From Legacy to Innovation: Lisa Smith's Journey in Insurance Technology

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Lisa Smith: has over 20 years experience in the tech insurance industry, with her career leading to becoming the CEO of Tech-Insure Consulting, a boutique-style consulting company on insurance industry solutions. She is also more recently the CEO of Insurekore, the world’s first digital brokerage. Lisa will share her journey to becoming a CEO as well as a mentor for women in business, while also being on panels as an industry expert on AI as well as for companies like Fintech.

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Host:
This is Lisa Smith. She has, for quite a long time, been the CEO of tech insurer. Am I right?

Lisa Smith:
Correct.

Host:
Right, right. Well, how are you doing?

Lisa Smith:
I'm doing fabulous. Got a little bit of a little bit of snow here, but the roads are clear. Traffic's good, we're all set.

Host:
Okay, all right. Well, I have a few questions for you. I guess my first question is: what exactly is insuretech? What does that mean to you?

Lisa Smith:
It's what it means to me, but it's also the group that works in this industry has worked very hard to define this industry. So insuretechs are considered a subdivision of the fintechs, and the fintechs are the technology companies in the space that deal with the financial services industry. So insurance, though, wants to separate itself out, and they did a great job. There's a lot of dialogue at the time. How do we do this? How do we manage this? And essentially what they came up with is insuretech is about protecting your financial position, as opposed to fintechs, which are about investing in your financial position. So we separated the mode. We use a hashtag in i-n-s-u-r-t-e-c-h. We drop the middle "e" typically.

Lisa Smith:
And what they are is: how do we challenge and disrupt the insurance industry to do things better?

Host:
What does better mean to you?

Lisa Smith:
Better means not your mom and dad's way of doing that. It used to be traditionally you'd go to mom and dad's insurance office, and the insurance broker would meet you with a big smile, and they would take down all your information and go and get you a quote. And then they'd come back and you'd say, "Great." You know, and then you'd have to do this whole long paper application and submit it through and then wait for the paperwork to come back again. What we've done in the last 30 years—let's say excluding the last 10—but what we've done is work to digitize that. But it's the same process. You know, what we did in the digital world was we still took that same application project paper and we just put it into a big XML request. We were some of the leaders in XML and data transformation and data movement. But everything's this huge application process, and it's still got to go through all these same steps.

Lisa Smith:
So we do it a little faster. We took weeks down to days. In some cases, we're getting down to hours, but we're not down to minutes and we're not down to instant responses the way other industries are. And we can do better. Even now, we've done better, but we can do better to get clients buying insurance for the right reasons at the right times with the service level that they expect, and I don't believe we're there.

Host:
From the side of someone who maybe is consuming this, what is the experience like? You talked a little bit about how you would have to fill a bunch of forms in, and now you're just filling a bunch of forms in a different way. It's just digital paper. So how are you able to squash that process down? What are you collecting or what do you have to not collect in order to make that a little bit easier for you?

Lisa Smith:
Well, and that's a really cool question because the reason we collect all that information is so that we can refine your price. If you don't provide us certain information, then I don't know things about you and I am going to assume then that you're a higher risk, that you're more likely to do things that the reason you're buying insurance is because you're more likely to have an incident. So be a little bit leery of anything that just says, "Oh, here's insurance," and I don't need to ask you a lot of questions, because you're paying a premium for that. You're paying a higher premium for that.

Lisa Smith:
What we can do better is if you share with us some of your other digital information. If you connect with me on social media and you can share with me, you know, your sex, your gender, your age, know your address and location things then I don't need to ask that and I can get that from you and I can start to build that digital request that I need in the back end without you having to form fill everything. There's some really cool things out there that we can let you can let us know with the use of your technology with the use of your profile that then lets us do some really cool stuff in the background.

Host: 

So this sounds technically quite challenging, like everything that comes easy for the consumer there's quite a lot of challenges for the CEO and her team, so how's that process been for you?

Lisa Smith: 

I have an amazing team behind me, building an insure tech at a time when investments are down in insure tech spending when there's a looming recession. I mean, people still need to buy insurance and they will probably more so now, right?

Host: 

Well, exactly because they're more at risk, they've got less budget to work with, right? If a financial disaster hit you, you need the protection more than ever.

Lisa Smith: 

Exactly. So how do we instead start to switch that conversation to moving away from having to do those big forms to getting these connections so that I can make this seamless? And it's one of the big things is hitting you at the right time, at the right place to get that product to you when you need it. So I need to get better at that, and social media and the social data and the information that's out there is one of the biggest tools we can use. The other big tool and the industry friction that causes me the stress is the platform to platform connectivity systems. You know, these carriers are still either on archaic mainframes and they're trying to put really spaghetti code in front of them, or they're on a little more updated system, but I like to call them modern Legacy. They were designed to be more efficient for them so they can move data between their components better, but they're not better at making those components exposed to me so that I can build that better digital journey. Probably the biggest challenge that we've been facing and dealing with is how do we get the information? You can share it in the social media part is better, but now I gotta really work on this. The industry's tried all kinds of joint solutions, but who pays for them and how does the fund get really complex?

