Insurance companies take active steps towards modernization to keep up with customer's expectations and recent entrants to the insurance space who use the latest technology. Carriers introduced new entities into their organizations to champion and facilitate progress. Today there are innovation teams, innovation labs, venture arms, accelerator programs, and the less familiar function -- the Entrepreneur in Residence (EiR).
In the VC world and in many tech-savvy and innovative companies, e.g. Nike, the EiR is a familiar role that provides value as part of the investment pipeline, part of an incubation program, or in the role of an intrapreneur.
To understand better the avant-garde insurance that is done by the large insurance companies and their innovation programs I reached out to the leading insurance innovation teams.
Here is a short interview with Dominic DiMarco, EiR in QBE insurance, the man with the best job in the insurance industry.
"All the big businesses are trying to figure out how to do things "faster, quicker, easier and leaner" and they don't have those skills in their four walls to do it themselves most of the times."
[G] What are the "forces" behind the increasing number of Entrepreneur in Residence (EiR)?
[D] EiR title becomes more and more popular as my anecdotal research shows. All the big businesses are trying to figure out how to do things "faster, quicker, easier and leaner" and they don't have those skills in their four walls to do it themselves most of the times.
[G] Let's start with the first step of your journey. What's your background?
[D] I am a startup person at my core, and I somehow managed to find myself in insurance, and I still don't know much about insurance. That is, almost, a blessing in disguise because I don't need to know how things should work I just need to challenge the status quo and find what's next, what is coming down the pipe.
[G] How long have you been in insurance?
[D] I have never been in insurance.
[G] Great! That's the spirit of thinking outside the box by not getting into the box or boxes.
[D] I have been with QBE for a year. Before I joined QBE, I traveled the world for seven months, and from time to time I would come back to Madison to check-in with people. Once, I was introduced to a guy, my current boss, who had an exciting role, and they needed my experience with startups, investments, and IoT, and I worked with other insurance companies particularly with American Family Insurance.
[G] AmFam ventures built a proactive and robust brand in the insurTech venture scene.
[D] Yes! We are based in the same town. In fact, I see them out on the street quite regularly. When we started our venture, they were hugely beneficial. We met with their managers and principals and asked them questions about what they did when they started, what mistakes they did and which tools they used to get the venture off the ground.
Before that, I was a startup guy. I did a program in TechStars and ran a startup for five years after that, I raised some venture capital and mentored in multiple accelerators.
"I was never in insurance; I worked in startups that had an intersection with insurance."
[G] After how many milestones or success stories will you become part of insurance?
[D] I don't want to be an expert in insurance. I am not trying to avoid the knowledge of how the industry works. I don't want to be comfortable with how things are that I can't see how things should be.
Will I understand insurance better? Absolutely.
Will I work with an insurance-related company? For sure.
Will I know all the nuts and bolts? I almost hope not, so that I can keep my beginner's eyes to see the potential of what can be done.
"Insurance companies, at their core, are massive financial institutes."
[G] Where is the innovation in the insurance space? What is the value that the technology startups that assume the title InsurTech bring to the table?
[D] There is a difference between the IT infrastructure and core systems to the innovative work that is happening on the fringes. You can't replace a core system at once. Insurance companies, at their core, are massive financial institutes that take your premium dollars invest those in various investments and hope that between the combination of ROI and loss they will be profitable at the end of the year. So when you look at insurance companies, they are a massive investment company, they are an economic engine, they do so many different things. So, when we look at the insurTech startups, they don't even address a fraction of the issues that a multi-national, global, specialty insurance carrier addresses.
The first three investment the QBE made, two of them, arguably, somewhat insurTech, and one was not insurTech.
Photo by Alex Knight on Unsplash
"I don't think that we will see a startup that doesn't use AI"
[G] CrunchBase reports QBE Venture's investments in Cytora and RiskGenius. Are you targeting AI or is that a coincidence?
[D] I can't hear an InsurTech pitch without the words AI, machine learning or blockchain.
