From Horseback to Horsepower to Whatever Comes Next

Brian Gaab is Managing Principal at CSAA Insurance Group, a AAA insurer. He leads a small team called Core Innovation within the company’s strategy and innovation organization, and he has spoken at events including CES, SXSW, InsureTech Connect, DigIn, OnRamp, the Connected Insurance Summit and the Internet of Insurance. Before AAA, he was a management consultant for seven years across Fortune 500 clients in many industries. He joined from his home office in Walnut Creek, California, in a dress shirt put on for the recording.

About Brian Gaab

Brian Gaab works on implementing new technologies at CSAA Insurance Group to make insurance simple, proactive and personal. CSAA is an approximately $4 billion personal lines carrier writing home and auto, and a budding commercial business, in 23 states and Washington, DC, branded in the marketplace as AAA Insurance.

How AAA Is Structured

Brian explained that AAA is a federation of more than 60 million members across the US and Canada, with many clubs of different sizes. CSAA is one of three AAA insurers, and it works through club partners who employ the agents that sell its products and who also provide the services AAA is known for, such as roadside assistance and travel. Everyone has a AAA story, he said, usually being rescued on the side of the road, and it energizes his work. From a customer’s perspective, it is a single entity.

Think Big, in a Slow Industry

Asked how an old-school brand grows, Brian started with thinking big. Insurance and financial services change incrementally and more slowly than, say, retail, with larger hurdles and regulatory constraints, but that doesn’t mean there isn’t opportunity. He noted that ten years earlier the word insurtech would have drawn blank looks, and now it’s common in insurance, finance and venture capital.

Lyft Credits Instead of Rental Cars

His example of starting with a fundamental problem: around 2016, CSAA saw the rise of ride-share companies and also saw a pain point in claims. When an accident happens, every insurer provides a rental car while the vehicle is in the shop. CSAA had worked hard to make this seamless with rental partners and body shops, but much remains for the consumer: getting to the rental facility, getting the car to the shop. So CSAA formed a strategic partnership with Lyft and piloted in a small area offering Lyft credits as an alternative to traditional rentals.

The results were better than expected, including use cases the team hadn’t imagined: a policyholder in the Bay Area, for instance, whose street requires a parking sticker overnight, which rental cars don’t have. Brian’s advice to founders: start with the customer problem and accept that you will be wrong, because the problem and solution will evolve and what comes out may look quite different from what went in. Gilad linked it to the customer journey in his previous episode with an author.

Mobilitas

CSAA’s strategy recognized that people are using cars, and other large assets like houses, differently: sharing, automation, Airbnb. The organization stood up a new venture, Mobilitas Insurance, focused on new mobility, and Brian had just seen it make headlines as one of Lyft’s insurers in 11 states. CSAA remains committed to its core products, but Mobilitas lets it work with commercial entities and embed itself in new technology products, with Lyft as a great example. Brian invited anyone thinking of a mobility venture to reach out.

The Innovation Gateway

Gilad noted that having an innovation title makes you a gateway, and Brian described balancing external work with startups and established companies against internal work, staying close to the product, claims, service and risk organizations so that real problems guide conversations. He believes in starting with real customer or business problems, not solutions.

His illustration is Cape Analytics. About four or five years earlier, Brian began working with it when it was using geospatial imagery to detect pool covers for a handful of Florida counties, which didn’t matter directly for CSAA. But he knew agents ask policyholders how old their roof is, and the usual answer is “I don’t know,” and roof age is a critical underwriting criterion in some wind and hail states. He recognized a business problem, found technology that could eventually address it, and worked with the company over time. CSAA later invested through its venture capital arm, Avanta Ventures, and it is now at scale in the business.

Buy, Build or Partner, and Buy-In

For a successful innovation group, Brian said buy-in across the organization and from senior leaders is essential. His strategy and innovation organization is about three and a half years old, and the support continued and was amplified with the arrival of CEO Tom Troy, which he called long-lasting in innovation terms.

The buy-build-partner question has to be asked early, he said, because organizations jump quickly to build. New initiatives cost money, resources and organizational commitment, and there is much more partnering now, and some acquisitions, than there was. On how CSAA works with Avanta, he said the two groups often talk to similar founders and work closely together, and it can go either way: Cape Analytics started as a commercial partner and became an investment, and a company could also be invested in first and worked with later.

2021

Brian expected many insurtech “graduations” in 2021, such as IPOs and acquisitions that would have come in 2020 if not for COVID. Internally, CSAA affectionately calls its transformation a mission to Mars, and he’s excited about growing the core and expanding into new areas, and hopes to leave the house more.

Advice: The Queen’s Gambit, Water and Sleep

Brian has been reading less than expected during COVID because of two young kids. He watched The Queen’s Gambit, restarted playing chess with his wife, and had to buy a chessboard, which Gilad linked to a reported spike in chessboard searches. His life hack for cold and flu season: drink lots of water and sleep as much as you can.

Key Takeaways

• CSAA is an approximately $4 billion AAA insurer in 23 states and DC, working through AAA club partners to distribute its products.
• Start with a fundamental problem, accept you’ll be wrong, and expect the solution to evolve; Lyft credits replaced rental cars in a pilot with unexpected use cases.
• Mobilitas Insurance is CSAA’s venture for new mobility, including as an insurer for Lyft in 11 states.
• The Cape Analytics story shows how a problem (roof age) and a technology can connect years later, first as a partnership and then as an investment.
• Buy-build-partner should be asked early, and an innovation group needs real senior-leadership buy-in.
• Expect more insurtech graduations in 2021, delayed from 2020 by COVID.