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AM BEST'S MONTHLY INSURANCE MAGAZINE


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Life Insurance
A New Game

When insurers and insurtechs engage with each other, it accelerates the speed of change and forces both sides to up their game.
  • Kate Smith
  • December 2019
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Vidado Chief Executive Officer Nowell Outlaw was confident his company could handle a project of one million New York Life policies. But when those one million policies turned out to include 100 million pages, it tested his company's capabilities as well as its computing power.

Partnering with insurtechs and adopting a digital environment is equally a test for carriers. Joel Albarella, senior vice president and co-founder of New York Life Ventures, compared it to training baseball players to play ice hockey.

Albarella and Outlaw spoke with AMBestTV at InsureTech Connect 2019, held in Las Vegas, about how both sides are affected when insurers and insurtechs form working relationships.

Following is an edited transcript of the interview. 

Vidado does intelligent automation. What does that mean?

Outlaw: Vidado exists to essentially extract and automate processes that have really been untouchable in existing companies like New York Life. There's a lot of processes and there's a lot of data that these organizations have that they have needed access to that have helped them drive a new way of doing business.

Intelligent automation is helping them uncover all of this trapped data that exists in the organization. 

Can you give me an example of how your two companies are working together?

Outlaw: It started about a year ago. New York Life had a warehouse with about 100 million pages, or documents, contained in it. In that 100 million pages is all kinds of data elements that help them build and understand their business better.

New York Life approached us about figuring out how to pick the needle out of the haystack for all of these pages, and then applying intelligent automation and machine learning to it to extract the data out, so that they can then use it in their data and analytics research departments for learning more about their business and the outcomes of their business.

We did that. It started in October of last year, and we got done in July.

As a tech company, how big of a challenge is 100 million pages? It seems overwhelming.

Outlaw: It was overwhelming, to be sure. I think the interesting thing about startups, especially as it relates to insurance companies, is that you have to understand the scale and size of these organizations. We went into this initially with a discussion about one million policies.

You say, “OK, that's pretty easy,” but what shows up at your doorstep is 100 million pieces of paper. We had to scale tremendously in order to be able to service the needs of the organization.

I think it's an interesting dynamic when you have a New York Life, which has been around for more than 100 years, and a startup. Can you talk a little bit about the challenge of the speed of pace, moving at the speed of a startup, versus moving at the speed of an insurance company?

Joel Albarella New York Life Ventures

With the world changing as quickly as it is, how you engage and how you partner with companies and firms that are moving faster than you are is going to be a critical competitive differentiator.

Joel Albarella
New York Life Ventures


Albarella: It's an important consideration, I would say, now as much as any time in history. With the world changing as quickly as it is, how you engage and how you partner with companies and firms that are moving faster than you are is going to be a critical competitive differentiator.

We've been driving partnerships over the last seven years at a rate of about one every two-and-a-half weeks. We are able to have driven a [proof of concept] somewhere within New York Life's business, a tremendous value driver.

Even if they don't lead to implementations, it's been able to help us think differently about our road maps and so on. Based on that experience, I wish I had some really insightful thing, beyond it's mostly about empathy.

It's mostly about understanding where the other person is coming from. Self-awareness, and understanding what your blind spots may or may not be, as a larger organization. New York Life, as you noted, actually well over 100 years, 175 next year, we'll be celebrating our anniversary.

Having some empathy, having some self-awareness, and really acknowledging this exciting intersection between an organization that's very, very large—which implies a certain speed, a certain cycle time—and companies that are very, very small, which is going to have a much tighter cycle time.

Really trying to figure out what's going to work best for your organization to be the interface, to be the friction plate that's going to manage those two relationships. That's something we've been very pleased with our results to be able to do that, but something that I encourage all incumbents to think very hard about.

Winners and losers, again, will be separated by the speed at which they can learn new things. To be able to learn quickly, you're going to need to have a strategy and a capability to engage with smarter and faster earlier-stage companies. 

How about for you as the startup?

Outlaw: You want to move at Mach 3 as a startup. Large companies that have been in business for 170 years, they don't necessarily move at Mach 3. It's good, because it teaches you how you have to define value for the organization.

A lot of tech startups want to talk about their tech a lot. It's important, but the driving thing is, what's the value to the customer? I think the one thing is having a company, like a life insurance company, that helps you understand the value chain and where the technology can be greatly applied, is really of fundamental, building-block importance for any startup.

