The biggest disruptor is the use of data

The biggest disruptor is the use of data

Written by Roger Peverelli and Reggy de Feniks on 31 Jul, 2017

Interview with Christopher Longo, Executive Vice President, COO & CIO AmTrust

What are, in your view, the key technologies that will drive innovation in insurance in the years to come?
Chris: ‘’AmTrust Financial is a fairly young and entrepreneurial company and we are not afraid to take risks. In the early 2000’s we actually did disrupt one of the largest P&C markets in the US - workers’ compensation and employer’s liability. We used technology and our own data to do this. And fifteen short years later, because of that disruption, we are the number one provider of that type of insurance in the US.

We now operate in 70 different countries around the world.

We grew that product through data and technology, and I think that one of the biggest disrupters for the coming years will continue to be the use of data. What I find most intriguing is the internet of things, the telematics, and all of the information that is now available to utilize. For me, the most exciting thing is data science. It is still relatively young. Data science, and the new data that is now available to us through the internet of things and different devices, is ushering in a whole new way to look at products, price products, and to do risk selection.’’

Many insurtechs that presented their solutions on stage at the latest DIA edition were about artificial intelligence used to innovate customer engagement; turning data into a really new conversation also for customers and new added value.
Chris: ‘’Think of the information that you are capturing through that artificial intelligence. They are capturing the entire conversation that you are potentially having with your customers. You know how they are answering questions, how they are behaving. Insurers are very good at identifying the business products that customers need. Twenty years ago, innovation was in new products like D&O insurance – which was not taken seriously at first – but is common now. Innovation will come out of places like Asia, like WeChat, which is a good example of things to come. You can join social groups and sourcing ideas you love and that others like, and start to incorporate the e-commerce element. The public is starting to participate in the development of products. Wouldn’t it be better to hear 1,000 customers talk about what would be helpful to them in auto coverage, and have consumers that need the service driving the product development, rather than the old model of insurers working with underwriters and actuaries to develop product ideas? This can be revolutionary.’’

What specific developments around data should worry insurance incumbents?
Chris: “One of our greatest competitive assets is our clean data and the outcomes of interactions. I’m not fearful of distribution platforms – one thing that is worrisome is the amount of data that is being aggregated outside of insurance companies. Just look at the automotive industry. Cars are now “smart” – Google Maps, Waze, etcetera … they’re all capturing more information than an insurance company has the capability to. They know where you travel, where you park, how often you’re driving, your radius, what bars you’re going to, how often you go to the gym, what you’re eating and how you’re driving. There is a bunch of behavioural information they’re getting that we don’t have. Most automotive companies are making cars more connected as standard features, and the cars are beaming telematics information back to the manufacturers. You don’t need Progressive to send you a dongle anymore; your data is being stored at all times. We are competing for data and since we’re not focused on each individual consumer as much as someone with a connection to their phone or car beaming information, we’re always going to be receiving information at their mercy or not receiving it at all.’’



Digital transformation is about embracing digital mentality and getting everyone on board and up to speed.
Chris: ‘’AmTrust actually has a huge advantage when it comes to this. We have a lot of disadvantages being a very young company in a very old industry, but technology isn’t one of them. The founders of our company were disruptors; they started as a transfer agent company, revolutionizing the process of stock transfer. The largest corporations were unable to pivot and offer a superior service at a lower cost. This is in our DNA.

When I first met our founders, it was clear they embraced technology and the company was open-minded – they wanted to figure out how it should work. As of today, we maintain that technology as the core of our company. We pride ourselves on developing as much as possible in-house, but also commit ourselves to remain abreast of new developments and active in the Insurtech space. That’s why we find DIA and other Insurtech events of this quality as indispensable parts of our business. You can be getting a glass of water at an event like this, and bump into someone who can completely change the way you do business.

