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7 Things I Learned at Bold Penguin

This is my first week at Bold Penguin… marking the true beginning of my insurtech life.

I’ve followed insurtech for more than three years, writing and speaking on the movement, but my vantage point has always been one of the intrigued outside observer.

And while one week does not make you a qualified insurance technology startup guru, here are my first seven insights after diving headfirst into my new role as chief marketing officer at Bold Penguin.

1) Small Business Insurance Is the Holy Grail

McKinsey & Company has been referring to the SMB market as one of the “few bright spots” in the property/casualty insurance sector for years now.


Because no one owns the small business insurance space. The marketplace is fragmented, and generally speaking the commonly accepted customer experience is poor at best. Yet, done right, small business insurance is a growing and profitable market segment.

This is by no means breaking news.

That doesn’t diminish the fact that no one has small business insurance figured out, (except maybe…), making the SMB market the holy grail of meaningful organic growth for the foreseeable future.

2) There Is No Road Map

In case you’ve never worked for a startup before, there is no road map for success.

Insurtech startups are creating solutions that haven’t existed before. Look at the work that Chris Cheatham is doing in policy automation at RiskGenius or Mike Albert and Allan Egbert are doing in open APIs at AskKodiak.

Quite literally, they’re making things up as they go along.

…because they have to. The work lives in uncharted waters.

My point is, just as insurtech startups must mature into the greater insurance ecosystem that has existed for more than 400 years, the more traditionally oriented organizations (and individuals) must accept the slightly more haphazard nature of startup companies.

Insurance carriers with open-mindedness to the realities of trailblazing startups will position themselves out front as the partners of choice for insurtechs mapping solutions for our industry’s most challenging obstacles.

See also: An Insurtech Reality Check  

3) There Is a Race to Remove Friction

Research from a McKinsey & Company survey shows a 73% increase in customer satisfaction when customers reported they were pleased with the entire customer journey, not just specific touch points.

Winners and losers of the digital insurance revolution will be determined in the race to remove the most friction from the customer experience.

This doesn’t mean removing human agents or blowing up the traditional insurance carrier model. Rather, we must think of insurance as a service and create flow throughout the customer journey.

I joined Bold Penguin because it’s my belief that their solution will be the foundation upon which many winning agents, brokers and carriers build their unique customer journey.

Whether you partner with Bold Penguin or not, make no mistake, the race to remove friction is real and it’s happening right now.

If your organization is not having serious conversations about the customer journey, you’re already losing.

4) It’s Time to Ask “What if?”

It’s time for everyone to start asking “What if?” when it comes to the future of insurance.

  • What if APIs are the future?
  • What if customer experience is all that matters?
  • What if we can’t build it ourselves?
  • What if half our agency plant retires in the next five years?
  • What if our carrier partners demand digitization?

Whether you believe these scenarios will come true or not isn’t the point. The insurance marketplace is changing rapidly and being prepared for all the “What if?” scenarios possible is the only way to survive…

…because no knows what’s actually going to happen.

5) Disruption Is Dead

From now on, every time you hear the words “disruption” or “disruptor” come out of a startup’s mouth, your insurtech B.S. alarm should leap to life, the blaring sirens and seizure-inducing flashing lights overwhelming your senses while an impenetrable B.S. Protection Barrier envelops your entire body like some scifi force field.

Seriously though, disruption is not the answer.

Instead, insurtechs should focus on collaboration, facilitation and integration with traditional partners, building on the previous foundation as much as possible and alongside where it does not.

6) Culture, Culture, Culture

I’ve seen first-hand the impact a toxic culture can have on organizational success.

We live in a tumultuous time for workplace culture. According to the American Psychology Association, the workplace continues to be a leading cause of stress (with 61% of Americans listing work as a significant stress factor).

We’re under more pressure to spend more time, to get more done every single day. Work-life balance has become a cliche joke.

While I believe in hard work, giving more of yourself than is asked in the job description and just kicking ass in general, organizational culture must be a fit to achieve our goals of world domination.

Here are three aspects of insurtech culture vital to success:

  1. Always put staff satisfaction first. An inspired team believes, an uninspired team blames.
  2. Never blame the customer. Period. Own your outcomes. The customer may not always be right, but the customer is never wrong.
  3. Don’t take yourself too seriously. As an old mentor used to tell me, “Everybody ?s.”

I’m sure there are more. But these were the three most obvious to me after spending time at the Bold Penguin headquarters this week.

7) Your Story Matters

Your story matters as much as your product.

It doesn’t matter how amazing, revolutionary or game-changing your product or solution is, if your story doesn’t make sense, if people can’t connect the dots between your solution and how it benefits them and their organization, your product essentially doesn’t exist.

This is something we need to do better at Bold Penguin.

We’re not amazing at telling our story today.

We’re going to change that.

One of many reasons I joined Bold Penguin was that the whole story had yet to be told.

I feel like I’ve found a gigantic diamond just lying there on the sidewalk.

And while everyone else walks past, oblivious to the treasure they’ve just nonchalantly stepped over, to the trained eye all it takes is a craftsman-like approach to telling the story of what Bold Penguin can do for insurance agents, brokers and carriers to unlock industry defining value.

But Bold Penguin isn’t alone. Wait until you hear about what Joseph D’Souza is doing at ProNavigator, or Jason Keck at Broker Buddha, or Phil Edmundson at Corvus Insurance.

Having a great solution is the barrier to entry. For anyone to care about your company, you must to be able to tell your story.

See also: Innovation: ‘Where Do We Start?’  

The Rub

According to the most recent CIAB Market Study, “Driving organic growth, hiring and recruiting talent and enhancing the customer experience remain top organizational priorities” for the U.S.’s top insurance brokerages.

