A Conversation with Eugene Lee of Hearsay Systems

The new VP of Insurance Solutions talks about his focus on Agent Actions, digital transformation in insurance, and the future of the insurance agent.

(Eugene Lee, VP, Insurance Solutions, Hearsay Systems. Source: Hearsay.)

During a career of over 20 years, Eugene Lee has held consulting, managerial and other roles in a list of prominent companies including Accenture, IBM and Hitachi, but he is best known to the insurance technology community for his ten-year stint at Guidewire Software. Having valued Lee as a source, both on and off the record, over the years, Insurance Innovation Reporter took interest in his move to Hearsay Systems. Like Guidewire, Hearsay is a Silicon Valley company that took a fresh perspective on the insurance industry. A somewhat younger company, Hearsay is focused on supporting the critical relationship between agent/advisor and end customer. As Hearsay Systems’ new VP of Insurance Solutions, Lee will apply his knowledge and experience in enterprise workflows and analytics, starting with a focus on the vendor’s Agent Actions offering, which offers producers decision-making support in the field. Agent Actions falls within The Hearsay Advisor Cloud, which is used by over 150,000 agents and advisors in 22 countries, enabling them to publish content on social media, connect directly with clients via email, and use their mobile devices to text and talk while maintaining regulatory compliance.

Insurance Innovation Reporter: Tell us about your responsibilities in your new role at Hearsay.

Eugene Lee, Hearsay Systems: I will spearhead all solutions and offerings within the insurance business unit for Hearsay, beginning with our Agent Actions offering. Hearsay analyzed the data flowing through its platform and realized that agents and advisors use digital channels to deal with some common issues. For example, at one company over 10 percent of their text communications with clients was about billing issues. So we went to our customers with our findings and they told us that there were other needs as well. Things like tracking follow-up on corporate-generated sales leads or referring renewal premium changes to agents for up-sell and retention. Because the agents’ digital interactions are recorded in the Hearsay platform, we have a unique opportunity to automate and test-and-learn to understand what kinds of interactions flows lead to the best outcomes

IIR: Hearsay seems an interesting departure for a Guidewire guy. Is there a clear tie to the analytics work you were doing to Guidewire to what you’re now doing for Hearsay?

EL: Absolutely. For many of the Agent Actions we are building, the workflows actually start within a core system like Guidewire. The referral to the agent is just the “last mile.” For example a delinquency process starts in an insurer’s billing department before it gets escalated to the agent to try to recover a lapsed policy.

Our opportunity is benchmarking and optimizing these workflows in core systems to drive operational cost savings. At Hearsay, we enhance the conversation between the agent and the customer. By analyzing the data for our customers, we will enable them to identify best practices to improve client sales and service, drive deeper engagement between the agent and the customer, and ultimately lead to happier customers who are more loyal and profitable.

IIR: I think it’s fair to say that Hearsay is better known for its work in life/annuities and wealth management; could we also draw a connection between your experience in property/casualty and Hearsay’s increasing commitment to serving that side of the insurance industry?

EL: That’s a great question. Hearsay is very committed to the P&C industry. In fact, Hearsay’s customers are roughly evenly distributed across P&C, life, and wealth. In my experience, I have found that across those industries, the front office and the agent-client interactions have very similar challenges, including the conversational content being about wealth and protection, similar compliance issues, and similar distribution channels.

That said, there are differences.  From a product perspective, life and wealth are similar to personal lines P&C products.  However we recognize that half of total P&C premiums are in commercial lines. And from a distribution model perspective, most P&C insurers sell through independent agents.  Hearsay is working to address needs in both of these segments. Stay tuned.

IIR: What attracted you to Hearsay as a company you were interesting in joining?

EL: First, it was the opportunity to focus on a new challenge. Insurers have very few levers they can pull to drive growth. They can enter new markets or offer new products, but both create near-term risks to profitability. And while it’s possible to get an experiment off the ground, it’s hard to get a business to scale. There’s only so much premium you can get from various niches.

Incumbent insurers have a largely under-leveraged competitive advantage in their established distribution networks—that is, their agents. Too many of the agent interactions are offline, too much of agent work is not automated or optimized. This affects their sales effectiveness and the insurer’s ability to learn from what is working. That’s a very interesting problem, with huge potential benefits if we solve it.

The second reason I was attracted to Hearsay was the people and the leadership. They struck me as straightforward, sincere and laser focused on the opportunity in front of us. For the past 10 years, I’ve been blessed to work with wonderful colleagues solving hard problems in a critical industry. That’s what I was looking for and what I think I’ve found here.

IIR: Are you working on Agent Actions with any customers today?

EL: Yes, we have a number of early adopter customers who are working with Hearsay to automate key agent workflows like corporate lead follow-up, recovering delinquent accounts, and proactive outreach during policy renewals to optimize retention and cross-selling.  We are also announcing that American Family [Click here for related story] is leveraging Agent Actions to drive customer loyalty and improve billing response and follow-up processes for its property and casualty customers.

That reminds me of another reason I was attracted to Hearsay: the company’s deep and enduring partnerships with the world’s largest insurers and wealth managers.

IIR: Digital transformation is a top priority for insurers, and vendor are responding. What’s your view of the insurance industry’s progress in this respect, and how does Hearsay differentiate itself in this highly competitive marketplace?

EL: People are talking because digital transformation is top of mind for our industry. It’s also very early in our collective journey. Digital transformation means different things to different people, which creates a very confusing landscape to understand with lots of seemingly overlapping offerings.

The market will take time to sort out. In a world where a majority of interactions are digital, there won’t be a single panacea solution. Insurers will need to segment their needs and find the best solution for each need.

For example, Guidewire’s original digital value proposition is simple: if you’re going to build an externally facing portal, you should have a single source of truth for your business logic: your core system.

That works well for the digital self-service. But a majority of digital interactions are not self-service. Customers want a coherent conversation with their insurer, one that doesn’t require them to start over when they change their engagement channel.

Hearsay’s view is equally simple: the linchpin of the insurer-customer conversation is the agent and the key element of digital transformation is getting those interactions systematized and tracked, best practices and compliance enforced. Agents need to be provided a platform that supports every digital channel—for example, text, voice, social, messaging, email, web—and then smart automation based on the way they work.

IIR: Since the emergence of e-commerce, the disintermediation of agents has been a topic of conversation. The Internet has turned out to be a great tool for carrier/agent/policyholder relationships, but we’ve also seen the advance of direct sales. What’s your view of the future of the insurance agent?

EL: It’s true that a some years ago it was en vogue to predict the demise of the agent. But the agency model in insurance and wealth management has proven to be highly resilient. And I think the insurance agent will continue to succeed and thrive for two simple reasons:

Insurance is a complex product, especially in lines of business like commercial, P&C and Life.  It’s only logical to conclude that buyers will always need an expert to help them navigate and assess their needs–from potential gaps in their coverage to a major life change—educate them on the available offerings and act on their behalf.

Perhaps equally as important, insurance agents—and  financial advisors—are, in my view, the ultimate entrepreneurs: building a business through hard work, relationships and trust. I strongly believe that people who are incentivized as entrepreneurs do better than those who aren’t.

American Family Insurance Pilots Hearsay Systems’ New Agent Actions for P&C

Anthony R. O’Donnell // Anthony O'Donnell is Executive Editor of Insurance Innovation Reporter. For nearly two decades, he has been an observer and commentator on the use of information technology in the insurance industry, following industry trends and writing about the use of IT across all sectors of the insurance industry. He can be reached at AnthODonnell@IIReporter.com or (503) 936-2803.

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