AI Wisdom Ep. 22: Customer-centric Insurance in a Post-COVID World

Digital Transformation, Insurance Industry News & Views - March 24 2021

On this episode of the “AI Wisdom – Talking Innovation in Insurance” podcast, host Ron Glozman speaks with David Perez, President and Founder, Lumen Insurance Technologies about meeting the demands of the ‘new normal,’ how insurance agencies are being forced to re-invent themselves to deliver a touchless digital experience, and his predictions for the commercial insurance industry. David shares advice and recommendations for successfully delivering a digital customer experience in a post-COVID world. Click the play button to listen or read the full transcript below.

Full Transcript

Ron Glozman: Hello and welcome to “AI Wisdom - Talking Innovation in Insurance. On this podcast, we talk to business and InsurTech leaders about how artificial intelligence is transforming the way we buy and sell insurance. I’m your host Ron Glozman, Founder and CEO of Chisel AI and a strong believer in the power of AI to help people work smart and enrich their lives. So, let’s get into it.

Ron Glozman: As commercial insurance agencies are forced to reinvent themselves to meet the demands of the new normal, how will they address customer needs for touchless digital experience, embrace emerging technologies and drive innovation to foster positive customer experience? I’m very pleased to have David Perez, President and Founder, Lumen Insurance Technologies join me today as we discuss customer centric insurance strategies for a post-COVID world. Welcome, David. Before we jump in, can you please introduce yourself?

David: Thanks for having me, Ron. I'm Dave Perez, the Founder and President of Lumen Insurance here in Austin, Texas. It is a niche focused agency helping technology companies who’ve been funded with their commercial insurance journey. We were founded in 2016 and on a mission to help out tech companies as they go through rapid growth and have really enjoyed going through that journey with several clients all the way through full cycle. I’ll explain a little bit more about that later. But thanks for having me on the podcast, really looking forward to it.

Ron: Love it. Thanks for joining us. So, David, or Dave, I’ve heard before that people don’t really choose a profession in insurance, but they sort of fall into it. As a military veteran, can you share a little bit about how you made the transition from the military to being President and Founder of the company?

David: Sure. I’ve heard that too, I’ve actually heard that it’s either family influences or accident that drive people into the insurance business and mine is certainly the former. I had an uncle who was an underwriter for a major carrier and then went on to the brokerage side. My father-in-law’s a P&C agent on the personal lines side and another family member on the life insurance side. And so, I had family influences there that showed what the lifestyle looked like and kind of let me in on the secret. As far as transitioning from the military into insurance, it was an interesting path, but

I kind of knew about halfway through I was going to get out of my service term. I was working on my MBA and looking to go into the business world and just started asking questions.

Really, I guess this is, for any military person transitioning into the real world, it’s just figuring out what you want to do and for me it was asking questions, being curious about what other people are doing and what they’re working on what the lifestyle is like, what the pays like and as I was getting out and moved to Austin, I just started meeting with people in the business and asking questions and meeting with folks on all facets of insurance. On the captive carrier side, personal lines, life insurance people, benefits people, commercial P&C people and ultimately landed on commercial P&C for a regional firm that was headquartered here in Austin. After a few years there just discovered that there was a need in the marketplace for somebody to help early stage tech companies and I couldn’t really find a good solution for my friends who are starting companies in the tech business and so went off on my own to help those folks. So that’s how Lumen started.

Ron: I love that. So now that the world is maybe changed in a way that nobody has ever seen before, I’m curious to hear your thoughts on what has been the biggest impact on the commercial industry specifically, as you talked about being closest to that, and sort of how well is the market responding to this?

David: So the insurance industry’s being impacted from a bunch of different angles, from the regulatory standpoint, we’re seeing some talks about how insurance companies might be forced to respond to some of these claims and some, maybe some legislation that’s going to force people to do that, which definitely is going to change, change the industry, if any of that passes, particularly in California. We’re seeing lots of claims, and even if the claims don’t go through, and I can give some examples of this, but even if the claims aren’t approved, they still have to dedicate resources from a carrier standpoint to walk through the claim, investigate the claim, and then determine that it’s not included, particularly around the business income and extra expense claims. And so, we're seeing some things there on the claim side.

