Tips for Fostering a Culture of Innovation in Insurance: Mark Rieder, SVP, Head of Innovation, NFP

Can you share any details about NFP’s digital strategy?

About five years ago, we set out on a path of innovation within NFP. Our initial focus was on gaining a better understanding of all the insurtech platforms, products, and solutions that were coming to market that we felt were poised to enhance the insurance industry and our business. While some might have called them disruptive technology, we looked at everything that was happening in a positive light. So we spent the first year doing our due diligence and understanding what was happening, who the key insurtech players were, what technologies were coming to market, and where the opportunity was.

We realized pretty quickly that a) our employees and customers didn’t really have a good understanding of the solutions coming to market nor were they ready to implement them and b) that most of the tools that were coming to market were very closely linked to data. And if we were going to have success we needed to do a better job of organizing our data.

So, in “phase two” we then focused on our educating our employees and our customers on what innovation was and that it was the responsibility of everyone in the ecosystem (our employees, our clients, and the start-up community) to drive innovation. We worked to bring innovation into our culture, to empower our teams to think outside the box, and to rethink the way they do business. I would suggest that most organizations would say that they don’t discourage out-of-the-box thinking, but there’s a difference between not discouraging it and encouraging it. So, we worked with the business units to help them realize that innovation was about being better. They didn’t have to know the technology, they just needed to help identify the problems and the opportunities, and then we could apply the technologies and tools to address them.

And finally, “Phase Three” is when we launched our digital transformation strategy “officially.” Our strategy is enterprise-wide and really focuses on the entire client lifecycle. We aren’t simply focused on the output but rather we are rethinking every aspect of our business. From how we capture data, eliminating the typical PDF/email stream, to how we organize the various systems that support our client delivery model – all with a focus on creating a better user experience and delivering a more cohesive data driven strategy across our enterprise.

To support this transformation we have developed a proprietary platform known as NFP Connect. Again, enterprise wide, so employee benefits, property and casualty, retirement, and individual solutions, all are supported on the same platform.

It should be noted, it is super important to embrace the insurtech platforms. Although we have development capabilities in-house, we know that, first and foremost, we’re an insurance brokerage, not a technology company – we know what our wheelhouse is. So, the platform construct allows us to plug in third-party solutions that are the best at what they do.

What are the top three considerations that insurance brokers should consider as they embark on their digital transformation journey?

I think the first thing to consider, or tackle, is generating buy-in within your own organization. Top-down, bottom-up, make sure everyone is on the same page – that they understand the strategy and the roadmap.

Part of generating that buy-in is helping people in the organization understand that transformation is not questioning/criticizing them and the work they are doing, rather focusing on the process, and their help is needed – their engagement is critical.

So, I’d say buy-in and engagement are one and two.

And number three, focus on problems to solve for as opposed to focusing on technology. Once you identify the workflow and the problem that you’re solving for, there’s plenty of technology out there to apply to it. But to go out and find a vendor or a tool or a platform, and then try to figure out where it fits within the organization – I think that’s the wrong direction.

We all know that large-scale digital transformations don’t happen overnight. How do you drive change, push innovation forward, and empower others within the organization to accept and embrace change?

The first thing you need to do is get all the constituents that are part of your ecosystem to understand what you’re trying to do and how it benefits them. A lot of companies focus solely on their customers when they think of digital transformation: We need to meet the needs of that client or that customer. Well, your account teams and the people within the organization, they’re the ones that are doing a lot of the work to get to that point. They’re the ones that are focused on meeting customer needs day in and day out. So, if you’re not improving their lives, if you’re not making things better for them, the chance of adoption is limited.

You can continually push out an idea of what you’re going to do for your customer, but if it doesn’t get adopted internally and it doesn’t get buy-in, then it’s not going to be successful. And the only way to do that is to have your internal teams understand and realize how you’re helping to improve their lives. And once you do that, then you have buy-in, and once you have buy-in, you can forge ahead and change the interaction with your end-user, the customer.

If you think about the insurance industry, and I’ve been in it for about 25 years now, we’ve been following a lot of the same models for how we service business for the last 25+ years…there aren’t many other things in your life that are the same as they were 25 years ago, right?

So, when I talk to teams and departments, I start with, “What part of your job is difficult? What do you hate doing? What keeps you from getting out of the office on time? Ok, now how can we make it better?” It’s about understanding their pain and helping them understand that a little bit of effort today can help pay dividends tomorrow. You can continue to go about things the same way and expect more time to miraculously free up, but that’s the definition of insanity – doing the same thing over and over again and expecting different results.

You’ve been called an insurance change agent. In your opinion, what are the defining characteristics of an effective change agent?

