By Scott Holeman, Media Relations Director, Triple-I
California Insurance Commissioner Ricardo Lara made state history by becoming the first openly gay official elected to statewide office. During our Declarations of Pride series, he shared his unique journey with Triple-I, by discussing his entry into politics, views on how the insurance industry is supporting the LGBTQ+ community and what Pride Month means to him.
Lara says important steps are being made by the insurance industry to advance LGBTQ+ rights.
Lara says #Pridemonth is an important time to honor LGBTQ+ civil rights pioneers, but also for understanding obligations that remain in the fight for equality.
By Marielle Rodriguez,Social Media and Brand Design Coordinator, Triple-I
Triple-I’s “Insurance Careers Corner” series was created to highlight trailblazers in insurance and to spread awareness of the career opportunities within the industry.
This month we interviewed Sunil Rawat, Co-Founder and CEO of Omniscience, a Silicon Valley-based AI startup that specializes in Computational Insurance. Omniscience uses five “mega-services” that comprise of underwriting automation, customer intelligence, claims optimization, risk optimization, and actuarial guidance to help insurance companies improve their decision-making and achieve greater success.
We spoke with Rawat to discuss his technical background, the role of Omniscience technology in measuring and assessing risk, and the potential flaws in underwriting automation.
Tell me about your interest in building your business. What led you to your current position and what inspired you to found your company?
I’m from the technology industry. I worked for Hewlett Packard for about 11 years, and hp.com grew about 100,000% during my tenure there. Then I helped Nokia build out what is now known as Here Maps, which in turn powers, Bing Maps, Yahoo Maps, Garmin, Mercedes, Land Rover, Amazon, and other mapping systems.
I met my co-founder, Manu Shukla, several years ago. He’s more of the mad scientist, applied mathematician. He wrote the predictive caching engine in the Oracle database, the user profiling system for AOL, and the recommender system for Comcast. For Deloitte Financial Advisory Services, he wrote the text mining system used in the Lehman Brothers probe, the Deepwater Horizon probe and in the recent Volkswagen emissions scandal. He’s the ‘distributed algorithms guy’, and I’m the ‘distributed systems guy’. We’re both deeply technical and we’ve got this ability to do compute at a very high scale.
We see an increasing complexity in the world, whether it’s demographic, social, ecological, political, technological, or geopolitical. Decision-making has become much more complex. Where human lives are at stake, or where large amounts of money are at stake on each individual decision, each individual decision’s accuracy must be extremely high. That’s where we can leverage our compute, taken from our learnings over the last 20 years, and bring it to the insurance domain. That’s why we founded the company — to solve these complex risk management problems. We’re really focused on computational finance, and more specifically, computational insurance.
What is Omniscience’s overall mission?
It’s to become the company that leaders go to when they want to solve complex problems. It’s about empowering leaders in financial services to improve risk selection through hyperscale computation.
What are your main products and services and what role does Omniscience technology play?
One of our core products is underwriting automation. We like to solve intractable problems. When we look at underwriting, we think about facultative underwriting for life insurance where you need human underwriters. The decision-making heuristic is so complex. Consider somebody who’s a 25-year-old nonsmoker asking for a 10-year term policy of $50,000 — it’s kind of a no-brainer and you can give them that policy. On the other hand, if they were asking for $50 million, you’re certainly going to ask for a blood test, a psychological exam, a keratin hair test, and everything in between. You need humans to make these decisions. We managed to take that problem and use our technology to digitize it. If you take a few hundred data fields, and a few 100,000 cases to build an AI model, it quickly becomes completely intractable from a compute standpoint. That’s where we can use our technology to look at all the data in all its facets — we automate and use all of it.
Once you’ve got an AI underwriter’s brain in software, you think from the customer intelligence standpoint. You’ve got all this rich transaction data from your customers to pre-underwrite, qualify, and recommend them for different products. We’ve also built a great capability in the data acquisition area. For workers comp and general liability, we have the data that improves the agent experience. We can also correctly classify any NAICS codes and can help with claims avoidance and finding hidden risk. We’ve also got a great OCR capability. In terms of digitization of text, we can take complex tabular data and digitize it without any human in the loop. We’re able to do this worldwide, even in complex Asian languages. We also do a lot of work in asset and liability management and can do calculations that historically have been done in a very low-powered, inaccurate manner. We can run these calculations daily or weekly, vs annually, which makes a big difference for insurance companies.
We also work in wildfire risk. A lot of wildfire spread models look at a ZIP+4 or a zip code level, and they take about four hours to predict one hour of wildfire spread, so about 96 hours to predict one day of wildfire spread at a zip code level. In California, where I am, we had lots of wildfires last year. When you double the density of the grid, the computation goes up 8x. What we were able to do is improve and look at the grid at 30 meters square, almost at an individual property size. You can individually look at the risk of the houses. At a 30-meter level, we can do one hour of wildfire propagation in 10 seconds, basically one day in about four minutes.
Are there any potential flaws in relying too much on automation technology that omits the human element?
Absolutely. The problem with AI systems is they may generally be only as good as the data that they’re built on. The number one thing is that because we can look at all the data and all its facets, we can get to 90+ percent accuracy on each individual decision. You also need explainability. It’s not like an underwriter decides in a snap and then justifies the decision. What you need from a regulatory or an auditability standpoint is that you must document a decision as you go through the decision-making process.