The employment practices liability insurance line of coverage is a very, very interesting one. I try to keep up with the D&O marketplace a lot and I mean, we’re getting companies sued for, lack of diversity on a board. We’ve got BLM going on, you’ve got lots of protests, you’ve got COVID. Did somebody act fast enough today? Not act appropriately? Did they not take enough measures? As we look and hopefully this thing kind of lets up a little bit. If somebody doesn’t put the right company, doesn’t put the right measures in places people head back to the workplace, could that open up another set of employment practices liability issues, and so we’re seeing some tightening on the marketplace from an underwriting standpoint, we’re also seeing on the D&O side where carriers are just not renewing our clients, which is interesting.

Ron: That is very interesting. What do you think people can do to actually respond to that?

David: From the client standpoint, the options are to, find another carrier, find another home for the D&O or for the employment practices liability insurance. And a lot of times that’s what we’re having to do. We’re probably on a weekly basis, we’re fighting somebody who’s not being renewed or, the premiums are increasing significantly. In many cases, we’re having to move from a standard carrier to a surplus lines’ carrier, which just has a little bit different nuances to navigate. But we’re just trying to find homes for these policies.

Ron: I love that. I think it’s so important to, especially in a time of need, when people probably need this, especially if they are able to get it through their existing. That service that agents and brokers provide is more viable maybe now than it ever was before.

David: And there was one other thing that I was going to mention. You asked how the marketplace is responding. Those are kind of some of the negative things, I mean, the tightening of underwriting and the increasing of premiums and things like that. But there are some companies who are doing well. I mean, these are mostly on the personalized side. So, I don’t want to focus too much on that, but companies are giving some premium dollars back, which is kind of an interesting thing.

Then on the commercial lines, payment flexibility, I think there’s, just an understanding that it’s tough times for everybody it’s a tough situation and being flexible with those payment terms, whether it’s, regulators or not, carriers, being quick to react to that and say, "Hey, look, we know it’s tough times, your need to conserve your dollars, we’re going to extend grace for 60 to 90 days for you to, work on your cash flow and kind of work something out with us." I think it just shows flexibility and a little bit of empathy.

Ron: As you think about a world post-COVID. Do you have any predictions for what we might see?

David: Well, I alluded to it a little bit earlier, because we’re already seeing it. I don’t want to say we’re post-COVID because that assumes it’s behind us. But we do live in the post-COVID world. I wish it was behind us, frankly. But we are seeing those underwriting guidelines be more restrictive. So, in the past where you might see a young startup that’s gotten some funding would be kind of a slam dunk for some of our standard carriers. Now they’re just saying, "Hey, look, we’re not writing anybody from California or we’re not writing anybody who’s less than three years when in the past, we would have considered that."

Even funding, what we’re seeing is, the typical question is, how do they plan to sustain operations for the next 18 months? We’re seeing underwriters now ask for 20 for a minimum and then a pro forma for 5 years, which is as you and I both know, as you write it down, it’s wrong.

So just seeing some interesting things on the underwriting side. We are seeing some premiums, that are going up so hardening market, and it was probably trending that way before COVID. But certainly, seeing that on our end, that’s, as these renewals come in that, that the premiums are going up and, carriers are trying to recoup some of those losses that they’ve had in the past and they’re going to continue to have. I think the third thing is, consumers will be looking for experts to be helping them through how they react to the post-COVID world. So just an example is, we work with a lot of tech companies and, with Facebook and Google and a lot of these other large tech companies going full remote. Some of them are just their leases up or near the end of their lease or they’re just not coming back in the office or not going renew their lease or sending everybody home who wants to stay home for the foreseeable future. And, if a company does go for remote, what is look like from a business owner policy standpoint, do we need to keep general liability on the account? Do we need to keep property on the account? And how do we manage a completely remote workforce, whereas in the past that hasn’t been the norm. So, we’re just kind of adapting to that, that post-COVID world.

