Why The Future of Insurance Needs to Trust the Moments that Matter

It's possible that's what the industry has been doing all along...

Now the only thing that's left to do is sprinkle a little more technology over everything.

That should help make the point of need bigger and brighter to find the best policy at the best time.

It might even be possible to adjust the words that describe the coverage to operate in a more dynamic and real-time way.

Bryan Falchuk, Founder and Managing Partner at Insurance Evolution Partners, talks about all the possibilities you should prepare for.

Joey Giangola: This is Bryan Falchuk. How you doing today, sir?

Bryan Falchuk: Good. How are you doing, Joey?

Joey Giangola: Bryan, I'm doing good. I have to know. This is going to be a throwback to sort of the origins of our relationship. But if you had to give me a food that you eat that's healthy, but you eat it in a very unhealthy manner, what is that food?

Bryan Falchuk: Wow. Oh, man. Probably peanut butter. Because peanut butter in small quantities is perfectly fine, but the size of my spoon and the height of the scoop that comes out with it is, I think it's hard to call any of that small quantities, so peanut butter.

Joey Giangola: That is an excellent answer. I will see your peanut butter, raise you almond butter and add an apple to it, and that's just, my day is done. Once that happens, it's a bad combination.

Bryan Falchuk: That's good stuff. Yeah.

Joey Giangola: It is. It is indeed, but Bryan, I have to know what has been going on? It's been a while since we've talked, how is life in your sort of world of insurance?

Bryan Falchuk: Yeah. A lot has changed. So my days are still fully insuranceified, but I don't work for anybody else anymore. That's when we talked last. I was at a carrier and then I went to an insurtech for awhile and now I help both. So I do a kind of advisory work for carriers and insuretechs whether carriers or kind of solution providers helping to navigate what I think is a really interesting time of change for our industry. And I'm not talking about COVID. I mean, that certainly accelerated things, but we're just, we've come into this really, I think big opportunity for the industry to move ahead because customers are finally, they're not willing to put up with kind of non-digital, non-responsive slower ways of working and then you throw COVID in it and not only are they not willing now they're all trained.

So everyone pretty universally, not a hundred percent but close to it, we're used to digital ways of serving ourselves and getting things done and so it's like the world is primed for the industry to really start to move ahead and there are some very interesting solutions and new kinds of competitors that are helping to push that further. So really interesting time for the industry and I get to be kind of right in the middle of it, which is really cool.

Joey Giangola: Yeah. I was reading an article in the, might've been the New York Times, Wall Street Journal. I don't know one of the two. And it was talking about the companies, this is more globally outside of insurance, but the companies that had a strong sort of foundation on a, we'll say a digital presence are the ones that are not only surviving, but thriving and the ones that did not are the ones that you're struggling seeing that are going bankrupt and things like that. I think.

it started with what got me into the article was it was about Guitar Center, I think was the latest company that's kind of filed for bankruptcy and I would imagine that's sort of a similar thing that you might be coming across.

Bryan Falchuk: Yeah. And it's interesting to me where I haven't figured out what's the profile of an insurer or a service provider who's ready to make the change or changes they need to, or not. I've seen a hundred year old plus mutuals in a really rural area who are like, "This is our moment. We're going to embrace this and we're going to change and we're small so we can be nimble. And we don't have to worry about shareholder returns. We can just push ahead." And then I've seen pretty similar looking carrier, do the opposite and be like, "Well, we'll wait until this blows over."

And it's like, I was talking to a life insurer who has 10 to 15,000 policies stuck in underwriting because they can't get medicals done. And I'm like, "So what are you doing about it?" And their response is like, "Well, we're hoping that we can get some paramedical folks out to these people's homes or get them to come to a lab." And I'm like, "Meanwhile, your competitors are pushing ahead with either not requiring the medicals or looking at other ways to get it done."