With that said, for us, we achieve change by having a mutual, company-wide understanding that we do not have a choice but to constantly be at the forefront of technology. At the end of the day, the industry is bettering itself every day and we can go with it or be left behind. We also understand that it’s a positive thing and not something for us to dread. With each technology that we integrate, we are lowering costs, becoming more efficient, or providing better service. If you look at the end result, it’s not about integrating a technology but doing one of those three things, and everyone in our company is already on board with that.’’


Chris Longo (AmTrust) at DIA Amsterdam 2017

But how do you secure that everyone is also on board when things become very concrete, when it comes to integrating a specific insurtech solution?
Chris: ‘’To “test and learn” is essential, and that has to be part of the culture of the company. It is a sales job internally; it is our job to sell the value; what the risk is associated with; and a lot of it comes down at how you mitigate the risk. And what you are selling to the C-suite executives, is that we are not looking to fail, but we are mitigating our risk, so if we do fail we are going to minimise that. We are just going to go in one region, we are going to pick one product.

A focus group of ten people is not an experience. You do not have a data point; there is not enough to test to evaluate what happened. That is the challenge, to make a credible test, to get enough of a coalition built within the corporation to take a test. We are going to pick an entire region, an entire product to go live. We are going to turn it on for one month and then we are going to come back, evaluate, and maybe three months later we will do a bolder launch. You do that on many fronts of many different pieces of technology, and you have to be able to take these baby steps. You have to prove it out before you are bold enough to take the full step.’’

What are you looking for in insurtechs?
Chris: ‘’I always look to align our corporation with Insurtechs who have worked their way up to us; I look to learn from them on how to integrate, more than I look internally. If you work with an Insurtech that has worked with start-ups, then medium-sized insurance companies, then companies our size, the answers we have will have been answered, and the mistakes will have been made on a smaller-scale prior to getting to us. A lot of the Insurtech companies are going “big game hunting” and trying to take down the large customers and corporations. The large corporations are inundated with politics and they’re difficult to change – there is too much risk and little agility. Corporate politics are the biggest barrier to entry, so you need to know how to manoeuvre around that as much as you need to know about your technology. They should target small- to mid-size companies, and cut their teeth on small issues before they enter the arena with larger corporations. Make the mistakes with the smaller corporations. Screw up a 20 million dollar insurance company deal, screw up a 100 million insurance company deal, but do not screw up an eight billion insurance company deal. You don’t want to be anyone’s experiment; you want these companies to know exactly how to embed themselves in your corporation.’’

How do you deal with corporate antibodies? What would you advise insurtechs?
Mark: ‘’You have to have a concierge service. If you step into our company, someone has to navigate the waters for you and they have to point out: this person is going to be difficult, this person is like this, this person is stubborn, this person is... you know. Those people, the corporate antibodies, are doing it to protect the company. Some of it is to protect their own territories, but a lot of times it is because we have done this for 20 years. I have seen a lot of smart people make big mistakes, so you have to involve them and incorporate their ideas in the process. Not enough to let them kill it off, but to let them know that they are involved and that you are valuing what their opinion is, because they are doing it out of necessity and out of their own legitimate fear for the good of the company. It is tough sometimes from an egotistical standpoint: “this is our idea, how can you change what I am doing, what I have is a perfect solution.” But you have to sometimes bend a little bit to get involvement.’’

What do you find interesting in the insurance business?
Chris: ‘’On paper – you could say that insurance isn’t changing. The concept and the purpose it serves is, in fact, the same. What’s exciting about our industry is that the way we do business is advancing at a very rapid rate, and today is different than yesterday. We can’t even always foresee the changes of tomorrow. The way we do everything – from pricing with data from our actuaries, to customer service experiences using A.I., to marketing using insurance specific platforms… there is something new happening every day. If you think insurance is boring and your career is in insurance, I encourage you to become more involved in your industry because in the past few years, insurance has been a major hub for technology and innovation. For the first time in history, the insurance companies have means to interact with the consumer in a much more intimate way. It is putting pressure on us, the insurance companies, to provide even better customer service than we do today.’’

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