Season 2, Episode 1 - 4

September 23, 2021

Season 2, Episode 3 | Bob Frady

Speaker 1 (00:04):

Welcome to InsurTalk, the podcast where we don't just talk about innovative ideas in P&C insurance, we talk with industry trailblazers about the big ideas they made happen and how they did it. This podcast is brought to you by Guidewire, the platform P&C insurers trust to engage, innovate, and grow efficiently. Visit guidewire.com for more information, and now, let's make it happen.

Laura Drabik (00:31):

Welcome to InsurTalk. My name is Laura Drabik, and I'm the Chief Evangelist at Guidewire. In this episode, I have the privilege of interviewing Bob Frady, CEO and founder of HazardHub, an insuretech startup and leading provider of property-level hazard data and risk scores in the US. HazardHub was recently acquired by Guidewire to help our insurers deliver more innovative lines and services. Hello, Bob. Thank you for joining my podcast.

Bob Frady (00:59):

Hello, Laura. It's a pleasure to be here.

Laura Drabik (01:01):

Why don't you start off by telling our listeners about HazardHub?

Bob Frady (01:05):

Sure. HazardHub is a company that tells you all the bad things that can happen to a property, which makes us no fun at parties. We tell you the risks for things like wildfire, or flood, or ice dams, 35 different risks altogether, that help you to understand what can impact a property. Now, we've also grown into things like, how many bedrooms, how many bathrooms, what are the square footage, who are the occupants, or what are the occupancy types at that location? We've also delved into the world of building permits. We've built our own building permit database, so we can tell you, for a property, what has gone on at that property that you might want to be aware of if you're either buying or insuring that property. All of that in two seconds with the single click of a mouse.

Laura Drabik (01:48):

Hey, I noticed for the second time in a row, HazardHub was named to the InsureTech 100 list in 2021. Congratulations.

Bob Frady (01:55):

Thank you, thank you very much.

Laura Drabik (01:56):

For our listeners, this is a rating of the most innovative companies in the world, and one of the rating factors considered is the industry significance of the problem being solved. Bob, can you explain the industry significance of HazardHub and the business problem you are solving?

Bob Frady (02:13):

Sure. You know, data and risk data has existed in one form or another for as long as there's been insurance. The problem is that getting that data into the insurance funnel is so expensive that people don't often use data until after they've found a policy. So, they go down a path, they find a policy, and then they figure out what the risks are of that policy, which we thought was just dumb.

Bob Frady (02:38):

So, what we decided to do was to make data like a new television set. When you walk into Costco, you see a new TV, and it has a better picture, and it's cheaper, and it's lighter than the TV you have in your house. Data should be the same way. It should get better, faster, and cheaper every year. And, that's what we're solving for. Because we can build data so aggressively and cost effectively, you can use it at the point of application, which is exactly where it should be used.

Bob Frady (03:04):

It's not that data is all that magically different. Now, we do offer improved models, but it's the ability to tie it with technology that lets you put it in the very beginning of the sales process in insurance. That's what sets us apart.

Laura Drabik (03:18):

I really like your statement. Better data, delivered cheaper and faster. So, I'm sure you get asked this all of the time, but what was your impetus for starting HazardHub?

Bob Frady (03:27):

I blame it on my now former mother-in-law. She lived on a river in Massachusetts and had a flood. And, I looked up all the data, and I saw that she wasn't in a flood zone, but she was right next to one, and I asked her if anybody had ever told her that she was right next to a flood zone, and she said no.

Bob Frady (03:45):

The insurance company didn't tell her, because they don't cover flood, and the bank didn't tell her because she wasn't in the flood zone. Well, the river came up. It wiped out her basement, a significant loss that could have been avoided by just having her change her sump pump batteries every six months.

Bob Frady (03:59):

And, it was always one of those things that stuck in my head. It's like, we can solve for this. We should be able to help insurants to understand what their risks are so they can make better decisions. And, it just, it was just one of those annoying things. It's like when a song gets stuck in your head. This was stuck in my head for five years.

Bob Frady (04:16):

So, finally, I hired a designer. I had met with a couple of friends, and we decided to put together a company called HazardHub. We built a bunch of mock-ups. We showed it to some people. They were like, "Hey, we'd like that," and said, "Well, how about a down payment?" And then, we started the company, so that's the really fast genesis of our business, but it was all built on one thing. We want people to know what their risks are so they can protect their own properties.

Laura Drabik (04:40):

Thank you so much for sharing that very personable, and also memorable story. So, in August of this year, Guidewire acquired HazardHub. Welcome to the Guidewire family.

Bob Frady (04:50):

Woo-hoo. We're happy to be here.

Laura Drabik (04:51):

It's good to have you. Now, insurers will still be able to leverage HazardHub directly, and I also see great potential in weaving HazardHub's risk scores into our PolicyCenter and ClaimCenter core solutions to provide augmented intelligence to both the underwriter and claims adjuster. What is your first use case with Guidewire, and what's on the roadmap?

Bob Frady (05:12):

One of the big difficulties that we see in the use of data is insurance companies have to decide, okay, which data provider am I going to use? And, the second is, they have to say, okay, now, I have this big, giant IT project to get this data into my core system so I can use it effectively. Well, with the acquisition by Guidewire, we eliminate that. The data is natively inside of the platform, so there's no IT project to actually pull the data in, which is a huge both cost and time savings for our customers.

Bob Frady (05:43):

So, the first use case is, we are embedded inside of PolicyCenter, so you can see what the risks, where we have a grade, you can see those at the property level inside of PolicyCenter. Just turn on the switch, and it's there, so that's the first application that we have.

Bob Frady (05:58):

The second is to do two things. The first is to expand that to ClaimCenter, so you could do things like automated claim triage. Was there an event? Is this a high-risk area? Pay the claim without having to send an adjuster necessarily out there.

