Season 2, Episode 13 -14

September 13, 2022

Season 2, Episode 14, ICEYE's Global Head of Insurance Stephen Lathrope on Flood Intel & Winning Pitch Day '22

Speaker 1 (00:01):

It's time for InsurTalk with insurance industry tech geek and Guidewire Chief Evangelist, Laura Drabik. In this podcast series 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. If you're looking for insights on the trends and technologies reshaping the industry, an all new InsurTalk starts now.

Laura Drabik (00:27):

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 Stephen Lathrope, Global Head of Insurance at ICEYE. ICEYE is a member of Guidewire's Insurtech Vanguard's incubator program and the winner of our inaugural Insurtech Pitch Day. ICEYE provides satellite based monitoring and change detection intelligence, which keeps insurers in the know about flood risk. As climate change accelerates insurers need access to evolving data to profitably price risk and to respond effectively to flooding when it happens, and that is the focus of today's conversation.

(01:07):

Hello, Stephen. Thank you for joining my podcast.

Stephen Lathrope (01:10):

Thank you, Laura. It's a pleasure and a privilege.

Laura Drabik (01:13):

Tell our listeners about ICEYE, and your role there.

Stephen Lathrope (01:15):

Sure. ICEYE is a company that has developed a completely unique technology that enables radically more complete, accurate and timely monitoring and measurement of things that happen on the earth surface. We use that technology, combined with advanced data analytics and other capabilities, to provide powerful solutions to insurance companies, to government, to defense and other sectors. The company is based in Helsinki, but we have a very global team. We build and operate our own constellation of radar enabled satellites to support our solutions. My role within the business is to lead the solutions team, and I head up our insurance business specifically.

Laura Drabik (01:51):

Stephen, global insured losses from floods have increased from $40 billion from the year 2000 to 2010 to a whopping $80 billion for the last decade. What is causing the global increase in floods?

Stephen Lathrope (02:05):

The numbers are mind boggling, aren't they? I mean, the factors that are driving the increase in costs, first of all, the lower atmosphere of the earth is becoming warmer and more moist as a result of greenhouse gases. There's greater potential there for increased frequency and severity of storms and flooding. So we're seeing heavier rain, we're seeing rivers overflow, and we're seeing flash flooding affecting areas where there isn't generally a water body. We're seeing coastal flooding where severe storm combines with high tides to inundate the coast. And alongside all of that atmospheric and climate related stuff we've got factors that relate to the world as we live in it, where we build, where we house people. And all of these factors together mean one way or the other society and the global economy can only expect those losses to increase over time. So we've got more damage, disruption, cost, and of course, loss of life related to flood likely over the coming years.

Laura Drabik (02:58):

So how does your technology address these issues and help mitigate and control flood losses?

Stephen Lathrope (03:04):

The core of ICEYE's capability is our ability to observe the earth from space. So I've mentioned radar technology. We use a particular flavor of that called synthetic aperture radar, and that really differs from some of the earth observation that we're all used to seeing, low level photographs on Google maps or something. But when we think storm, you think of those swirling clouds seen for space. Now, satellite based radar technology is different because we see through the darkness and clouds and smoke, if we're looking at forest fire, and we see what's happening on the ground so we can detect where flood water is rising and falling.

(03:41):

We've been doing that for a couple of years now. So we can provide insurers with really high definition analysis of where the water's been with major floods historically, that they can use for understanding risk and assessing impact and damage that is likely with upcoming events. We can also provide that in near real time when an event happens, which really makes a difference for them in their response to major flooding while it's still going on.

Laura Drabik (04:06):

Can you explain what synthetic aperture radar, or SAR is, and why should it be important to carriers?

Stephen Lathrope (04:13):

Sure, absolutely. It's a technology that sees through the dark and sees through weather, so it has a particular capability, but it's also the synthetic nature of the aperture and the fact that you can make a very powerful high resolution image using a relatively small radar array. That's a real breakthrough for earth observation because it means that you can put the sensor on a much smaller satellite. So synthetic aperture radar has been around for many, many years, but it's typically been something you could only get into space on the back of a satellite that is the size of a small house and costs half a billion dollars. The synthetic aperture radar arrays are much smaller and lighter. The satellites that we build and launch are about the size of a refrigerator, rather than a house, which makes them very much less expensive to manufacture and operate.

(05:04):

So the synthetic aperture part of the radar is really about packing in a huge amount of observation power to a very small package. And that's part of the reason we've been able to launch a constellation of 21 of these things so far, and that gives us much greater global coverage. The ability to take many, many more images of things like floods, and the more images we have, the more data we have, and the more insight that we can provide to carriers.

Laura Drabik (05:30):

I like it. So it's more compact, allows for a global feel, and also more data and insight. Thanks for sharing that.

(05:37):

In the United States, almost 40% of the population lives in coastal counties and another 10% in flood plains. Stephen, what can we do to reduce the impact of floods for people living in these areas?