So we're honestly in a better state if everybody just kind of built some microservices and started exposing them to us. I actually got to—there's a term in the financial industry called open banking, and these are the services that let you, you know, when you go into your bank account app or these other new apps that you're seeing on the fintech side: how's your spending? How's your budget? I can see you went to Starbucks. I can see you did these things. If you did this, you could save more money. I don't have open insurance, so I don't have access to that data as an outsider. They keep me out, so I either need them to give me the microservices to share it or we need open banking, open insurance, and open insurance is way behind politically and socially where open finance and open banking is. This is where insurtech innovation can play a big role—helping to create more transparent, accessible platforms. By integrating AI in insurance, we can streamline the way data is shared across platforms. With improved insurance data analytics, we can predict customer needs and offer them the right products at the right time. This also aligns with effective risk management in insurance, as better access to data allows insurers to understand and mitigate potential risks. The goal is to find new digital insurance solutions that help improve the customer journey, making it easier for everyone involved.

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Host: 

Yeah, you're right, it's a lot of challenge.

Lisa Smith: 

No, for sure. I mean, I really like this idea you brought up of open insurance. Like, I think that's something that it already hooks because we've heard open banking and we've heard that push, and it's almost now once you've said it, it's like, why isn't that there already? It just makes the most sense, right? Like, you already have it.

Lisa Smith: 

It does, and I'll tell you why it's not there right now. Everybody believes that their value is in their data and they're right, but I believe and I think more people will end up where I am that the value isn't in owning the data. The value is what you can do with the data, and what those actuaries can do is the real gold of those companies. It's not their tech investment, it's not their process and solution, it's how do they price the product? I can help them with everything else. I can get that product to market for them. I can start to hit the right clients and manage the social data for them. I can design the journeys for them. If they can give me the product and the pricing, by holding that back, they're keeping all the responsibility for that journey, for that buy, for that sale on themselves as opposed to letting us in. But as long as they feel that the value is in that data ownership, they're never going to go. Like I said, the other social media services and stuff that are opening up the data for me let me do some really cool things, you know? Finding you in the right place, knowing that you just bought a phone and might need insurance for it or might need a warranty for it, all those other things we can do. So it's really exciting. I think that if we can just get some people in there on the insurance industry to listen and to contribute, we're going to end up in some really cool spots, but we're not there yet.

Host: 

One thing I was thinking is how, you know, it seems there's a lot of technical challenges for sure, right? And it seems like you got a good handle on, you know, what it really means to move that forward, what you need to connect and what you need to put together, but you know, how difficult is it to have these conversations and how do you sort of navigate that? Because, you know, there’s a lot of incentive management there.

Lisa Smith:
Um, but just in general, how do you bring this forward? And it’s, I think, it’s kind of almost clear that people would want this, right? I mean, they want it everywhere else, why wouldn’t they want this here? The reason I think they wouldn’t want it here right now is—and it’s changing—it is, but it’s moving at the speed of an iceberg. It’s very, very slow. They want this because they want the sales and they want to provide value, and we can do that, and we can grow, but right now, the growth is more in aggregating and consolidating the brokerages and the independent advisors in the U.S. so that the brokers are building a bigger portfolio to work on, and they’re not working on new business or organic growth. So now the insurers are trying to do that directly, and, but they’re so conservative in their pricing and their approach that we’re hitting roadblocks. The answer is starting for me at least, is there’s some breakaway components. There’s some components deciding that those big insurance companies are too monolithic because of their systems, their processes, and everything. How do I break away and disrupt pieces? Like me, I can do this piece for you. Let me do it. The other piece that’s breaking away, though, are what we call MGAs—they’re wholesalers—and they actually are getting so that they can design their own products. And when they do that, and they can get funding and investors for their product, they become more like a hedge fund or mutual fund operator. They design an insurance product that they’re taking a risk on that they think they can provide protection for everybody and still make money. And they do it in these with more micro components. And when they do, they need help getting it on these platforms, in these systems. So this whole concept of multi-tenant and the concept of integration is happening, but it’s happening at that level more often than it’s happening with the big carriers and more often than it’s happening with the really small carriers who have no budget. But breaking off the components, we can solve the problem one piece at a time.

Host:
So, are there pieces that have a tendency to accelerate more than others in the market, where, you know, maybe this is something people are willing to digest a little bit faster? Right, like something like this kind of insurance? You know, people are still really resistant because the insurance industry and all of this too has done a very lousy job at creating that good sales experience, that good buy experience.

