due to a variety of reasons, including young people’s dislike of the trade, the difficulty of the work and its reputation as a low-status occupation, the construction industry is facing a significant lack of skilled workers in the US. With the sector poised to grow 1.3% in 2021 to $1.45 trillion, it needs to add 430,000 new workers to meet demand, according to the Associated Builders and Contractors of America. A major concern for the industry, the labor shortage is causing delays and associated costs. “This is beginning to concern underwriters of subcontractor liability business as firms scramble for labor, some of which isn’t trained as well as it should be or has been in the past,” Abramson says. Mier echoes that sentiment, adding that “contractors need to make sure they
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COVID-19’S IMPACT ON CONSTRUCTION FIRMS Projects canceled or postponed
60% Struggling to find skilled workers
52% Projects taking longer to complete
44% Adopting new tech to address the labor shortage
40% Pre-pandemic projects halted
33% Project costs higher than planned
32% Source: Associated General Contractors of America and Autodesk
“Contractors still have challenges attracting and retaining talent, whether it’s qualified employees or hiring qualified and capable subcontractors” Ben Beauvais, Liberty Mutual understand how independent contractors are covered by their general liability policy. With a shortage in labor, you could be hiring uninsured/underinsured subcontractors.” Beauvais adds that “the shortage of skilled labor is a challenge for the construction industry because at the end of the day, contractors are hired to deliver a project that’s within the scope of the owner’s vision, that is a quality project. We want it to be delivered in a safe fashion so that the risk of
loss is minimized at the site itself. “Where the skilled labor shortage really comes into this is scheduling – making sure the contractor and subcontractors are qualified to deliver the scope of work they’re being brought in for. Most of the contractors we deal with – whether they’re general contractors or subcontractors – have a pretty sophisticated risk management function to prequalify the subcontractors who come along. But if they have access to a pool of
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FEATURES
SECTOR FOCUS: CONSTRUCTION
TOP CONSTRUCTION TECHNOLOGY TRENDS
01
Connectivity among job sites
02
Wearable technology
03
New fabrication technology
04
Advances in drone technology
05
Advanced computer technology
skilled labor, other contractors are likely after that same skilled labor, and that can affect planning.” If high-caliber talent isn’t available, contractors sometimes have to rely on lowerskilled workers, which increases risk for everyone on the project. While Abramson says the lack of skilled construction labor is currently having the biggest impact on project timing and delays, “supply chain issues have crept up as well, particularly the difficulty in securing competitively priced timber.” The key to helping brokers in this space find success, Beauvais says, is “partnering with them to really understand their risk profile that they’re assuming and working with them to deliver a safe project or safe workplace culture – helping them drive a compliance culture and delivering quality output with minimal human costs.”
deliverable management, documentation of work, documentation of prior conditions and information intake in the event of a loss.” Meanwhile, Beauvais lauds the fact that handheld devices such as smartphones and tablets with powerful cameras – unheard of on job sites 15 years ago – are now commonplace. He says the real power lies in the use of handheld devices and smart technologies, such as wearables, with transformational building information modeling (BIM) to facilitate multidisciplinary coordination, 3D design, analysis, cost estimating and construction scheduling. “Scheduling, design changes, change orders – all that gets sort of built out, tracked and driven through the BIM,” Beauvais explains. “From a site safety and worker safety perspective, the adoption of things like wearables that can monitor ambient temperatures to make sure workers have adequate breaks
“Auto fleet telematics is going to be a key component of risk management for auto and excess claims prevention” Jennifer Mier, Amwins Brokerage of Texas
06
Building information modeling
Source: BNC Finance
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Construction tech takes hold While the skilled labor shortage will continue to increase exposures in the industry for the foreseeable future, advancements in technology have been consequential in transforming the risk landscape across the construction industry. “Auto fleet telematics is going to be a key component of risk management for auto and excess claims prevention,” Mier says. “These technologies will play a major role in the industry moving forward.” Abramson agrees that “technology is having a positive impact for those clients who elect to incorporate it into their businesses. On-site and construction defect risk can be mitigated somewhat by things like
are popular, as are more sophisticated ergonomic and motion-detecting devices.” He believes the biggest advancement involves merging the capabilities of imaging technologies with advanced software and a BIM system to overlay site progress against site plans – although the work still depends on skilled laborers to carry it out. “When you’ve got to replace a water main, you still have to dig it up, right?” Beauvais says. “That’s a backhoe – no matter which way you slice it. But it’s the imagery of figuring out where the water line is and overlaying what’s likely underneath, modeling all that out and making sure you can do it with minimal disruption. That’s where the technology is going.”