Stephen Lathrope (05:48):

Obviously, as a society, whatever we can do to reduce the increasing impacts of climate change, or whatever we can do to slow that increasing the temperature of the oceans, the moisture and the atmosphere and so on, will reduce the pace of what's going on here. There are obviously things, as society, that we can do about where we build and where we house people, and about making sure that we've got the right kind of physical defenses in place.

(06:12):

But from an ICEYE perspective, our earth observation can play a part in a number of aspects of this. We are capable of helping insurers, government agencies to understand what happens when water does inundate land. So we can provide a lot of very detailed data that can help with planning and help with risk management. When a disaster does strike and the waters do rise, we're able to give a view typically of what is likely to happen two or three days in advance of the event. We've got meteorologists on the team at ICEYE. They're continually watching the atmospheric conditions. We have our own application design to provide a two, three day forecast of flooding events. And we provide that information to our customers so that they can inform their customers and give them the opportunity to take action, move your car, move things off the ground floor, that kind of thing.

(07:00):

And then when the waters do rise, the insights that we can provide four hours in to the event, and then full analysis within 24 hours, and then over the course of the event, really helps carriers to target their response, to communicate with their customers, to allocate resources effectively, to understand where provisional payments might help. So, big picture, it would be great if, as a society globally, we could get together and reduce some of the effects physically. But from ICEYE's perspective, what we can do is help to understand the risk, help to manage the risk and really help with the response when things go wrong.

Laura Drabik (07:35):

Awesome. Great information. When we come back after this short break we'll continue our conversation with Stephen Lathrope.

Speaker 1 (07:42):

Digging InsurTalk with Laura Drabik? Be sure to subscribe on Amazon, Apple Podcasts, Stitcher, or wherever you get your podcasts. While you're at it, rate the show on Apple Podcasts and let us know how we're doing. Now, let's get back to the show.

Laura Drabik (07:56):

And welcome back to InsurTalk. This is Laura Drabik, and I'm talking to Stephen from ICEYE.

(08:01):

How did ICEYE founders come up with the idea to provide satellite monitoring of floods? I know you're founded in Finland, did being so close to the polar ice cap serve as a catalyst?

Stephen Lathrope (08:12):

It absolutely did, and the clue is in the name of ICEYE, to an extent. The guys that founded the company were working as part of their university project on using satellite technology to monitor ice formations in the northern seas. The initial application of that was for energy companies, but very quickly the broader capability of measuring all sorts of different things on earth became apparent. We're all about the commercial applications, and ice is part of that. We can see ice formations building, receding. We monitor movements in the ice caps still as part of what we do not for profit. So a lot of it's water related, but at the same time, we also are using our capability to measure the damage caused by wildfire as well. So it's quite broad application that started with ice.

Laura Drabik (08:58):

So I was shocked to learn that 82% of global economic losses from floods were uninsured. One of the issues in the U.S. is that not all States have flood disclosure laws. This means that people who are about to make one of the biggest financial investments of their lives have zero knowledge of whether a house has flooded and is likely to flood again. How does your technology help mortgagees and homeowners better understand their property's flood risk?

Stephen Lathrope (09:25):

Sure. I mean, that 80% plus is staggering, isn't it? And there's a massive under insurance issue globally. There are all sorts of vulnerable communities that really need help with this stuff. I think the main benefit that we are working on right now for the U.S. consumer is that we, through our ability to observe flooding and to report on historical flooding, we're enabling a number of really innovative new carriers, and MGAs, and existing incumbent carriers to start to offer private flood insurance that hasn't been available in that market in the past. So there's an opportunity there for product innovation and for us to play a part in that.

(10:03):

Looking more widely, we're also helping with a new generation of parametric insurance products, where communities, including in the U.S. where individuals may not have access to traditional indemnity based insurance products, either because they're not available or because they can't afford them, to have some protection provided by a parametric product that doesn't require that underwriting element. So some protection there for people currently under or not insured at all.

Laura Drabik (10:28):

Any real life stories or metrics you can share with us on how you've helped an insurer proactively detect, monitor or adjudicate flood risk?

Stephen Lathrope (10:36):

Sure. I mean, we've got customers using our technology in a wide range of use cases, from parametric, as I've mentioned, through sharpening underwriting models, lots of use in claims and in insurance linked securities. I guess, the most practical real life stories are all to do with claims currently where insurance companies are using our flood insights to understand which customers are most affected, to communicate rapidly and effectively, to direct their resources.

(11:02):

My favorite illustration of that is through our work with Tokio Marine in Japan, where through their relationship with a number of non-government organizations, not for profits, we were able to, in a recent fairly severe flood in Japan, provide information to save the children. It enabled them to get help to a flooded nursery to help their staff and the children at that location before they would otherwise have been aware that anything was going on at all. So it's a not for profit example, but it's absolutely one of my favorite.

Laura Drabik (11:34):

Well, it's a very noble and beautiful story. Thank you for sharing.

(11:36):

You manufacture and maintain your own satellites. Why should that be important to carriers?

Stephen Lathrope (11:41):

Because we have the design, build and operate the technology in-house, we're constantly able to enhance the technical capabilities. So we've got a really wide range of observation capability, including the ability to fly over exactly the same spot in exactly the same place at multiple times a day, which we call ground track repeat. That enables us to create a time series of what's happening on the ground, which is very powerful for a whole range of commercial and government agency activities. We're the only people who can do that currently.

