Insurance: The New History

History, as we all know, is written by the victor. Winning means you get to tell your side of the story and have it live on through time as the facts as they accurately happened. How the simple passage of time elevates one person’s perspective to the absolute truth I’ll never know, but that’s how it is. In order to be history, you have to make history.

I’m going to venture into the world of insurance and tackle history with a more agile approach. In this new blog series, “Insurance: The New History” we’ll take a dive into the things happening in insurance and around insurance now, or things that I think will be a major player in the industry very soon. This is my perspective on the what, the why, and the how of history-making tech in insurance.

These articles should serve as an innovation jumpstarter or, better yet, get companies to think “let’s try something different” instead of “this is the way we’ve always done it; this is the way we’ll keep doing it.”

I’m hoping this helps people in insurance be the victor, the historian of record for their own stories.

Be the disruptors, not the disrupted.

But they’re a tech company!

Disruption in a relatively newer concept to the insurance industry. Many companies have been focusing on digitalization strategies, reorgs, strategic reenvisionings, and steering committees galore to address the large-scale changes they need to make to evolve. And they’re wrong – strategic change is all well and good, but until you change your culture, how your people think and work and solve problems – real change just isn’t going to happen. In the words of Peter Drucker, “Culture eats strategy for breakfast.” 

In the tech industry, however, disruption is their bread and butter. Which is why so many companies in that space get noticed for their innovation and new ways of thinking. They are not held back by history or the hindrance of “doing things the way they’ve always been done.” I’m sure anyone reading this has heard the “tech company” complaint before. It usually is a generic response to a conversation that goes like this. 

Sam: “We should be releasing every time anyone checks their changes into our source control. 

Alex: “Why would we even try that? Our customers, agents, employees, brokers aren’t asking us to always be releasing. There is no value in that! What do you think we are, a tech company?!?!” 

Sam: Yeah. Ok, good point.” — mentally writes resignation letter 

We’ve all been there. We’ve all heard it. Maybe you were Sam, but if you’re in insurance, there’s a good chance you were Alex.  

I’m not really sure why the insurance industry thinks they are only in insurance and not all of the other industries they support and work in. An insurance carrier underwrites risks for many types of industries and businesses. They understand how those companies operate. They have seen things over the years that policyholders do as part of their business process and the carrier might adopt this as best practice for themselves and have their employees follow that process. But to this day, carriers still think of themselves as an insurance company and only an insurance company.  

Insurance – Cooler than people think, not as cool as it could be 

There are very few large insurance companies that only operate in under 50% of the United States. The majority are national. In Europe and Asia, it is very common to see carriers that operate in most countries in their economic zone. If you look at the truly largest carriers, they are multinational companies that aren’t just in insurance, but also other financial services and even industries outside of that. Even though these companies stretch over large swaths of our landmasses, they have one thing in common…the “traditional insurance culture”.  

I am over-generalizing a bit, but honestly just a bit. Insurance companies are perceived to be run exclusively by stodgy old white men who don’t like to pay claims when you wreck your vehicle. They are seen as very slow-moving with very little innovation and a lot of really nerdy people crunching numbers while chopping down whole forests to deliver your policy declarations to your door via snail-mail. 

Please lower the pitchforks and put out the torches, these are just examples of some of the more common stereotypes that our industry has. We can laugh at some of these because “maybe the industry used to be like that, but it’s surely changed.” Inside the industry, we know that is absolutely true.  

Insurance companies like Root started up and rolled out nationwide in the US at a pace that a lot of people thought would be unachievable. There are now more minorities and women as leaders of insurance companies than ever before. I can’t think of an insurance carrier in the modern world that doesn’t have a diversity and inclusion program. And we even have a specific Women in Insurance Conference!  

Insurance companies have taken a hard look at their business models, at what they really do, and are starting to change practices to help truly “make the customer whole” again after a loss. Customer retention is a higher goal than profit in most cases. And innovation, don’t even get me started; we’ve got drones, Convolutional Neural Networks, Machine Learning, AI chat, Computer Vision, a crazy thing called Insurtech, and ridiculous amounts of examples! 

Think small, be small 

I listed out a lot of the positives that are happening across the industry, but these haven’t been adopted across all aspects of the industry. Insurance as an industry is still very much anchored in the belief that any and all problems that arise should be addressed in a way that is right for insurance, which makes sense for insurance, which has proven to be effective in insurance. It’s an arbitrary and outdated parameter that is hampering change and innovation. And it needlessly makes modern problems (problems that have been addressed brilliantly outside the insurance industry) harder to solve.  

As much as people hate stereotypes, most were created from a generalization of reality at a certain point in time. They persist, often long after the origin of their creation has faded or evolved. If perception is reality, stereotypes can be potentially quite damaging. It’s a sad truth that our society across the planet has to deal with this, but it is what it is. The second worst thing the insurance industry can do is to ignore the stereotype. The absolute worst thing a carrier can do is expect others to change their minds without giving them a very good reason to do so. 