AI can provide value in every area. From customer service to pricing, risk selection, claims, it is going to be everywhere. Whether it is chatbots or talking to models that determine if you are a good risk. Detecting fraud using...
The difficulty is to determine from all the AI and machine learning InsurTech startups that are out there that are all sound remarkably similar is who is doing what and who is do it particularly well. That is the most significant challenge. I don't think that we will see a startup that doesn't use AI.
[G] Is it overhyped?
[D] I don't think so. I think that there is a lot of benefits to come out of it. And we started to see results in our organization by using these technologies. We are always running experiments and playing with all the new toys in our lab.
"Blockchain is a fantastic solution looking for the right problem to solve"
[G] Let's use this opportunity to talk about another hot topic - blockchain. What do you think about Blockchain and startups that use this technology?
[D] Blockchain is a fantastic solution looking for the right problem to solve. The one problem that it solves exceptionally well is crypto-currency. And it makes a lot of sense in that scenario. Most of the pitches that I hear that involve blockchain are using blockchain as a substitute to a relational database. I don't see that value, and I think it adds an overhead and complexity that is entirely unnecessary.
I heard recently of two startups that use blockchain technology for audit trail on diamonds. They use it to say where the diamond came from, who has owned it, what mine did it come from, and if it is conflict-free, e.g., not a blood diamond. That said, that can undoubtedly be done with other technology, blockchain is a good solution, but not the only solution.
I want blockchain to live up to the hype. I haven't seen an application that went me say "that is the killer application in addition to crypto-currency."
[G] You came from the startup world where it is the bleeding edge of technology is revered, and the smallest optimization provides an exponential competitive advantage. How do you find the culture gap?
[D] It is a different world. I work in some sort of a bubble. Our office is in a suburb of Madison Wisconsin; it is a process driven facility, but the global digital innovation lab is based here. The lab is an unstructured environment in a very well structured company. I think that I have the best job in the company. Culturally, it has been good. I am not sitting in a cubical; I don't have a 9 o'clock stopwatch, I am given a great deal of latitude to do what I need to do, and I do it in the same way that I did when I was an entrepreneur and work seven days a week.
[G] Do you need to deal with the enterprise processes, budgets, and deadlines?
[D] I live in ignorant bliss for many of these things. My primary responsibility is scouting, identifying and nurturing relationships with startups. There are other members of the team that drive partnerships, proof of concepts (PoC) and investments. My job is where my passion and that is where I am most effective.
[G] How did you find the experience of moving from raising the money to investing the money?
[D] It is an interesting perspective. I get a lot more insight that comes from exposure to a large number of startups. I think that being on my side of the table improves your skills on the other side of the table. So, having been an entrepreneur made me a better at what I am doing now. And, doing what I do now, will make me a better entrepreneur when I go back to that side of the table. It hasn't been a hard switch. In fact, it has been challenging and rewarding, and I enjoy everything that I have done. I am not looking to go back to be an entrepreneur anytime soon, but when I'll do, I'll have better set of skills, a better understanding, I'll be better positioned to succeed.
"Doing a startup or being a startup, there is no better time than now"
[G] What is your prediction for the insurance space?
[D] I think that we will see the customer swinging back to the center of the relationship. We will see it in more significant parts of the economy. We saw it in retail; similar things happened in airlines, the customer is going to be important again. The service is going to be of critical importance going forward.
That said, there are still going to be large sets of data, large sets of money, and everything else behind insurance. But, customer centricity is going to be key.
Shopping by price alone is going to appeal to a certain segment of the economy; I think that other segments are more about feeling as though they are being valued as a customer. So, what does it mean concerning a global organization?! That is yet to be seen. And, so far in terms of the technology that makes that occur "easier, faster and better" there is a room for all sorts of ideas in there. As far as trying a startup, doing a startup or being a startup, there is no better time than now. The opportunity cost is relatively low. The out of pocket cost is relatively low. If you have an interesting idea within an area, it is really easy to bounce that idea in front of people.