💡 The Future of Insurance with Lisa Smith, CEO at TechInsure Consulting

We are live with Lisa Smith. She is CEO at TechInsure Consulting. So this is a CEO wisdom podcast insurance edition. I've been curious about the insurance and precisely the intra tech industry for quite a while. Lisa's right in it since pretty much all of her career tech insurance started seven years ago. There's intercourt also that she's been leading since the last two years. Going to talk about the consulting model, we're going to talk about the SaaS model and the intra tech industry. Lisa, can you say quickly hello, tell us a bit more about yourself and your businesses.

Thank you so much for having me. Hi everyone and absolutely I have been in insurance for over 30 years. I grew up in IT and I believe that it can do so much to help people with their financial protection. But what I didn't like is how we service it, how the interconnections of all the data and all the pieces fit together. So I built my own consulting company and my own insure tech company to help make that better. I want to lead my industry a little better off than what it was when I started it.

So you and I, last time we discussed about the actuarial model behind the insurance industry and that's been the success. It's kind of betting against the casino. Well, the casino, they do their calculus, they do the math so that you don't have to and you get the mental safety. That's what you get as a consumer when you buy insurance. We also said that the insurance industry wasn't fully taking care or fully taking advantage of data making sense out of that data, feeding it to GPT to get recommendations. On the other side we also talk about potential products partnering up with the insurance companies. For example, okay, you can pay a bit more per month. We will give you an order ring to track your health. This will help your health so that because you know the payout, if I mess up my health and I get paid to go to the hospital, that's pretty much the last scenario that we want to happen. Before that it would better to prevent it and insurance companies can still get money with that peace of mind that they provide. So do you agree that the next frontier in the insurance world and in the intra tech world is actually taking that data making sense out of it and modifying the product to not only be a payout based product but also partnering up with other companies so that we can provide more peace of mind? That's a very long question.

It is, but you're right. The first part that listeners might be concerned about is when we say we don't have the data, the answer is we largely do have data. But there's new data. There's new things like the rings that you're talking about, your smartwatch, a Fitbit device. In the property and casualty, they'll hand you an app to put on your phone to measure your driving in telematics devices or use based insurance devices. I only want insurance while I'm using something. How do we, and you're, I, I think you hit it bang on. It's how do we change the products to work while we have the exposures versus that random concept. Everybody knows that, you know, in the, in the pioneer days, a certain number of barns were going to get hit by lightning. It was just a case of which barn. And so everybody threw in a pool. And there's your insurance. Now whoever is the one that gets the lightning, everybody has chipped in and helped cover it. Now we need to switch our mindsets. It's about and here's the word you're looking for a phrase you're looking for. It's risk management. It's how do we manage the risks and then just ensure the gaps. How do I get rid of some of the health bricks? By making you healthier, by making you exercise more, by making sure you drink water while you're at work. Those things that make you healthier but still understand that you could unfortunately get hit by a car or something else could happen. So there's still a need for insurance. But we have the data. But the way we use the data needs to change and the way we build product needs to change. So there you go, your long question. My long answer, yeah.

Your answer was shorter and better than my question. So are we seeing the future? Like okay, so this ring right there, it gives me data about my body, my heart rate. That data is fed to the insurance company to know that even if my heart rate is good, I still have a 5% chance of a heart attack. Then it also gives me recommendation, you should go for a walk. You should do that. And that the cash payout of the, the insurance company, it covers the potential risk. Now what would be a potential partnership with let's say Oura Ring or the Apple Watch. What could they do with that insurance company? The insurance company is like, okay, I'm going to refer you clients, the hardware cost something also the software back end, we will take a percentage of that. Would that be like the nature of the deal between the two companies?

Very likely. You think you're going to the best base for that kind of insurance and that kind of data is in the employee benefits program. So if we have a company with a thousand employees, could we get them all the way ranks? Now there's a certain number who won't, there's a certain number who will, but you offer it to them now we can collect that data. Then the better premiums because everybody's hopefully being healthier and taking the advice that's coming back in the interaction comes back to both the company and the employees in cheaper benefits. So yes, it's worth the employee benefits company buying those rings and those products and giving them to the employees versus trying to make the employees buy them, having them enroll in the program and then the insurance company gets the data and the ring companies or the manufacturers, whether it's the ring, the watch, whatever, is also getting data. And every time we do this, the connections get better. John Hancock in the US has been running similar types of programs and trying it.

Do you see these companies as coming up with their own insurance plans? Would you be surprised to see that Apple would start offering insurance insurances pretty soon? Because there was Apple pay. They're developing the financial side of things because offering insurance all about calculating risk. It's having the cash in the bank, which Apple has has trillions in the case of an intra a payout case in which I mess up and the casino loses. So do you see these companies start these programs from scratch or would they, would it be like on the insurance side which is like a large bank, they would acquire oura ring to have them under their own companies.