Lisa Smith:
Tenant insurance is one that a lot more landlords and a lot more condominium unit owners and stuff are being required to buy. So very much like auto insurance, your state or your province is requiring you to buy it. So you’re buying it at a necessity, and you don’t understand the value of what you’ve bought until you need it.

Host:
Is that true in the U.S. as well?

Lisa Smith:
Yes, it’s true pretty much everywhere, you know, in any market.

Host:
So when you’re forced to buy something, you’re resentful of it. But when you see the benefit and you know what it’s doing for you, it becomes really, really exciting. Um, and if you don’t mind, I’ll share a very personal story with me, which is why I stuck in the insurance industry.

Lisa Smith:
I was working on the life insurance side, and it’s very hard to build a book and a portfolio, so they gave us some accounts to go back and contact and see if we could upsell, they call it. You’ll sell them a little more coverage, see how they’re doing, see if there’s other products that they need. Some of these accounts have been pretty old and pretty neglected, and I was doing my phone calls and I called the household and found out that the policy owner had actually deceased several decades ago, honestly, and she didn’t know that he had this policy out there. So we expedited the claim, we got it pushed through, you know, this poor widow has been without this money and without her spouse. You know, this money should have been there to make her life easier at the time, it’s what he bought it for her, and she just never knew. We got the check and we went out to personally deliver it to her. It was a bit of a life-changing experience for me. Um, it was only five thousand dollars, you know, back then it was a little bit more because we’re talking quite a few years ago from myself, but it’s—five thousand dollars, even then, was not life-changing typically speaking, right? You’re not gonna all of a sudden be able to get a better condo or get a newer car or anything like that. And this poor lady was so excited because it was her turn to her the card party that week with their little seniors group, and she really wanted to buy cream instead of milk, and that just wasn’t in her budget, and here I am handing her a five thousand dollar check in her world, that was...life-changing, that's what this is supposed to do. It's supposed to provide her with what her husband intended to do—make her transition a little smoother, to make her life that little bit better, that little bit more comfortable. The fact that she got the check late was better late than never, but that's what insurance does: it protects your financial position. Without him, she couldn't afford cream in her retirement. With that little extra that he provided her, she could. You know, it's when you're in a car accident and it's the medical bills. In all the provinces, if you're in a car accident, your medical bills are not covered by your provincial plan, and in most states, they're not either. They're covered by the auto plans. Those auto plans then take over everything, and a lot of people don't understand that. They don't understand that there are actually income replacements if you're off work, that there's childcare coverage if you can't take care of your kids. It's covered under that auto plan that you resent paying.

Host:  

I get it. High premiums, I resent it some days too, you know, that money that's coming out of your bank account, and you don't see anything for it right away. But when that emergency happens, you'll know. I haven't been— I want to say a question about you. How long have you been in this industry? What made you get in?

Lisa Smith: 

So, we're gonna round down on that question to about 30 years. I'm not going to confess to anything over that. But I ended up in a very strange way. My mom was an insurance agent, but I didn't inherit her business or anything like that. What ended up happening was, it was a little local regional office just like I was describing. He wanted to do his auto and property sales in the daytime, but he did what was called a family insurance checkup with his clients. He'd invite them in to avoid those problems, like I saw before, where the clients weren't reached out to and never knew. So, he did these meetings every Tuesday and Thursday night, and I would go into his office every Tuesday and Thursday night. The office had a window into my reception area from where he was with the client. If they brought children with them, I became a nanny for a couple hours, and I had coloring books and games, and I entertained and babysat the kids where the parents could see through this window and keep an eye on me, but they weren't distracted and they could have that financial planning conversation with their agent. If they didn’t bring children, then I was a data entry clerk and I converted his office. He was one of the first paper-free agencies in Canada at the time, so, you know, I got to see the benefits. I got to see what that office was about. I got to see an agent who really cared about his people and why he was selling them certain coverages and protections and finding out why they needed it. I was sitting there with the kids, and he was talking about their family to them when all this was happening.

Lisa Smith: 

So, I was kind of— I was kind of done. That was it. I moved into insurance. I'm one of the few people who went to university saying, "I'm going to be an insurance person." But it's been an adventure. I started out as an agent, but it wasn't by then what I wanted. They were changing the contract terms. They wanted to pay fewer commissions. They wanted to structure it differently, so I moved on to underwriting. And, you know, I'm the one approving the applications and everything. I'm looking at all the data and seeing how the pricing is applied and learning how that works. Then I started to move into the technology side, and I did the agent technology side, and then I did the carrier technology side. I was somebody who could speak both sides of the equation. I understood both points of view.

Host: 

What does that mean, Carey? You're an agent technology center?