I just, I don't get that. And I haven't figured out is there, is it big, or is it small? Is it new, is it old? Is it... There's a capital position matter. I haven't seen a rhyme or reason. I think it boils down to culture and the leadership's willingness to realize, like, "We can't wait this out. This is not a flash in the pan." And even if it is, even let's say that magically there's a vaccine tomorrow and everyone's inoculated, and this is all gone, the way that consumers look at just everything in their life, but certainly doing business is totally changed, so it's not going away when the virus goes away.

Joey Giangola: Yeah. I said this not too long, but it's a genie that is not going back in the bottle anytime soon. Right?

Bryan Falchuk: Yeah.

Joey Giangola: You look at late night talk shows. Now you see people Zooming in on a actual talk show. It's like, how are you going to convince them to actually fly to New York LA or whatever when they've been...? I think it's the similar matter. Right?

Bryan Falchuk: Yeah.

Joey Giangola: I don't anticipate, the frequencies, I mean, you still might do it, but the frequency will be much less at times that you're actually going to do it. So, I mean, what do you think is the right, I mean sort of mindset or how do you sort of help somebody get to the mindset to where they need to start looking at the world that way?

Bryan Falchuk: Yeah. Well, it's tough and not everyone's ready for that. And I think if this wasn't enough of a shock to make that progress, then maybe it's not your place to move ahead, but generally I do see people who have had that wake up and what they're recognizing is, it's not an either/or. So like to your point. Yeah. I just came off a convention or an event at a conference used to always be in person. And now they're all virtual and people like, "Oh, I can't wait til they're all in person again." I don't think that's going to be the case. I think some will, or there'll be mixed media. And but to your point, you go to a one day conference, that's three days really between travel and the impact on your schedule, or you end up skipping out on half the meetings or half the sessions because your phone's going off or your email or whatever.

I think you need to be flexible with both. And I think if you get people to turn around and just look at their personal life, they're seeing the same thing. So recognizing this is the way the world works now. And so how can you provide an omni-channel or omni-service kind of experience to your customers, to your agents and brokers, whatever external parties and your employees. It's not all work from home or no work from home and I don't think it's ever going to be a hundred percent, one way or the other across the industry. And it's not that people will never get together again, or won't come together for a big meeting or something, but you need to have the tools to be flexible, to meet people where they need to be met.

Joey Giangola: I don't know if this is a thing or not. It just kind of hit me as you were talking, but I mean, how much of it do you think might be around the idea of being able to kind of facilitate a craving that somebody might have for an experience at the given time that they're possibly having it, and that becomes a much more difficult sort of balance to maintain I would imagine?

Bryan Falchuk Yeah, well, I think that's a really interesting point because that's one of the things. I do a lot of work in the startup world. That's something thematically that a lot of, some of the new solutions are talking about is sort of micro insurance solutions at moments where they figured out you are interested or you have a need. So, it's like the example from Asia I think is a really strong one, but Grab is a super app. It's like a ride share kind of service and has lots of other things that they do as well, but they've also layered in all these other services. So when you take a ride to the airport, that's probably an interesting moment to talk about travel insurance and like marrying the fact that your life is... this app knows so much about what you're transacting in your life.
It would understand like, "Oh, this person needs product warranty extension," or, "Their cyber risk has changed now, so they might be interested in adding some protection there," and it's not a $1,200 a year policy. It's a in-this-moment kind of solution. So I think if you extend that notion more broadly, as you get more digital interaction, you have more insights into these moments where there is something specific that that person actually is ready for and probably interested in and you would be helpful to them, not just that annoying sales call that they wish they didn't get.

So looking more kind of point specific, and that's very different from how insurance has worked in the U.S. historically. So I think that's an interesting shift and actually opens a moment for brokers and agents to change the value proposition they bring to their clients. Suddenly you're solving for a much broader set of daily needs versus like, "Oh, those are those policies I wish we didn't have to buy, but we have to because our bank required it or the regulators did or whatever."

Joey Giangola: Yeah. And I think it's been sort of the carrot on the end of the stick for a lot of companies over the last four to five years in terms of how do you kind of be at the right place at the right time? At what point do you, I guess, I don't know, I'm just kind of going to toss this out to you. Is there a level of exhaustion that comes in to that idea of managing that level of we'll say specificity and is there another alternative that you think we might maybe not be opening ourselves up to that might be a little more broader or just sort of, again, re-thinking the way we look at initiating that sort of coverage point?