They might try the acquisition route just to control the data. That's where this comes in is who has the data. And if it's in your Apple cloud or your Google cloud, then they have the data. And both of those companies do have a history of wanting to get into insurance. What they don't know yet because it's an experience learning things is what are those payouts? What are those probabilities of this? I have the data, but they don't understand the probability yet. As they can use their data to become more predictive, could they actually replace underwriters? Absolutely. That predictive factor then becomes the knowledge of not just the insurance company, but the knowledge of those other tech companies as well. Now one thing to remember is insurance, like a lot of banks, is financially regulated. When they do that, they have to tie up a big chunk of their money. And this has actually been a problem with InsurTech. With what part of our technology development and why insurers are so far behind when you pay premiums, they have to guarantee those premiums. If they go bankrupt, your personal money is refunded back and then you can go get a premium or policy somewhere else. If a claim is lodged or the statistics say a claim happened, even if they don't know about it, they have to create loss reserves and set that up and start to create that liability on their balance sheets. And the regulators help them manage that. Therefore, all their cash isn't really available to reinvest. So this is why I think so far, many of the insurers don't, many of the tech companies don't. This is why they're going to. As the data gets better, but they're not quite ready. But this is also why the insurers don't have the extra cash to invest in tech. They try to buy the technology, they try to buy it because they want to control the data, but if they do, it's dipping into their cash fund and then they can't sell as many policies. So there's a real catch 22 here. There's a real chicken and egg problem of how does this work? And yeah, it's a lot of fun to try to solve that puzzle, but it's, it's a little tricky.

And how does tech insured consulting comes into play? It's like a boutique firm. You offer your advice to some of these companies what to do with data and so forth. Tell us about that one first and then we'll, we'll get into Intracore.

We at Tech Insure, what we do is we work with exactly as you say, the insurers, the brokers, the wholesalers, everybody. We look at their back office. Can office systems support digital growth? Can they do the things that they need to do? Can they actually scale? And most of our solutions in the industry can't. So we work with them on processes or we work with them on upgrading their solutions. The other side, Tech Insure Solutions is that is the front end solution. Now we're actually helping them by building this front end to say now we can sell policies, we can embed those policies into different workflows, different processes. We can hide them out on the Internet. And then because you find them, it invites you in on an insurance journey to say you meet certain requirements, there's protection that's available that might help you. Here you go. So tech insurer consulting is about getting you ready. Tech Insure Solutions is about actually helping you sell policies. It's about helping you, helping people.

Right? And Intracourt, so My understanding you went for the consulting model for seven years and now you're trying the SaaS model. Tell us a bit more about the what here. Who do you target your go to market strategy to that one and about consulting kind of helping the SaaS and SaaS helping consulting, absolutely.

We designed it all to hopefully work together so that we're an all in one boutique consulting. But we have the solutions. So Insure Corp, because of that conundrum we were talking about with can the brokers and the carriers, when they have these premium constraints, how do they invest in insurtechs? And the answer is right now in this market, funding's down, they don't want to, the risks are bad. The smoke damage, the fires, the payouts this year are really bad. So they're not investing in those things. So what I did is my tech solutions, Tech Insure Solutions actually partnered with a brokerage that we own, Insure Corps. And that's how we pilot, that's how we model, that's how we get it out there. So if you have a product in insurance that you want to get out to the market, we do that consulting, back office prep you are you ready? If I flood an extra thousand policies a month through your system, are you ready? If digital is more than just a storefront, Right. Digital should be an experience. There's a lot of chatter about, especially in more traditional consulting rules about cx, the customer experience, how do we deliver that, how do we do that? So our team separates, that puts it through, but your back office has to be ready. Then what we do is we pilot it with the InsureCore product to make sure everything's working, it's seamless, it shows. And yeah, it's kind of a SaaS model. We don't want them to do have to buy the systems, we don't want them to have to take a risk, an enterprise risk right now because the market won't absorb that. As a, as a CEO, that's been one of the interesting challenges. I know I'm launching my company at the wrong time. I know that there's no funding unicorn money out there right now. I kind of missed that window. But I believe so much in what we're doing. Trying to help the brokers, trying to help the MGA wholesalers, trying to help the companies get product out, that we're doing it anyways. And what we're trying to do is actually even go beyond SaaS to go to transaction as a service. How can I just help you process the sale? But then I have to solve that data problem now. I have the sales data. How do I hand that back to you as that mga, as that wholesaler, as that insurer? And that's what we do, though, is we take that transaction, we process it, and then we hand it back to you with all the data. And that's the part I'm. I'm really excited about. But I will also say that's the challenge. How do I explain to people that they're not actually giving something up by letting me do this for them? It's like when you get house cleaners for the first time, right? You don't want. You clean up before the housekeeper comes for the first time. You don't know what to expect after a while. You understand the service that's being offered and you know how to turn things over and let them do it. And that's the. That's where we're at. That's how we're trying to solve the puzzle. But we have to convince everybody that we actually have a solution, right?