If you’re building a model off historical data, how do you make sure that certain groups don’t get biased again? You need bias testing. Explainability, transparency, scalability, adjustability — these are all very important. From a change management, risk management standpoint, you have the AI make the decision, and then you’ll have a human review. After you’ve done that process for some months, you can introduce this in a very risk-managed way. Every AI should also state its confidence in its decision. It’s very easy to decide, but you also must be able to state your confidence number and humans must always pay attention to that confidence number.
What is traditional insurance lacking in terms of technology and innovation? How is your technology transforming insurance?
Insurers know their domain better than any insurtech can ever know their domain. In some ways, insurance is the original data science. Insurers are very brilliant people, but they don’t have experience with software engineering and scale computing. The first instinct is to look at open-source tools or buy some tools from vendors to build their own models. That doesn’t work because the methods are so different. It’s kind of like saying, “I’m not going to buy Microsoft Windows, I’m going to write my own Microsoft Windows”, but that’s not their core business. They should use their Microsoft Windows to run Excel to build actuarial models, but you wouldn’t try to write your own programs.
We are good at system programming and scale computing because we’re from a tech background. I wouldn’t be so arrogant to think that we know as much about insurance as any insurance company, but it’s through that marriage of domain expertise in insurance and domain expertise in compute that leaders in the field can leapfrog their competitors.
Are there any current projects you’re currently working on and any trends you see in big data that you’re excited about?
Underwriting and digitization, cat management, and wildfire risk is exciting, and some work that we’re doing in ALM calculations. When regulators are asking you to show that you have enough assets to meet your liabilities for the next 60 years on a nested quarterly basis, that becomes very complex. That’s where our whole mega-services come in — if you can tie all together your underwriting, claims, and capital management, then you can become much better at selection, and you can decide how much risk you want to take in a very dynamic way, as opposed to a very static way.
The other things we’re excited about is asset management. We are doing some interesting work with a very large insurer. What we’ve been able to do is boost returns through various strategies. That’s another area we’re excited about — growing quite rapidly in the next year.
What your goals are for 2021 and beyond?
It’s about helping insurers develop this multi-decade compounding advantage through better selection, and we’re just going to continue to execute. We’ve got a lot of IP and technology developed, and we’ve got pilot customers in various geographies that have used our technology. We’ve got the proof points and the case studies, and now we’re just doubling down on growing our business, whether it’s with the same customers we have or going into more product lines. We are focused on serving those customers and signing on a few more customers in the three areas where we are active, which is Japan, Hong Kong, China, and North America. We are focused on methodically executing on our plan.
By Scott Holeman, Media Relations Director, Triple-I
David Glawe, President and CEO of the National Insurance Crime Bureau, has been fighting crime for nearly 30 years. His extensive background in national security, law enforcement and management provided distinguished credentials to lead NICB’s efforts in combatting insurance fraud and theft. Before taking on this position, Glawe served as Under Secretary of Intelligence for Analysis at the Department of Homeland Security, and was the highest ranking, openly gay official in the U.S. Government.
During our Declarations of Pride series, Glawe shares his personal life journey, which includes progress in LGBTQ+ issues and examples of why there’s ongoing need for meaningful dialogue about equality with friends, family and allies.
Glawe encourages asking questions for meaningful dialogue with LGBTQ+ friends and family.
Glawe says speaking OUT is important for LGBTQ+ people who may be struggling for acceptance.
By Scott Holeman, Media Relations Director, Triple-I
Michael McRaith is proud of the way insurance companies and Corporate America have helped advance LGBTQ+ rights. In this installment of Declarations of Pride, the Managing Director of Blackstone Insurance Solutions discusses the evolution of LGBTQ+ rights and the importance of diversity in the workplace.
McRaith’s distinguished insurance career includes being the first director of the Federal Insurance Office in the U.S. Treasury, Director of the Illinois Insurance Department, and an officer with the National Association of Insurance Commissioners. Prior to public service, he was a partner in the Chicago office of McGuireWoods LLP. In addition to his role at Blackstone, he also currently serves on the Board of Directors for Gryphon Mutual Insurance Company.
Among honors for public service, McRaith has received the Distinguished LGBTQ Alumnus Award from Indiana University, the Exceptional Service Award from the U.S. Department of the Treasury, and recognition as a Distinguished Fellow by the International Association of Insurance Supervisors.
By Scott Holeman, Media Relations Director, Triple-I
Triple-I’s Declarations of Pride series celebrates and features prominent LGBTQ+ insurance professionals. Meet Ken Ross, Vice President & Counsel at John Hancock Insurance, who says insurance companies are responding to the unique needs of the LGBTQ+ community.
Ken also says Diversity, Equity and Inclusion have never been more important in the workplace. Ken encourages the LGBTQ+ community to consider the insurance industry for rewarding career opportunities.
Ken has 30+ years of legislative and regulatory experience, specializing in state regulatory and legislative relations. Prior to joining John Hancock, he served as President and COO of the Michigan Credit Union League (MCUL), Assistant General Counsel for Citizens Republic Bancorp Holding Company (CRBHC), and Commissioner of the Michigan Office of Financial & Insurance Regulation.