Bob Frady (06:12):

Then, the second part is to bring all of the data in. Right now, we're bringing the scores in, which are A through F grades for 35 different risks. We'll also bring in all of the data that was used to create those scores. One of the big complaints we're hearing about things like wildfire risk is people have no insight as to why it's happening. We want to be able to provide instantaneous reasons as to why a wildfire score is constructed the way it is, give away all of the data elements that make up that score, so we increase the transparency between the insurance company and the insureds.

Laura Drabik (06:45):

This is such great information. Before we continue, listeners, if you're enjoying this podcast, be sure to subscribe to InsurTalk on Amazon, Apple Podcast, Stitcher, or wherever you get your podcasts, and you can rate and review this show on Apple Podcasts. It helps others learn about and discover the show. Now, this is Laura Drabik, and let's get back to conversation. I'm talking with Bob Frady, founder of HazardHub.

Laura Drabik (07:09):

What are the main benefits insurers are able to realize with HazardHub? What are the synergies of Guidewire and HazardHub combined?

Bob Frady (07:17):

I think that the reason why people choose HazardHub is we give them, A, really excellent models for perils. There's ways to get this data, but to break it down into a useful format, that's something we really specialize in, so it's the quality of the data that we bring for things like hurricane, or wildfire, or fire risk, the big perils that can really impact [inaudible 00:07:40] business.

Bob Frady (07:40):

The second reason was the sheer volume of information that we provide. You don't have to go to eight different companies to get an answer. It's a one-stop shop. Then, the third reason is, it's just much more cost effective than any of the competing systems out there. It is ridiculous sometimes what competing systems charge for the use of data that is really sometimes built on public data. How are you consciously charging so much money for something that an underwriter could go look up for themselves?

Bob Frady (08:07):

So, I think that we match value with quality in a way that no one else does. The synergy with Guidewire is the integration into the platform and the instantaneous access to the data. The, like I said before, you don't have to go through the IT project. It's right there.

Bob Frady (08:21):

So, then, what we'll eventually be able to do is move it into the predict product, as well, so you'll start to be able to build models on it. You'll have our day zero models available, but if you want something else, you can use our data to go build more models. So, it's a really exciting marriage between our two companies.

Bob Frady (08:38):

And, what's funny, I, I use that term on purpose, because at InsureTech and at Guidewire threw a party to recognize the acquisition of HazardHub, and all of our friends came. And, the number one thing that we heard was like, "This is just like a marriage. You know, this is two companies coming together who compliment each other in a way that you don't often see in the insurance landscape," so, super exciting.

Laura Drabik (08:59):

Wonderful. As one of the founding employees, I have to say, I am very excited by this acquisition and how you're helping to evolve all of our modules. When I first joined, all we had was ClaimCenter, and now you're actually helping us make ClaimCenter even better, so thank you for that. Can you share with us any specific examples of cost savings or revenue growth that you've generated for insurers?

Bob Frady (09:21):

Sure. I'll share two examples with you. We had one customer who was a commercial lines insurer who writes in cat-exposed areas. They go where people feared to go, because they have a lot of data to help them make decisions. The loss ratio on their book is 20 points better than their nearest competitor. So, while we don't see that necessarily as a cost savings or revenue growth, we see that as a really important bottom line figure for them.

Bob Frady (09:45):

The second is, we have a personal lines carrier who also writes in cat-exposed states. Their loss ratio is in the 60s because they use data intelligently to help them find the risks and the prices that make the most sense for them. You know, at the end of the day, we can all talk about cost savings, but really, it comes down to loss ratio, and that's where the most inventive uses of our data really win, because they have that data at their fingertips to say, this is how we should treat this risk, because we know what the underlying data is for that property.

Bob Frady (10:18):

So, that's just a couple of examples of how it works on loss ratio. We have lots of other examples where we can turn our system on in a day, and you can be onboarded in a day, which is something that our competitors can't do. It can sometimes take months to get started with competitive systems.

Bob Frady (10:34):

We are an API-native company, and if you can absorb an API, you can be on tomorrow with our platform. And, that cost savings internally for our customers is almost immeasurable, because they don't have to go through all the pain of trying to hook up to a system that just doesn't want to be hooked up to. We can make it easy to integrate into platforms.

Laura Drabik (10:52):

HazardHub data is relevant to every Guidewire customer writing US business. Any plans to expand outside of the US, to start Canada or carriers in other regions?

Bob Frady (11:02):

The short-term answer is the US market is a big market, and we want to really focus on dominating the US market. The long-term answer is that it's a little tricky in other countries sometimes. A lot of other countries don't like to make data available, and it's difficult to get the source data that you need. Our goal in 2022 is to figure out which countries allow us to get the data that we need to build the models that we need, and we're working on it.

Laura Drabik (11:30):

So, I was recently reading the United Nations report on climate change and was quite shocked when they characterized climate change as a code red for humanity. Wildfires and winter storms in the US, and tornadoes in Europe, were enough to deliver a $40 billion blow to global insurers in just the first half of this year. That translates, Bob, into the worst year for natural catastrophe insurance in a decade. How does HazardHub combined with Guidewire help carriers rethink risk assessment and price more accurately?

Bob Frady (12:00):

I think there are a couple of different ways that climate change presents itself. The first is what we'll call the macro level, with the climate, it, it's changing. How do we adapt to that? How do we change our systems? How do we try to lower our carbon footprint? And, that is a very macro-level question.

Bob Frady (12:16):

The bigger problem that we see with climate change is not climate change itself. It is people moving into areas that have always been terrible, in terms of climate. Texas has, I think, 14% more people than it did a decade ago, and Florida has 12% more people. Both of those states are terrible in terms of catastrophes. So, the one way that we can help people today is to look at where their population is and give them the risks of their population, so they can understand what their exposure is because of population shifts, as much as anything else.