www.ibamag.com
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FEATURES
AGENCY INSIGHT
The start of something new Agents who want to dive into new specialty product lines sometimes need help to put their plans into action. Dave Zeornes, sales leader for Aon Programs, explains how they can take the bull by the horns in 2021 IBA: What challenges do insurance agents face when they’re looking to expand into new product lines? Dave Zeornes: The biggest challenge is knowledge in general, and that falls into a few categories: Do they know what the right market is for their agency, do they know what that industry looks like, do they have any experience in the industry prior to their insurance experience, and do they know owners and operators in that space? Once they get past that, they have to figure out the products – what are the details and nuances of the products in that space – so they can build up enough knowledge to actually talk to and attract customers to their agency. That education is going to be key for any broker trying to get into a new space.
IBA: How difficult is it for agents and brokers to get into new lines of business? DZ: In my time in the specialty markets segment of the industry, I’ve seen brokers who have started out as a traditional P&C agent, and they’ve transitioned into focusing on food trucks because they saw that part of the market and wanted to go after it. I’ve seen agents start out as a Farmers Insurance agent and then go independent and become strictly a flood insurance agent, because either they see that flood is important in their part of the country, or they see an
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opportunity to provide specialty service to maybe larger commercial operations. We’ve seen that story happen again and again … so it’s not like this hasn’t been done before. There have been agencies that have completely reinvented themselves, and then there are agencies that are just looking to add that other segment to differentiate, diversify their revenue and grow their business, so there’s a spectrum.
IBA: How can insurance agents figure out what products will be the right fit for their business? DZ: [First of all], look for markets that are growing quickly. I mentioned the food truck agent … she identified that food trucks were growing, so she started to insure those folks. She learned the market, talked to people who run food truck operations and built a network, and then was able to sell to that network. So a growing market is going to be a
big opportunity for agents. There also may be changing competitive landscapes, so maybe there’s a big player in the industry that is retiring or selling their agency, or one of the competitors is not going to be there going forward, so there may be a vacuum for a certain amount of time – and an opportunity for agents. Geography is the third one, and that focuses more on the catastrophe coverages. If I’m in an area that has recently flooded or that is prone to flooding, but I’m not in one of these specialty spaces and I have a wide swath of knowledge on flood or other catastrophe coverages, I’m probably missing the boat.
IBA: As they move into new markets, how can agents find the right partners to work with? DZ: That is absolutely key, and it’s not something that’s going to happen overnight. An agent needs to have a discovery process in the
ABOUT AON PROGRAMS Aon Programs is an Aon Affinity business that helps agents and brokers develop tailored insurance portfolios for their clients by giving them access to more than 300 specialty insurance programs. At the end of 2020, Aon Programs asked insurance agents and brokers about their attitudes heading into the new year, including the specialty lines they wanted to expand into over the next 12 months. According to the survey, agents are looking to add offerings for professional services firms (21%), catastrophe (17%), nonprofit organizations (13%) and healthcare providers (11%).
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07/05/2021 3:08:40 am
AON PROGRAMS BY THE NUMBERS
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“There have been agencies that have completely reinvented themselves, and then there are agencies that are just looking to add that other segment to differentiate, diversify their revenue and grow their business” space, so if it’s a business that they’re trying to understand – if it’s kids’ camps, for example, that they’re looking to insure – they need to talk to the people who run and own those camps, and understand the space and know the vocabulary. There may also be designations that they can get to really become a flood expert, for instance, and understand the vocabulary [that is] used in that space. If it’s a business that has a site, go visit the site to understand what’s happening there,
what the pain points for that business are and how you can protect them. Many producers in the insurance space don’t come from insurance, so if it’s the nonprofit segment that they’re trying to get into, there may be some folks who work in the nonprofit space who would be willing to leave and come to your agency, so you can actually leverage their relationships. Once that process is complete, then you can start looking at carriers and decide who you’re
$850 million+ Premium volume
going to partner with in that space. Industry associations are a great place to network and find not just carrier reps, but folks in the underwriting departments and claims experts. There are industry associations for each one of those portions of the business that agents might be able to leverage to learn more and be as knowledgeable as possible before they get into the space. Agents need to understand [these other professionals’] views of the business and their appetite.
www.ibamag.com
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FEATURES
CULTURE
The negative impact of an urgent culture Over the years, people have become busier and everything more urgent – but there can be a heavy cost for both you and your team, writes Dermot Crowley
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www.ibamag.com
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UNPRODUCTIVE URGENCY, and the resultant reactivity it creates, has become an acute and chronic issue in many modern organizations. We all seem to be moving at a million miles an hour, running from meeting to meeting and dealing with email after email. When did everything get so busy and become so urgent? Urgency is a reality in our workplaces, but it’s important that we don’t become victims of it. We need to take control and learn to manage it. If we don’t, we will pay a high cost when it comes to our productivity. You might see urgency as just part of the territory of working in a fast-paced, customer-
But unlike in manufacturing, knowledge workplaces might not see the wastage, downtime and rework that is created because of unnecessary urgency. Too much reactivity can lead to avoidable mistakes due to wasting time and resources on redoing work.
