We recently had the opportunity to catch up with Abel Travis, Vice President, Underwriting and Innovation, AF Group and host of the Insurance Innovators Unscripted Podcast to discuss pragmatic approaches to change management in the wake of innovation in the insurance industry. As the commercial insurance industry is confronted with a tidal wave of change – from revamping age-old processes and adopting new technologies like IoT, AI, RPA, and chatbots to facing a crusade for new talent – maneuvering digital transformation is a daunting task.
Tune in to hear practical advice and recommendations on how to effectively ride the of wave to help your organization embrace the cultural shift needed to fully embrace innovation and change.
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Click the link to have a listen. You can also read the full transcript of the conversation below.
Ron Glozman: Hello and welcome back to another episode of the Chisel AI podcast. Today on our show, we are here with Abel Travis, Vice President of Underwriting and Innovation at AF Group and host of the Insurance Innovators Unscripted Podcast. Abel, thank you so much for joining us today. Can you tell us a little bit about yourself?
Abel Travis: Ron, thank you. It is definitely a pleasure to talk to you today. I’m the VP of Underwriting and Innovation for a company called AF Group. We are a multi-line carrier located in Lansing, Michigan who specializes in workers’ compensation. But, of course, that’s not all we do. We also do a lot of other lines with our commercial auto trucking launch that we did last year (2018), and also other multi-lines of business with casualty and property that we have been rolling out through our AF Speciality brand. So that’s me and AF Group in a nutshell.
Ron: Awesome. Thank you. So, as you are probably aware – and our listeners are probably aware – the insurance industry is currently being confronted with many challenges: new market entrants, disruption both within the industry and from outside the industry, customers demanding digital experiences and faster than ever responses. Competitive pressures are just coming at the industry faster than ever before. So, many companies are figuring out whether they should be afraid or whether they should look at this as an opportunity to be innovative. I would love to get your thoughts on how insurance companies know that it is the right time to embrace change. What are some of those signs and motivators for change?
Abel: Ron, that is a great question. As we look at what’s been playing out in the industry, we know today that it is absolutely the right time to embrace change – especially with a lot of the insurtechs and the transformational elements happening across the insurance value chain that are starting to peek through.
I always tell people we are an industry that has been unscathed by innovation for quite some time – up until a few years ago. Not only are we changing within this industry based on what we’re seeing play out here, but we are also being influenced by industries that have absolutely nothing to do with insurance.
Customers are now expecting services that they would get, say, in a retail environment with, let’s say, an Amazon, or that they would get from a company like Apple. Retail and manufacturing are changing customer expectations. It’s a situation where they are so used to that experience, when they come to engage with an insurance carrier, that expectation follows along with wanting that same experience from an insurance company. I look at organizations like Lemonade, for example.
Let’s say I’m a millennial and my first experience with getting insurance coverage for my home or apartment is through Lemonade where I can quickly go online, quickly search through my mobile phone, and get insurance coverage within 30 seconds to a minute. That’s my first experience with insurance. So, when I become a business owner, my expectation is going to be that, hey, my experience of purchasing commercial insurance might feel very similar to a Lemonade.
When I look at the industry, and what is driving innovation and transformation, it really is customer expectations, the speed at which technology has been transforming and is being adopted in this segment, and then the experience that you want to make sure you’re giving to your customers so you can serve them in an effective way.
Ron: I’m curious to hear the inverse. Are there any parts of the business that should remain the way they are for whatever reason?
Abel: That’s definitely a really good question. Ron, I’ve got to tell you, as I look across the entire insurance value chain, because a lot of elements haven’t really been touched, I believe there is an opportunity to innovate and change all aspects of the insurance value chain.