He has degrees from the University of Michigan-Dearborn and Western Michigan University’s Thomas M. Cooley Law School.
By Katrina Cheung, Communications Manager, Triple-I
As we continue to celebrate AAPI Heritage Month, Triple-I is spotlighting Filipino-American gallery owner, painter, and Covington, Louisiana-native, Marianne Angeli Rodriguez.
Rodriguez spent much of her life living abroad in West Africa, Central America, Europe, and Asia before settling in the U.S. She earned her bachelor’s in media studies and anthropology from the City University of New York at Hunter College, and a degree in fashion design from FIT. After being laid off from two different fashion industry jobs, she worked as a freelancer creating fashion and beauty sketches for magazines, in addition to taking client commissions. She eventually outgrew working in small-scale and shifted to working on larger canvases.
Rodriguez’s art has garnered attention from numerous magazines and has led to various collaborations.
Her work is on permanent display in numerous public installations, including the Sloan Kettering Cancer Centers in New York, Southern Hotel Covington, Magnolia Hotel New Orleans, Shirley Ryan AbilityLab Chicago, Nolé restaurant in New Orleans, and the New Orleans Louis Armstrong International Airport.
We had the pleasure of speaking to Rodriguez about her gallery, her work, how she remained resilient in the face of the pandemic and other setbacks, and how she protects her business from natural disasters.
Tell us about your work and your gallery. How did it all start?
Shortly, after I was laid off, a job opportunity for my husband moved us to a different city and I dedicated the following year to painting out of my dining room. I developed a website to sell my work online, and soon after I rented out a studio to work out of. After three years of working diligently and growing my client-base, I outgrew that space and decided on a new, more prominent, gallery location around the corner. At this point my husband joined me to work on the business full-time as my business partner and gallery director. We signed the lease to this new location two weeks before COVID shutdowns.
Wow, 2020 was such a tough year for small businesses so I can only imagine how daunting it was for you and your husband to open the gallery during the pandemic! Despite the unknown and challenges that the pandemic presented, it seems like the gallery is thriving.
Can you talk about some of the obstacles you’ve faced since opening the gallery and how you have been able to overcome them?
Since we took on a much larger brick and mortar space right in the beginning of the pandemic, our main challenge was the disappearance of foot traffic. We realized that our online presence and web shop was going to be our saving grace so we re-strategized and poured our efforts into marketing, re-designing our e-commerce platform, and becoming more engaged on social media. We also tapped into local partnerships and were able to offer more products and services including custom framing and high-quality canvas prints to diversify our offerings and meet the needs of various art buyers. Since everyone was quarantined and taking on home-improvement projects including decorating, 2020 turned out to be a prosperous year for us as a small business.
Given that you live in a hurricane-prone area, in what ways have you safeguarded yourself and your gallery property against extreme weather?
During hurricane season, with any imminent threats, our typical drill is to secure the outer perimeter of the business by removing objects (like our hanging gallery signage) and using sandbags at entry points to safeguard against flooding. In case of emergency, we have insurance and an evacuation plan.
Art is such an important part of our history and our communities. It tells us stories from all walks of life, including those that might not be told often in mainstream media. As an artist, what do you hope to convey to people with your art?
I’m a colorist, so first and foremost what I wish is to elicit feelings of joy, delight, and positive energy when viewers first come across my work. As a minority based in the South, it’s been a privilege to sprinkle in bits of my Filipino heritage in both the imagery and the titles/stories behind the work – it’s a way to invite others to receive new insights without necessarily speaking so directly about it, and I love the way it opens the door of deeper connections and curiosity.
There’s been a consensus in the AAPI community that many have felt cultural and societal pressures to pursue STEM-related careers.
What advice do you have for anyone that wants to follow their dreams, but feel pressure to follow a certain career path based on societal pressures or maybe even pressure from their family?
My advice for anyone wanting to go “against the grain” is to be fully prepared to and willing to take on the rollercoaster that may lie ahead. Research your industry, know your competition and stay ahead with technology and social media. Take one step at a time, and fully immerse yourself in each evolving chapter. Take note of the hard lessons, be thankful for them as they’re there to help you move closer to the best most professional version of yourself/your business. Build trust by over-delivering on customer service. Practice gratitude daily.
Were there other times in your life that you have personally had to remain resilient despite the challenges ahead? If so, can you share what those experiences were and how that has helped you as an artist and businessowner?
Years ago, when I had just gotten laid off from my job and was dipping my toes into the artworld doing local art fairs, my car was stolen and everything I had invested in for my new venture was gone. It was devastating. My family urged me to move back home and consider a career in the corporate world. I stuck it out and stayed and rebuilt from the ground up. That experience gave me the tenacity I so needed to be fully independent, committed and driven in pursuing my creative path. Later, as I grew more serious in my practice, I got rejected from the galleries I wanted so badly to land a relationship with, but I continued to work on my art, perfecting my process and investing in courses to widen my business knowledge, and ultimately opened -and now operate- a gallery of my own.
What has been the most rewarding part of being a small businessowner?
The most rewarding part of being a small business owner, specifically as an artist, is having complete autonomy over the creative vision being released out into the world. Having the ability to positively impact your community and brighten someone’s day is both empowering and humbling.