Bob Frady (12:49):

The second part is we do have sea level rise estimations inside of our API currently. So, if you're writing coastal property, and you're concerned about the impact of sea level rise, then we have that available today for our customers to append to their files, and say, okay, sea level rise is probably the most immediate impact of climate change, so how do we measure that for our customers? We can do that today.

Bob Frady (13:14):

The next stage will be the integration of climate change models into our datasets, and how do we say, okay, if we agree with climate change that's going to change by this, what's the impact on our book of business? That's a coming product that we're really committed to building. It's a little tricky, as you can imagine, but that's what we want to be able to bring, long-term, to our combined customers.

Bob Frady (13:37):

So, today we can tell you what people are moving into bad zones. We can show you the risk-adjusted portfolio exposure. Then, we can tell you what the impact of sea-level rise is, and then the next step is to say, "Okay, let's be a little bit more modeling-focused," and say, "What's the impact going to be on my portfolio, given certain types of climate change?"

Laura Drabik (13:57):

We need to take another break. If you're enjoying this podcast and would like to review more of my thought leadership, please see evangelist.guidewire.com. Now, let's get back to our conversation with Bob.

Laura Drabik (14:08):

So, HazardHub has had some explosive growth. What advice would you give to other entrepreneurs and insurtechs who want to successfully work with carriers?

Bob Frady (14:17):

Oh, gosh. You know, we could have a whole other podcast about this. The first thing is it's a, if you are selling into either underwriting or actuarial, your sales cycle is measured in years and not months. It will take a year to two years to prove yourself, and then it will take another year to two years to actually implement your solution.

Bob Frady (14:38):

And, most people aren't prepared for that long of a sales cycle. We knew going in it would take a long time. We knew it would be a three to four-year process, so that's number one. Get yourself prepared for a really long sales cycle.

Bob Frady (14:52):

And the second is, you have to understand, insurance companies hate risk. They do. They avoid it. Insurtechs are risky, so, with transitive properties, therefore, insurance companies hate insurtechs. So, your job is not to be great as much as it is to be safe. You have to become the safe bet.

Bob Frady (15:10):

Like, now, if somebody says to HazardHub, you know, "Who you working with?" And we can go, "Well, here's 150 customers who we're working with." And, people keep hearing our name, and that makes us safe. That's the hard part. Even as great as our data is, the safety of our brand is the reason why we've had so much growth in the last two years. We've grown 90% this year. We grew 70% last year. It's because we are now a safer bet. Now, with Guidewire purchasing us, we've become even safer, so we expect even more growth next year. So, number one, it's a long sales cycle, and number two, your job is to make yourself safe rather than outstanding.

Laura Drabik (15:47):

Sage advice. Let's look at the flip side of that question. Based on your experience working with carriers, what is the most effective way for insurers to work with insurtechs?

Bob Frady (15:57):

Number one is to bring data to the party. If you don't have a claim set or a policy set, you're just holding progress back. And, number two, focus on the problems that you're having. Find solutions to those problems, and have a bias towards execution. A lot of times, people say, "We'll just wait it out and see who the winners are," which is really tough for a lot of insurtechs to have to live with. So, number one, bring data, and number two, focus on the problems that really cause you problems, and number three, have a bias towards action.

Laura Drabik (16:25):

So, what's one critical piece of advice you would have liked to have known back in 2015, was it, when you started HazardHub?

Bob Frady (16:33):

(laughs) Oh, gosh. I would tell myself to calm down. It's all going to work out just fine. You know, we knew what we were getting ourselves into, and one critical piece is just to ignore the financial markets. A data business is a tough business to raise money for, so we spent a lot of time going down a path that was a waste of time. Just bootstrap, toughen up, and go, go, go. Everything'll work out fine.

Laura Drabik (16:55):

Bootstrap, tough it up, and go, go, go. I love that. (laughs)

Bob Frady (16:59):

(laughs) It's the basics. Build a profitable business, and things will work out well. Don't be so concerned with getting a big valuation from a VC. That can be a tricky road. I like building businesses that actually make money, not necessarily ones that get big valuations, and the advice to myself in 2015 is, you're on the right track. Just calm down.

Laura Drabik (17:17):

I'm sure your younger self would have appreciated that. Bob, thank you so much for your time today, and more importantly, thank you very much for joining team Guidewire. You've showed us it's not about ideas. It's about making ideas happen.

Bob Frady (17:31):

Thank you so much for the time today, Laura. It was a pleasure talking to you.

Speaker 1 (17:34):

This podcast is brought to you by Guidewire, the platform P&C insurers trust to engage, innovate, and grow efficiently. Visit guidewire.com for more information.

 

 

Season 2, Episode 2 | Shane Cassidy

Speaker 1:

Welcome to InsurTalk. The podcast where we don't just talk about innovative ideas and PNC insurance. We talk with industry trailblazers about the big ideas they made happen and how they did it. This podcast is brought to you by Guidewire, the platform PNC Insurers trust to engage, innovate, and grow efficiently. Visit guidewire.com for more information. And now let's make it happen.

Laura Drabik:

Welcome to InsurTalk. My name is Laura Drabik, and I'm the Chief Evangelist at Guidewire. In this episode, I have the privilege of interviewing Shane Cassidy, EVP Global Insurance at Capgemini. Shane focuses on the enablement of transformational strategies through technology and operations for leading Insurers. And, the focus of today's discussion will be on Shane's area of expertise, how carers can and are transforming their business. Hello Shane, thank you for joining my podcast.

Shane Cassidy:

Hello Laura. Thanks for having me.

Laura Drabik:

Tell our listeners about Capgemini and your role there please.

Shane Cassidy:

Capgemini is one of the world's leading global systems integrators. We have over 300,000 people and across, I think 45 countries at this point. We break down our business by sector and I run one of those sectors, which is Insurance.