Ron: And that’s perfect because I want to take a slightly different spin aside from COVID and you touched on this, there are problems that come with having a remote workforce and maybe specifically cyber, I don’t know if you have any thoughts around cyber if you’ve seen more or less need for it, if you’ve experienced more or less claims around it. But I think there’s specific problems and again, things like business interruption can change when you’re out of the office, you talked about CGL and Property. What are your thoughts may be around cyber and business interruption?

David: So as far as cyber is concerned. That was also just background on this, we did an insurance predictions in the post-COVID world review. I think it was two months ago and that was one of the predictions that we have is that we’re going to see an increase in cyber claims. And what’s interesting and depending on which article you read, but one that I was reading the other day was saying that cyber claims we’re going down. I thought that was interesting and I don’t really have a good explanation for it at the moment, but I think that in the past I’ve read, it can take anywhere from two months to six months for a cyber breach to be discovered. So, if a breach has occurred, they’re just sitting there, whoever it is, is sitting there just watching the activity so they can, make the right moves, and financial moves for them on the black market.

So maybe it’s because we haven’t seen those claims yet, but I do think that those are coming, again it sounds like it’s going down at this point, the cyber breaches have gone down. But I think that’s to be determined.

Ron: That’s very interesting. In some ways I hope you’re right, and in some ways, I hope you’re wrong.

David: Me too. For our clients’ sake, I hope I’m very wrong.

Ron: Exactly. So, we’re going take a quick 20-second break to tell you where you can find out more information and insights about insurance innovation. We’ll be right back.

[If you liked this episode of AI Wisdom, subscribe to our blog, Writing the Future: AI in Commercial Insurance at www.chisel.ai/blog for feature articles, interviews, opinions, and more.]

We’re back with our featured guest Dave Perez, let’s jump right into the next question. What are some of the challenges and obstacles you see when it comes specifically to agencies trying to innovate, how can they overcome those challenges, and what is at stake if they don’t?

David: I’ve kind of seen and heard just from talking with other agents about digital transformation and how scary of a challenge that can be. I think the number one notion out there just my straw pole has been, what if they mess up my book of business? You know, that’s a cool technology. But what if it doesn’t work and it messes everything up. And I lose all this business because you tried. An interesting story when I first started Lumen, I was really sick of the app process like printing out applications and sitting down in front of a client basically, like watching them fill it out while I sat there and answered questions, which I think is, crazy.

And so, I digitized it with a Google form and then found there’s some other opportunities to work with people who have done that in the past. There was a local gentleman who was working on something similar. So, I took a shot at using his technology and loaded up an app, send it to a prospect. That was an intro from a VC. I was like, oh, this is going to be great. I’m going to send it over to him. He’s going to be like, wowed by the digital app instead of a PDF or like a printout and it didn’t work. I was kind of crushed, but I was like, hey, man, you got it. Can you fix this, and I’ll send it back over to him? So, he fixed it and sent it back over to him and the conversation I have with that CFO, he goes, look, I’m in the technology business as well. Tech breaks from time to time, just fix it and send it back over. It’s no big deal. And like, it was interesting that my fear of him being like, ah, your tech doesn’t work. I’m out. Then just finding somebody else in the next in line. He was more open to it being a young startup as well saying, hey, stuff breaks, like we’re still trying to figure it out ourselves. Send it back over, like, fix it and send it back over. We’ll be fine with it. So, I thought that was an interesting story. I don’t know if other agencies would feel the same way, because maybe they are, you know, they have more legacy systems, the stakes are bigger, since I’m a younger company, I’m open to these digital transformations. But I think fear is kind of the biggest factor there.

Ron: That’s a great example. I find that, I really, really connect with that story, actually, because and not everything and not everybody obviously has the same propensity or tolerance for bugs, but I think it speaks maybe a little bit to the times and one great thing is maybe, back in the day, you would be able to deploy software updates once or twice a year and it was a whole process where technician came in with like a floppy drive or a thumb drive, and they loaded it up as like a whole day thing. And half the time the computer broke and you lost your files, and nobody liked updating anything.

And nowadays, we live in a world where we get updates to our apps on our phones, like weekly or monthly and everybody’s so used to, like, things just break, and they get fixed. And that’s okay, because the turnaround time, I believe is reduced. And that’s maybe a testament to one of the reasons why people can be more accepting of a process. I’m going to be great. Can you speak a little bit maybe about what’s at stake if you don’t innovate? Like, do you think it’s okay, like, if I just keep doing paper forms forever, I’ll be fine?