(12:13):

For our flood solution, what matters here is capturing as many images as possible. So there it's about the size of the constellation and control over what the satellites are doing at any point in time. So for the flooding in Australia in New South Wales earlier this year, we were able to capture 47 images of a multiple thousand square mile area over the course of the flood. Although some of the existing satellites can capture one or two images, or five or six, it's really in the 10s of that you need to get to in order to provide a full analysis of what's happened.

(12:46):

So why is it important to have your own satellites? Well, the main reason is because it means you can control what you capture and you can capture a vast amount more imagery, which gets directly to the value of the analysis.

Laura Drabik (12:57):

Great. Thanks Stephen.

(12:59):

On the other side of this break, we'll continue the conversation, so don't go anywhere.

Speaker 1 (13:04):

Loving Insurtalk with Laura Drabik? For more expert insights and inspiration, subscribe to Laura's email newsletter at drabikdigest.com. Your one-stop resource for Laura's latest blog posts, videos, podcasts, articles and more. That's www.drabikdigest.com. Now, let's get back to the show.

Laura Drabik (13:23):

Welcome back. This is InsurTalk with Laura Drabik, where we're talking with Stephen Lathrope.

(13:28):

Stephen, could ICEYE's technology be used to predict future flooding events?

Stephen Lathrope (13:33):

I don't think we'll try to get into the space of predicting overall risk of flooding on a global multi-year basis because there are very smart people with those kind of flood models out there already, and we'll leave that to them. But as we build our library of really detailed analysis of events that have occurred, the last two years we've got 70 odd in the library so far in areas, the U.S., Japan, Australia particularly, we have captured a higher definition account of where the water went than anybody else has. And that has potential to really help predict where the water will go next time because these flood prone areas, unfortunately, it's a fact that they are areas that are likely to flood again unless we can do something physical to stop that happening.

(14:15):

More immediate term, we do look at the weather daily. We've got those meteorologists on the team, and we can forecast two to three days in advance. And that short term prediction really does help with taking action before the water starts to rise. So we can help with that, Laura, even if we can't be the people that are going to tell you how many floods in which regions in X year's time.

Laura Drabik (14:36):

Yeah, that makes sense and super helpful, being able to empower carriers to proactively in advance respond to flooding. Thanks for sharing.

(14:45):

So, what critical advice would you share with insurers exploring the use of satellite technology for floods? What do they need to consider and prepare for before implementing?

Stephen Lathrope (14:56):

Frankly, part of what we are here to do at ICEYE in the solutions team is to make it as easy as possible for carriers to get value from satellite based earth observation without having to do too much preparation on their side. So we combine our imagery with digital terrain models, with flood models, with optical imagery and what that can tell us about an event. So we deliver the complete analysis to the customers so they don't have to do a lot of preparation. The preparation that they do need to do is much more about how are they going to take advantage in their business processes of having that much more complete and rapid insight into what's happening on the ground. So it's really a business opportunity preparation and implementation planning that our customers need to do, rather than worrying too much about the satellite technology or the radar.

(15:45):

The only other thing I would add to that is that part of my job is to make sure that carriers understand that not all satellite imagery is equal, and that this synthetic aperture radar imagery tells you something very different to photographic optical imagery. Its measurement rather than just a photograph, and that volume of imagery really matters, and definition of imagery really matters. Those are the two things, that with our constellation, our technology, we've invested in. So they don't need to worry about building and running the satellites or doing the analysis. We'll do all of that for them. We want them to know that the product is different from other radar based or optical imagery they've had before, and we want them to think about where they can use it in their business.

Laura Drabik (16:27):

Yeah. And that's something I actually learned, which is not all satellite imagery is created equal. What you describe being able to see through clouds and in the dark, as well as a millimeter of change on the earth's surface, is really providing that fine level of detail for the carrier.

(16:43):

So I can see other industries, like mining, energy and oil spill detection benefiting from your technology. Which industries are leveraging ICEYE?

Stephen Lathrope (16:52):

Those are great ones that you've described actually, and our ability to persistently monitor the movement in heavy plant and machinery and buildings is a great application. We're doing lots of R&D and feasibility with the sectors that you've mentioned, actually. We have done oil spill detection. We haven't done that on a commercial basis as yet. The imagery has all sorts of defense applications. So the same information that is valuable to insurers related to different types of catastrophe is also, of course, really valuable to government agencies tasked with responding on the part of communities and businesses. So we're doing all of that as well.

(17:29):

The use cases are really wide for the technology. We're moving into detection of damage from wildfire. To give you a flavor of the extent of the use case, one of the applications that we are providing commercially is measurement of illegal deforestation in South America. That could be not further away from flood if you tried, but it's a great use case because we can scan vast areas of land on a regular basis and we can detect when the canopy has been altered very rapidly and get that information back in time for action to be taken, often while that's happening.