Laura Drabik:

When I'm in the field, talking with our carriers about their strategic aspirations, I often hear goals from them like, "I want to get brand new, innovative lines to market quickly", or, "We want to improve the customer experience by creating an omni-channel approach", and also achieve straight through processing of claims. Based on your carrier field experience, what are you hearing is the top business goals carriers are trying to achieve to transform their business?

Shane Cassidy:

Carriers are focused on their transformation because they've had such success implementing core platforms like Guidewire that allow them to focus on transforming their business. They have a system in place that allows them to focus on things like product, pricing. And in COVID, is obviously touched off the renewed focus around digitization and touchless claims is become ever-present. If people aren't starting their effort towards a more touchless version of claims, they're thinking about it. And it's one that I see a lot of traction in over the next couple of years.

Laura Drabik:

One of my favorite customer transformation success stories is from a Canadian carrier economical insurance, who leveraged our technologies to launch a brand new digital carrier and brand new lines of business. The purely digital carrier was called SONET. Within two and a half years of launch, they had grown from zero DWP to over 200 million. What is your favorite customer transformation story? And please share why.

Shane Cassidy:

Sure. One of my favorites is one we also worked with Guidewire on which AAA on the Roadside Assistance. And it's really the unification of Roadside and Insurance coming together, almost under an Uber-like experience. I think it was pretty unique and it provided, not just a customer experience, but also for safety and security of passengers. So, you could do everything from recognizing an accident to automatically calling the tow truck or other services that might be required, as well as guidance around how to stay safe.

Shane Cassidy:

In the interim sometimes these are on a heavy traffic highway or out in the middle of nowhere. So, understanding and knowing who's coming, what the picture of maybe the service provider that's coming to support you is. It's a pretty unique solution and service that it kind of leapfrogged the industry if you asked me. And I think they're taking it further, which is starting to predict where there might be services needed. There might be a giant concert somewhere or a weather incident coming in and they can move their services into the region ahead of time so that they're best prepared to respond quickly to their customers. And I think it's a really innovative solution where we've brought products like Guidewire and Salesforce actually together. Using tools like Autonomo, SmartCar and really allowing the data to drive the service in a very unique and innovative way.

Laura Drabik:

That's an excellent example. Swift, safe service, and then also predicting service. I love it. Thanks for sharing. To measure success of a transformation initiative. I have seen carriers use financial metrics, such as DWP and Stakeholder Measurements, such as agent, employee, and consumer satisfaction ratings. How do you recommend carriers measure the success of their transformation initiative?

Shane Cassidy:

The standard measurements are good, but it's more about the processes. What happens is you get into these programs, these programs can be one to three years of transformation, and unfortunately, after a certain amount of time, you get so focused on the technical execution and you lose track of what you were measuring from the beginning, because it's all about budget and deployment, or what you plan to measure in the beginning may not have as much business relevance as what you're looking for in the end. We've created a solution called VRO, Value Realization Office. Whose job is to work with the customer and actually build that capability into the organization so that they are constantly looking at, what is important to the business and how has this platform going to deliver against our business needs? How do you extract the value out of the investment we're making?

Shane Cassidy:

Because you can make the investments and not necessarily extract the value. Have you changed your business? Are you driving different metrics into your organization? Are you setting expectations around roles and responsibilities so that you're getting the benefit of the changes that you're making? And I think customers are really starting to focus here on measurement and the benefits of the investment and again, I think it can change. Obviously, you can measure combined ratio and the agility of the product, pricing accuracy. I think you start to look at different measurement opportunities based on the technology you've actually implemented.

Laura Drabik:

This is such great information. Before we continue, listeners if you're enjoying this podcast, be sure to subscribe to InsureTalk on Amazon, Apple Podcasts, Stitcher or wherever you get your podcasts. Now this is Laura Drabik and let's get back to our conversation. I am talking with Shane Cassidy, EVP Global Insurance at Capgemini. It's estimated that half of the American workforce will be freelancers or part of the gig economy by 2028. Shane, how are carriers addressing this trend with new lines of business and also with services?

Shane Cassidy:

There's a great one that we both worked on again, Metromile, who focuses on the Uber-like services, who's been extremely successful. Where we implemented a platform that allowed them to really deliver price and manage imply services to a group of gig operators for these different types of companies. It's been extremely successful, but you've got others across the spectrum. Hartford has got putty now coming in and focusing on contractors for a general liability. Chubb is going after MicroBOP. Hiscox is developing a aligned for its freelances for professional liability. And I guess though short history, these risks have actually proven to be really good risks, low claims in comparison to broader groups. So, it's going to draw in more and more and more focused around, looking at these different gig entities. But I think what's also interesting is really specific products for them. Really coming up with innovative truly new solutions, new products for these workers, which I think is a trend that's going to last. Especially, as the profitability around these books are strong so far.

Laura Drabik:

The United Nations report on climate change was actually scary. It characterized climate change as a code red for humanity. Federal regulators in the US went so far as to suggest that the potential damage from climate change could end up being as severe as the fallout from the mortgage crisis, triggering the 2008 financial crisis. So, from your perspective, how are carriers addressing climate change and weaving it into their transformation initiative?

Shane Cassidy:

Yeah. We did done a lot of work around this in our last world insurance report there was a lot of focus on essentially uncovered risks in the market and opportunities for Insurers. Climate change was one of the big ones and it's actually interesting because the customers are saying they don't feel they have coverage, and the Insurers are saying, they think this is a gap in the market and we kind of verified all of that. I think the first thing that we probably need to recognize is that just need better data and more extensive property data to assess the risk to advise. And there was... Obviously you guys acquired HazardHub, which I think shows the exploding need for data around property. And so, I think that's an interesting acquisition and kind of supports that need to improve that. I think number two would be around the protection. So, as we started thinking about how we build buildings, the construction requirements, and then even kind of leaking into responsiveness, right. We have the sensor explosion as well.

