AI Wisdom Ep. 25: The Intersection of Technology & Culture in Commercial Lines Underwriting

Digital Transformation - October 20 2020

On this episode of the “AI Wisdom Talking Innovation in Insurance” podcast, host Ron Glozman speaks with Megan Bock Zarnoch, Founder & CEO, Boundless Consulting Group about her digital transformation predictions for commercial insurance underwriting including recommendations for successfully pushing innovation that delivers a digital customer experience where and when it makes sense. 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 InsureTech 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: As the commercial insurance sector is forced to reinvent itself to meet the demands of the new normal, how will insurers address their customers' demands for touchless digital experience, embrace emerging technologies like artificial intelligence, robotic process automation, chatbots, drones, and more, while driving innovation in areas of the business that require the most critical change? What does the future hold for commercial insurance underwriting? I'm very pleased to have Megan Bock Zarnoch, Founder and CEO of Boundless Consulting Group joining me today as we discuss digital transformation and commercial insurance underwriting. Welcome, Megan. Before we jump in, can you please introduce yourself?

Megan: I'm Megan and my story is actually a little bit of an interesting one. I'm a cultural anthropologist by education, that's what I studied in school, was super passionate about and then like so many folks fell into the insurance industry and built a career here, primarily as an underwriting executive, leading teams, regions, and businesses. And then most recently, I brought it all full circle. After years of observing some of the challenges around innovation and doing things better and differently at traditional insurance carriers. I founded Boundless Consulting, as a way to help the insurance industry do things differently, using their organizational cultures, employee engagement to really fuel innovation, solve their business challenges, and create an ecosystem where both employees and companies are wholly thriving. I'm excited to be here today because one of my key focus areas is really this intersection between all of the digital transformational tools that you referenced in the intro and underwriting culture. I really do think that culture is the key to success here. So, I'm looking forward to the conversation.

Ron: I love that. I don't think we've ever had a cultural anthropologist on the show before, so you have the first honor. So, I'm very excited. I'd love to maybe jump in and talk a little bit about COVID-19. Because I think that's definitely still on people's minds and the count, at least when we record this on September 18th, seemed to be maybe trending the wrong way at this point in time. And would love to hear what are the impacts that you're seeing? What factors do you feel are having the biggest impact on the industry, underwriting, and what is the market reaction?

Megan: Yeah, so it's interesting, clearly, COVID-19 is having impacts in a variety of ways on the insurance business itself, whether that comes to coverage, or claim payouts, and things of that nature. You had Dr. Hartwig on earlier this year, he's the foremost expert. So, I won't try to opine on what the financial impact is going to be to the industry. But rather, I'd like to talk about some of the silver linings that I actually see coming out of this pandemic and ways in which it can improve the business itself and our outcomes. I've done quite a bit of research and what I've found, even amongst traditional insurance companies, is that there hasn't really been any drop off in productivity or day-to-day operations, once they got through the process of getting up and running virtually and that was quite a sprint for some of them. Very different than day-to-day operations in many cases. There has been a lot of traditional views around teams that have to sit together, managed by walking around have that on-site supervision, etc.

So, this is really debunked that view that that's necessary in order to deliver on the value proposition and it creates an environment where there's some experimentation with new digital alternatives and different types of connectivity. I also have found that it's been reorganizing relationships and, in many cases, creating new deeper connections and more empathy within teams particularly teams in a silo. So, manager-employee relationships, not necessarily across an organization and I do think that it's encouraged folks at all points in the value chain to prioritize their own wellness. Their family, their whole person and I think that that's a really positive step that needs to be a part of workplace culture as we go forward, whether we're talking about the insurance industry or any other industry. I actually think that it is some of those tenets that can lead to more creativity and more innovation down the line.

So, it really comes to pass that day-to-day underwriting operations, how they get work done, has felt very much business as usual, but with a bit of a better balance and I think this is a cool opportunity to leap forward for the industry.

I will say that the pressures that COVID-19 has put on the business are sort of compounded with all of the other industry trends that we've been seeing over time. Available premiums have been compressed, there is more competition, all of the insurtechs that have entered the marketplace as full-stack carriers, or just even more competition there. And distribution has continued to consolidate more and more rapidly over time and that puts pressure in a number of ways, not the least the expense, because carriers are paying more to be intermediaries in order to have access to compete for the business. So, I think insurers have largely responded in their usual way. What are the short-term fixes and factors that can help get through the situation at hand? Take more rate where needed, changing the mix of business, trying to expand and think differently about their distribution strategy. We've seen that there's been maintenance of investment in the technologies that was already underway, although not a whole lot of new sort of greenfield development.