Currently residing in Chicago, Leong shares her insights on how technology and big data are changing the actuarial career path and insurance landscape. She speaks about her team’s work at Zurich and how data science and analysis have helped to improve claims models. In addition, Leong shares the CAS’s initiatives to actively support diversity, equity and inclusion in the insurance industry.
Triple-I CEO Sean Kevelighan currently serves on the CAS board of directors.
You’ve been able to live around the world: Australia, the UK and now the US. What moves in your career did you make for that to happen? What piqued your interest in actuarial studies and the path that led you to data science lead at Zurich?
I decided to become an actuary very early on in my career. I grew up in Australia, and when I was in high school, I knew I was good at math and I was looking at what professions that would lead to. Actuarial naturally sprung up as it does for a lot of people who are good at math, but it looked like a really rewarding career and a rewarding profession.
A lot of Australians like to take a year off university and do backpacking around the world. I took a year off, went to London and got my first actuarial job, working six months at St. Paul. With that money I backpacked around Europe for a year. Then I went back to Australia, finished my degree, and my first job out of school was in London. I just had the itch to go back, and the actuarial profession is a good one if you enjoy traveling.
Then my boyfriend-now-husband got a job in New York, so that’s why I moved to the States. I never actually thought I would live in America, and it’s been more than a decade.
Would you be able to share a project that you’re currently working on at Zurich?
I have a team of data scientists at Zurich, and we build models for three different groups: For underwriting, to help us with risk selection and pricing; for claims, to work on better claims triage and finding claims fraud; and then lastly for our customers to help them better manage and understand their risks.
We have done a lot of work in claims. For example, we have built a claims model that alerts us if a workers’ comp claim is going to become complex, and if it would benefit from having a nurse to review that case and manage it much more proactively. That has really benefited Zurich in terms of outcomes. It has also benefitted our customers and their employees in terms of getting back to work and regaining their health. It’s been a win-win all around.
What are some challenges you’ve experienced in using data in relation to privacy, regulations or bias?
This is a very big topic for not just the insurance industry, but also more broadly, as big data gets bigger and artificial intelligence continues to advance. Something that we do for all of our models is talk to legal, compliance and privacy. They do a thorough review of the models before we actually put them into production, to make sure that from the data and the algorithm viewpoints, we stay true to our principles within Zurich. A few years ago, Zurich released a data commitment to the general public and to our customers about the kind of data we will and will not use so we take that seriously.
Are there any implications that you’re seeing that the pandemic has had on data analysis?
Yes, definitely. A lot of the analysis that’s done in insurance relies on the history being somewhat predictive of the future, and frankly, all data analysis relies on that because data is by definition, historical. So anytime you try to make a prediction from data it is relying on historical fact, and obviously the pandemic really upended that. How do I look at this data and use it to make predictions of the future? It is less clear, and we’ve had to rely much more on judgment, and we’ve had to really think outside the box about the different types of data we should use now to try to make predictions of the future.
Congratulations on your presidency of the CAS. Why did you join CAS and what led you to being elected as president?
When I initially joined the CAS in 2005/2006, I volunteered for the organization. About a third of our members volunteer in some capacity, which is tremendous for any society – that’s a very high rate. I find that the actuarial community is just a great community.
One of the benefits of volunteering for the CAS is having the chance to grow your leadership skills. Before long, I was chair of one of the seminar-organizing committees. That was a really good experience in terms of leadership for me, early in my career.
I was given the suggestion by my boss, about seven/eight years ago now, that I should be on the board of the CAS. It had never crossed my mind, honestly, that I would be even eligible for a job like that. The CAS has a nominating committee, who called me and asked me to run. Then I got a call, maybe two/three years later, asking if I would consider running for president. I’m so honored to have this role.
There’s a three-year plan to create unicorns. Are you seeing any impact so far? Is this resonating a lot within CAS and the industry?
Last November at our annual meeting, we released a new Envisioned Future and a three-year plan. Our new Envisioned Future says “CAS members are sought after globally for their insights and ability to apply analytics to solve insurance and risk management problems.”
Now that might not sound like much, but if you think about what it used to say, something like “the CAS advances the practice and application of actuarial science,” we made the change to be more evergreen and more actionable. We will do whatever analytics needs to be done, and we will do it to solve business problems in insurance, and this will evolve over time.
What this means is that the actuary of the future needs to have three key skill sets. First, they need to be great at analytics, the kind of analytics you need to solve the important insurance problems of today. Second, they need to be great at problem-solving. Actuaries are good at solving the core problems in insurance, pricing, reserving, capital modeling. But more and more with big data, there are new problems you can solve. The example I gave before – is this claim going to become complex, would it benefit from having a nurse? Those are new problems you can now solve with data and analytics that you probably couldn’t have done before. The third area is the domain knowledge in terms of P&C insurance.
That is the unicorn. That is the actuary of the future, having all three key skill sets.
How are you attracting a more diverse body of students to pursue actuarial or related studies? How are you trying to attract different types of people and different ways of thinking to the CAS and to the insurance industry in general?