Laura Drabik (18:03):

That's a wonderful roadmap item, one that I'd certainly like to see come to fruition, especially with regards to the effect on climate change.

(18:10):

So ICEYE won Guidewire's first ever Insurtech Vanguard's Pitch Day. Congratulations, Stephen. Well done.

Stephen Lathrope (18:18):

Thank you, Laura. I mean, we could not have been more delighted as a team to have had the opportunity to take part in Pitch Day, but also, I mean, secondly, really, really delighted to win. It was quite an experience. I mean, I have to say there are so many different dimensions to what we got from that and what we hope others did. I mean, it was great for us as a team to meet other Insurtechs, and frankly experience each other's pitches. I think the format of it being so short and sharp really made us think about the things that we wanted to say to the judges, to the audience and to the Guidewire customer community.

(18:52):

And so we got a lot from it on the day and in preparation, but I think we're at least as excited about what we've got from it subsequently because we've ended up with relationships with some other Insurtechs that they may not have picked up the trophy from you, Laura, but they were on that stage doing fantastic pitches and we got to know those guys well. And we've had some great follow up conversations with them as well as with people attending the event. So, I mean, look, as I say, we're delighted. We're looking forward so much to connections. We've got so much out of the engagement so far. It's a great format.

Laura Drabik (19:24):

Oh, wonderful to hear. And to our listeners, the Pitch Day took a format of allowing the Insurtechs only four minutes to pitch, hence why they had to bubble up the most important highlights of their value prop.

(19:36):

So I have a different perspective being from the software community, and then also working for a carrier, in that Pitch Days are really important for educating our customers, our employees and our partners on wonderful new value propositions, like your own. Why do you think Pitch Day should be important to an insurance carrier?

Stephen Lathrope (19:55):

I think it's a great way of getting a condensed view of what is out there, in terms of emerging technologies that are commercializing and becoming available really quickly. So I mean, it's difficult to understand how you would pick up quite such a complete and direct articulation of the value proposition in a different format with a series of packets of really rich information from passionate leaders within those Insurtechs describing to the carriers where they see the value and why. Who would've thought that that was a goldmine for carriers who would otherwise have to go out and find that information from websites and other material. And though it might be out there, it will never be as concisely delivered as four minutes of fun.

Laura Drabik (20:38):

Well put. Four minutes of fun.

(20:40):

Stephen, thank you very much for your time today and for your incredible insight. You've showed us it's not just about ideas, it's about making ideas happen.

Stephen Lathrope (20:48):

Thank you, Laura. It's a pleasure and a privilege.

Speaker 1 (20:51):

Tune in next time for an all new episode of InsurTalk with Laura Drabik, brought to you by Guidewire, the platform P&C insurers trust to engage, innovate and grow efficiently. For more information visit guidewire.com.

Season 2, Episode 13 | Mountain West Farm Bureau VP Tim Hays on Cultivating the Farm Bureau of the Future

 

Speaker 1 (00:01):

It's time for InsurTalk with insurance industry tech geek and Guidewire chief evangelist Laura Drabik. In this podcast series, 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. If you're looking for insights on the trends and technologies reshaping the industry, an all-new InsurTalk starts now.

Laura Drabik (00:27):

Welcome to InsurTalk. My name is Laura Drabik and I'm the chief evangelist at Guidewire.

Laura Drabik (00:32):

In this episode, I have the privilege of interviewing Tim Hays, vice president of Mountain West Farm Bureau Mutual Insurance Company. Tim is its senior executive responsible for all aspects of technology operations, information security, and digital transformation for property casualty. The focus of today's conversation will be on how Mountain West Farm Bureau with Tim are cultivating a farm bureau of the future.

Laura Drabik (00:58):

Hello, Tim. Thank you for joining my podcast.

Tim Hays (01:01):

Hello, Laura. It's great to be here today.

Laura Drabik (01:02):

Tell our listeners about your role at Mountain West Farm Bureau and what gets you fired up every morning to work in insurance.

Tim Hays (01:09):

Work in insurance, it gets fired up, hmm, that's a tough question. No, just kidding.

Tim Hays (01:13):

As you said, I work for Mountain West and 360 Insurance. We're a property and casualty insurance company operating in Wyoming, Montana, and Colorado. The company was initially founded to provide insurance for farmers and ranchers in largely underserved areas. I'm one of seven vice presidents that are entrusted to run this company and I have specific responsibility, as you mentioned, to look after our technology investments.

Tim Hays (01:40):

What gets me fired up? Well, I don't know. If it's not broke, break it, maybe? Nah, seriously. I like to build things. In this case, we're not building with steel or concrete. We're building with ones and zeros. But the concept is the same, to see something come to life that's useful. I guess that's why I've been implementing ERP systems for companies more than 20 years now. Sometimes I wonder if there might be easier ways to make a living, but I do enjoy it. I enjoy the craft of building software that's useful.

Tim Hays (02:08):

But truly what excites me is to use technology to improve a life or to improve a business. I've got a person working for me right now who said recently, "I've been working for this company for over 20 years and I have learned more in the last two years than the previous 20. I am more stretched. I have been more busy and never been more satisfied than I have in the last two years."