Bryan Falchuk:Yeah. Well, I think the 1.0 version of doing that is like a new version of direct mail. It's just like, just hit them with offers at various points in their life cycle. I know we're a little bit smarter. That's the wrong answer. It's very doable. And this is why whenever someone's on Facebook and they see an ad, they're like, "Were you just listening to my call? Because the only place I've ever talked about this was on the phone just now and now you're serving me..." That doesn't feel good.
And I don't know, maybe they were listening to the call, but that's a really point specific intelligent offer with no sense of `with the person's receptiveness to it. That's the missing link. And so I think we can get smarter about what offers to make at different times, but whether the person actually has any propensity to engage with it is more important because otherwise we just burn them out on everything and every offer is ignored. So I think that's kind of another level to it.

Some companies I'm working with that do things around kind of our propensities, our appetite for things, whether we would respond or not, and what ways we can talk about things so it doesn't bother them, but actually it speaks to their actual need instead of that upfront filter we all have. It's like, my phones rang three times today. I don't even check it because I'm like, "Well, that's definitely not a person. So what's the point?" You get to this sort of boy who cried wolf kind of thing with a lot of this, if you just treat it like smarter direct mail.

Joey Giangola: That's interesting point. Definitely, 9 times out of 10, it is not a real person calling you. Although when your mom calls, that's the one time you better be paying attention, Bryan, but-

Bryan Falchuk: Depends where you fall on that spectrum. Not making a comment about my mother.

Joey Giangola:Yeah, no, get you. I understand what you're saying. Well, I mean, so I think the interesting thing there is that sort of experience that you just described would be, it's still not even there in the industries that are typically pushing the [crosstalk] limits on this stuff. So to expect insurance to get there right away I think is interesting.
But I mean, what do you think it takes? I mean, because like the word, if I will reference the book, the word future of insurance, right, we use that for a lot of different qualifiers. What does that look like for you if you had to sort of paint your picture? What does that mean to you? And it doesn't have to be an exponential future, but at least the future that's around the corner.

Bryan Falchuk:Well, so I think the long-term is actually easier. I think the short-term is a lot harder to figure out because there's so many moving parts and I'm not sure that we know quite what's going to win out, but I think there's some themes that are coming more to the surface these days that over the next five years, I think they'll play out to a broader extent.

And one is the sort of matching the need more specifically. And whether that's a microinsurance that's offered through the essentially a Facebook ad kind of approach, or it's more like, look, the structure of a policy has been, we offer these combinations of limits and deductibles or SIRs or whatever on an annual term for X premium that's filed versus it's tied to your actual usage of it or your kind of your temporal need.

So it's switching on and off, it's reacting to the scale of the exposure and it has the insights to do that, and that, yeah personal auto and sticking a dongle on your car, connected car. That's all talked about, but even things like workers' comp. Actually knowing where the exposures and this is one of the first startups I ever worked with is one who is focused on getting the exposure clear in three-dimensional space and time so you know where every worker is relative to the risks that are out there.
That's game-changing because for comp carriers, it's kind of like, you don't really know what's going on in that plant or that quarry floor, whatever. There's lots of presumptions, you'll send your risk engineers out and they'll observe, and but when those white lab coats and the carrier branded hardhats aren't there is that really what's happening.

And the reality is, people are taken off their hard hats. They're cutting through shortcuts on the plant floor, going through areas they're not qualified to be in because they're not trained to be in those spaces. There are good safety reasons why they shouldn't be there, but it's faster. Or their sensors are going off and they pull the battery out of it or they muffle it so they can finish their job. And it's like, "No, that's chlorine gas that'll kill you. Don't just cover it up or walk away for a few minutes and come back."
What if you knew all that stuff in real time, or the good behaviors. For the insured, it always feels like, no matter how low the premium goes, we're always overpaying, right? It doesn't feel good on either side so what if we had more clarity on the actual exposure in real time and matched coverage to that? So I think that will be increasingly common, and not just in personal lines where there's dongles and IOT devices and whatnot, and lots of focus on that stuff, but actually it's commercial lines where that really got its head, like the fleets. That's where used to base insurance in auto really took off because fleets are all tracking everything anyway. You don't have to convince the consumer, like, "Don't worry. We're not going to screw you over. We're not big brother watching you."