With 80% of CIAB’s responding agents and brokers listing “driving organic growth” as a top priority for 2018, it’s exciting to be part of a company working to solve organic growth concerns, not through disruption but through collaboration, facilitation and integration.

You can find the article originally published here on LinkedIn.

Click here to learn more about Bold Penguin.

P&C Has a Problem With Classification

The commercial property and casualty (P&C) insurance industry has a classification problem. The overlapping use of standard industrial codes (SIC), Insurance Services Office (ISO), National Council on Compensation Insurance (NCCI), North American Industry Classification System (NAICS) and a dozen or so other carrier-imagined coding systems are creating a growing number of problems for insurance companies and agents alike. Ambiguity, misuse, line of business (LOB) specificity, misunderstanding and straight-up miscategorization leads to missed sales opportunities, higher underwriting costs and unexpected exposure to risk down the road. It’s time for the industry to examine risk categorization and take a fresh shot at solving the classification problem.

The problem is, many of the fundamental issues stem from limitations of the underlying classification systems themselves.

Dude, SIC

Standard Industrial Classification (SIC) is like the mainframe computer of classification systems. Wildly out of sync with the modern world, it somehow is still extraordinarily prevalent in the wonderful world of insurance. SIC was first established in the 1930s as a way for government agencies to speak the same language with one another. Obviously, American businesses of the ’30s, ’40s, ’50s and ’60s looked very different than the business of today. SIC was developed mostly as a taxonomy for an industrial economy. Attempt to look up the SIC for web developers, for example, and you won’t find it. Many other modern businesses are also missing, because the SIC system itself was retired in 1997. SIC includes broad classifications and generalities, which are largely too unspecific to be of much use in classifying risk. Consider a fairly common code: 5812: Eating Places. Naturally, one would think immediately of “restaurants,” right? Unfortunately, that code also encapsulates industrial feeding, dinner theaters and sports arena concessions. While many insurers would likely write the GL on a restaurant down the street, few would be inclined to touch industrial feeding (whatever that is). What’s good about SIC is that it’s insurance agnostic and has applicability to all lines of business. What’s bad about SIC is that it’s too broad and, perhaps even more of a deal breaker, it stopped being updated two decades ago.

See also: Future of Securities Class Actions  

The Last DJ

There’s a line in a song by Tom Petty & the Heartbreakers that wonders, “the boys upstairs want to see how much you’ll pay for what you used to get for free.” This comes to mind anytime anyone advocates for a proprietary classification system. Setting aside the often-high licensing cost, these schemes are also almost always hardwired to the insurance industry, often because they have roots in rating. There are at least two significant consequences to this hardwiring. First, it creates a user experience challenge. This manifests itself to the policyholder, be it on an insurance form or a website. For an industry outsider, categorizing a business using an insurance code is just plain hard. This user experience deficiency also extends to the agent or CSR who must first be trained in the codes themselves before being able to begin to apply them. Second, and of increasing consequence, these values are not found in publicly available data. As insurers and intermediaries continue to integrate with any and all available public data to improve underwriting and reduce sales friction, proprietary, industry-specific classification is always something that will have to be derived after the fact, creating an exposure for error. With the continued use of proprietary classification schemes, industry participants are paying a bundle to speak a language that’s foreign to the rest of the economy.

LOB-Specific Systems

Workers’ compensation (workers’ comp) is perhaps the best example of a LOB with a classification system developed for pricing. Workers’ comp codes are exceptional for pricing workers’ comp. These codes do the job perfectly, but a coding system designed to attribute premium to payroll classes is not the same thing as a classification system to categorize the aggregate risk associated with the operation of the business. As an example, any insurer that has ever written workers’ comp will know that two of the top “classes” are clerical and outside sales. But what does that business with those exposures actually do? Is a business with clerical exposure an office full of desk workers, or is it a couple of managers at an industrial chemicals factory? The problem with workers’ comp codes, in particular, is that they describe what specific employees at the business do, not what the business itself does in the big picture. Expressing risk appetite is challenging, if not impossible, using payroll codes as a basis, and it’s difficult to convert these codes into eligibility for other LOBs for cross-selling other lines. A higher-level description of what the business actually does is required for portfolio underwriting — payroll codes are not sufficient.

The case for NAICS

NAICS is provided for free by the U.S. Census Bureau. NAICS classification provides very detailed descriptions of what it is that the business actually does, and, thusly, what exposures come with its operation. NAICS replaced SIC in the late ‘90s. In terms of detail, SIC codes are like on old tube TV, and NAICS is like a 4K flat panel. This high-definition classification has been updated to reflect the service economy and has a much lower level of detail describing exactly what a business does. The eating places conundrum discussed earlier in the context of SIC is a great example. With NAICS, it’s actually possible to code the restaurant down the street differently than a snack vendor at a stadium. As an insurer responsible for underwriting such risks, a high-definition description of the business operations is tremendously useful for pricing and underwriting. Clearly, not all eating places have the same exposures, so NAICS is a fantastic way for commercial insurers to express appetite. (Cafes, yes. Dinner theaters, no.) NAICS is also updated on a five-year rotation, most recently in 2017. Each revision builds on the last, incorporating new and emerging business types. Furthering the case for NAICS, the U.S. government has incorporated it as the go-to system for business classification, meaning that publicly-available data sources can and do provide these codes.

See also: Chatbots and the Future of Interaction  

A Call for Class Action

Adoption of NAICS as as a standard for commercial P&C risk classification benefits the industry in all phases of the policy life-cycle — from reducing friction in how products are distributed; to reducing exposure to mis-categorized risk; and to enabling portfolio underwriting, all while supporting the new businesses being created in the modern economy. It’s long past time we all got on the same page.