Tim Hays (02:30):

I've got another lady who is leading our data migration effort here at Mountain West and she stood up in front of the entire company, nearly with tears in her eyes, over the joy of what had been accomplished. This person attempted to quit my project twice. She said it was too hard, she couldn't do it, and I had to convince her that she was the right person for the job. She wasn't in this on her own and we've had a lot of success with our data migration. So with a little encouragement, she stayed.

Tim Hays (02:57):

So what gets me out of bed in the morning? Working on these projects, I get to see a team achieve more than they thought they were capable of. These technology projects have such a bad reputation for going south. People don't want to work on them. I say it doesn't have to be that way and it can be one of the most rewarding experiences of a person's life and career.

Laura Drabik (03:15):

Those are wonderful quotes. Thanks for sharing. In particular, I really like, "If it's not broke break it." Sounds like my 10-year-old daughter in our home.

Laura Drabik (03:23):

Tim, Mountain West Farm Bureau embarked on an ambitious journey with us, Guidewire, to transform your systems of record, your digital experiences and your data analysis. Congratulations, first of all, on your go live.

Tim Hays (03:36):

Thank you.

Laura Drabik (03:37):

You've been serving the needs of families and businesses for over 72 years. Tim, why change now?

Tim Hays (03:43):

Laura, I was in Italy this past July and I got to see a lot of interesting places that have been around a long time and it occurred to me, there are only two options for most of these buildings. Its usefulness and, therefore, repair and investment, or they become a pile of old bricks.

Tim Hays (03:59):

I think it's that way with business, too. Remodeling and maintaining old things is really expensive and sometimes it's faster and cheaper just to start over and build something from scratch that was meant to function in the modern age. So the first answer is we needed to. The old systems were not going to get us to where we needed to go and we've charted, of course, that said it's going to be better for us to start over than to upgrade.

Tim Hays (04:23):

The second reason is I believe every company faces what I'll call the Uber moment. Think taxi service. What did they do wrong? They picked up people, they dropped them off and they exchanged money. Yet, ridership dropped 70% in, what, a year? Somebody changed the rules of the game. Somebody changed, more importantly, the experience and when that experience change happens, you can either run from it or you can embrace it. The question is, what are you going to do about the landscape that you're faced with?

Tim Hays (04:53):

I think insurance is facing a landscape of unprecedented change and we can either be excited about that and prepare for it, or we can run away from it and be entrenched. We're going to choose a path of being prepared for it to the best of our ability and focus on being the best insurance company possible and that requires a new system.

Tim Hays (05:11):

I was hired in order to make sure that this company has a strong technology foundation on which to be in business for the next 75 years and to enable the capabilities that have the potential to delight our customers in the digitally-enabled, experience-based economy.

Laura Drabik (05:25):

I've interviewed many insurers over the years and I often hear that growth is a strategic imperative for investing in a modern platform, a system that enables scalable, sustainable growth. Tim, can you share with us your strategic imperatives?

Tim Hays (05:40):

We talked about profitability growth here frequently. My job is to ensure that we take the reasons we can't implement a growth strategy off the table. My job is to make IT a non-issue. "We'd like to do this, but our system won't currently support this," something we commonly hear. "We'd like to do that, but it will take IT over a year or longer to be able to enable that."

Tim Hays (06:02):

This project does many things that feed future strategic growth. One of them is a modernized technology platform that's easier to maintain and improve. I've heard that upgrading an insurance platform can take eight months to 10 months on average. We did ours in a month so kind of a game-changer in terms of speed to be able to stay modern.

Tim Hays (06:22):

The second is a new approach to project execution that translates into everything we do as an organization at every level and in every department. This Guidewire project touched the entire organization and set a tone for execution that hadn't been known. So maybe it's just as important that we're creating patterns of execution that can be utilized all over the organization as it is to improve the technology that the company's built on.

Laura Drabik (06:47):

Wonderful input. One of the guiding principles that I encourage customers to adopt is to stick to out-of-the-box capabilities.

Laura Drabik (06:56):

Now, Tim, you implemented the entire insurance suite platform so that's policy claims, billing. You also implemented Guidewire digital and data. The entire platform for five lines of business were implemented in 12 months. What were your guiding principles for achieving your implementation timeframe?

Tim Hays (07:13):

Sure. Five things. One, fanatical project execution and program governance. Two, executive sponsorship. It's not an IT project. It's a company-wide project. Three, manage change. Don't do change management. Manage change. Make decisions quickly and, most importantly, make them once. And number five, the software works. Don't change it.

Tim Hays (07:34):

Some of these might be like, duh, for 200, Laura, I don't know, but most projects fail to meet their objectives and 70% of the time it's due to poor project management, somebody once said, and I believe that to be true. It's been true in my observation as well.

Tim Hays (07:47):

Executive sponsorship, you cannot take on a project of this magnitude with this amount of change if it's an IT project. It can't be a Guidewire project. It's a Mountain West project. It's our project and we are running this project. There's everything about how we run this organization that's being touched so making decisions quickly is important.