Shane Cassidy:

Sensors are becoming ubiquitous, they're becoming everywhere. And you started thinking about home, water flood, fire, and ability to help people recover faster, if not avoid the risk altogether, and I think that's what you're going to see more and more of. There's some people out there that are beginning focused around leveraging the technology, USAA is a good one where they have a focus on responsiveness. It's how fast can they get to the risk, get you paid and rebuild whatever needs to get going. And I think this is important, especially where finding these people to repair your home, there's a certain amount of people that are available out there. It's tough going.

Shane Cassidy:

So, the faster you can get that risk assessed, faster you can get somebody paid and faster to get them out there with their builders, the better off your customers are going to be. Lastly, I think the flood system is broken. The data, the information, the support. Flood is an area where I think is going to get a lot of attention over the next five years, but it needs innovation, it needs leadership, and I think that's coming. It'd be really exciting area for probably the next decade or so. If you look at UBI and Auto versus sensors for home, it's just not even comparable yet. There's a long ways to go. Huge opportunity across the board.

Laura Drabik:

So, one of the coolest innovations I've seen implemented was from a carrier that launched a mix of chatbot and human service. It is so well done. The consumer doesn't know that there's actually a robot behind the scenes, helping the human respond to inquiries. This innovation helps, I think CSRs, as well as adjusters, deliver very personalized responses to the consumer quickly. What's the coolest innovation you have seen implemented? And please share why.

Shane Cassidy:

There's one outside the industry, we're working with Aflac. And they have a really good process, for essentially instant payments. So, we're talking pretty complex claims and we're using AI and to read the claims documents, photos, you name it. And basically deliver straight-through processing, but almost instant payment of claims. And I use as an example, because I think we're seeing that push into PNC really quick.

Shane Cassidy:

Another one is a customer we jointly have in the UK, DLG. And we use Guidewire and several other Cloud tools in a fully Cloud solution to deliver a capability and a lot of their businesses aggregator driven. So, it's about speed and price accuracy. And, using a full Cloud solution, including Guidewire, developed this platform that can return pricing in two seconds, but more importantly, it can massively enrich the data within that amount of time through parallel processing. It's got a bit of a unique architecture that allows it to really take in data from many sources, and it's flexible enough that'll continue to evolve over time. But it is from a performance and an accuracy and a pricing specialization. Is extremely innovative.

Laura Drabik:

According to Oxbows latest report on glacial shifts in PNC value, independent agents will steadily increase in value up until the year 2030. This makes sense due to economic reasons, as well as growth opportunities by providing carriers with access to existing distribution channels that independent agents have. How are you seeing carriers address independent agents in their transformation strategies?

Shane Cassidy:

It's a great spot for the Insurers. I don't think there's a consolidated view of how to do it just yet. I know it's going to wrap around data, service simplification for them, how can we provide more enterprise-level data for the independent agent and really help them provide the services that allow them to focus on what they want to focus on, which is selling and making commissions while still driving customer sentiment through the roof. Everybody also wants to have a direct channel as well, but the independent agent market and capabilities not going anywhere soon.

Shane Cassidy:

And the Insurers are largely focused on figuring out how to bring them a better-simpler more effective service and very much in a predictable way. I think these folks are spending their time in the market, but they want to do it with more data than they actually have internally. Yes, they have information in the marketplaces, but the Insurers have far more and they have the ability to enable them to be much smarter about what they do and almost bring business to them. And I think that's what a lot of the Insurers are focused on figuring out how do they do that more effectively than they are today.

Laura Drabik:

We need to take another break. If you're enjoying this podcast and would like to review more of my thought leadership, please see evangelists.guidewire.com. Now, let's get back to our conversation with Shane.

Laura Drabik:

Working for a tech company, I see Cloud as important to our industry because it provides carriers with access to leading-edge infrastructure without the operational overhead or capital expense and Cloud Software provides carriers the flexibility to rapidly prototype and deploy new lines of business, as well as services. Shane, why do you think Cloud is important to a carrier and also to our industry?

Shane Cassidy:

I talk about this all the time, internally, the focus on Cloud and its importance. I almost feel it's... The purest truth is that the future will be data-driven and agile in every way. The products will evolve faster and faster, pricing more individualized, sense of data will become ubiquitous to lower the risk and embedded insurance is inevitable. And, I personally don't see a path toward achieving that without Cloud at the center. Cloud is the enablement underneath that allows all of these things to happen at speed. I'm not seeing many customers who haven't fully bought into "Cloud is our future". It is about converting, not just your current strategic applications into the Cloud, but you have to actually convert your legacy applications into Cloud-enabled so that you can get access to that data. You got to move your data into the Cloud to allow for far better usage and complete use of that data. So, to me, Cloud is a done deal. It is core to what the future of Insurance will be.

Laura Drabik:

I like that statement, "Cloud is a done deal. It's core to the future of Insurance". Thanks for sharing. So, as you know, many years ago, I was a change management consultant and saw firsthand how culture and talent were the top obstacles to a transformation initiative. What do you recommend to carriers to help them proactively create an innovation culture and talent pool?

Shane Cassidy:

This is a hard one in this industry. It is without question the cultural change. I'd haven't seen it work without both top-down mandated strategic change and bottom-up desire to do something different. This is a big DNA shift for Insurers. We use the term Transformation Program. Transformation starts largely when the program ends or it continues in perpetuity, because you are making the investment around a Guidewire and extended platform so that you can operate differently.

Shane Cassidy:

And if you choose to operate the same, you've really left a lot of investment on the table. It is about getting alignment from the beginning of that program all the way through building a culture, as well as... I think you absolutely need a dedicated focused team that drives transformation and looks at everything from operating model to Org. structure, to roles and responsibilities. Because as technology will continue to shift, data becomes more and more prevalent and available. You'll have to change, your products are going to change, the way you interact with your customers, the way you work with your partners and service your clients is going to continue to evolve. And you can just tell those that embrace transformation as a culture will move faster and win in the end.