One of the pillars in our strategy that we released with our Envisioned Future is to diversify our pipeline. We have various initiatives to look to do that. One thing is we are pushing forward in terms of diversity, equity and inclusion, and we recently put out some metrics on our website. Right now, for example, 23% of our members are Asian, under 2% are Black and under 2% are Hispanic. The diversity from the Black and Hispanic point of view is not where we want it to be, and we have a goal of increasing that to about 5% to 8% of our new members in the next five to 10 years. We put a stake in the sand in terms of how we want our racial diversity to improve.
A few years ago, we engaged a consulting firm to figure out what is holding us back in terms of having more diversity. One of the things they identified is just finding out about the profession early in your life is going to be key, because a lot of people in various racial and ethnic groups are not really finding out about the actuarial profession when they need to. So we’ve been doing actuarial high school days, visiting diverse high schools to talk to them about the actuarial profession.
We also have a scholarship program for these underrepresented groups, where we will pay for exams given a few qualifying criteria, because we know that the cost of the exams can also be a hindrance, especially when you’re still in school and you’re not earning any money. To get an internship, you need to have three exams under your belt, but they cost money. It can be tough, so we’re seeing what we can do to help.
What challenges have you had to overcome, as a woman and a person of color in the insurance industry?
I’m very big on self-improvement, and I have tried to develop myself in a way to be successful in this environment.
If I think about my upbringing, it was different as an Asian person growing up in Australia. When I was in high school, I was on the track team and I had wanted to be in the relay. There were only four people in the relay, and I wasn’t picked as one of the four, even though I was probably the third fastest person in the school. I thought that this was just unfair and favoritism. I told my mom, “This is really unfair; you’ve got to do something about this,” and she told me, “Don’t complain; just do what you’re told. Don’t stick out.”
That really jarred with me then and still now, thinking back on it. That highlighted the difference in culture. As I’ve been navigating my way through predominantly Western work culture, I have worked pretty deliberately to think differently and to acquire skills that would help me in this kind of work environment.
By Marielle Rodriguez, Social Media and Brand Design Coordinator
Triple-I’s “Insurance Careers Corner” series was created to highlight trailblazers in insurance and to spread awareness of the career opportunities within the industry.
May is Asian American and Pacific Islander Heritage Month, and this month we interviewed Janthana Kaenprakhamroy, CEO of London-based insurtech, Tapoly. Although Janthana lives in the UK, we believe that Asian heritage should be celebrated no matter where you live.
Founded in 2016, and backed by Lloyd’s of London, Tapoly is Europe’s first and fastest growing insurtech, providing on-demand flexible commercial insurance products for SMEs, freelancers, the self-employed and the gig economy. Recognized as Insurance Provider of the Year at the British Small Business Awards in 2018, Tapoly’s mission is to make insurance simple, accessible, and flexible.
We spoke with Kaenprakhamroy to discuss the role of AI and technology in her business, the boom of the sharing economy, and what the traditional insurance industry can learn from insurtech.
Tell us about your background and your interest in building a business. What led you to your current position and what inspired you to found your company, Tapoly?
I was born in and come from a small part of Thailand, grew up in Sweden, and have lived in London for the last 20 years. I have roots in different parts of the world, which has shaped my international way of thinking. I feel like I don’t fit a specific stereotype and can blend into different cultures.
I’m an accountant by trade and have worked in investment banking for almost my entire career. In late 2016, I decided to quit my job and build Tapoly. We provide technology solutions and insurance products locally in the UK as well as in Asia.
I was never sure what I wanted to do until I came across a problem in 2016 when I was trying to buy insurance for my short letting over the summer, which you can only do for about 90 days a year. In 2016, no insurance companies were serving the types of products for the short letting space. Ever since then, we’ve been developing technology solutions and products to cover this massively underserved market within the micro, SME, and freelancing space.
What is your organization’s mission? What role does tech and AI play in your platform?
Our mission is very simple – we want to able to provide an insurance solution online that is quick and easy for people, in the most convenient way, which is one thing in the commercial lines space that’s not very well-developed. Most companies are buying insurance through their brokers, rather than online directly. We wanted to make commercial lines products easier and less time-consuming for customers to access, without making them answer several questions that they may or may not know how to answer.
If you offer insurance online directly, then the underwriting decision must be prompt and that can only be achieved when you have data on your customers. There is data that traditional insurance companies aren’t using, for example, social media data, which can be cross-referenced with [the customer’s] profile. It’s all about augmenting data to amplify or make customers profiles more prominent for underwriting decisions – it’s something insurtech is doing well. Insurtech would allow data to flow from the point of the customer buying insurance to the point of the underwriter making the decision – this makes the process more seamless and transparent.
A lot of what we do at Tapoly is data analytics. It’s not only for risk selection and underwriting alone – it’s also for customer acquisition and marketing. Customer segmentation is very important, and you can only do it with a certain level of good-quality data on your customers.
What do you see as the biggest pain points for customers within traditional insurance that insurtech can better solve?
Customers in the market segment that we serve, which is microbusinesses and freelancers, have three main pain points. One is the price, especially for customers who do ad-hoc jobs which are not part of their core competency or core activity. Second is the convenience – the ability to fill in a simple questionnaire and get insurance quickly. Third is the availability – some products are not available for some freelancers. For example, a group of freelancers doing construction work in a certain environment are less likely to get certain insurance products due to their high risk profile.