If you look at claims, I’ll give you a personal lines example. Just a few weeks ago, I actually got into a pretty bad car accident. I drive a BMW. When I got into the accident, the first thing that came over the speakers in my car was somebody from BMW saying, “Hey, Mr. Travis, we see that your air bags deployed. Are you ok?” This astounded me. Wow! This is a service that I didn’t even know I had until I got into the accident. You don’t want to have to activate that service, but when I had the accident, I realized, hey, BMW is on my side. That was an experience that will keep me as a customer for BMW for the long term. I know that they were trying to get me back whole and make sure I was okay, or dispatch services in the event that I needed an ambulance or something like that.
I look at things like this and I think, wow, the insurance industry performs claims services well today. Imagine if we could deploy a similar capability that shows customers that we are there for them at any given point in time during a claim.
Keeping with claims, it’s things like Vision Analytics, for example, where if I get into a car accident, I can pick up my mobile phone, take a picture, and send it over to my insurance carrier so I can get an adjustment done really quickly so I can be made whole or potentially get the vehicle repaired without having to wait weeks and months which is what it has taken historically with some of the incumbent insurance carriers.
That’s a back-office operation. Think of Policy Administration Systems, Point of Sale Systems, or even a mail room, for example, where insurance carriers receive hundreds of thousands or even millions of pieces of mail. There is an opportunity to innovate these elements of the value chain by using OCR, or AI, or natural language understanding to synthesize the information that is coming in to make it easier for the folks that are performing those back-end functions.
When I look across the entire insurance value chain, what it is screaming to me is that, hey, while there are some things that could stay the same, if we really want to become effective at what we are doing, which is paying claims, we need to look at the entire value chain to determine where we can innovate and make this a much more efficient industry.
Ron: I love that example with BMW. Props and kudos to BMW for doing that. That is an amazing customer service that they have in their cars. It makes me think, with IoT and the interconnected device economy that is coming, if car manufacturers had partnerships with insurance companies, potentially they could give them the data right away, saving a lot of time creating that first notice of loss. They could assess the damage literally within seconds of the collision happening to simplify the process for everybody. It makes me hopeful and pretty excited for what potentially could be coming in the next several years.
Abel: Absolutely. I actually don’t think it is that far off. People love to hate on Elon Musk, given his huge ambitions not only in insurance but in so many different areas of industries – from solar cells and batteries all the way through to Hyperloop and so on. The one thing that he gets is what drives a customer to want to stay with an organization based on the experience that they are getting.
People scream from the mountaintops that Elon Musk doesn’t know what he’s getting into when he’s coming into the insurance space. But he and Tesla are working to partner with insurance companies like Liberty Mutual and other insurance companies globally to provide services that look and feel just like that so, in the event that there is an accident, they can not only try to mitigate the accident from occurring, but also get the right services in place to either bring you back whole or fit you with a new vehicle or a new car. I truly believe that this capability is one that’s probably not too far off.
Ron: It’s interesting because change can be a little scary, and this is obviously a big change from how we do things today. What do you think are some best practices that companies can adopt to manage that change effectively across the business units and make sure that they include all the different parts of the value chain?
Abel: That’s a question that organizations that are looking to transform and innovate face day in and day out. I think first and foremost a best practice is to make sure that when an organization is changing, the buy-in is coming from the top, from the CEO down to the rest of the organization. Because there are folks that really buy in to the notion that my leaders are saying that these things need to happen and are driving the message. That’s the first best practice that every organization needs to have. Otherwise, if it is coming from someone in the ranks, they might not have the same level of respect that the leaders of the organization have.
The other thing that is critical is I don’t think innovation or transformation is something that can happen in a vacuum. If you want the business to buy in to the change that you’re hoping to put into the rest of the enterprise, you have to make sure the business is on board and a part of the change. You hear a lot about companies that are going through digital transformation. The biggest limiting factor in doing this successfully is not the technology; it’s the culture.
If the people that are going to be using this technology day in and day out don’t buy in to the change, it will be so difficult to change the culture and for the rest of the enterprise to on-board a digital transformation.
So, you have to have the buy in from the CEO, you have to engage the business, and the last best practice is to make sure there’s an actual change management plan in place.