So I think that's one piece of it. And the other is really looking at like more parametric or parametric- like solutions. Whether it's actually like this event that we can verify publicly happened. Here's the data for it, so you just automatically get paid, or we ask you if you need the money and then we'll pay you if you say yes to maybe something where the adjudication of the claim, it doesn't have to be the process it's always been, we've made the, through better analytics we've understood that the trade-off of investing this time in adjusting it traditionally costs us more than if we just paid these when these triggers are hit.

So, no, it's not technically parametric. There's still valuation going on and other data that's coming in, or maybe it's images that are being auto-adjusted, but it acts and feels that way. So, you could have a loss that is settled within hours instead of multiple weeks. And I know having run a claims organization, if you can close that claim faster, even if you end up paying a few grand more than you should've paid, if you had carried it out for four months or whatever, it's vastly cheaper, and your book will run at higher quality, all else being equal, and you're going to retain that business, it's going to perform better, word-of-mouth. Brokers will like you better for it.

It's like, "Oh, they just took care of it." That's the last thing a broker wants is to have to step in because a carrier is not seeing a claim through, or they're tripping over themselves through the process. So I think these are things that will absolutely be more normal in the short-term. Long-term, there's much bigger questions afoot and I think the biggest thing is autonomy. So as we moved, and I don't know when that switch gets flipped, but at some point cars will drive themselves and they probably won't be owned by individuals. They'll either be in a fleet or there'll be shared by some company that runs it. And maybe that's a hundred years from now, maybe it's 50. Gartner probably says it's like five, but at some point down the road, we will not all own our own internal combustion car. I think that's a pretty safe bet.

So now you're not talking about a personal auto policy. You're talking about a commercial property. These are commercial property and product liability. Volvo is one of the first to say when they were starting to test their AI self-driving cars, they're like, "If our software is running the car at that time, it's our liability. It's not State Farm or Allstate or whoever. So if you are a State Farm or Allstate or whoever, you've got a huge personal auto book. What are you doing today so that 50 years from now, or whatever it is, when this is now all a commercial exposure that's probably sitting over a captive or some... An OEM is probably going to self-insure a good chunk of that. How do you stay relevant?

If you've got 200 billion or whatever it is of auto policies gone, how do you stay in business or relevant in that world? Is it all just kind of Munich Re and Swiss Re that ends up insuring the world, or do some of those primary carriers still matter? I don't know, but those are things that you do need to start to make some decisions today, like CSAA did with Mobilitas. How do you start to get your hands dirty in those shifts so you can see them before it's already shifted because that's not the time to do something about it?

Joey Giangola:Yeah. It's definitely some heavy stuff and I would think that goes back to what we were talking about earlier is there's probably a bigger opportunity to insure more things at different times. You'd think that they would maybe want to shift the focus to different personal things. But who knows. Like you said, it's anybody's game when that's concerned, but all right, Bryan, let's say we wanted to just, really just put out there, what maybe the thing is that you think if you had to pick a horse or something, or just tell blanket, like, "This is the first thing that we all should sort of get behind, right, in terms of unifying our step towards the future of insurance." What is that thing if you had to give somebody one? Impossible question, but go ahead.

Bryan Falchuk: Yeah. It's a really hard question. I think there's a basic kind of enabling piece that everyone needs to be okay with, or you're not going to move ahead. And this sounds super elementary, but it's basically like, "Are you able to work with APIs quickly and easily?" If the answer is no, then the first thing you need to do is get yourself to that place, because that's really how everything is delivered. There are so many amazing microservices point solutions, new ways of doing things that everyone is Cloud-based and API driven.