Laura Drabik:

Shane, thank you very much for your time today. And for being a wonderful Guidewire partner. You've showed us it's not just about ideas, it's about making ideas happen.

Shane Cassidy:

Thank you Laura. Greatly appreciated being here. Lots of fun.

Speaker 1:

This podcast is brought to you by Guidewire, the platform PNC Insurers trust to engage, innovate, and grow efficiently. Visit guidewire.com for more information.

 

Season 2, Episode 1 | Steven Van Belleghem

Audio:

Welcome to Insure Talk, the podcast where we don't just talk about innovative ideas and PNC insurance. We talk with industry trailblazers about the big ideas they made happen and how they did it. This podcast is brought to you by Guidewire, the platform PNC insurers trust to engage, innovate, and grow efficiently. Visit guidewire.com for more information. And now, let's make it happen.

Laura Drabik:

Welcome to Insure Talk. My name is Laura Drabik, and I'm the Chief Evangelist at Guidewire. In this episode, I have the privilege of interviewing Steven Van Belleghem, international keynote speaker, author, entrepreneur, and my co-presenter at two Guidewire user conferences. Steven is a global thought leader in the field of customer experience, and that will be the focus of today's discussion, how organizations create a differentiating customer experience that will allow them to win the hearts and the business of customers over and over again. Hello Steven, thank you for joining my podcast.

Steven Van Belleghem:

Hey Laura, it's a pleasure. Thanks for inviting me to your show.

Laura Drabik:

Tell our listeners about yourself and how you spread your thoughtful ideas about the future of customer experience.

Steven Van Belleghem:

My core focus is to do research about the future of customer experience and share those ideas on multiple platforms. I've written five books on the topic, and I share a lot on social media, so people can find me on YouTube, I have my own blog, I share a lot on LinkedIn, on Instagram, and it's the core of my passion just to share ideas and inspire companies to do a better job in making their customers happy.

Laura Drabik:

Yes, and you do a very good job of it, of inspiring people, including myself.

Steven Van Belleghem:

Thank you.

Laura Drabik:

In your book, The Day After Tomorrow, you explained that we are entering a new third phase of digital transformation. The first phase was making data accessible. The second phase was about mobile and communication. And the third new phase is about artificial intelligence with companies moving from a mobile first strategy to an AI or artificial intelligence first strategy. Can you elaborate on this?

Steven Van Belleghem:

Sure. I think the big change that we've seen, let's say between the early days of the internet and then 2015, 2016, was the shift in platform. We used to start with a desktop and then when surfing, then we moved to mobile. It took a while before every company really knew that they had to go on mobile. Now everyone is on the new platform, but now you see that automation becomes crucial to make a difference. And the bigger companies are now understanding that everyone is becoming an artificial intelligence organization, because if you want to deliver a certain level of service, you need that automation. If you look at the trend of what people expect, the effort that people want to put into discovering your company and your apps and your applications is close to zero right now. So without automation and without leveraging the data that you have, it becomes very, very difficult for organizations to actually fulfill customer expectations.

            And if you look around you, you see that it's happening right now. A couple of weeks ago, you may have seen this, Laura. Elon Musk gave a new presentation where he talked about his humanoid robot that he wanted to launch. It was a little bit of crazy presentation, but at the same time he said something else. He said, "You know what? We're not a car company. We're not a software company. We're an AI company. And our future is AI. We want to create autonomous driving that's AI. And we want to create this crazy looking robot. That's going to be AI." So you see how all these companies are really putting their efforts into it and it's going to become commonplace really, really soon for us customers.

Laura Drabik:

Yeah. That makes a lot of sense. And yes, I did see Elon Musk premiere of the robot. Reminded me a little bit of the movie back in the '80s called Robocop.

Steven Van Belleghem:

Oh yeah. I saw that one too.

Laura Drabik:

Yeah, it was a good one for us older generation. But we are an AI company. You know, that is a really powerful statement, thinking big picture. I remember Goodyear over a century ago, started off as a horseshoe company. It didn't focus though, just on horseshoe. It focused on being a transportation company and has grown into now this huge company. But I really like that statement that you articulated from Tesla, we are an AI company, because they're following them the big picture and moving towards that goal.

Steven Van Belleghem:

Absolutely.

Laura Drabik:

So the user interface is the point at which we, these humans, interact with a computer, a website, or an application. The goal of effective UI is to make the user's experience as easy and intuitive as possible. You mentioned that customers only give an app less than third seconds before deciding on whether to use it. How important are elegantly designed user interfaces to a company's evolution or to their survival in the future?

Steven Van Belleghem:

Well, today we live in a world of zero tolerance for digital inconvenience. And some people think that I'm exaggerating when I'm saying that, but then indeed, I ask them, how many chances do you give a new app? And 95% is one, and that one chance lasts 30 seconds. So we are not willing to waste our time, which is our scarcest resource. We're not willing to waste our time to figure out how something works. And that is something that is still being underestimated by many, many organizations. And the crazy thing is, in the past 10 years, between 2010 and 2020, if you were the most convenient player in the market, you could win. It's how companies like Amazon grew rapidly. It's how organizations like Uber became successful, because they completely reinvented the level of convenience.

            Today, we're almost 2022, and convenience has become a commodity, which means that if you have it, if you have great convenience, that people will find it the most natural thing in the world. If you don't have it, it's the reason why you could go out of business. So the differentiator has become the norm. And that's why I urge everyone who's listening to become some sort of a friction hunter of their own organization. You know that I play with this term where I really invite companies to look for very small frictions in all their interfaces, in all the touch points that they have with their users, and then remove those frictions one by one, not to win the game, but to stay in business. It's crucial.

Laura Drabik:

So there are many forms of UI, including touch, voice. What is an example of a completely different and very active user interface?