You could say, hey, we’re going to do all of these things, and we’re going to take on board a lot of the new capabilities, technologies and business models, but if you’re going into it haphazard with no real plan in place, there’s no guarantee that you’re going to see success. Organizations should make sure they have a plan in place, whether it looks like having a change management team or a written plan that is helping the organization drive the change within all the ranks throughout the organization.
I think these are really three best practices to have on board.
Ron: I love that one. The one about the CEO buy-in is key because we see a lot of this. We talked about this on your podcast: Innovation for the sake of innovation. That often happens when an executive says, “Go do innovation,” without needing to commit to it from a business sense.
I’m curious about the third point: If people want to be practical about transformation, who should be the right person inside the organization to manage it? Is it the business owner, a project management person, or a product person? It’s about culture. I think its hard to put a box and be able to define culture. I would love to hear your thoughts – as practical as you can be – about how to get those game-changers or cultural movers to step up and really move the needle.
Abel: Personally, I believe everyone owns the culture within an organization. If we use digital transformation as the example again, while digital transformation feels like a technology initiative, really, it’s not a technology initiative. It’s a business initiative that impacts the entire culture. You have to have change agents, plural, and not just one owner for all the digital transformation. Because it’s something that is going to have implications for folks all across the entire enterprise, you have to have change agents in each of the different areas across the enterprise. It’s necessary to have a business change agent and a technology change agent.
If it’s an insurance organization that has an actuarial team onsite, you need someone within the actuarial organization that is leading the change and taking the perspective of the actuarial team, and so on and so forth. You can keep going with the operational organization, corporate underwriting, product management, and so on, in terms of owning the change and what change feels like within an organization practically.
That being said, I know the way Agile processes work and the way business processes work. You still need one individual, one person leading things. I think that could be a product owner from the business, who can manage the integration and coordinate the communication and working relationships with all of the change agents across the enterprise. In this way, the culture could be influenced to take on the change that we’re trying to invent.
Ron: I love that. I think, to your point, it’s everybody’s duty. As a start-up, the way we define culture is the way we do every day common tasks and the way we approach them. It’s more than a set of values that we throw down and never look at again. You really have to live them and embody them. A big piece, I think, is communication. What are some effective communication methods and what roles play a part in effectively communicating across the organization?
Abel: It really depends on the organization that you’re in. There are so many different communication styles. You have to communicate in ways that your individual employees are used to. If you are an enterprise, let’s say, that has staff domestically and globally, you have to use the means to get the message out there and get people excited. I always say video works, as well as ensuring that you’re sending collateral through emails. The most effective tool that I have seen work is giving individuals the opportunity to be hands-on with the innovation and communicating it in a way that shows how the change impacts me directly. As an employee, you’re always wondering, what is this going to mean for me and for my role?
If we are talking about digital transformation, and an employee that works in the service center that is used to opening envelopes and going through texts and scanning them, you need to physically show them what the change will mean. If you message things in such a way that you show directly how it will make your employees more effective and let them focus on more important things, now you’ve got an employee who is saying, “Wow, now I know how that change is going to affect me and now I know how I should embody this change.” So, he/she can become a change agent at the desk level without having to be labelled a change agent.
I’ve always found that if you can show hands-on what the change really means it helps to make the change more effective across the organization.
Ron: I think that’s a very hands-on approach that people can really take action on. Another one that I have seen work is something that I believe Zurich Insurance does. They look within their organization to find employees to bring forward ideas about ways to improve their lives. A committee looks at which ideas they can take action on in the short term, medium term and long term and then put together the resources required to fulfil the ideas. It’s like a suggestion box. Obviously, it’s digital and they have an interesting user experience around it.
I think it’s a very practical approach to solicit people internally to contribute to the direction and allow them to feel a sense of ownership and autonomy. As most people who have read business books know, autonomous employees are the happiest employees. It’s like Google’s 20% time: 80% of the resources are dedicated to traditional business objectives and 20% are dedicated to innovation and improving the business and employee’s lives.
