Direct Carriers & Changing Risks: Q&A With Rob Galbraith

Rob Galbraith has been called “the patron saint of insurtech,” “a global insurtech thought leader,” “a wonderful motivation,” “an inspiration,” “a mentor to many in the insurance industry,” “the prophet,” and “the most interesting man in insurance.” He is the author of the international bestselling book The End Of Insurance As We Know It, which has been a runaway success since its release in 2019. Rob is a popular keynote speaker who has shared his unique insights at numerous events around the globe on the topics of innovation, insurtech and the future of insurance. Rob has over 25 years of experience in the financial services industry in a variety of innovation and leadership positions. He is a recognized thought leader on P&C insurance, a frequent media contributor, and well-known industry influencer. Rob holds a Master’s of Science in Insurance Management from Boston University and a Bachelor of Arts in Economics from Michigan State University. In addition, Rob holds the CPCU, CLU, and ChFC professional designations.

The following are excerpts from a conversation between Ryan and Andrew Wynn, Co-Founder and Co-CEO of Ascend, the first modern insurance payments platform that provides automated all-in-one financing, collections, and payables.

AW: What are some of the top insurtech trends you’ve noticed this year?

RG: Broadly speaking, there are three big things I’ve noticed. Number one would be remote work. It’s amazing just how much we are capable of doing remotely nowadays. We’re even having this conversation remotely. Obviously things like video conferencing have been around for a while, but with this past year forcing everyone to go remote, it’s driven a lot of different behaviors. There are tons of people who typically work in person, like claims adjusters, underwriters, or inspectors, who realized that they could work remotely. And with this, I’ve seen tons of people say that they have newfound time and productivity. People are spending less time commuting to work and traveling, and more time being productive.

When all of this started, I think that a lot of people thought that remote wouldn’t work. But this past year and a half proved that it does. However, from there, we have a new onslaught of questions. What does collaboration look like? What does having a sense of team look like? Do you feel the same connection with your company and your teammates? Can you innovate and be creative? What does a brainstorming session look like? How do you approach going back to work now? Today, everyone is dealing with things differently. Some companies, like my own, are back in the office. Others are letting employees do whatever they prefer. There are still some open questions that we have yet to fully answer.

The second thing I’ve noticed is the validation of insurtech. Think of companies like Lemonade and Hippo that have had successful IPOs. We’ve been seeing a lot of exits and acquisitions. To me, all of this is the market validating now that there is value in insurtech. External parties are saying that they see business value here — value that those of us within the industry have seen for a long time. Now, we’re getting the skeptics on board. This is not just a fad or hype.

Third would be the amount of consolidation we’ve seen in the industry. We’re seeing insurtechs buying insurtechs, and mom-and-pop agencies selling their business rather than passing down. As agents and brokers continue to get bigger, they are dictating technology requirements to their carrier partners. They’re only working with the carriers who can meet their needs, a lot of that being tech integration. If you can’t integrate with our tech stack, we won’t do business with you. Consolidation takes many forms, and it’ll be interesting to see where this goes in the next decade.

AW: What areas of insurtech are still under addressed? What gaps need filling?

RG: I think that claims are very under-invested. A company could have a claims system that costs them $5M a year, and be offered the exact same system for $1K, and they wouldn’t make the switch. The pain of making that change, knowing that there will be hiccups, is enough to deter companies. We aren’t necessarily rethinking products — everything is still product centric, not customer-centric. I think that that’s a big thing we’re missing in the industry. We’re still grabbing low-hanging fruit, and not fully leveraging the capabilities of the technology available to us. At some point, everyone is going to make that switch, we just haven’t seen it yet. Right now, we’re doing insurance mostly the same but slightly better.

AW: These past few years in insurtech, we’ve seen players trying to do it all. How do you think that’s going to play out?

RG: There’s always been a sense of an agent being a middle man. You don’t need them when you can just go to Expedia or book an airline ticket by yourself. I can’t tell you how many insurtechs have realized that the customer acquisition costs of going direct are enormous, and now they’ve made a pivot to go direct. Even a lot of insurtechs that sell direct will tell you between 5–15% of their business is direct and the rest is through agency.

Now we’re seeing this on the personal and commercial sides more. It’s a digital experience, whether it’s the customer directly or an agent or broker themselves. Agents and brokers are embracing these digital tools. Additionally, so many people start their search for insurance on Google, the same way we search for every other product we buy. You need to have that digital presence.