To be a pain in the ass! [Laughs] No, listen, you need to have a good understanding of the industry, a good understanding of technology and what it can do, and a good understanding of data. You don’t have to be a Ph.D. in any one of them, and you don’t need to be able to write code, but you do need to understand business processes and what data should be able to do. You need this knowledge and understanding to be able to challenge people on the way they do business because if you can’t challenge folks, you’re never going to impact the change. You need to be comfortable with challenging people, with being the only person at the table who thinks one way and who isn’t going to get swayed the other way automatically. BUT at the same time, you can’t be so pigheaded that you can’t recognize when some of the things you’re proposing just don’t make sense or won’t work.

Another thing that is super important is having the ability to help the people you are working with come to a decision on their own and allow them to be the ones bringing the ideas to the table. You can’t feel as if everything has to have your name attached to it. As a matter of fact, you’re better off if your name isn’t attached to it – be comfortable with being behind the scenes, pushing people “towards the light.” Things don’t get done because it’s my idea; things get done because our people come up with ideas of how to be better.

According to McKinsey’s Global Innovation Survey, 84% of executives agreed that innovation is critical for their business and is an important component of their growth strategy, but only 6% are satisfied with innovation performance. How can insurers build a culture of high-performance innovation and empower change agents and teams to embrace – and lead – meaningful change?

First, at NFP, we don’t have a separate innovation team per se. I lead the charge and I have a title of head of innovation, but we have purposely approached innovation not as a separate department that sits in a different building and does different things. Rather we have built a network of innovation ambassadors within every part of the business. I think that strategy of building from within, although it takes longer, allows our innovation initiatives to be more sustainable and more impactful.

You’re always going to get naysayers along the way. As long as you have top-level support from your executive suite, you can continue to push the envelope and step on the gas until maybe somebody screams and then, ultimately, you’ve got the support of an executive to say, “This is what we’re doing and why we’re doing it.”

Second, there’s certainly enough opportunity within the insurance industry to create efficiencies, right? We’re a paper-based, manual process, legacy system industry. So, if someone came in and looked just at the business model and said, “Hey, I can see a ton of efficiencies out there that we can layer on top” and just start plugging in new tools, I think they would hit roadblocks. If you’re going to spend resources on tools to make a business unit more efficient, you need to justify the spend versus the return, and many business units don’t measure themselves and their current cost of doing business to the degree that they should and so it becomes very difficult to build a solid business case with ROI.

Also, business units tend to be very sensitive about the impact new technology might have on their existing business, client relationships, and retention. You can get a lot of push-back and nervousness when you come in and want to change a workflow. One way to counter this resistance is to look for new markets to move into in order to test the waters with new platforms and technologies. Everyone likes new revenue, it’s exciting and sexy, and people want to talk about it. Then, once they see the outcome that you can have on a new market, the teams can work to figure how to bring it back into their existing business, as opposed to just trusting that it might work.

I also think we as an industry need to be bolder. I see a lot of people get caught in “pilot hell” where they’re doing 12 technology pilots at once. Well, how’s that impact top-line revenue growth or bottom-line efficiency if you just test a bunch of stuff and never pull the trigger? You need to get into the game. You’ve got to get off the edge of the pool and start swimming.

The global insurance industry continues to experience disruption due to various market factors (the pandemic, a hardening market, new risks, remote/distributed workforces, etc.). Which factors do you feel are having the biggest impact on the industry today?

The changing profile of the insurance buyer is the big one. The demographics have shifted to a buyer who has been born and raised in the digital age. These digital natives expect a better user experience because in every other industry they’ve gotten it. They also understand how data impacts the way in which they live, work, and play. They know the data is available, and they expect it to be used to better their experience.

This is why we’re seeing new non-traditional entrants into our market. The Amazons and the Googles of the world have built a great, data-driven user experience for their customers and they’re looking to extend their platform. They’re looking at industries that historically have not provided a good user experience and don’t have a good NPS score. To be candid, insurance is probably at or near the bottom. They see the opportunity to fulfil the needs of customers who are yearning for more personalization and a better user experience.

If you think about the insurance industry, we’ve been siloed or departmentalized. You have personal lines (auto, home, renters, pet), health and welfare (dental, vision, etc.), and then you have financial products over here, and business insurance over there. Well, our buyer is not departmentalized. They have a life to live and they’re looking for a holistic strategy. They don’t want to go to one place to get these four products and then to another place to get these three products, and so on. At NFP, we’ve been focused on saying, let’s look at this as a buyer, let’s forget about lines of coverage and our corporate structure. Let’s just say, “How would we as buyers want to interact with an insurance company?” and then build that environment.

As these tech giants like Google, Amazon, and others enter the insurance market, will this present new opportunities for insurance brokers?