Tim Hays (08:06):

Finally, the software works, don't change it. I stood in front of this organization during the kickoff meeting and boldly said, "I don't care what you don't like about this software. I don't care what you would do different. What I do care about is why it won't work. We will be focused like a laser on any reason why this software won't work. But we're not trying to rebuild legacy systems here. We're not trying to recreate your job the way it was done in the past. We're attempting to implement this software and if you run it, we think you're going to be delighted, but that's going to take a little bit of trust."

Tim Hays (08:38):

That's why it takes the executive sponsorship to buy into a vision that says, "We are going to run this software the way it was delivered to us. And if we can't find that 80% of the feature functionality that we need to run our organization is out of the box, you should move on and pick something else."

Laura Drabik (08:53):

Awesome. Great information. When we come back after this short break, we'll continue our conversation with Tim Hays.

Speaker 1 (09:02):

Digging InsurTalk with Laura Drabik? Be sure to subscribe on Amazon, Apple podcasts, Stitcher, or wherever you get your podcasts. While you're at it, rate the show on Apple podcasts and let us know how we're doing. Now, let's get back to the show.

Laura Drabik (09:16):

Welcome back to InsurTalk. This is Laura Drabik and I'm talking to Tim Hays from Mountain West Farm Bureau.

Laura Drabik (09:23):

Tim, something I think was incredibly important to the success of your implementation was that you made it a company-wide initiative and you stressed the importance of considering company-wide functions when mapping business processes and collecting data. How did you go about doing this?

Tim Hays (09:40):

Absolutely, Laura. This was not an IT project. It was a company-wide initiative and to prove that point, no contractor was allowed to touch the keyboard during our sprint demos. Only Mountain West employees could run the demos. This was a Mountain West project that we owned, that we controlled, that we were voting on, not Guidewire.

Tim Hays (09:59):

Second, we did all the modules at the same time. We did 10 Guidewire modules or programs simultaneously. There was no option for the organization to not be involved. We're doing billing and PolicyCenter and claims and finance all at the same time.

Tim Hays (10:15):

The key reason for this is time and testing and lower risk. I reject the notion that a phased rollout is lower risk and it is certainly not faster. The reason you can't say its lower risk is three reasons. One, you can't test it end-to-end and you have to build a bunch of integrations that you have to throw away. Third, it's hard to keep the technology stack in sync when it's by its nature on a different platform and on a different upgrade cycle.

Laura Drabik (10:40):

Makes perfect sense. Tim, let's talk about what's unique about implementing at a farm bureau. How fast is the decision-making process and could you please share what the appetite for risk is?

Tim Hays (10:51):

Sure. First, I don't think that Mountain West is unique and, second, I'd say its appetite for risk is no greater than anyone else I've worked for. They want perfection, no errors at go live.

Tim Hays (11:03):

So I give Mr. Geesey, our CEO, a whole lot of credit for the success of this project. He was willing to embrace the cloud solution from Guidewire, the cloud solution owned and manage and operated by someone else. He was willing to empower me, an unknown talent, to his organization with little experience in the insurance industry, who proposed a radical transformation of the entire business with an implementation model they'd never seen before and thankfully, Laura, it worked out well.

Laura Drabik (11:29):

Well, I think it was due to you and to a lot of your planning and experience, Tim.

Tim Hays (11:34):

Thank you, Laura. But there are things that derail a project and nothing derails them faster than slow decision-making, or poor decision-making, or no decision-making, or making decisions over and over again that lead to rework. Rework is the nemesis of these projects so we adopted strategies that made decision-making accurate, rapid, empowered and we attempted to make them only once and stick to it.

Tim Hays (11:59):

Perhaps what is unique, if I really think about it, is a management team here at Mountain West that works hard. They care about the clients and the employees and the agents, and they want to leave this company better than they found it. Perhaps it's unique because it was willing to do something that most said and would say is impossible.

Tim Hays (12:17):

Or maybe it's that adversity doesn't build character. It reveals it. And the aggressiveness of this project revealed the very, very best qualities in people that were already there and just not challenged enough yet.

Laura Drabik (12:29):

What a wonderful quote. Adversity reveals character. Well said.

Laura Drabik (12:34):

How did your culture influence your implementation and any tips to share on how to leverage your culture for a successful implementation?

Tim Hays (12:42):

There's a saying, right, culture eats strategy for breakfast? I completely agree and I would say that two years ago that there was an expectation that IT initiatives would fail to meet some or all of the objectives.

Tim Hays (12:53):

Vince Lombardi said, "Winning is a habit. Unfortunately, so is losing." I couldn't agree more. In my opinion, this project was the catalyst to amend the culture and now the folks walk these halls with swagger in their step. They did something that nearly everyone said was impossible, and now they feel the power of their success and it's contagious.

Laura Drabik (13:13):

I love that, walk with swagger because of the success.

Laura Drabik (13:17):

I want to thank you for partnering with Guidewire to develop six new pre-built integrations for our marketplace. Clearly, our customers benefit from your effort because they're able to leverage the content on their initiatives to reduce implementation timeframes. So what was the benefit to Mountain West in helping us to create these packaged integrations?