Within the gig economy, there are job titles that are outside the norm and that don’t fall inside traditional insurance categories. We need to revamp the list of professions. In insurtech, we see gaps in coverage [in certain industries]. For example, marketplaces where the underlying risks may be different depending on what level of services and products the platform is providing. Another example may be the evolution of some professions, e.g. “virtual assistants”, where they may in some cases provide basic accounting services, which would previously be performed by certified professionals, because accounting is also moving online. There’s a lot of mismatch between the way insurers categorize their customers and the profession that customers recognize themselves as, and the ability to buy insurance automatically in the most convenient way.
Do you see innovation and transformation happening in the traditional insurance space?
I think the insurance industry is well-aware of the need for innovation and many companies are at the beginning of innovating, but innovation takes time. While we recognize the need, it will take time to implement. As a startup, we don’t have a hierarchical structure or have as many constraints. We can build anything we want without waiting for the approval of senior management. What insurtech can bring is the speed to market, the ability to adapt, and to implement changes and help insurers prove the concept in the most cost-effective way.
In what ways has COVID-19 impacted the sharing economy and your business? What are your predictions for the growth and trajectory of the sharing economy?
A 2015 PWC report showed that revenue from the sharing economy was $15 billion in 2013 and would reach $335 billion in 2025. That’s a phenomenal increase in the market within 12 years. I think the COVID-19 pandemic really accelerated the sharing economy. There are so many businesses that did fantastically well during the pandemic, including businesses in logistics and delivery, and the insurtechs that are operating in that space. From the product delivery, customer-facing side, we didn’t have a problem because we were already set up to operate online. However, it did impact our customers and some of them didn’t renew their insurance or either postponed or changed their policy.
In terms of opportunities, there are many insurance companies or intermediaries that have started to think about innovation. COVID-19 has really accelerated that thinking because tech has become a big hurdle. There are a lot of operational challenges among larger insurance companies that are not set up to sell insurance digitally. That is something insurtech can take advantage of because we are already set up to do this.
Let’s talk about diversity in VC funding and entrepreneurship. A2019 Diversity VC report showed that ethnic minorities are under-represented in venture capital and women are under-represented in senior roles. Another2020 Extend Ventures report shows that female entrepreneurs receive just a fraction of available funding that male founders do. Were there any initial challenges in founding your company and attaining funding, and how did you overcome these obstacles? Are there any present challenges of being an Asian- and woman-owned business and founder?
In the beginning, not raising enough funding can cause a slowdown in your growth. Even with the best ideas, it’s hard to scale your business without capital. I certainly think that the confidence in a woman in running a business could be improved in the VC space. There are a lot of stereotypes and unconscious biases that people apply to their decisions. The VC space needs to work on being self-aware and educate themselves around these issues especially when judging a first-time entrepreneur. There is also uncertainty and a lack of data on startups that make it difficult for VCs to validate and invest in, on top of gender stereotypes.
My biggest daily challenge is finding enough capital to be able to grow my business. The difficulty for early-stage founders is balancing your own interests with the investor’s interests and figuring out how much you want to raise versus how much you can raise. To overcome this problem, we usually find strategic investors that can add a lot of value.
What are your goals for 2021 and beyond? Where do you see the traditional industry heading in the next few years given the pandemic?
We’re preparing for hockey stick growth in 2021 and want to exponentially grow our company in 2022. My aim is to raise enough money to be a larger team and to have the capacity to manage that level of volume and growth.
I think the traditional insurance industry will evolve slowly in the next couple of years. A lot of insurers have been badly hit due to COVID-19 because of claim costs and loss of investments. It would take a couple of years before we recover fully, and hopefully insurtech will still be relevant within this space. At least if anything, insurance companies will be spending more on innovation to reduce their claims and operating costs.
Triple-I’s “Insurance Careers Corner” series was created to highlight trailblazers in insurance and to spread awareness of the career opportunities within the industry. This month, we interviewed, Annette Martinez, senior vice president, State Farm, who discusses her 33-year career in insurance, growing diversity and inclusion at her company, and the significance of Jake from State Farm.
Tell us about your role at State Farm and the work that you do. What attracted you to work in the insurance industry?
I’m currently a senior vice president at State Farm and that includes oversight of what I call the “people areas” – human resources, learning and development, public affairs, and the executive succession and development team. I’ve been with State Farm for over 33 years.
My degree is in Biology and Chemistry, and I was working for an R&D facility early in my career. My husband started with State Farm as an auto underwriter, and he encouraged me to come over because of the opportunities.
I began my insurance career in health underwriting. Every two to three years, I was able to recreate myself into new roles. I spent five years in life/health operations before moving to human resources. Within human resources, I was able to work in early succession efforts and then move into leadership in human resources. In 2002, I started the diversity and inclusion initiative and the trajectory of being able to move the organization forward. Like many in the insurance industry, I came in thinking I’d get great experience for a couple of years and now here we are 33 years later, and it’s been an amazing journey.
You launched the first office of diversity and inclusion at State Farm, initiated its diversity council, and started its affinity group program. You’ve also been recognized and awarded on numerous occasions for your work in diversity and inclusion. What inspired you to become a champion of diversity and inclusion?