David: No, I don’t. It’s interesting that I still have clients that come to me and say, "I filled out a paper form." And even in today’s environment, why do I have to literally to have a wet signature on this particular document. It’s just kind of an interesting deal where some carriers haven’t adapted to that. And what happens is they just get frustrated and find somebody else.

I think that’s the biggest challenge is that if innovation, digital transformation, and innovation doesn’t happen, then they’re going to find somebody who is doing that and those who refuse to change be left in the dust.

Ron: When you see the bigger picture, as you look around, and you look at what people are thinking about, what do you see as the trends that are going to have the biggest impact?

David: On which side? Like, on the carrier side or on the client side? Which side?

Ron: Both, either, maybe in the spirit of where this question comes from is, you talked about, digitizing and, you for example built a Google form, and then you found somebody local in Austin who was working on a technology that sounds like it was, somehow complimentary or very similar. So, do you see that as a trend like digitization of forms or do you think you know what, maybe forget forms, it’s just going to be chat bots, or I’m really excited about blockchain? Are there just trends that you see that you’re very excited about?

David: I think the connectivity in the insurance space is really what I’m excited about. I feel like, carriers have so much data. Agents have so much data, and kind of connecting all of that is really what I think would be very, very powerful. I know that a lot of the carriers that we work with are, they have somebody that’s in maybe a Head of Innovation or Digital Transformation title at the highest levels. I know that they’re attempting to try and make it a little bit more connected, whether it’s through your agency management system, or just kind of open API’s and things like that, it’s evident in the upload download technology that exists today and that it’s existed for a long time.

But getting that technology better, and then figuring out how we share it amongst all of the carriers or share that with an agency or if the agency has the data, kind of doing a push pull type of, sharing the technology. I just find it interesting that we’ve got so much data and it probably resides in the system already.

But when we go to a carrier portal and try to enter in information, we have to go find it, particularly on a building that hasn’t changed. I mean, maybe there’s some updates like they update a roof every 15, 20 years, but we’re talking to a company who doesn’t own the building, and, they’re occupying, 20,000 square feet or something and they’ve got to ask their landlord all these questions about when the roof is updated and when the building was built and all these questions they don’t really have handy so just creates more friction. But you and I both know that that information probably exists somewhere whether it’s in the county tax records for a year built or like a LoopNet or some other commercial insurance type sales platform, I mean, all the information exists somewhere, it’s just connecting all of it so it’s easier and more seamless for a client to use.

Ron: So when you think about, you talked a little bit earlier about, not wanting AI or not maybe even AI but technology in general you made a comment about do I trust it with my book of business and then it’s going to be delivering the results that I want and not burning bridges and actually deteriorating my book of business. I’m curious to hear about maybe the different technologies you’ve tried and your experiences with them. And as a follow up to that, where you would maybe recommend other people think about leveraging technology?

David: Yes. So, I would say that, the biggest challenge for AI might be, well, are you going to replace my job? And I’m not saying that as like me specifically, but, your boots on the ground and you’re a stakeholder sitting in an office and you’re an account manager or account tech, or maybe even an agent, and you’ve got somebody that’s building chat bot technology, that’s kind of taking away from the conversation with the client. If it’s AI, does that mean I’m completely replaceable, and I think that there’s kind of a lack of understanding that those are tools used to enhance the customer experience, as opposed to replacing the customer experience or the interaction. It’s just putting things at a higher level, to where, you’re not asking basic questions over the phone, you can have, a chat bot or maybe some sort of AI technology, ask those questions up front, knock out the basics, and human to human have the higher level conversation.

So, I think it’s just kind of a misunderstanding of how to leverage technology. And honestly, I think I think some folks have just been doing things a certain way for so long that it’s just, things are working the way they are, and let’s just kind of leave them.

We’ve been doing business for 20 years, 30 years, 40 years, some of them 100 years. This agency has been around 100 years and we’ve seen this and that and we’ll see more after this. And, we’re going to continue to do it the old-fashioned way. I think that kind of resistance to change over time is...I feel like they’re missing out.