Lisa Smith: 

So, you're correct. The agent is the person who's selling you the insurance. They are the ones who have to capture all that data and create that request—digital paper or whatever they have to do. The carrier is the person or the entity that actually underwrites the product. They're the ones that agree to take your premiums and pay the claims, and they pay agent commissions or some kind of compensation for selling for them as a distribution model. But that's the disjoint that happens. That's what's causing all that friction we talked about earlier and where I need those APIs. It's how do I get the data from you through that sales process, supervised by an agent who can make sure you're buying the right products at the right time, and get that through to the underwriter, who can confirm the pricing, who can validate it hopefully, digitally, very quickly and return that back to you so that you know you're covered.

Host: 

It's so not easy, is it?

Lisa Smith: 

No, it's not. At some point, you decided to start InsureTech. So you've gone through your journey. I think you probably have done quite a few roles—maybe, in fact, all the roles possible within that industry. And then you said, "You know what? I want to just take over." Now, when did you make that decision? How and why did you take over? This is really hard to do.

Lisa Smith: 

So I started—no, it's a really cool question. It's a really cool question. I had a lot of mentors kind of in the industry and mentors should grow and change with you over the years because as your career changes, you're going to have different needs. And I had a couple that were kind of sitting back watching me and they're like, "Well, at least, you know, you've got all this information and you've experienced all these things, you've seen us all in action now with your Consulting career. You've been in there to so many agencies in so many different carriers. What are you going to do about it?" And it takes a lot of guts to start your own company like that. You have to have home support, you have to have business support, you have to have those mentors who are going to be there on the bad days, you have to have co-workers who believe in your vision and your plan, and you—because there is no roadmap. I can't hand you a job description, I'm still building that. We're building that, you know, it's a very odd world. So it took me a lot of time to kind of get my nerve up. You know, a female in technology in an industry that's moving at the speed of icebergs—how do you not only break the glass ceiling but how do you break that glass technology firewall? How do you start to get people to listen to you? And I usually joke that they weren't listening because I'm only five foot two. You know, how do you get your voice up there? How do you get your voice out there? And I've been really lucky and blessed, had these mentors. So, we started consulting as an independent probably about six years ago. We actually then really chose the piece of the market we wanted to disrupt.

Exactly a year ago. This is pretty much our anniversary month, coming into early February. We started building the plan the previous fall. We thought we had a vendor who was going to help us with the contracting on the FL3, but we couldn't agree on things. So how do you turn around and decide, "Well, we'll just build it ourselves"? And it was a very gutsy move, but it was a very exciting move. And we started about a year ago. We're going live now, just hooking up the production environments and pushing that technology out with our first client.

Host:
That's incredible. I know this has been quite the journey for you. What would you say has been the biggest challenge in all of this?

Lisa Smith:
The biggest challenge is understanding the shift in the market and where I wanted to disrupt. So, I chose the sales distribution. I really believe the products are good, you know, and they'll continue to evolve and they'll be better, and the carriers have a handle on how they get better at that. Yes, they need to share the data a little bit, probably, but we'll get there. The piece is that we have so many agents and sales brokers retiring, and nobody wants to grow up and be a sales agent still. You know, we haven't done better at making that career better. So we chose that digital disruption in the sales process. We're choosing to make that much more fluid, much more frictionless so that you can get through that process, and you can get the right products and coverage when you need them. Because the thing that freaks me out—there was another mass shooting in the U.S. today and last night, and here's a whole bunch of people now that are going to have medical claims and medical injuries. And honestly, in the U.S., they don't have the coverage. You know, here in Canada, our government provides a lot of our healthcare coverage, but it's—you know, we're still there with floods, we're still there with the fires, we're still there with all these other claims. You know, even if you just had damage inside your house and you're hit with a couple thousand dollars, some people don't have a couple thousand dollars spare right now because of the economy. So, how do I get that protection to you? It's been a challenge, as we discussed. There's been a lot of ups and downs. But it's the people cheering you on, and it's that 30-plus years of background to know that this is the area that I can make better. This is the area that I feel the most passion about. This is the area that my eyes light up and get excited talking about. So hopefully, hopefully, we make a go of it. And this is where insurtech innovation becomes crucial—finding new ways to distribute insurance products efficiently. With the integration of AI in insurance, we can personalize coverage options, making it more accessible to individuals when they need it most. Utilizing insurance data analytics also allows us to understand claims patterns and offer better predictive solutions. In turn, strong risk management in insurance strategies ensure that both providers and consumers are protected. Ultimately, implementing digital insurance solutions could streamline the entire process, from purchasing coverage to handling claims, making the system more seamless and responsive to societal challenges.