I am well aware of all of the terrible impacts of this pandemic has had on so many people, and so I do not take that lightly, but I do think that this creates an opportunity, if we take a positive look at it, to think differently and really prioritize and leap ahead. So, I think this is actually an inflection point for the industry. And I'm hopeful that we'll see some real and lasting change as we go forward.

Ron: I love that. I want to draw on a specific thread that you talked about, sort of in the middle there regarding building environments and relationships, especially now and especially in siloed organizations. I'm curious if there's specific tools, I mean, obviously, everybody's using Zoom, or Google Hangouts, or Teams, or some type of video conference. So, is there maybe specific tools that you would recommend outside the norm that maybe most people haven't heard of? Or even tips and tricks on how to use the common everyday tools and better ways to build those relationships?

Megan: That's a great question. So, I don't. I, like everybody, am using the same tools and technologies that we're aware of - video conferencing, telephone calls, virtual happy hours, all of those kinds of things. I actually think that it is an inherent part of what's happening in those contexts is that individuals are, whether they like it or not showing up as they really are. You know, you see kids running around, in my case, you see my dogs poking their heads in and telling me it's time for dinner, which happens at least twice a day.

It's really around showing up authentically, as you very much are, and that creates more empathy and connection between people. So, I think taking the time, asking real questions, and being open to getting to know each other in that new and different way is what's making the difference now, and teams that are doing it differently are going to be able to capitalize on that moving forward.

I don't know about you, but a lot of people have a work persona, that when we were all going into offices, we showed up with our work hat on and maybe that was exactly who you are at home, but in all likelihood, it was probably a polished up version of that. And so, now sort of that polish is no longer available and I actually think it is going so far to help people connect. And that creates these deeper relationships is more based on authentic connection. At the end of the day, people really just want to help one another. So, if there's opportunity to do that, I actually think that's how these relationships build and deepen in this time using the tools that are already available. It isn't a matter of the technology; I don't think needing to jump forward. But instead, it's all about people and culture and the way that we create time, both organizationally and personally to use it, because those connections are really valuable.

Ron: And so, you recently published a LinkedIn article that was titled, "What Would Underwriters Say." I'm going to quote a piece that I'd love for you to expand on and it goes, "The secret for success is not dependent on which firm can invest the most in new technology. It is about who will turn that paradigm on its head and invest intentionally in culture, letting business lead the strategy, and thus fueling innovative ideas and exponential success across all metrics." Would love for you to share with the listeners your recommendations and insights on some of the steps insurers can take to do this well and achieve their desired business outcomes.

Megan: So let me set sort of the backdrop or the current state how underwriting feels today and I come at this from an underwriting lens, because that is my operational experience and that's the main intersection of production for insurance organizations, that's who interfaces with all clients, and who is responsible for the top and bottom line from a revenue perspective. What I've found in my personal experience as well as in the research I've done is that traditional insurance companies have placed a really implicit value on doing things the way they've always been done. Sort of that's a cultural underlier that reinforces a particular set of behaviors and all the while they may be investing in technology or "innovation," but it's being done separately. It isn't incorporating some of those individuals in the business in underwriting or in the field who have great voices, have really good ideas. They're the ones serving the customers, they're the ones getting business done day in and day out and so they haven't been a part of that transformation journey. And in fact, the underlying tenor is to continue to do things the way they've always been done so that innovation and ideation isn't really encouraged. Instead, what's happening is insurers are investing in new technologies that are primarily focused at - still on policy administration.

So, there's a ton of advanced technologies out there as you are well aware. But many insurers are still stuck, research shows that over 50% of insurers are still working on updating their policy administration systems. So, the work that's happening, updating the policy admin systems, is being done in a separate silo and is being pushed at your field underwriters. All the while, we found that in only up to 84% of companies, roles are either rarely or never changing, along with some of those technological changes.

So, what you see there is a dynamic where technology is being built in a silo, it's being pushed at underwriting teams, who are not a part of understanding why it's necessary, how their roles are going to evolve and change and how they continue to add value to the organization. Therefore, there could be changed fatigue or resistance, folks aren't adopting changes. And so, all of the impact that is expected from those updates in technology isn't necessarily being earned in. There's also just a lot that piles on because every incremental change, whether that's to the policy admin system, or new and cool advanced technologies, it all kind of adds on to an underwriters desk while they are trying to manage their day to day, renew their deals, write new business, build relationships with their agents and brokers. So, there is a lot on people's plates, and we need to have an awareness of that to think about change successfully for the underwriting organization.