Ron: A 100%. And I think a lot of it comes down to, you talked a little bit about, doing it the same way I’ve always done it and adapting to new ways I think when we personally have seen technology work best is when it’s like a human in the loop. So, a machine will make a prediction, it will say, I believe, this is the right information, or I believe this is where you should get this information. And the human says, "Yes, thank you." And instead of having to spend 10 minutes going and digging through your email, just to find, for example, a binder to find the premium so you can tell them, how much they owe them. Maybe that can be automated, and you can just say yep, great. I want the, yeah, that’s the right email, right? Instead of having to do all the features. So, I think it really just comes down to being open to change and really working hand in hand because I don’t think it’s like it’s a question of A versus B, I think A plus B is much greater than A versus B. That’s really where we’ve seen technology work.

And so, as we wrap up, I’d love for you to talk about what you think is the one biggest piece of wisdom that you would like to share. And this doesn’t necessarily have to be insurance related or business related. It can be life related or anything, what would you share with your peers in the industry?

David: I guess for the sake of this conversation, I would just say, be open to change. I think a lot of folks are scared of change, and I’m one of them too. I mean, nobody really likes change that much. It’s just how well can you adapt to it? In many cases, the change is good. So I feel like in our industry is just quite the challenge because so many people have been doing things the same way for such a long time, that it’s just kind of a routine and getting out of that routine a little bit and, exploring different options that are out there.

Once you’re open to the change, not being afraid to make the leap, kind of like the story I shared earlier, where I was scared that I was going to lose this opportunity and it was quite the opposite. He’s was like, "Hey, like, we’re peers now because, you’re taking a shot and using a new technology that’s trying to make my life better. And I like that. I like that about you. I like that about your agency. Just fix it. Send me the link again, we’ll be good." Not being scared to have those conversations and make those mistakes. I think it could be a refreshing opportunity for the industry.

Ron: I love that spirit. That’s exactly it because you fail the day that you give up. That’s a saying that I heard recently, and I think is really powerful because if you keep trying, you sort of never fail and you will eventually succeed, and you fail the day that you stop trying. So being open minded and being willing to try new things, and when they fail, iterating on them, fixing them where possible, identifying new areas for improvement, because you will get there. I do honestly believe that there is an opportunity, a big opportunity here for technology to really have an impact on this industry in a positive way where it’s not detracting from people’s jobs. It’s not in any way having a negative impact. It’s only positively impacting. So, with that said, Dave, where can people find out more about you and what you guys do?

David: Sure, well, we’ve got a website and we share valuable content on our blog. We post monthly and it’s really just questions that we’re seeing trends from. So right now, it’s how are our clients doing in the post-COVID environment and prior month it was about insurance predictions and post-COVID world. We can always connect there. We are active on Instagram, Twitter and Facebook. We have a LinkedIn profile with a few hundred followers and so we engage with the network there and with the tech ecosystem there. Would love for anybody listening to be a part of that. Go and check it out and look forward to connecting with people. Once we can all meet in person again maybe one day, we’ll be able to hear you speak at DIGIN in Austin or ITC in Vegas again.

And, we also would love to have you at the InsureTech ATX meetup which is kind of on hold right now like many other get-togethers and meetups and things like that. So when things let up, we’re just looking forward to getting people together and sharing some ideas and having provable conversations around digitization technology and just making the insurance industry a great place to work and a great place to help our clients.

Ron: As always, you can find out more about Chisel AI at www.chisel.ai. And of course, check out our podcasts, wherever you might be listening, and follow us on LinkedIn. Dave, thank you so much for taking the time and everybody stay safe and we’ll see you soon.

That’s a wrap for this episode of “AI Wisdom” hosted by Chisel AI and me, Ron Glozman. Thanks for listening.

If you like our podcast and want to hear more, check us out at www.chisel.ai or tune in and subscribe wherever you get your podcasts: SoundCloud, Spotify, iTunes, Google Podcast, or Stitcher

Join us next time for more expert insights and straight talk on how AI and insurtech innovations are transforming the insurance value chain. See you on the next episode!

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