Host:
I think you’re already making a big impact. So, I want to talk a little bit more about the technology and how that actually integrates into these older systems. You've definitely given a good summary of sort of the idea behind it, which is you're taking customer information that they've already given and provided to, in public platforms, leveraging that to make a pseudo—even probably even more accurate—assessment of who they are. Because you're moving comparisons of different places, making an approximation, and really, you know, giving them some value based on that, even maybe seeing how the identity for themselves has changed. Right? You know, because if you're able to compare in different places, there's a lot of opportunity there. I mean, I think there's—we can go deep in terms of how you can really get to understand a person, but rather than maximum value, right, in terms of giving them exactly the kind of coverage they would—they even don’t know that they need. So, you've talked a lot about a little bit about that, but then there's this side of, you know, you have these salespeople who are taking that information and then helping people. Make decisions based on that, uh, and then you're also talking about the brokers and connecting, you know, some of their products through, right? So how does that, you know, so you have all these sorts of pieces and you're trying to fit this puzzle together. You go to a broker and you tell them, hey look, uh, we have these things and we want to work with you, so how do you, uh, what is the process behind that? You know, do you talk to the engineering, do you talk to the head, do you talk to, like, how do you actually, you know, make this possible? We can make this possible, who do we talk to to make this possible for you on the condition that you understand how valuable it is?

Lisa Smith:
Absolutely, and you're a little bit right and a little bit the way the technology works, it changes that conversation a little bit. So the part that you're right about is how do I go to those agents, those wholesalers, and say, hey you got a cool little product, let me help, you know? And that does become a bit of the conversation then with them, is can we help you grow and expand that product? And as soon as the answer is yes, then we move very quickly away from the conversation, it's no longer with them. You know, we want to know about their sales journey, we want to get their data and their experience, but that's the stuff that makes it nice and it's important to do, but I can't do those things if I don't move to the next piece, which is platform to platform. And a lot of that right now is, as I mentioned earlier, that trust conversation that they can't do at all. Why should they let me in? And it's understanding that the world has evolved to this platform to platform system. You're going to take your sales platform and put it on Salesforce, you're going to take your digital store platform and put it on Amazon, Amazon's platform, and create these connectivity pieces. That's the challenge I'm trying to solve for the insurance industry. They've got a system, how do I convince them that my system should be in front? So for your listeners who are really techy, the business architecture model is separating the user experience in the GUI from the back office processes. It's about letting their back office processes be back office processes and quit trying to be everything to everybody because that doesn't work.

Host:
So how do they keep their back office processes and make sure that their back office processes are running efficiently and that they're investing the time and the energy that they need? 

Lisa Smith:

And that's not the issuing of the policies, the paying of the claims, and those things that actually make the insurance industry go versus spending their time on the front-end data collection, spending their front-end time on data analysis. If you let me do that piece for you, then I can hand you back the data. You still own it, you know it's going to end up in your record because you have to track, you have to handle the premiums, and the audits, and the government controls on that money, the investment, and reporting, that's all on that money. So you do that stuff, but let me gather, let me analyze, let me synthesize it for you and then let me just pass it off to you as already done. So it becomes really a lot of the sales pitch very quickly moves into the platform to platform discussion and how do we connect and how do we do that, then it moves into the last part which is, okay, but now what are those other pieces of data that you need me to synthesize? What are the pieces that I already have and that I'm missing and how do we close those gaps? This is where insurtech innovation plays a crucial role in ensuring seamless connections and the flow of data between platforms. And that's, those are not easy conversations to have with people, especially when they're on systems that don't have APIs. But yeah, I know I'm very interested in, um, sort of first of all there's a lot, there's a lot of complexity there, right? Um, you know, there's a lot they don't have that you, a lot of people can sit on top of and feel comfortable about but you just don't have that luxury, right? AI in insurance is one of the solutions that can simplify this process, using automated systems to analyze data and close the gaps efficiently. There's actually step two questions first, is that reality and how to deal with that? And then how does that end up, uh, how are you able to, you know, because a lot of people, what they end up doing is they have all these systems that they're, they can sit on top of and then when they have a conversation with someone, they end up being able to say, look, we have this down pat in this way or we have several variations of this and you are one of them, so therefore it's worth it and we can do it in a certain time. But because of the complexity of the people you're working with, from the fact that they're a little bit older and in terms of their systems and things of that nature, you know, are you able to have that, like do you have that luxury where you can just say, okay, um, this is very much like this, or do you have to like, okay, this is, we have to figure out a new way for these guys because this is even separate from the fact that they might have said they have all this, they don't have it and then, or they said they have it, um, and it doesn't work well, right? So there's all these, all these problems that they are, they're bringing to you and you're expected to solve it in the exact same time frame. This is where insurance data analytics and risk management in insurance come into play, helping to identify and mitigate these challenges while improving overall process efficiency. Utilizing digital insurance solutions ensures that all these complexities can be managed and solved quickly.