I've collaborated with Deb Smallwood and Strategy Meets Action specifically on this topic, because we think that there's so many opportunities to really leap ahead. There's two things that I think are really important here, number one, editing and prioritization and number two, incorporating your culture and your people on the journey. So, the approach that I think makes the most sense here is really working backwards. When I say editing, it means you can't accomplish 100 things. Instead, you need to place your big bets on two or three, and then move those forward and maintain them.

The key here really is prioritization and including people and culture in your transformation journey. So, what we have posited is that you really need to be able to have a framework and work backwards, so that you can create a strategic plan that then moves forward to deliver that vision. Ultimately you need to take a more outside-in view and think about that end goal.

Who does your company want to be in a decade? Who are your customers? Where do you plan to grow? What's the value that you add? And specifically, what kind of culture does your organization need to have in order to deliver on that effectively. So, that's your end goal, and you work backwards from there to think about how it's going to get done. And finally, build that very explicit strategy, including investments in technology and process that will deliver you to that vision. Simultaneously, you're able to create a plan relative to your people and culture that will enable you to successfully deliver on that end vision. So, you can think today about the skills and the capacities, and the other types of cultural elements that you need to have present in your staff in order to fulfill that. Who do you need to hire? Or how do you need to upskill your talent today to bring them along the road with you? The last piece of that culture is when you're very intentional about creating your strategy to deliver that long-term vision, you can use an effective change management framework.

The key pieces there are having employees, your teammates, engaged in understanding the why. They need to know where you're going, and how they can contribute to it, and have that strong communication looped all the way through. So, in doing that, we actually think that you can slim down your focus and be more effective at delivering it. And when you get there, your people will be ready to not only catch it but to have the next big idea and build on it from there.

Ron: Empowerment is definitely the key.

Megan: Absolutely. You know, I think at the end of the day, and this is what my quote was referring to, if you invest in 100 cool new technologies, they're out there, absolutely. But you probably will be shooting in the dark as to which one is going to effectively deliver on that end vision. Whereas instead, you can select the top three or five that's going to enable you to really achieve that vision, and then incorporate your empowered people along the way. So, it really accelerates the journey and makes the best use of your resources. When people are focused, you know, they're excited, they're in that flow state and they're really with you. So, it's really an ecosystem that encourages more innovation and ideas. I mean, that's the culture I want to be a part of.

Ron: Have you seen recently a rise in the need for companies to sort of try to catch up, or do you get the sense that companies are in catch up mode where they're having, obviously the need to have business continuity, having to redesign their businesses or figure out new ways to operate. At the same time coupled with an increase in cyber attacks because people work from home. And in a reduction in face-to-face interaction, which, you know, in one interesting study that I saw said that output wise people are 90% to 100%. So, if you just measure based on output, most companies seem to be doing just as well. But what they found was most people were working roughly 140% as much time because the hours were blurred and they might wake up at 7:00 a.m. and check their phone and do the emails and even at 7:00 p.m. and at 8:00 p.m. So, would love to hear if you've seen any of that and then on the flip side, how can companies stay up to date? How can they catch up and not fall behind with this digital world that we live in?

Megan: I think it's a great question and my answer here is really, well, let's start with where we are today. I would say that, yes, we're in a bit of a catch-up mode. I recently read a Capgemini survey and they ranked insurance companies as eight out of nine industry categories in terms of digital technology and innovative culture. So, I think that says something and that actually speaks to a little bit of how it has felt being a part of the industry. So, we've got some catch-up to play, particularly in the traditional insurance carrier spots. But I think it's exciting because all of the cool digital tools and technologies are out there. They're being built, they're being ideated, there's so many interesting insurtechs in the environment. So, the problem isn't technology, it's getting it implemented, making sure that it is actually taking hold and creating a more effective, efficient environment for everybody who works there. I think this comes back to the prioritization.

You know, I think I'll use a simple analogy, but you've got 100 units of effort, and each of them are equivalent to an inch. So, I've worked at insurance carriers, I think everyone is familiar with places that have 14 different proofs of concept going, they've got three other pilots over here, there's a new team that's doing X, Y, Z thing and oh, by the way, we're trying to improve on our top-line revenue through increased submission, volume, etc., There's any number of metrics. So, if you think about that, it's the same. You've got 100 units of effort, if you're putting them each in separate lanes, then you only get one inch in each direction. You've got proof of concepts that peter out and frustrate people, you've got, this or that flavor of the day initiative that isn't taking hold and isn't going anywhere.

Instead, when you prioritize, and you pick three big ideas, you place your bets there, you know, now those 100 units of effort divided by three, you get a yard in each of those directions.