Something else we’ve seen a lot of is embedded insurance. Everyone is trying to embed everything. It’s less about price today and more about ease of doing business. People have shown a willingness to pay more for better customer experience. People don’t want to shop around for insurance — it’s a product they don’t fully understand but they know they need. They want the path of least resistance, whether that’s going through a third party or buying directly. Embedded is the path of least resistance in many cases. It fits the common theme of “how do I get from beginning to end as quickly as possible?”

AW: What are some areas insurtechs can better work with agencies and carriers?

RG: From an agency standpoint, customers are not particularly picky right now. A lot of people pick their agent based on their online presence. Who comes up on Google? The average customer doesn’t care if an agent is big or small, what kind of tech stack they have, etc. But as time progresses, I think that customers will develop a better understanding and begin to be more selective. There also isn’t a ton of brand differentiation, which is something that I think will change over time.

On the carrier side, I think that the biggest challenge is that everyone is used to working in a very siloed environment. They’re used to having their separate systems — one for claims, one for billing, etc. Now everything consists of platforms, ecosystems, APIs, etc. It’s a total 180 for carriers — and I think it’s something a lot of them are struggling with right now. They’re realizing that they can either adapt their legacy systems, or they can migrate to softwares like Guidewire. But truly I don’t know that carriers are going to be able to keep up in terms of their IT departments and tech people. We’re also seeing tech experts and professionals unwilling to go work for big companies, especially when they’re happy and fulfilled in their current smaller companies. A lot of these big carriers may soon find themselves relying heavily on an IT department that isn’t made up of experts.

AW: What advice do you give to insurtechs building for carriers?

RG: I would go and pick the brains of the largest brokers. Figure out what they want from both their customers and their carrier partners. Then go to the carriers and ask: “Are you positioned to meet these needs?” With everything consolidating now, these brokers are going to be laying out terms and agreements that carriers need to be able to meet. We talked a bit before about carriers going direct, but what we didn’t mention was why many chose not to go direct — they don’t want to piss off their agents. By not going direct, they’ve doubled down on their agency distribution model. And now, agencies are changing how they want to interact with them. It’s easy to find yourself in a bad place amidst all of this. Carriers need to understand that ease of doing business is going to become more and more important over time.

AW: Do you think there’s an issue with people being under-insured?

RG: Absolutely. Right now agents are the only ones that are well positioned because they have a financial incentive. Interestingly, I think that the investment space is a ways ahead of the insurance space in this regard. Financial advisors have been pushed to robo-advisors, which eliminates the trust issue of advisors selling for commission. We don’t currently have an insurance equivalent of robo-advisors. For consumers today, insurance is an obstacle rather than something you want to protect yourself. We’re missing trusted advisors to help people insure themselves.

AW: Who is one insurtech expert, founder, investor, etc. you’d yet to meet but would like to?

RG: Daniel Schreiber, CEO of Lemonade.

AW: How can insurance decision-makers maintain existing business that drives billions in revenue?

RG: I think a lot of these companies are too focused on today and not tomorrow. They hone in on their KPIs and don’t often look past that. They’re too myopic. Interestingly, I was speaking with someone who told me that their strategy team and their innovation team are the same team. I love this concept. Innovation is one the newest, if not the newest, function within a carrier or an agency or brokerage. But what does innovation look like? You need innovation to be a discipline, not just something that’s new. You can’t be limited by the CEO’s priorities for the month, you need to figure out what’s the most impactful thing you can do for your business in the long term.

I also think that this strategy always needs to be informed by your view of the world. You always have an individual risk, but now we’re seeing more catastrophe-type systematic risks. Think climate change, politics, the pandemic. Risk as a whole isn’t going away, but it is changing form. The nature of risk is going to continue to fundamentally change over the next decade or two, and a lot of decision-makers aren’t talking about that or considering it. I also think that this opens up the industry to newer smaller companies and levels the playing field against incumbents.

AW: What’s the biggest customer pain point you notice? How can it be addressed?

RG: I feel like the biggest pain point is being listened to. The best customer experiences we have are when we feel like the number one customer. You like to feel like the priority, even if you aren’t the biggest or highest paying. I don’t know that we have that as much today. But it’s what we all ultimately want.

Bio: Andrew Wynn is the Co-Founder & Co-CEO of Ascend, the first modern insurance payments platform that provides automated all-in-one financing, collections, and payables. Prior to Ascend, Andrew built a home maintenance startup called Sheltr, which provides homeowners with routine preventative maintenance service and diagnostics to offer data-driven proactive care to catch issues before they become costly repairs. The company became the first acquisition made by insurtech unicorn Hippo because of its intuitive and technological approach to building an insurance product that went beyond the customer interaction. Prior to Sheltr, Andrew was at Instacart, leading the company’s product and data integration team.