Host:
This is such an amazing conversation, you're, you're somehow naturally we're getting from piece to piece, this is really exciting. Um, you're right and if they don't have those pieces and I don't do those APIs as a salesperson for myself, for selling my services in my industry, I did not want to lose product and journeys and clients for that reason.

Lisa Smith:

Um, so I talked to my team and we said, "Wow, we can build that." But like any project, you really got to manage scope. And when you're a startup and people are investing their time and their effort into you—and we're completely self-funded, we're just a group of people who really believe in my vision and me honestly, you know, these are people who believe in me. It's been so flattering to have them agree to help me, um, and build this and go with my vision.

Host: 

So to manage the scope, we said, "We can build this."

Lisa Smith: 

And this is a really cool piece of advice for any other startup in sure tech, fintech, or otherwise: you've really got to manage scope. We've all been in projects where it's blown up because of scope creep, you know? Uh, we've blown it up because of processes with change requests and things. Every time you try to manage it. We sat down with a business architect very early in our process. That was my background, business architecture. Um, how do we list all the components that we want, and then how do we pick the ones where we can get help?

Host: 

And we actually went out to a bunch of the MGA systems out there and said, "What happens if we buy some of your pieces and we build our technology on front of it?" A couple of them weren’t interested. A couple of them said, "Cool, but you can't get those APIs that you need, even from us, until 2024."

Lisa Smith: 

One of them even told me 2026. They said, "It's a minimum of three years before we can get to you."

Host: 

That's not the rate of speed of technology and change. That's policyholders like you who need the coverage, or me, who need that coverage now. Can't wait three years for an API.

Lisa Smith: 

You're working with your partners and you're talking about the APIs, and if they don't have APIs, or if they have APIs and they don't work, if they don't have APIs and it doesn't work. So, how do you deal with all these different levels and still provide value within a certain time frame? Do you have a system, and/or do you have such a good team that you're able to sort of break through all those bottlenecks and still provide value?

Host: 

There are all different ways of hitting it. None of those ways are easy, but they all have to happen. So, how do you meet all those challenges?

Lisa Smith: 

I try to do all of those things. Um, I'm really lucky. My partner in crime on the technology side is, as he put it, a "grumpy old backend developer," you know, because they're the ones who know how to work with those legacy interfaces. They're the ones who know how to do it, you know? And he's got a couple of compatriots that we contract out to when we need the help. They all jump in and are very eager. Those are resources that are really valuable to have. There's a shortage of them in the industry. So when I need to connect and that other partner doesn’t have the technology or doesn’t have the capability, we can jump in and help.

Host: 

You're right. What if they just don't have the technology? And we talk a lot about project scope and managing that. Our team did a great job in managing our business architecture. We listed out all the capabilities, we chose which ones we’re going to develop, and we outsourced all the ones that we didn't want to develop.

Lisa Smith: 

What I have is a partnership with a company that underlies and manages the back office, and they handle all my data capture for me and how I build the clients. But they have the extended capability of allowing us to, if you have one of those insurance products and you don't have it digitized, you know, it’s still in an Excel spreadsheet... and nobody laugh at that, that is very, very true right now. A lot of your insurance premiums are actually still calculated in Excel worksheets. We can—then we have a platform that we didn’t have to build—that has that capability. So we will not lose a client or a product because they don't have a digital product. We can help, and we don't have to build it, which was a really good use of our resources. And a better leverage of that partnership. This is where insurtech innovation really comes into play, enabling us to digitize and integrate traditional insurance products seamlessly. The efficiency gained through digital insurance solutions helps streamline processes that were once stuck in outdated systems.

And then those back office processes, if they can't issue that policy digitally, if they can't manage and track it because it's one of those breakaway wholesalers or something, we can jump in and help. You know, if it's a broker who has the idea, as long as he can get the underwriter to back him on paper and buy on paper the financial background, like, unlike Bitcoin and all the scandal with the NFTs and those crashes where there's nothing behind it, insurance data analytics always has something behind it. And it's a piece of paper, and it's an agreement to pay everywhere, so we can manage all the flow. As long as they can get that piece of paper... so is that piece of paper, that's when you say something behind me, that piece of paper, and then who's backing or what is the mechanism or the organization or the laws backing that piece of paper? Is that coming from the government? Is that coming from a large organization that's committed to sort of paying that out? This is where AI in insurance and risk management in insurance can provide solutions to ensure these back office processes are handled effectively and efficiently.

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Host: 

So how does that work?