From the time that I was young, fairness was always important to me, which may be in part because I was raised in an environment where I didn’t see people like me. However, for a long time I have and still believe that everyone should be treated with respect and dignity and have the same opportunities. Opportunity should be open to anyone who has the desire and the capability.
When I began the diversity initiative, I was already conducting diversity training in the organization. State Farm is a fantastic company and has been progressive in programming over the years. We started one of the first minority summer intern programs, but I knew there was more that we could do. My focus was on improving opportunity and bringing people into the organization who had a different pattern of thinking and could positively impact the company. That’s what diversity does. It’s not only a social imperative – we all get to benefit from that – it’s a business imperative about how we treat and gain new customers and how we move forward.
You mentioned that not a lot of people looked like you throughout your career. As a Latinx woman, what obstacles have you faced and overcome?
That’s correct, early on in my career, very few people looked like me. It was isolating. I had to understand that my voice mattered and that I had the opportunity to speak on behalf of many others. There was a lot of pressure with that.
I’ve had some amazing mentors over the years of all genders and races. There was a retired senior vice president, Dave Gonzales, who was the first Hispanic executive that took me under his wing. Dave told me it was going to be a difficult road, but he was and has always been a great support system for me.
We’ve always had mentorship programs at State Farm, but several years ago we started a more formal matching program for people who want to mentor or be mentored. It’s blossomed into a way of life and become part of the culture. I’m active as a mentor and a mentee. I’ve had senior leaders throughout my career who have coached me on to the next level. I’ve also had people [early in their careers] who have guided me into what’s happening at all levels. As a senior leader, it gives me insight into how our actions impact every employee.
How can we foster an honest and open culture at the workplace that welcomes and encourages employees to have conversations around race, discrimination, and equity?
In 2019, we decided to get bold in our conversations. State Farm started working with CEO Act!on For Diversity & Inclusion and implemented a program called “Conversations Worth Having.” In February 2020, we had our first session on racism. We knew that it was going to be a difficult and honest conversation. We had a panel that shared their stories about their lives, their children, and what they experienced.
We had no idea that COVID-19 would happen a month later. The social unrest throughout 2020 was foundational for what we needed to address last year and will continue to address this year. These open conversation forums have continued and are important in allowing people to express their frustration and allowing us to be part of the solution.
We learn every session. Setting ground rules is also important – trust that people’s intentions are honest, listen before you react – some basics in conversations that we talk about each session. If someone responds negatively to a session, we take the time to speak with them one on one to have conversations on a personal level as well.
How has State Farm addressed the current social and racial climate of this past year? Are there any actions or initiatives that State Farm has taken to support Black and Asian American Pacific Islander (AAPI) communities inside and outside the workplace?
State Farm named a Chief Diversity Officer in 2020, which was an important step for us. We also realized that we needed to be quicker with our communications and the acknowledgment that we stand against racism. In the past, we may have addressed it internally at a more moderate level, but we took the stand that State Farm is against racism and the hatred that leads to racism. This is who we are. We respect people – everyone should be treated with respect and dignity, and there is no place for racism in our organization.
There is more work to go into this. It’s an ever-evolving journey, and I think we’re learning as we communicate. We are the Good Neighbor organization. We care about all our neighbors, and we aren’t exclusive to anyone.
Our CEO, Chief Administrative Officer, and Chief Diversity Officer have also been involved in listening sessions to allow employees the opportunity to talk about an experience that they have had, even at State Farm, to better understand the work ahead of us. We want to be an organization that’s part of the healing process.
Jake from State Farm was recently recast as an African American man, actor Kevin Miles. How do you think this change has made an impact on diversity and representation in insurance and has it helped State Farm reach out to more people of color?
The first Jake from State Farm was an actual employee. We pivoted away to some other campaigns for a while, but then we did some research and realized that Jake from State Farm was still very relevant. We knew the needs in a marketing and advertising world today would require more than what we could ask of an employee, so State Farm began an external talent search. We are typically very intentional about diversity in our marketing and advertisements, but ultimately what we did was pick the right actor for the right role.
The actor [Kevin Miles] is from Chicago. One of my favorite stories involves an event early on in his role as Jake from State Farm. We invited him to do a meet and greet at headquarters. It was a big deal, and he brought his parents to the event. The atrium was packed with employees waiting to meet him. He was humbled, kind, and genuine, he spent hours talking to and taking pictures with employees. His success is not only impressive externally – it’s impressive internally as well. The traits you can see and feel from Jake from State Farm are also traits Kevin embodies. And because of that, we intentionally let a lot of Kevin come through in his role as Jake from State Farm.
Can you speak about any upcoming or future diversity and inclusion initiatives for State Farm that you’re excited about? What are your goals for 2021 and beyond?
We’re proud of the intentionality that we put behind diversity and inclusion. State Farm just kicked off a governance council in January, which is a group of senior leaders in the organization who will drive the future strategy of diversity and inclusion.
One focus area that we are looking at is more transparency. How do we tell our story internally so that our associates feel comfortable? How do we tell the story greater from an external perspective? We’re working on deliberate performance goals for all associates around diversity and inclusion, which will be part of their performance assessment and how they actively engage in that work. We are continuing to define our metrics and tangible ways to measure the progress that we are making as an organization. The “Conversations Worth Having” sessions are scheduled throughout the year as well as the listening sessions with our executive leadership. We’re excited about the continuation of programming and leaning into the opportunities ahead of us.