Tim Hays (13:37):

Yeah, you're welcome. Do I get to send an invoice to someone for that?

Laura Drabik (13:42):

I got a T-shirt for ya.

Tim Hays (13:42):

Oh, okay. All right.

Tim Hays (13:44):

Well, you're right. I mean, I think it does benefit the ecosystem and that's okay because a rising tide lifts all boats and others that are going to make investments in the cloud platform are going to benefit us at Mountain West and we're all going to benefit because of this investment. We just happen to make some pretty cool investments in the cloud and so, again, you're welcome for that.

Tim Hays (14:04):

Well, the bottom line is I don't want to be in the software building business anymore. I want to be in the software running business so I need the Guidewire platform to do all the functions of running this business flawlessly. Where the platform has white space or missing functionality, I've got to build or engage in an integration and, quite frankly, I'd rather have Guidewire maintain that rather than me so I'm selfish. So thank you for building the first six integrations and thank you for continuing to help maintain those as we go forward.

Tim Hays (14:32):

Laura, I think there are two schools of thought here for a CIO. "Buy a bunch of best-in-class stuff and make it integrate and put all this stuff together, pick the platforms and treat everything as an outside vendor and somehow it's all going to work together. But I'm picking the best tools for the job and I'm going to make it integrate with these integration tools."

Tim Hays (14:49):

The other school of thought is "I'm going to pick the very, very best platform I know how. I'm going to use it as effectively as possible, utilize everything on that platform that's available to me, fill in the occasional white space and treat those white spaces as error to be eliminated over time as the platform evolves through the partnership."

Tim Hays (15:08):

I am clearly in that second camp so working with Guidewire on these integrations was simply an execution of that. And Laura, I would say that the results, quite frankly, have been fantastic. After a few weeks, we've surpassed our multi-year goals for straight-through processing and automation.

Laura Drabik (15:23):

Any metrics you can share with us on those returns on straight-through processing?

Tim Hays (15:28):

Well, I'm going to say no. The reason for that is when I tell people that we executed this project in 275 days, they think I'm crazy or lying. And if I told you the straight-through processing numbers we're achieving, most people would say that they're unbelievable.

Tim Hays (15:42):

I recently sat down with an executive from Ernst and Young and I told him our error rate on this project and he said, "That's unbelievable." What he meant by that was it's not unbelievable that it's not believable, but it's true. So I'm going to keep that to myself, but let's just say it's an order of magnitude better.

Laura Drabik (15:58):

Great. Thanks, Tim.

Laura Drabik (15:59):

On the other side of this break, we'll continue the conversation so don't go anywhere.

Speaker 1 (16:06):

Loving InsurTalk with Laura Drabik? For more expert insights and inspiration, subscribe to Laura's email newsletter at drabikdigest.com, your one-stop resource for Laura's latest blogposts, videos, podcasts, articles and more. That's www.drabikdigest.com. Now, let's get back to the show.

Laura Drabik (16:25):

Welcome back. This is InsurTalk with Laura Drabik where we're talking with Tim Hays.

Laura Drabik (16:30):

I think I know the answer to this question, Tim, but why don't you tell our listeners what your favorite Guidewire cloud capability is and why?

Tim Hays (16:38):

I just have to say one, Laura? I think there's more than one. Let me give you at least two.

Tim Hays (16:43):

The first is the cloud enablement, the cloud platform. I'm out of the hardware business. I'm out of the hardware and infrastructure management business so that is clearly one of my favorite features. I get to move that to your responsibility.

Tim Hays (16:56):

But perhaps from an implementation standpoint, I would pick the APD, Advanced Product Designer. The reason for that is on all of these projects, we go to the business and we say, "Out of the box, out of the box, out of the box. Stay out of the box." We do not want to customize the software. In this case, we say just the opposite. "Tell us exactly what you want. We're going to build it on a mind map and we're going to turn that mind map into software that you can use."

Tim Hays (17:22):

So for the first five lines of business that we built, Laura, we did 100% customization of those lines, and that was absolutely necessary to make the transition from the old systems to the new systems. There just wasn't something available in a standard business template or a go product that would've worked.

Tim Hays (17:39):

But the Advanced Product Designer allowed us to build a map on paper that's easy to scrap until we get it right, take the software, build it exactly that way, use the mind maps to train people on how the software's going to work, use the mind maps to figure out how the documents and flows all have to work. So I want to thank Guidewire for putting this product out there because, in my mind, it is an absolute game-changer.

Laura Drabik (18:02):

It's actually one of my favorite capabilities as well. We allow everyone who actually creates product or has input into product like claims or finance, billing, and also the line of business owners, all to collaborate on this mind map and, Tim, we've seen reductions of what used to take weeks being achieved in APD using our mind map within hours, so weeks down to hours. Thanks for sharing that.

Laura Drabik (18:27):

When I was new to Guidewire 17 years ago, I used our story cards to help me come up to speak quickly on our system capabilities. For our listeners, story cards include a description of Guidewire's major capabilities, including the user interface, screen fields, rules, and the project team can even map out any updates to the capability directly into the card. Tim, how important were story cards on your implementation and how did your team utilize them?