Lisa Smith:
All of those things. So we have what we call domestic suppliers, and those are suppliers that are licensed regionally in your zone. So, in Canada, they have to license in each province; in the U.S., they have to license in each state to offer insurance. They have to guarantee your premiums that are refundable if they go bankrupt, so you at least get your money back and you're no worse off. They have to guarantee that they're liquid enough to make payments. You know, they want to reinvest the money and do things with it to help pay those claims while they've got your money, they invest it, and try to make more money to keep the premiums down. But they still have to meet that obligation. They have to meet that liability of paying the claims.

Host:
That's all regulated, right?

Lisa Smith:
Yeah, when they operate that way, you can also choose to go into the unregulated market. It's a little harder in Canada; there's a couple different ways of doing it in the U.S. and some of the other markets. But fundamentally, it's backed by a reinsurer or a syndicate or somebody who is a pool of money that agrees that they will guarantee those claims and guarantee those premium liabilities if somebody buys that product. For the premiums, then they get the money in the short term to invest it, to do other things, to grow their pool of money. But fundamentally, they're obligated to meet those liabilities, and this is really cool. This is when you buy that insurance policy to know that they have to meet them.

Host:
Yeah, that’s great.

Lisa Smith:
So when I'm an insuretech—if you don't mind, this is a really cool little bit—when I'm in insuretech, I can spend all my money and effort and blood, sweat, and tears reinvesting it back into my business. An insurance company cannot. They're regulated. That financial paper, some of that money is committed to paying claims, they're committed to paying certain bills. So they may only be able to invest 20 or 30 percent of every dollar that you pay them. Every dollar that you pay them in premiums, a certain amount of it has to be set aside, and they can only invest the difference. So when you're talking about fintechs and insuretechs, the insurance companies can't spend all their money on technology to upgrade and update and go crazy because they have those obligations. They're at a different ROI.

Host:
This is also a big challenge for us in the funding because historically what's happened with insuretechs is the insurance companies buy them. They say, “Wait, we've got a cool technology, we'll buy you, we'll integrate what you've done into our system.” And a lot of insuretechs thought that was an exciting way to go, and that's what they did, sold out to those companies. But honestly, with the way the investment structure is, that's not there.

Lisa Smith:
So then we went to VCs, the Venture Capital companies, and equity investors, and they say, “Invest in us, and we'll do this.” And they scaled up and they grew up, and there are some really great examples, but like Twitter, they're at a point where their clients can't afford to buy them anymore. They grew up too much. They're no longer like a startup, so how does anybody deal with them?

Host:
Right.

Lisa Smith:
But where else do they grow up? What else do they do? And the really cool answer that's coming out... it came out a couple of years ago when people started to see the trend, and it's the technology companies buying the insurance companies. So now, as a technology company, I can grow and visit, and I'm guaranteed a customer who I will sell my product to at cost, but they'll pilot it, they'll put it in production, they'll test it because I've been built from day one to keep my technology separate. I can now resell that technology to other carriers and invite them in our platform or invite them to integrate with us and invite them to take part in the solution that we found.

So, instead of the insurance company buying the technology and integrating it, or the insurance company trying to be the startup and the incubator, but then how do they separate it? And there's a lot of technology out there right now that fits in those categories, you know, there's carriers that have launched products that have done better in digital sales and digital solutions, like Sonnet Insurance is a breakaway of Economical Insurance. But how do you keep the technology separate from the underwriting when underwriting has these commitments and these promises that it's made to its policyholders? And it's really cool understanding where the money is going to come from and who, as my exit strategy for my insuretech business, who am I going to sell to? And in my case, the answer is probably not an insurance company, the answer is probably another insurance technology company because I built a piece that they need.

As long as we all stay separate from the insurance companies, then we can provide the value back. And, uh, the phrase that I've been picking up on lately, and it's not just for me, it's for everybody, is moving beyond software as a service—moving beyond SaaS to transactions as a service.

Let me do that sales transaction for you, and I'll hand you the data. You do what you do with it and we keep moving on it. You know, um, and that's the really cool thing I think I've solved, and hopefully, other insurtechs can follow and do the same thing. But I think I've solved the pricing model such that I don't need to talk enterprise sales anymore. Give me some microservices and I can do some things. Give me some more microservices and we can do more things and we'll build it gradually. We'll grow and offer more things. You'll start to get your ROI with us depending on the product. We're predicting seven months you can start to get an ROI on a journey in seven months.

Host: 

You know, they want payback, they want investment, and they want growth, and they need it now. It's a very different market that I'm coming into than if I was at insurtech 10 years ago.