An increase in stress levels In a 2018 white paper on workplace anxiety, Bonnie Hayden Cheng and Julie McCarthy cite research indicating that 40% of Americans feel anxious during their workday, and 72% of these people say they believe this anxiety affects their work and personal lives. Of course, there are many factors that
While organizations may be able to operate through periods of high reactivity in short bursts, if working in the reactive zone becomes a long-term part of the culture, then burnout and attrition will surely follow driven organization. You might not realize the cost of unproductive urgency to you and your team. So let’s explore the cost of urgency to ourselves and our businesses.
Avoidable rework Rework is a hidden but very real cost to businesses. In manufacturing organizations, a lot of effort goes into reducing wastage and rework in the manufacturing process. If a part is not manufactured correctly the first time, there is a very measurable cost to the bottom line for that product. So factories will have systems and processes in place to reduce the error rate. In fact, this is one of the key stats that is measured daily. The efficiency of the manufacturing process is measured constantly to maximize productivity and profitability.
might contribute to workplace anxiety, including cranky bosses, unhelpful colleagues and unrealistic workloads. But urgency is definitely a major part of the picture. Increased anxiety is bound to affect performance and well-being. We don’t think as clearly when we are anxious, we don’t feel as motivated, and sometimes we just opt out because of it.
A drop in quality of work Whether we are reacting blindly to incoming urgency or leaving things until the last minute ourselves, the quality of our work suffers. We make mistakes because we rush things. We compromise the finished product because we run out of time. And in the knowledge workplace, we lose the time to stop and think.
A KPMG Global CEO survey found that 86% of global leaders have struggled to find time to think about two of the most critical drivers in their businesses: disruption and innovation. When you consider the role a leader plays in steering the organization in the right direction and navigating the challenges of a complex and volatile environment, not having enough time to think is very problematic.
Burnout and attrition This is the big one for me. If urgency becomes the norm in a team or organization, it becomes part of the culture. While organizations may be able to operate through periods of high reactivity in short bursts, if working in the reactive zone becomes a longterm part of the culture, then burnout and attrition will surely follow. People might not be able to name it as a reason, but they will have feelings that have built up over time – feelings of increased stress, agitation and frustration. They might not mention chronic urgency as an issue, but they may say that they can no longer cope with the hectic pace. They may suggest that they would prefer a role that gives them more control over their work. I believe that most people want to do meaningful work that makes a difference. But working in a reactive culture can feel like constantly walking into a headwind. It is hard work. I believe we need to take the issue of unproductive urgency seriously and put measures in place to minimize it as much as possible. We will never totally eradicate urgency – nor should we – but we can learn to use it in a more mindful and purposeful way. Dermot Crowley is a productivity thought leader, the director of Adapt Productivity and the author of Urgent!: Smart Work and Smart Teams.
www.ibamag.com
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PEOPLE
OTHER LIFE
Andrews cleared a 5k, 22-obstacle course in 24 minutes a nd 26 seconds
TELL US ABOUT YOUR OTHER LIFE Email iba@keymedia.com
2012
Year Andrews got into obstacle course racing
13
Total number of obstacle course races he has completed
15
Place he finished in the North West Spartan Elite Heat in 2013
POWERING THOUGH Claims consultant Joshua Andrews has found obstacle course racing to be a great parallel for life A LONGTIME competitive runner, Joshua Andrews was encouraged by a colleague to give obstacle course racing (OCR) a try. After leading the company team to a fourth-place finish in his first race, he’s been hooked ever since. Andrews, a claims consultant at Woodruff Sawyer, says OCR combines his
love for running and competing with the “fun parts of being a kid”: getting dirty and jumping over things. He also believes it has imparted some valuable life lessons. “I see OCR as a way to challenge myself in new ways each day and to allow myself to experience something different,” he says. “There are always obstacles in life
that I may not be prepared for, but I must go through them anyway. No matter how much they make me suffer or want to quit, I know there is a finish line somewhere at the end. Life’s obstacles are also a little easier when I can compare them to climbing a mountain with a 100-pound sandbag on my back.”
Photo by Tyler Mode
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