Tim Hays (18:55):

Well, they're essential because we have a rule here. No story, no work. It is the root element of all of our feature development.

Tim Hays (19:03):

But backing up from that, the inventory of story cards that Guidewire brought to the project enabled us to do implementation workshops in advance of a statement of work or in advance of development to say, "Do you do these things? Do you do these things this way? If you do these things and you do these things this way, great. We're going to elaborate that. If you do these things, but you do them in a different way, now we need to talk about can you do them the way that the Guidewire application does? And if you don't do them at all, we just set them aside, maybe for future enhancements, maybe for work that we want to do later, but it's something that's out of scope and it's informative to talk about things that we don't have to do on the project."

Tim Hays (19:44):

So it is the foundation of our fanatical project execution. It was the foundation for our scoping this project and it was a lot faster to start with an inventory of some predefined cards than to sit around a whiteboard and say, "Okay, what do we do? How do I create a card that defines that and then go do it?" So we have an opportunity to stay much closer out of the box with this baseline inventory, Laura.

Laura Drabik (20:08):

Yeah, I couldn't agree more. Any future plans you can share with us on how you're going to be leveraging Guidewire cloud in the future?

Tim Hays (20:16):

Sure. We're going to complete the digital journey. We're going to delight the customer and we're going to empower the next 75 years of company success.

Tim Hays (20:23):

What's the digital journey? Well, I maybe can't tell you what it is, but I can tell you what it's not. Digitalization is not printing all your documents and mailing them to the customer. Digitalization is not asking questions of your customer that you should already have the answer to. Digitalization is being able to communicate with your customer in the manner that they want when they want and the quantity that they want and the quality that they want. So that's part of the digital journey, to enable all of those pieces of technology that make it possible for us to delight the customer.

Tim Hays (20:54):

Laura, I think we live in this experience economy. Other people have said it, I believe it. So we're going to use the power and meaningfulness of customer experience to drive this company forward. We're going to use it to be the best insurance company that we can imagine.

Laura Drabik (21:07):

Well, the future sounds bright for you and for the company.

Laura Drabik (21:11):

I also noticed, Tim, that you volunteer for Junior Achievement. Well done. I must admit that when I volunteered for JA, Junior Achievement, I found it quite intimidating walking into a classroom full of preteens. I mean, nothing erodes your confidence in yourself faster than a pre-teen. What have you learned from volunteering for JA that you've actually been able to apply back to your career?

Tim Hays (21:33):

Well, first off, teachers aren't paid enough, nor appreciated enough. I have never been more tired than after a day of work than when I've taught a Junior Achievement course on entrepreneurship to a class of fourth-graders. I usually leave thinking I'm thankful I don't have to do this every day. But it's also one of the very rewarding things I've done to be able to watch them learn and I think I get a small glimpse of why the very best teachers do what they do.

Tim Hays (21:57):

Second, anyone with some business experience should volunteer for Junior Achievement. I promise you, you'll learn something and so will the kids. We don't do enough to educate kids on why businesses exist, what's the function of a business, how money moves around in a community, why entrepreneurs are actually essential and Junior Achievement allows us and helps us do that. It's a great, great program.

Tim Hays (22:20):

What have I learned and brought back? Kids don't have limits. Want to go to Mars? No problem. Want to start a business with a hundred dollars in capital? That'll work. I want a bicycle that keeps going when I'm tired and when I'm not tired, I'll pedal again. When you're a kid, problems are just the next thing to tackle. But often adults, when they find obstacles, they ask the question, "How are we going to do that?" And the question, how, "How are you going to do that" becomes the big derailer of doing great things.

Tim Hays (22:46):

If I've worked for you before, or I'm currently working for you and you're listening to this, close your ears for a minute. I've started most, if not all, of my big projects with very few of the hows figured out. I don't know how we're going to do that, but we are going to do it so we'll figure out a way to do it as we go. As new information becomes available, we'll make a decision and then we'll do the right thing. I've observed big projects not start or fail because they didn't start until they had enough of the information figured out. They wanted the perfect solution, the perfect answer. Then they floundered and they were disappointed when the project didn't hit their original assumptions and they were proven wrong.

Tim Hays (23:22):

Kids don't have these limits. In their minds, they can do great things. So working with the kids reminds me to dream a bit and think bigger.

Laura Drabik (23:29):

I like that, dream and think bigger, and I'll make sure to share this podcast with my sister who's a teacher. She'll love to hear the positive comments you said about teachers and I can attest to the fact everything you said is true. They are challenged and underpaid.

Laura Drabik (23:43):

Tim, thank you very much for your time today and for your incredible insight. You've showed us it's not just about ideas. It's about making ideas happen.

Tim Hays (23:52):

Thanks, Laura.

Speaker 1 (23:56):

Tune in next time for an all-new episode of InsurTalk with Laura Drabik, brought to you by Guidewire, the platform PNC insurers trust to engage, innovate and grow efficiently. For more information, visit guidewire.com.