Lisa Smith:

Yeah, the industry doesn't have the patience anymore because of the sort of economic environment. People are looking for a non-profit as quickly as possible. They were looking for unicorns. They were looking for unicorns, and that's the word. And then in there, they look for unicorns, they forgot what a unicorn is. You know, it's a very rare mythical beast. Is it really out there? You know, we better off calling it—are you looking for four-leaf clovers? Yes, they're out there, but look at all the work you have to go through to find one, right? And then, and this really isn't market share like that, like the market is getting smaller and smaller for that sort of behavior in general because the gap, you know, the gap that you would need to fill through your product or service is very—it’s getting smaller and smaller because people are eating up more and more of that pie. With the rise of insurance technology, many companies are now exploring more streamlined ways to manage risk, offering innovative solutions for the future. I really like this transactions as a service solution you're coming into, just sort of breaking it down a little bit more and then providing for those companies, you know, a different kind of opportunity where they can feel like they can invest. But our sort of—the measure of the way you're measuring it is such that it's not really a gas. It's just like you or I can already see how you just take that, you see, here's your little piece and over time this is what's gonna happen, and then you can measure quickly and plan it out, thanks in part to insurance technology that allows for easier tracking and planning.

You made a comment earlier that was bang on, and to expand it a bit, you were like, "I potentially even know more about people because I'm out of their data loop and I have access to different things."

Lisa Smith: 

We are partnering with a company and we're able to find out what your risk appetite is. What I mean by that is, let's say something happened to your house in a storm. A simple tree branch came down—not big damage, just a little bit. But define a little bit because to you or to me, it might be something different than to somebody else.

You know, when we were selling auto insurance, there's a really weird coverage that covers your replacement car. It's the one that puts you in a rental car or gives you money to take the bus or the transit if something happens to your car, and there's collision coverage. And I heard a sales rep once ask, "Well, do you need your car? You know, can you get to work tomorrow without it?" And if the answer was yes, then you didn't need that coverage. Your risk appetite was: "I don't need that protection because I can have another solution. I have something else I can do. You know, my spouse can drop me off, I can take my kid's car, I can take mom's car, you know, whatever." Your answer was, "No, I can go as far as $5,000 before I would put in a claim."

Great. And let me sell you a policy that doesn't kick into that. Let me give you the coverage that doesn't kick into that because then you save premium. You're not buying protection that you don't need, but I'm covering the part that you do need. When I hit that level for you, then I can protect it and I have access to...

This data from this risk management company that can survey and figure this out for you with some really cool solutions. I have access to now that, you know, you just started shopping for diapers or you just started shopping for a new sports car because your kid moved out. Like, there's things through open banking and these data sources now that we can use that the insurers aren't, because they only care about the risk. Once we get it to them, it's how do I know you're going to have that risk? How do I know you're going to have that exposure?

And that's where we start to weaken. By separating those journeys, I can do something different that they can. That's what makes my service hopefully valuable to them.

Yes, they could build their own journeys. Yes, they could do a lot of what I'm doing with the technology because if they have the APIs, it means that they have the data. But it's the fun that I could have along the way because I'm not hindered the same way as them.

And, uh, yeah, I know I need a new hobby if that's my definition of fun, but it is. You know, it's kind of helping people. I don't go out and play soccer, unfortunately, on Sundays or anything like that. I sit here and try and figure out this puzzle. I try to make this better. I try to make people understand that insurance is really what keeps our economy moving. You know, nobody would do anything if, in our litigious society, if we didn't have insurance. Nobody would be a dentist.

Because what happens if you spend seven years getting your medical dentist license and you spend, you know, a hundred thousand dollars setting up your office or your practice or joining a practice and you drill into that first patient and it doesn't go well and they sue you? You know, all of a sudden now everything you've invested in—your career, your life, your plans—is gone.

And insurance is what protects you. Insurance is what protects you as a patient to make sure that if they do injure you or they do make a mistake, that you're not financially hindered getting that repaired, getting that fixed, getting recovery to the best that we can. You know, Nike's not going to ship shoes across the ocean in these containers that all go in underwater if they don't have insurance. No company is going to put all your stock into a container that could end up at the bottom of the ocean and you never get the revenue and the sales from it. All of that is insurance. All of that is what protects businesses and lets businesses and people and professionals do their thing without fearing that if you make a mistake, that other person is going to suffer. With the rise of insurance technology, many industries have embraced digital solutions that offer enhanced protection and streamlined processes. As the landscape evolves, insurance technology continues to revolutionize the way businesses think about risk management and customer service.

And it's what lets you as a person buy those services and know that if you suffer because of it, you can recover. It's such an amazing thing and people don't think about it. They're still resentful of it and it's like, "Oh darn it, guys, you're missing the point. Sorry."

Host: 

Well, you know, with subscriptions of any kind, they make people a little bit wary if they're not getting it immediately. But, you know, that's sort of what it means to, you know, ensure against risk or make sure risks don't end up, you know, putting you in a tough position. And that's it. As much as people feel like they don't want to do it, they understand if they didn't have it, I think they would.

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