A hundred percent – if you embrace it. The embedded insurance play is one area of opportunity for brokers. I was just reading an article today where they talked about how to sell insurance without really selling insurance. It’s now about bringing the insurance product to the buyer when they need it, where they need it, as part of another workflow. So, when I’m buying a new house, am I being offered home warranty at the same time? Am I being offered home insurance? When I’m buying a new car, is auto insurance offered? When I am purchasing airfare or a vacation package, am I getting trip cancellation? On the commercial side, if I’m leasing office space, can I effectively take care of all my insurance needs while I’m at it?

The point is that people have never loved buying insurance. “I have extra money on hand, I’m going to go buy more insurance,” said nobody ever, right? That said, we are seeing that post-pandemic, people are more open to insurance, but you need to bring it to them when they’re in the moment.

For example, I’ve heard ideas thrown around of ride share companies facilitating the sale of micro-insurance, two or three hours’ worth of coverage on your contents because you’re going out at night, and you might lose your phone. So, within your ride share app, you simply click on a button and buy three hours of let’s call it “blanket coverage” on your personal items that you have with you that night.

Now, we never could have done that before because there wasn’t a mechanism; digital has enabled that. These micro products don’t allow for the traditional agent model. It has to be done digitally and it has to be done at point of sale. So, the opportunity for brokers in the individual space to partner with companies that control the user experience and have data, and to embrace the utilization of that data to drive a more personalized experience is huge.

The role of the group/commercial broker is also going to change greatly. I think we will see a shift toward a more consultative approach rather than simply securing a quote for coverage. We’ll see a focus on helping customers better identify risks based on the data that is available. And working with the clients to implement tools that will help them obtain such data for risk mitigation. Risk mitigation is best managed with data, so how do we effectively digest it, analyze it, and create insights as quickly as possible to help our customers? The brokers that can gather, access, aggregate, and analyze data and spit out insights the fastest will be the winners in the future.

If we take cost out of the equation, what factors should insurance companies consider when deciding to partner with technology providers or insurtechs vs. building digital capabilities in-house?

I look for somebody that is willing to be a participant in the exchange of data and not try to own it or keep it siloed within their platform. I think you need to be a partner in that data exchange continuum. If you are pushing your own UI, your own proprietary database, and forcing people to access the data through your own reporting module, that makes you, for us, a less attractive partner. When you think about both insurers and insurtechs, the folks that aren’t open to data sharing and figuring out how to collaborate are the ones that will struggle.

How can AI and other emerging technologies contribute to a better customer experience?

The challenge with digitization in our business is that there are multiple parties involved, and there are still a lot of legacy systems out there. A lot of those legacy systems are within insurance carriers, which impedes data exchange. Instead of exchanging structured data with us electronically or via API, our partners are sending unstructured data in PDFs, emails, and documents from which we must manually re-key information.

As a broker, you could easily throw up your hands and say, “We can’t improve this business process because the data isn’t available.” Or you could be proactive and partner with an insurtech like the Chisel AI’s of the world that are using AI, machine learning, natural language processing and OCR to take those insurance documents and translate unstructured data into structured data. And then once you have all the data in one place and organized properly, you can utilize tools to produce insights and outputs that you can act on. I encourage brokers to take this into their own hands.

As the role of brokers continues to evolve to meet changing customer dynamics, what’s next in the evolution of the broker business model?

In the individual market, if the broker does not embrace digitally engaging with their customers, then they’ll have trouble remaining in business. In the near future, the individual market will be very much controlled by digital agencies

On the commercial side, I think the expectation of what a broker brings to the table shifts from just quoting/brokering to, I’ll call it, advising and consulting clients on how to effectively gather data and analyze data in order to mitigate risk and deploy the best insurance solutions.

From an insurance company perspective, if an insurance company today is asking a buyer to give them 50 data points before they can provide a quote as opposed to somebody that’s asking for ten data points, they’re going to lose out. Now, it doesn’t mean that the company that is only asking for ten data points doesn’t care about the other 40 points, but they know they can go out and get that data on their own, and they’re not going to ask the buyer for it.

If insurance companies don’t embrace the concept of bringing data into their underwriting process without asking the buyer for it, they will face increasing competitive pressure from newer insurance startups, insurtechs, and non-traditional insurers. Again, it’s all about the data.

Take out your crystal ball: What do you think the insurance industry will look like in ten years?

You know, ten years is a really long time. I think people that tell you that they have a 10-year business plan are full of it. I don’t think it’s possible. But I will say this: I would hope that in ten years, all the parties in the insurance value chain have come to the realization that data is king, and it should flow freely between parties with the goal of creating a better user experience at the end. Will we get there in ten years? My gut says no, but hopefully we’re further along the spectrum.

Mark Rieder is Senior Vice President, Head of Innovation at NFP, a leading insurance broker and consultant that provides specialized property & casualty (P&C), corporate benefits, retirement, and individual insurance and wealth management solutions. As a change agent and thought leader in the insurance industry, Mark is the author of multiple articles and white papers, speaks regularly at industry events and conference panels, and sits on a number of technological advisory boards.