So with what funds do you bootstrap that business? So you feed the consulting cash to that business, and then who is in charge of the backend and coding and all of that?

So I've been really, really lucky over my career that I've worked with some really great people, and I've been lucky. I've got a chief architect who noodled out this idea, brainstormed out this idea with me when we worked at a different consulting house at a different project. And we said, well, there's got to be a better way to solve this problem for them. And nobody took us up on the idea at the time, but we said, we think we're still right. So we built this piece together, and we found another friend who'd worked in insurance with us, and she does a lot of our BA PM work for us while I'm doing. It's funny, as a CEO, you think, oh, you get to delegate everything, but when you're a startup, there's nobody to delegate to. So I have to do the bookkeeping. I have to finally find somebody who can help me with the bookkeeping. And I have to read the report. So I have to, you know, do the advertising, do the sales. I'm everything until we're big enough to replace those roles. So having my friends that are so believing in what we're doing has been a huge amount of help. We've been blessed that all of us are able to put the time and sweat equity into something we believe in and hopefully it pays back for us.

And what would be the pricing model there? Would it be like a referral fee per transaction? And then the transaction, you would actually take the payment and be the middle person in there, take the data as well and resell that data. So not only take a fee per transaction, but a fee per data. Would that be the goal here? And what would be those fees on average? Are we talking about $5? Are we talking about 5%? What would that fee be?

We're working on that still. For the most part, we think we can get the transaction costs pretty low. The commission margin on insurance products is decent. There's room there because they're paying for a certain amount of tech. Now we just want to migrate that operation expense that they're paying now over to us. So, yeah, we're looking at, you know, probably 15, 20 bucks per transaction for standard larger policies per transaction. So if we could sell multiple policies, multiple coverages, it does really well for the, for the agents and the, and the insurers. That model falls apart on certain types of insurance, like travel insurance, because the margin is way lower. So what we're looking at is a volume game and just charging them for X number of transactions. You know, here, if you process a hundred thousand transactions, here's the fee. If you process 500,000 transactions, here's the fee. Because otherwise the model, it breaks down pretty fast.

Right. And what are your goals for this year? There's four, five months left to this year. What do you want to focus your time on?

I'm really excited about this time of year right now. It's an awkward time as a CEO to get excited about something at the end. Coming into the end of summer, the back to school sales are just starting, but this is when insurers are sitting there with a little bit of budget left over for this year. And because we're transaction as a service, it's not a lot of risk for them to take some of that leftover budget and do a pilot project with us, get a policy live, get a particular transaction live, and start to see, see an ROI on your investment. I really want to do a bunch of these between September and early December. That means then too, the rest of their budgeting season is going on, and then we become part of that budget for 2024. So that's my plan to kind of get this out there, get the first few transactions smooth, get the process smoothed out. We think we've got a good onboarding process, but we're smart enough to know that when you think you've got a good onboarding process, you're going to find a few bumps and bruises. It happens. But how do do we do that? How do we get the kinks and the shakeouts of the system? We are live and in production now, but obviously with different products, we're going to have different challenges. So I think that's our aim is can we get a couple of proof of concepts, can we get a couple of extra things flowing through, get it shook and out, get it stable and really look to 2024 as a growth boom.

What's your go to market strategy? How do you get in touch with these companies? Because you've got lots of contacts, but you also do cold outreach, for example.

I haven't yet because of my years of consulting and training. My network is pretty deep. So at this point in time, I'm still working my contacts and kind of offering it to them first. Because it's a known entity. I'm a known entity. That helps. I'm hoping. Then what I want to do is we're doing a big marketing campaign of which you are part of it, and we're excited. How do we get the word out there? The insurtech world has a lot of conferences, it has a lot of markets and articles that particularly cater to this side of the industry. So when you're in the insurtech space right now, it's about building our brand, building our visibility, so that when people look up at InsurTechs, we're there right now. We're. We're not a blip on the radar, but we really, really want to be.

Love it. Lisa, where can people find out more about you?

Oh, that LinkedIn is by far the best for us. We've got all our products out there. You've got me out there. I'm happy to reach out to anybody who wants to network and, and socialize. We are also on Instagram and X. I think it's still going to be X. Might go back to Twitter, I'm not sure. But we're out there on all the social media sites, both. But.