Since perception is reality, you need to own the perception of you, your company, and the industry. We need to really look at what these outdated industry stereotypes are doing to us. But before that, we need to actually fix the reason that the stereotypes exist. 

Ask yourself these questions: 

  • Does everyone at my company have the ability to innovate every day? 
  • Are processes in place to protect the company and make good decisions or are they just bureaucracy and red tape? 
  • Are decisions made at the middle management layer and up, or are people empowered to make their own decisions? 
  • Are all ideas, people, and decisions treated equally? Regardless of title/position? 

If you took any time to think about whether your response would be “yes” or “no” to any of these questionsit’s not good enough. 

Cultural stereotypes are a large reason that when I left my US Department of Defense job, they joked with me that “why would you work in insurance” or “they barely have any work to do in IT at those companies, they never move”. 

If I was physically hearing it, I know others are thinking it. While the “miserly old white dude” stereotype was, thankfully, a thing of the past, the narrow-minded way of thinking that was his counterpart is still present, particularly in IT. We are losing the possibility of great talent that could help drive the industry into the future. Or worse yet, if you are fixated on solving things “the insurance way,” whatever incredible talent you’ve recruited will leave because they’re frustrated and unfulfilled.  

The title of this section might be a little controversial, but I wanted to be real and honest with the readers of this blog that if you choose not to fix the stereotypes and show the world how those are outdated and quite frankly, ignorant, then your company will not see the growth of a carrier that chooses to buck the trend and fix this challenge. 

Thinking beyond insurance 

Every company is a tech company now. The sooner you can accept that universal truth, the better.  

Carriers need to realize that they are a digital business in the Financial Services Industry. Lemonade, which sees themselves as a techbased insurance company, is your competition (and they are squashing the stereotypes associated with the industry by the way). That doesn’t mean that you need to stop being an Insurance company, but you must figure out new ways to categorize yourselves and learn to look at other industries for support and inspirationThe first step to thinking bigger is to research differently. More on that here 

In the example conversation above – Sam, the innovator, fails to backup his point with facts and reasoning. He doesn’t have the why or the how. Yes, potential innovators need to convince their organization that they need to change, but the why will get them the buy-in they need to be a catalyst for change and the how is a blueprint to make those changes happen. 

I mentioned Peter Drucker’s quote that most everyone has heard, but what does this really mean. It doesn’t mean that every morning team meeting should include bagels and donuts (although, that would go a long way with the employees). It means that company culture is happening, it has been slowly molded over the time of your company to be what it is. There are amazing parts of culture that come like insurance companies helping out during hurricane recovery efforts even though they might not even sell policies in those areas, but there are also the ones that led to those poor stereotypes.  

No matter how strong your strategic plan is, if the employees don’t share the same company culture, they most certainly won’t share the same vision. Without shared vision comes division and you will have people fighting like a spoiled toddler not getting the candy they want at the grocery store. Even worse, they won’t even know they are sabotaging the projects and will be creating bad disruption in the name of “doing the right thing”.  

Alright, alright already. We get the why…. But the how? 

Culture change is one of the hardest things you will ever have to address, in your personal life or when looking at company culture. When you look at the scale of impact of the company culture, it is a daunting task that scares away the most well-paid executives and they fall back into statements that don’t acknowledge the issues underlying what stops the company from truly moving forward. But hang in there, there is hope! I’ve seen it firsthand; I’ve experienced it, I’ve been a part of it. Did we fix the whole problem? No. But our team created a precedent for enabling cultural change.  

As a leader at your insurance company, it is imperative that you look beyond the confines of your industry to what is happening in the outside world and how that might translate internally. One case that comes up quite often in the IT departments of Insurance companies is Spotify. It is usually a group of engineers that come forward and say they would love to follow something like the “Spotify Model.” As you can probably guess, the real-life end result of these discussions often follows the pattern of the hypothetical conversation we started with 

Culture is the number one place that I have seen any project, initiative, employee, or leader fail. It is either not adapting the culture, going against the culture, or the worst scenario…choosing to ignore it. Take the provocative approach and use your culture to change the culture and then maybe people will stop using Spotify as the example and use you, the insurance carrier that was probably behind in the times, as a model for inspiration. 

You are a leader! If you don’t think that you are, become one or go work on an assembly line. Leadership is not about title or role, it’s about guts, instinct, the ability to follow through, and more importantly – the ability to create belief in others. Our number one job as humans is to leave this world better than we found it, why not start at your own backyard. I always hear, “oh man, wouldn’t it be great to have an engineering culture like Spotify?” Most people might just shrug and dismiss that possibility as quickly as they would dismiss putting chocolate milk in their cereal, but sometimes you should take chances on your breakfast. 

What if you could go full-Spotify? Maybe you can. Tune in for my next blog to learn more about the how of solving insurance problems with tech solutions.