You're really leaping ahead; you're actually doing things differently. That proof of concept bore success, and now you've implemented it across the country and it's actually changing the way your teams do business and folks understand what's coming, how they're a part of it and they're excited for that to continue to grow and build momentum and change the way they get work done.

So, I really do think that the answer to the insurance industry both catching up and then getting ahead is less around creating new tools and more around getting over some of those cultural hurdles organizationally, to make sure that we're picking the right ones, and then letting them bear fruit.

Ron: I love it. We're going to take a quick 20-second break to tell you where you can find 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 for feature articles, interviews, opinions, and more.]

We're back with our featured guest, Megan Bock Zarnoch. Let's jump right into the next question. I recently came across an article that stated, "Traditional insurance companies should act like startups." Do you agree with the statement? And what do you think insurers can learn out of the startup playbook?

Megan: Well, clearly, you know, you're the expert on startups. So, keep me honest here. I've spent most of my career working in a traditional environment. But I think there's a really good point here. I do think that there are really some elements of startups that would totally benefit traditional insurers. More risk-taking, encouraging resourcefulness, and content of the stretchiness, that I recently heard from a professor, Scott Sonenshein, that really encourages innovation and creativity. I think the other thing that startups, from my perspective, do really well is that they operate as outsiders. They're questioning why, part of that's because they may not have been deeply steeped in the insurance business. But it brings so much benefit, because it's those outsider perspectives, the questioning of why we do something a certain way that we don't have enough of in the traditional insurance environment and that can create some of those real innovative leaps forward.

I think there's a benefit to having both because insurers can also benefit from their scale and history. It's the best of both worlds. Number one, typically the balance sheets are such that they can invest in multiple tracks at the same time, whereas startups really have to place their big bet and go down one path in order to see whether it can come to fruition, just my take at it. But an insurance company can test out multiple tracks and see what's going to work. And there's already so much data available to these carriers, their customer data, market data, etc., that they really have the inside track on buying patterns, what people have wanted historically. So, if they can couple that with that startup mindset, questioning why we've done it a certain way, being stretchy and resourceful, and encouraging that innovation and creativity, I think that it can be a real win-win. And the last thing I would add to that because this is sort of my mission is incorporate different voices and different people from those organizations today.

There's a lot of people at these carriers, who have great ideas and who want to be a part of that journey forward, and have some experience in that product set, in that marketplace, etc. So, it can be best of both worlds when you create a culture that replicates some of those best elements of a startup with the combined history and financial stability of the large insurance carriers. So, I think it's a great idea.

Ron: I'd love to hear your thoughts on large scale distribution transformation, because obviously, it can't happen overnight. It's a process that change management and process management has, and Six Sigma has many books and lots of people employed in the industry. And so, how can insurers ensure that they're continuing to drive process and secure buy-in, while also empowering those change agents? Because often times, people fear change, and not everybody is accepting of change, and many people dread change in some form. Do you have any advice for people who might be experiencing pushback?

Megan: Yeah, absolutely and you're right, this is such a huge element. It really is the number one reason that insurance executives cite for why digital transformation can get held up. It's not about the technology, it's about the implementation and success, is the thing that they're concerned about.

I conducted a recent survey in my collaboration with SMA, and what we found was that over 60% of insurance executives are worried, are concerned about fostering empowerment and innovation in underwriting culture.

So, that's a real concern on people's minds. It's also why there's an entire change management discipline. There's a lot of different ways to tackle it. But some of the core concepts are the same and I'll speak to that here. The first and most important element, I think, though, it speaks to what we were talking about earlier, which is really selecting those changes, picking those big bets in alignment with your company's mission and vision.

That's to make sure that it is actually going to deliver on how you set your organization up for success, who you want to be, how you want to help your customers thrive. If you connect it to that overall mission, then the why becomes more clear. I also think there's an element of sticking to it. So, change is...can be daunting as humans that creates uncertainty, we are living in a year of a lot of uncertainty, so that can be really challenging. But when, it's even more challenging when just it feels like different changes are coming at you from all angles without a lot of explanation.

It's really about picking those key changes, those key updates, and making it tie to your overall vision and effort and sticking with it.

Your underwriters are doing deals, they're meeting with brokers, they're running their portfolios, they're responsible for their regions and it's exhausting and distracting when you have to keep doing that day job and then navigate what changes are coming? How do you need to do business differently, maybe you've got one foot in the old way and one foot in the new way?