You might have really great analytics technology. You might have really good machine learning, but it's the application of that tech to find product-market fit. The only way you find that is with a customer that's willing to take you into those various business areas and say, “Let's apply this, and here's the business value that you get out of it.”

That's what you need a partner like New York Life for. 

Doing a proof of concept every two weeks seems pretty quick. Is it hard to get full adoption?

Albarella: It is. I think that the cycle time there, every two-and-a-half weeks, has been great, because it's a speed to insight advantage.

The knowledge is there to inform our very talented business leader on how they think about their road maps and how they think about engagement going forward. It's very helpful from that perspective. But for anything that is large and has been around a very long time, it's hard to be agile.

If you'll forgive me, I'll use a sport metaphor. If you think about the game of baseball, and you take the best baseball players in the entire world, and now, you think about the environment that we live in—a digital environment, customer expectations changing. We're on the cusp of quantum computing.

We're on the cusp of more meaningful AI. We have a well-funded venture industry that's focusing on solving big problems, really trying to get ahead of potential use cases. The game is changing.

It's almost like we have an industry full of very talented baseball players, and we're going to have to play hockey here pretty soon. As good as those players are at baseball, you've got to re-skill. You've got to retrain. You've got to attract talent.

Really, what you need to do also is learn the fundamentals. The fundamentals of baseball are very different than the fundamentals of hockey. You need to understand how to hold a stick. You need to understand that ice is slippery.

You try to understand those sort of aspects. I think the industry is doing a very fine job—and I know New York Life focuses on this very well—getting in and understanding the rules of this new game, and really adopting the right fundamentals to be able to compete as things evolve.

As the hockey player in this analogy, is it tough teaching the baseball player?

Nowell Outlaw Vidado

You want to move at Mach 3 as a startup. Large companies that have been in business for 170 years, they don’t necessarily move at Mach 3. It’s good, because it teaches you how you have to define value for the organization.

Nowell Outlaw
Vidado


Outlaw: Sometimes. I think the interesting thing is, the baseball players really want to learn. It's how much time do you spend educating them on how to play NHL hockey, when you're also trying to drive a business and move forward. Everybody's super excited. They're hungry for knowledge, and, “How are you doing this? How is it moving forward?” It's good. I think fundamentals of baseball also get applied to hockey, as far as how do we score, how do you have a winner, and how do you do things?

A lot of the people can move very quickly. It's just, as a startup, your value to them is because you have the best goalie, the best center forward. You know already how to skate, so you can help them accelerate quicker.

Albarella: I would just add, to clarify, less about the actual business, more about adoption of cloud, more about how you properly leverage an API strategy, how you truly think about analytic enablement throughout the value chain.

That is where the game is changing, not so much the businesses that we're in. I just want to clarify that. 

As an investor, is that part of what you're looking for, who can teach you something?

Albarella: I think as a venture investor, it's no big secret that it's really important who the management team is, what perspectives they take, and how they think about the problem that they're trying to solve.

For us, a cultural fit is very important, and I think an aspect of that cultural fit is, again, understanding what it would mean to work with a large organization, understanding that you need to have that right level of compassion and empathy to understand where that opportunity is.

Able to meet in the middle, able to have a high self-awareness around the product that you're offering or the problem that you're trying to solve. Doing your homework to understand where that lives within the value chain.

If you're going to try to have some sort of a role in a core function to our business, something that, literally, we hang our hat on as a business, you can't expect a very fast and loose type of engagement. That's just not the way that it's going to work.

Having that kind of understanding is a very important aspect of a management team, just to be able to acknowledge that, while at the same time, understand where there are opportunities to push faster, where there are opportunities to help us. 

What do startups need to be prepared to handle?

Outlaw: I think a combination. You have to manage to process, because a very large carrier is used to managing things in a very certain way. If you come in and are trying to get things done in a week—that might take three months. It's how do I fit into their process and how can I work with them to get this done?

I think the other thing is, understand the scale of the requirements. A lot of times, you may think you understand it, but you really need to do some deep exploration about—OK, we're going to start with 100,000, half a million, or a million. Really ask some tough questions back to the customer to say, “What does this represent as far as data policies, contracts, amount of money?”

Sometimes, even the customer themselves may not understand the full impact that you need to be able to handle for their business, because they're big.

We've seen customers that have made estimates, and they're like, “Well, we think it's going to be about 10,000 things a day.” Instead of 10,000, it's 50,000. You have to be able to rapidly adopt to that. I don't like to go back to customers and say no.

 

 


Kate Smith is managing editor of Best’s Review. She can be reached at kate.smith@ambest.com.


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