By Marielle Rodriguez, Social Media and Brand Design Coordinator, Triple-I
Triple-I’s “Insurance Careers Corner” series was created to highlight trailblazers in insurance and to spread awareness of the career opportunities within the industry.
March is Women’s History Month, and this month we interviewed Susan Holliday, a Senior Advisor at the International Finance Corporation (IFC) and the World Bank where she focuses on insurtech and insurance for SMEs and women. She is also a non-resident scholar at the Triple-I. Holliday sat down with us to discuss developing trends in insurtech, how technology and innovation can help close the protection gap, and the importance of collaboration in tackling climate risk.
Tell us about your current role at the International Finance Corporation (IFC). How did you fall into a career as an advisor and an investor in insurance?
IFC is the private sector arm of the World Bank. We focus on making investments and advisory work in emerging markets in sectors ranging from infrastructure to banking and insurance and healthcare. I’ve had a 33-year career in the financial services industry, particularly focusing on insurance and more recently fintech. I joined IFC to work on insurance and fintech. I’m currently working within different departments at IFC and at the World Bank and building a board portfolio. I’m also a non-resident scholar for the Triple-I.
A lot of your work is focused on insurance for women and SMEs. What do you hope to achieve in investing in insurance for women?
Before I joined the IFC in 2015, the company completed research in conjunction with Accenture and AXA about the insurance market for women. The study found that the insurance market for women could be USD 1.3 trillion globally by 2030 and half of that would be in emerging markets. The research also indicated that women have a better understanding of risk, are very open to insurance, and can be loyal customers and excellent employees in the industry.
After the She for Shield report was published, IFC started advising insurance companies in emerging markets on how to successfully serve women. IFC already had a program called ‘Banking on Women,’ which provided financing for banks to lend to women and women-led SMEs. Whenever we make investments in emerging markets, we are interested in taking an angle that better supports women.
Can you elaborate on the protection gap between women and men and between people with different financial backgrounds?
If you think about it, the insurance industry has a great history and is hundreds of years old. A lot of products were developed a long time ago when society and family structures were very different from what they’re like now. For example, today there are lots of single women and single parents, and most women work, which was not the case when the products were developed. We also have gig economy workers. The default option has always been to continue to offer products that have been offered for 50-100 years, but they do not necessarily meet the needs of today’s customers, whether they are women or men.
This is the reason why I like technology and innovation. To close the protection gap, we need to protect the things that people care about and that need to be protected. There has been a mismatch between traditional products and the actual risks people are facing.
There’s been a report by the Chartered Insurance Institute called “Insuring Women’s Futures” which looked at different times over a lifetime of one person, and it shows where a woman can be treated differently than a man. For example, having time off for maternity leave, having less pension, and living longer. It pointed out all these things that could accumulate and leave a woman being in a much worse position [than men]. Families are no longer a guy who’s working, a stay-at-home woman, and kids. Insurance needs to catch up to reality, and this not only applies to women but all underserved communities. This will not only be a challenge for the industry but also an opportunity to grow.
As an advisor to insurtech start-ups, what impact do you see these companies making?Are there any recent trends or developments in insurtech and fintech that excite you?
I think insurtech, digital, and innovation are critical. There is no insurance without insurtech. We’re never going to close the protection gap unless we use and utilize new technologies to do it.
One of the trends is bite-size insurance on demand. For example, instead of buying an insurance policy for a year, you would be able to turn it on and off, which is relevant to gig economy workers, and is popular in developing countries. Some people would rather access [insurance] when they need it.
Another trend is using alternative data to close the protection gap and get insurance to more people. If we just rely on the old sources of data, a lot of people get excluded from the market or get priced out. It may have built-in biases, which were not intended, but may disadvantage women or certain racial groups. The combination of alternative data sources and artificial intelligence is exciting.
You’re part of the leadership team for Triple-I’s Resilience Accelerator. Tell us about your work with the initiative and why you chose to join the team.
An area where the protection gap is big in the U.S. is in natural disasters and climate-related risks. We’ve seen so many things happen in recent years, such as Hurricane Harvey, and most recently, the very cold snowstorms in Texas and the wildfires on the U.S. West Coast. I think this is an extremely important area. It’s something that impacts everybody, regardless of gender, income level, or political identity.
I particularly like Accelerator, because I think insurance has a bigger role to play in prevention and mitigation, not just about compensation, and I like the approach of bringing different stakeholders together.
2020 was a historic year for natural catastrophe losses. What is the insurance industry doing to mitigate future losses and to prepare for a world impacted by climate change? What are the industry’s biggest challenges in creating resilience?
First and foremost, making insurance more available and more affordable. For example, there is parametric, index-based insurance, which can be provided at a micro-level and is used in some developing countries.
We need to get involved in longer-term thinking about how we can be more resilient against these risks in the first place. We must think about building towns, cities, and farmland in a way that they will be more resilient against weather losses. It has to do with planning, infrastructure, and it may have to do with changing certain industries.
I would like to see the insurance industry at the table in these discussions with regulators, local and state governments, and with private sectors so that all sides are working together. The industry needs to have a voice and be taken seriously. We need to think about how different parts of society can share the risk of climate-related losses.