So, those are all barriers and can create more of that fatigue and resistance. So, once you've got your change in mind, where you're heading, and you're committed to it, you're going to stick to it for the long run so that there's less change on the horizon, then it's about engaging and empowering your people. Making sure you're communicating effectively, all the way along, making sure everyone understands the why of that change, how is it helping fulfill the vision? How is it helping serve the customer? And how do they fit into it? How do each of your people fit into it, add value, and add along the way. So, they need to be a part of that journey. If they're not, then we're humans, people make up stories. We are a meaning-making species. So, if we're not given the story, we'll create our own story. That AI is coming along, it's going to replace my job and replace all of my peers' jobs. So, therefore, I am going to dig in my heels and not going to be the first to adopt it. Why would I want that to take hold if that means I don't have work?

So, instead, talk about it, frame it up, in terms of how it's going to enhance, how it will help that individual, that underwriter spend all of their time building those relationships, creating value for customers, proactively solving problems, and eliminate some of the busy work or the less value added work they've been doing in the background.

I also think incorporating more people into that innovation process. Sourcing ideas from the field, involving teammates in the build, and giving people explicit responsibility in leading change is super helpful, and can both get that buy-in and understanding and help troubleshoot any potential hiccups before they arise.

And the last tenet I would share is that change, and particularly technology improvement should be led and should be happening from within the business. I see challenges happen when technology or IT is built in a silo and then delivered to the business without the business owning, understanding, and leading that change effort.

So, the business should be intimately intertwined in selecting the initiative, the investment iterating and then certainly in delivering the message, getting sponsorship, engaging individuals, and communicating continuously, so that that ownership and empowerment all exists within that organization. And people will be along with you on that journey. It'll make implementation so much more effective.

Ron: Those are some great steps and definitely steps that are actionable. I think people can act on today. So, thank you. Last question. This is one of my favorite questions. If there's one piece of wisdom that you could share, and this doesn't have to be insurance-related, it doesn't have to be related to business, just one piece of wisdom that you'd want to share with people over the next 60 seconds, what would that be?

Megan: So, we've talked a lot about culture and people, and you've heard from me that I think it's effectively engaging your people and creating a culture that's innovative and change-ready is the key. I actually think that what this really requires is empathy and EQ.

The piece of wisdom is that this starts with you. So, creating space for your own feelings, understanding your own motivations, and taking care of yourself, your personal priorities or family. That is how you fill yourself up and become well prepared to engage effectively, build those relationships, empathize and understand your team, your organization and effectively create better cultures that are change-ready, innovative, successful, and frankly, just fun. The best thing that I have found to create that space myself is my meditation practice. So, if I had one tip or trick to share with anyone, it's that minimum five minutes of meditation a day is life changing.

It's not easy, it doesn't always look pretty the head can be quite the whirlwind. But just taking that time to have a little extra space really helps shore up my own personal practices, make me more available and empathetic to colleagues, friends, family, and the kind of cultural creator I want to be.

Ron: I've been practicing or trying to practice meditation for a couple of years. I'm curious, you know, there's many types of meditation and I've read many books on the topic. I'm curious if there's a specific mantra, and you don't have to answer it if you don't feel comfortable. But I'm curious if there's a specific trick to the meditation or a type of meditation that you personally have had success with.

Megan: You know, I've tried a variety of different types of meditation. Two personal favorites. Number one is the loving-kindness meditation. It is a set of mantras that helps you fill yourself up and then create empathy for the world through repeating for specific mantras, if you google it, loving-kindness, or metta meditation is very popular. Actually, the science shows that it takes less time doing loving-kindness meditation than it does doing other types of mindfulness meditation to actually change the neural pathways in your brain. So, a little bit of science that supports that, that's actually a really effective way to do it and the other is just a simple mindfulness practice. To sit, set my timer, and then let whatever happens happen because that's the meditation. Is being quiet, giving yourself that space, and noticing what's going on with you. Anything and everything is okay. It's cultivating that awareness that actually makes all of the difference in how you show up in your life.

I guess the last tip, I would say is, it's not that your meditation is going to feel life changing. It's not the five minutes or 15 minutes that you're sitting, most of the time that feels very gripping, and I'm watching all of my thoughts run all over the place. But I start to notice in my day-to-day life, that I have more space, I have more awareness and I have more empathy and ability to connect like, so it's the change that happens in your life versus letting go of any thought that something specific is supposed to happen during that time you're sitting. So, that can create a little bit more of a safe place to proceed.

Ron: So, where can people find out more about you and Boundless Consulting Group?

Megan: The best place to connect with me these days is on LinkedIn at Megan Bock Zarnoch or Boundless Consulting Group. So, feel free to connect with me there. Or if you've got any specific inquiries, feel free to drop me an email.

Ron: Awesome. Megan, thank you so much for taking the time. And I hope everybody out there stays safe.

Megan: Thank you. This has been quite a pleasure.

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 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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