So if you can't connect to older versions of Guidewire, not even that old, but older versions of Guidewire can't work with APIs. If you're on one of those versions, which a huge percent of their install base is you need to do something about that, and that's not the only one. So thinking about your ability to it's really about interconnectivity, not integrations, but being able to connect to better ways of doing each piece of the process or injecting new tools and new approaches along the way. And this is not just carriers. This is agents and brokers, service providers, it's everyone. If you're not thinking about your connectivity, then you're missing something because this is going to be much more about partnerships than one company who solves for everything.

Joey Giangola:All right, Bryan, I have got three more questions for you.

Bryan Falchuk:Yeah.

Joey Giangola:And the first one is very simply, what's one thing that you hope you never forget?

Bryan Falchuk: Man. That's a real... I have no idea. Like in insurance or in life?

Joey Giangola:You can go in any which direction you want. People generally go life, but feel free. Take it any way you want.

Bryan Falchuk:Yeah. I think the safest thing is like wife's birthday or anniversary, although she's forgotten, not her birthday, but our anniversary before. So I feel like I might have some brownie points with that where I've got some room to skate, but in all seriousness, I think ultimately, I'm very purpose-driven, like internally purpose-driven and that speaks to a lot of change that I've been able to affect in my own life. Losing sight of that would be terrible. So for me to never forget, stay connected to that and keep evolving it and digging into it, I don't want to just get complacent. So that's a bigger deal for me.

Joey Giangola:Right? Your wife might have bigger issues with you throwing her under the bus publicly on the anniversary, but that's maybe [crosstalk 00:21:59].

Bryan Falchuk:She won't listen.

Joey Giangola:No, you're fair enough. on the other side of that, what's one thing that you still have yet to learn?

Bryan Falchuk: There's a lot I still have yet to learn. Yeah. I mean, I think all of us can do better with how we react to the good and the bad, how we let moments kind of overtake our sense of kind of seeing through them and just dealing with anxiety. And I think we've all been very strongly tested this past year on how much we let our thoughts run away with us. And that's something I focus on a lot personally and mentoring work that I do. And so I'm not immune to needing to do more work there.

So I mean, they kind of tie together the thing to remember, and what I still need to learn is I still need to learn how to dig in deeper and see myself through those tougher moments. We all go through it and it's perfectly normal, and natural, and human. It doesn't mean I don't want to continue to navigate them better.

Joey Giangola:All right, Bryan, last question. This is basically been an entire conversation about this, but let's just see what happens. If I were to hand you a magic wand of sorts to really re-shape, change, alter, improve the way that insurance is handled, what is that thing, where is it going and what is it doing?

Bryan Falchuk:It's design thinking and that's pretty clear for me is the way that we engage with primarily customers, but also our own people and our partners it's changing, but it needs to change a lot faster. And for more companies and those that I've seen embrace just a very different approach to engaging in a question and people's views on it and how they feel about you and what you're doing and how you could solve for things differently. When I've seen people use that or companies use that approach it's a massive unlock in places where you wouldn't necessarily expect a change to happen.

And when I've seen folks who instead say, "Oh, we know what our customers want," or, "Well, they're all kind of out to get an extra buck on a claim, so we really have to scrutinize them," because that's where the, I think overall misconception about insurance carriers, not being here to stand by their policies or agents or brokers just trying to make a buck on commission and the carrier is always feeling like they're just trying to squeeze more commission out of me.
I think that's where those sentiments come from when people presume instead of actually just asking and then step back and listen to what you're being told instead of re-interpreting it through your own lens. So design thinking is a great way to sort of force that. And what you find is people discover major shifts are possible, and you can almost have a rebirth of your teams without having to fire everyone and bring in fresh new talent. You unlock people maybe been in the same job for 40 years and they're suddenly invigorated and full of passion to deliver something even better, which is really cool to see.

Joey Giangola:Bryan you did fantastic, so I'm going to leave it right there.

Bryan Falchuk:Cool. Thanks, Joey.