Steven Van Belleghem:

My future view of user interfaces are invisible interfaces. Things that just happen automatically because the machine knows that it needs to happen and we're not even aware of it. And you already see some small examples of that, like paying your Uber driver is exactly that. You get on your destination, you thank the driver, you get out of the car, and by the time you've closed the door of that car, you've paid, and you didn't do anything. That's for me the dream interface. You don't have to say, pay the driver. You don't have to click on a button. Okay, I want to pay the driver. It just happens automatically with an invisible interface.

            I think we're going to see much more of that in the next couple of years. The examples are obvious. We talked about them for a very long time. A fridge that knows when you need milk, a printer that knows when you're out of cartridges, your espresso machine that orders for you, your central heating system that is about to go down, but it calls someone to fix it before you even know that there's a problem. Those will be the game changing interfaces, where it's invisible and proactive, fully personalized, and because of that, the effort of the user is being reduced close to zero. I think that will be the future.

Laura Drabik:

This is such great information. Before we continue, listeners, if you're enjoying this podcast, be sure to subscribe, to Insure Talk on Amazon, Apple Podcast, Stitcher, or wherever you get your podcast. Now this is Laura Drabik and let's get back to our conversation. I'm talking with Steve Van Belleghem, global thought leader in the field of customer experience. Steven, in the past, organizations have had to choose between delivering operational excellence or customer intimacy. You mentioned smart companies don't have to choose anymore if they use digital in a good way to help them become more efficient, and if they use humans in a good way to help them become more customer-centric. Can you elaborate on this and describe the new customer relationship that is created by doing this correctly?

Steven Van Belleghem:

Sure. Traditional, strategic sessions were about indeed choosing between operational excellence and customer intimacy, or even a third one, product leadership. Now more and more, you're you're starting to see that product leadership becomes really, really hard. So most organizations that I know, they chose between operational excellence and customer intimacy. Thanks to the possibilities of digital and automation, I think we can actually now combine the two. And what you need to do is combine the strengths of digital with the strengths of humans. And digital interfaces, automation, it improves efficiency. It may makes the process faster, slimmer, more efficient. And because of that, you can play the operational excellence game. That's what digital can do. On the other hand, you have your humans. I have this strong belief that the more digital the world will become, the more important and the more valuable human interfaces will be.

            This is based on the law of scarcity. If something becomes scarce, it actually increases in value. Now the human part is decreasing rapidly in frequency in the business world. But because of that, the moment that you get help from a human, it's actually some sort of a premium experience these days, because it hardly ever happens again. So if you know that, then the question is, okay, what do our humans need to do in such a world? And I think humans need to excel in those fields where computers are not good at. And those are the more emotional aspects of the relationship, empathy, passion, enthusiasm, creativity.

Laura Drabik:

You are a fan of Disney. And in particular, the movie Inside Out, one of my nine year old's favorite movies. How do you use this movie to describe what a customer relationship should look like?

Steven Van Belleghem:

Well, it's a brilliant movie. So if people haven't seen it, this is their homework for the weekend. Because it learns you so much about customers. Because if you watch the film, you follow the emotions of a teenage girl that moves to a new city. She moves to San Francisco and in the beginning, it's all really good. But then the problems start in her mind.

            And the person who programmed us, who programmed our brain, made a huge mistake. We have five emotions and four of them are negative. We only have joy as a positive one. And then we have sadness, we have anger, we have disgust, and we have fear. That's why your customers complain so much. 80% of their emotions are negative. They can't help it. It's how we were programmed. Now, if you know this, you can actually use that in the whole discussion that we just had about operational excellence and customer intimacy.

            If you do your digital part right, and you focus on operational excellence, the consequence is that you will neutralize the negative emotions of people. They won't be frustrated with you. And by doing so, you create time and space for joy, the human part, to create a more emotional bond and those two, they work closely together. And some people then tell me, oh, Steven, this is great news. We have the humans. We'll do digital in 2030 when we have budget again. But that's not how it works, because if you don't have great digital interfaces, the consequence then is that your humans have to fix those problems. And then there's no time and space anymore to do the more emotional bonding. So neutralizing the negative emotions, thanks to great digital interfaces, creates the opportunity for joy, the humans can make a difference. And that's how I use the Disney movie, Laura. I like to use that as a metaphor.

Laura Drabik:

So digital transformation and human transformation need to happen at the same time. How can organizations successfully do both, Steven?

Steven Van Belleghem:

It's a challenge. What I see now is that there's an enormous amount of focus on the digital transformation, which makes sense. And with COVID we had this big digital jump forward. It was like we're catapulted into the future. So it makes sense that people spend more time on that, but we tend to forget the impact that it has on the human part. The consequence of the digital transformation is the human transformation. And they happen at the same time.

            Now, how to deal with this is you really need to focus on the strengths of both. You need to understand okay, digital is about efficiency. It's about automation, making life easier and so on and so on. So we're going to make sure that we completely focus on those core strengths, but at the same time, we're also going to focus on the core strengths of humans, the empathy, the passion, the creativity, and we're going to make sure that people know that this is a skill set that will increase in importance, and we're also going to spend time and energy on that. So it's a double track. They're not sequential. They happen at the same time.

Laura Drabik:

You believe there will be a shift from AI, artificial intelligence, to IA intelligence augmented, where we will use technology to boost the power of our employees. You use KLM as an excellent example of a company doing this well. Could you elaborate?

Steven Van Belleghem:

Yes. You know, many people believe that because of automation we're going to replace humans by robots. And maybe we will, but I'm certain that the bigger benefit will be to augment the potential of humans, thanks to AI. And that's what I call intelligence augmented. And what KLM does is in the field of customer service, they use behind-the-scenes software that dives into the customer service data, and they translate that data into a mathematical model. And then a question from a customer comes in, like for instance, can you rebook my flight? And then the machine looks to the data from the past to suggest an answer for that human. But the answer doesn't go directly to the human. The answer goes to a service agent, someone who works in the contact center, and they see what the computer is proposing, but then they can play with it.