Abel: Just to give an example, the first thing I did when I joined the organization here was to figure out how to change the culture across the enterprise and solicit ideas from folks throughout the organization as well to help shape our strategy. To get people feeling that sense of ownership that you talked about, we set up a handful of councils both internally and externally. We set up an external council to capture the feedback from our closest partners and agents so they can feel a part of the change. And then our internal innovation council captures the same level of feedback from individuals across the organization.
We also built a homegrown tool called “The Idea Pipeline” to electronically solicit information from everyone, determine the themes coming out of the insights, and then we could decide what we want to target next.
The one caveat with this approach is that you have to be sure to communicate what is going on with the ideas that are coming in. If they see that you are not doing much of anything with the ideas that they are putting out there, they might end up disengaging from the transformation and from process. You can keep a high level of engagement with the individuals across the company.
Ron: I think that last point needs to be emphasized. I have seen the same thing at many organizations as well. People are very eager to give feedback and, as a business, you can’t always move the ball as fast as you’d like. The bigger the organization, the more change management that needs to happen to get the action taken required to implement that vision or idea to its full mission. So, I think it’s very important to communicate where in the process that idea is, and make sure that the people who give the ideas have visibility into how they are progressing. As well, other people can see that, when advice is given or ideas are provided, they are taken action upon. I think it is a very difficult thing to get right, especially the bigger the organization.
So, as we wrap up, if you had to give one piece of advice to leave our listeners with regarding the wave of insurance innovation, what would it be?
Abel: That’s a good question. I think the advice I would give people is: Be open to change. When you work for a large organization or even a start-up, you need to understand that the things that got the organization to where it is today aren’t going to work 3, 5, or 10 years from now. There are market influences and factors that you have absolutely no control over. You may have to continuously shift your strategies in order to be successful at what you’re doing.
I always tell folks you absolutely have to be open to change and open to doing something different from the status quo. With that being said, you do need your “Steady Eddy’s” in an organization too. You need the people who are going to be there to help run the business and service the business. But you also need those people who are always looking towards the external and internal market influences and how we can change in a way that’s going to help us better serve our internal and external customers.
Five to ten years from now, the status quo is not going to be enough to sustain your growth.
Ron: I think that is exactly right. I remember seeing a very famous caricature/cartoon that says, “Who wants change?” Everybody’s hands go up in the crowd. “Who wants change?” Everybody’s hands go down. People always want change, but they don’t want to change, because it’s scary. You have to be open to change. I don’t think it is possible for everyone to be open to change. You do need Steady Eddy’s, to your point. It’s something that both large organizations and start-ups face, this struggle between status quo, needing to pay our bills at the end of the month and provide excellent customer service, and wanting to invest time and resources into innovation. It’s not possible to take all of our existing resources and throw them into new innovation. That would just not work, unfortunately.
People who are open to change are relatively rare and they should be highly valued. When you find those people, you have to hold on to them and support them because it is going to be an uphill battle for them, and also for the Steady Eddy’s who are running the business.
As a CEO, I hope other CEOs take it as one of the main emphasis of the job to be there for their people, and lead through empathy and support rather than through an iron fist.
Coming to a close, thank you so much for coming on this podcast with us. I really appreciate your insights. Do you have any parting thoughts?
Abel: Absolutely, thank you. I’m very active on social, particularly on LinkedIn. You can also check out the Insurance Innovators Unscripted Podcast. Folks can go to wherever they like to listen to their podcasts – Stitcher, Apple iTunes, or Google Play – and find me there.
Ron: Awesome, thank you, everyone, for joining us. You can find Abel on LinkedIn. You can find me as well on LinkedIn and Twitter. Please check out Chisel AI as well as the AF Group and the Insurance Innovators Unscripted Podcast. Thank you until next time.