            They can personalize it. They can change the tone of voice a little bit, add some human touch to it, and then they send it. But because of the computer-aided system, KLM can now answer more questions per hour than any other European airline can, in a more personalized way. And the cool thing is the competitors are like, how does KLM do this? And then the customers, they're like wow, KLM must have better people than Lufthansa, and this is wonderful. But Lufthansa and KLM, they have the same kind of people. They're both great, but the KLM people get the support from technology. And that's where we're going to see, I think, the first real benefits of artificial intelligence, where you use it to boost the power of humans.

            It's like when you go to a hotel. I travel a lot, and very often I go to the same hotels over and over again. Then I check-in and then they ask me, Hey, Mr. Van Belleghem, is this your first time here? It's a very kind question, but it's a question you should never ask. You should know that, especially if you've been there six times. You're like, no, this is not my first time. It's actually my seven-time here. And you cannot expect that human to know that. They see so many new faces or they just started in the job, but you can expect the hotel to make sure that they at least have that piece of data available so that they can say, oh, Steven, great to have you back, welcome. Or hey Steven, this is your first time. How can we help you to get to know the hotel? There's so many situations that I can imagine where a human could get support by a machine, that it would be a pity not to look into this in your organization.

Laura Drabik:

Steven, will people ever fully trust the algorithms?

Steven Van Belleghem:

Of course, there is no doubt about that. I know a lot of people think, no, I will not trust an algorithm, but the truth is that most of them are probably actually trusting an algorithm while they're listening to this. Take GPS systems, navigation software. I still remember that I had my first navigation system in 2001 and it had like a hit rate of 50%. Only half of the time I arrived at the destination. So a human back then had a higher hit rate. So if we were driving me and my wife, and the machine said, it's straight ahead, but my wife said, no, no, no, no, Steven, it's a right turn here. I listen to my wife, because she had a bigger hit rate than my machine.

            Now, if you use ways you have a 99.99 hit rate. So you get everywhere. We trust that fully because it works for 99.99%. If it only works for 90% or 95, then we do not turn an algorithm because then we know that something may go wrong and we look for a human safety net. But the moment that it really works, then we trust it, and we don't think that we're using an algorithm anymore. It's just something that we use, and it's so common that we think it's part of our lives. So once it works and it really works, we will absolutely trust it.

Laura Drabik:

We need to take another break. If you're enjoying this podcast and would like to review more of my thought leadership, please see evangelist.guidewire.com. Now let's get back to our conversation with Steven. So Steven, what is one thing organizations should never do because it erodes the customer experience?

Steven Van Belleghem:

There's so many things now, but mainly to summarize it. It's an over-focus on internal procedures. It's an over-focus on statistics. I'm a fan of measuring customer satisfaction and the promoter scores, but there are too many organizations that only focus on that, and then you're dehumanizing your customer. And I think that's the most dangerous thing you can do. I think the challenge is for most organizations to get as close as possible to your customer, the real human, and make sure that as many of your employees, of your coworkers as possible get direct feedback from customers, because it increases empathy. And if you only rely on statistics, then you are decreasing your empathy level in your organization. And I think empathy is going to be the most important skill to win in the next decade.

Laura Drabik:

On the flip side, how about one thing that is mandatory for delivering a differentiating customer experience?

Steven Van Belleghem:

The most important thing here is to make sure that all your employees know how they can contribute to the success of customer happiness. There's still too many organizations that believe that it's only the frontline staff that can make customers happy. It's not, it's a team effort. Everyone plays a role. People who pick up the phone, people who do the invoicing, everyone who's working behind the scenes eventually has a contribution to customer happiness. And I think as a leader, you need to look your coworkers and your team in the eyes and really tell them how they contribute. And the moment that they understand that, they're going to look completely different to their company and their business. I don't believe in the concept of internal clients. It doesn't work. There's only one client and it's the end client. And if you keep everyone focused on that end client and make sure they are part of that journey, then your success rate will be higher.

Laura Drabik:

I couldn't agree with you more. Customer happiness is a company effort. So you are the author of multiple international bestselling books, including, let me brag on you, please, The Conversation Manager, When Digital Becomes Human, Customers The Day After Tomorrow, The Offer You Can't Refuse and a technology thriller called Eternal. Which one is your favorite and why?

Steven Van Belleghem:

That's a terrible question that you're asking me. That's like letting me choose between my children, Laura. I cannot possibly choose because they each have their own story. Like my first book Conversation Manager, it was the jump in the deep end, and I was hoping that some people would read it and it became a hit in many European markets. And I was so happy with that result. And When Digital Becomes Human, that was the first book that I wrote without being part of a bigger organization. I did it between brackets on my own and people loved it. So it was fun as well. And now The Offer You Can't Refuse, I wrote it and launched it during the lockdown. So this was very intense to see what would happen.

            Until now, I'm very fortunate that all my books did really well. And they have their own story, like the technology thriller that I wrote, Eternal, unfortunately only available in Dutch for now. That was like a side project, a hobby, but I had so much fun doing it. So every time when I launch something new, I'm still so nervous to see what the market will say. So it's fun doing this. I'm very thankful that I can do all this.

Laura Drabik:

Well, I have to say that I also love all of your books and I would like to get my hands on Eternal when you do release it in English.

Steven Van Belleghem:

Oh, definitely, I will send you a copy as soon as I have it.

Laura Drabik:

Steven, thank you very much for your time today. As a global thought leader and best selling author, you have shown us it's not just about ideas. It's about making ideas happen.

Steven Van Belleghem:

Thank you for having me, Laura, always a pleasure to talk to you.

Audio:

This podcast is brought to you by Guidewire, the platform PNC insurers trust to engage, innovate, and grow efficiently. Visit guidewire.com for more information.