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Success in personal lines property/casualty insurance means having the right products and the right price, and creating a compelling and convenient experience for both agents and consumers, according to Ryan Vigus, Executive Vice President, Personal Lines Product at CSAA Insurance Group (Walnut Creek, Calif.). In IIR’s recent conversation with Vigus, he stressed the importance of modernizing core technology to provide a simplified foundation for easy integration of new capabilities. CSAA also completely redesigned how the business and technology teams work together, resulting in much faster and successful project outcomes. The insurer now provides accurate, bindable quote using 10 questions or fewer for both auto and home policies. It is also able to react on a daily basis to significant changes in the marketplace.
Insurance Innovation Reporter: Your job as EVP of Personal Lines Product seems to be broader than such a title might have suggested in the past. What are you expected to get done?
Ryan Vigus, EVP, Personal Lines Product, CSAA: Our team is here to do essentially three things from which all other initiatives flow. One is to create modern product breadth—meaning the products and options customers want in this day and age. Number two is what we most often refer to as “competitive prices,” which is essentially price accuracy: matching price and risk. The third is creating top-tier experiences for our agents and customers.
IIR: Could you elaborate on top-tier experiences and its relevance to you as a product executive?
RV: The best-case scenario for the insured and us is that the insured doesn’t use our product. If they do, it means they’ve suffered some trauma, or their life is being displaced in some way. We have an expression that “the experience is the product.” In some ways, the product isn’t the product language, it’s how someone feels and interacts with the product when they buy it.
Typically, people making purchase decisions make them on price and ease and the way they feel. They’re not doing it on the 40-page product language. I think we’ve historically underinvested in that. Almost exactly two years ago, we set out to completely modernize the experience for both agents and consumers, starting with the front end, meaning the quote and bind experience. We’ve seen really dramatic changes in outcomes, given our investment in that space.
IIR: How would you quantify “dramatic”?
RV: We’ve seen a much higher throughput rate. For example, we set out to basically get you an accurate, bindable quote in 10 questions or less for both auto and home—at this point it’s two different ten-question sets. It’s probably not a surprise, but if you can get someone a quote in under a minute, relative to what many people’s legacy experiences are, you’ll get a very different quote completion rate, and therefore a chance at sale.
IIR: What has that achieved in concrete terms?
RV: In auto, our quote completion rate went from sub-50s a nearly 80 percent quote completion rate. Basically, we make it so easy, you have to complete the quote.
IIR: That’s a great example of how technology supports your business objectives. How important is technology to CSAA’s strategy generally?
RV: The way we think about it is technology is that it’s a necessary but not sufficient condition to be a successful insurance company. Another way of putting it is that excellent technology is table stakes. But you also have to master every other dimension of our business. Our business is low-margin, highly competitive, highly price sensitive. So, you have to master the pricing, underwriting, claims, regulatory compliance, etc. We aspire to be a technology company and an insurance company. That’s how we think about it now. I wouldn’t say we’re there yet—and no true high-tech company would say we’re there, but that’s our mindset.
IIR: And how does that view affect the way you operate in terms of the alignment of or cooperation between business and technology?
RV: We have completely redesigned how the business and technology teams work together. Many readers will be familiar with Scaled Agile Framework—or SAFE. We have adopted SAFE and we have seen tremendous changes in throughput and quality and efficiency of throughput. We’re getting a lot more done today than we would have gotten done even two years ago.
We’ve also changed the way we do projects to have what we call a “two-in-the-box” leadership framework. That means that for every major technology project there is a business person and a technology person that are “Two in a Box.” And I say, “technology project,” but really it’s business project because they are one in the same. We don’t do any projects that are just technology projects.
IIR: How has that framework played out in practice?
RV: It has paid great dividends in terms of people’s mindset, because there can be no finger-pointing. From ideation, you have to find the business and tech leader. Product or business folks will come at an idea from a business perspective, but if you have a tech person next to you, you can design an elegant technology solution—something that’s easy to roll out and maintain. If you don’t have both people in from the beginning, then you end up with something suboptimal, inelegant.
IIR: Would you say this is an approach of “industrialization”? Many insurers have made significant progress in speed and quality in recent years. How has methodology been improving your results at CSAA?
RV: When you’re using scaled agile frameworks, you have to make sure that you have the right people in the room—including the users. And that you’re on a rapid iteration scale and a rapid check-in with project leaders so that you’re always building to the right thing.
One of our first products was building the new quoting experience for our agents. Up front, we set that clear guideline I mentioned earlier: 10 questions or fewer in under a minute. Initially, the pushback was, “We think we can get it down to 30 questions,” but I insisted that the guideline had to be met.
We also knew it was indispensable to include agent input. What we do with scaled agile is to constantly run iterations past our agent stakeholder group. That way, they’re in there designing with us—it’s not principally designed by underwriters or product people but by those who know how to build to the end user. In the past, projects in traditional waterfall took so long and were very risky. You didn’t get a working product until a year into the project. It’s completely different today—you’ll know within two weeks if you’re off pace.
IIR: What would you identify as some of the most important areas of technology investment and development at CSAA across the enterprise?
RV: The most important thing is already done: modernizing our core admin stack. We started that project and about 2010 and then we were on both product lines—auto and home—in about 2014-2015. And then it took a few years to get off the legacy systems. Today, we have a modern [EIS] policy administration system and a modern claims administration system and we have no legacy systems. It was a huge project but now everything we’re building on top of that foundation only has one integration. We’re not trying to jerry-rig our MyPolicy experience or quoting experience across a lot of different platforms. It has really simplified our infrastructure and that’s enabled us to build things like very modern data systems.
IIR: What are examples of what you’re building on top of your new core stack?
RV: Our experience systems—I talk about that agent experience and the customer experience—it’s all built on top of a single platform, not multiple platforms. Same with our marketing, our ability to ingest data and send it in different directions. We are nearing the final stages of our modern tech stack, our modern experience stack, our modern marketing stack and all those things are trying to come together to really create a ton of efficiency where we can move quickly, or more quickly than we had in the past.
IIR: What does that look like? How much more quickly, in what way?
RV: Today we can make an experience change or product change and we can know tomorrow what the impact was. In the press there’s been a lot of publicity about State Farm pulling out of California commerce market in terms of new business. We looked the next day, and we could ask how did new business and our quotes change? And we were looking at it every day. That wasn’t possible in the past.
IIR: Since customer experience is an important part of your remit, maybe you could speak more about your vision of customer engagement.
RV: For me, the platinum rule is to treat customers how they want to be treated. Using modern predictive models, APIs and external datasets—and also feedback from how the customer interacts with us—we can start to customize the experience based on what they want. And you have to remember that preferences differ. Personally, as a consumer, I would hate a high-touch engagement model. I want you to be there right when I need you and solve my problem right the first time—that’s what I want. Other people like the updates along the way—
Tell me I’m making the right decision; give me an update, check in with me.”
So, we’re trying to really segment. Marketing has built customer segments, and we’re able to use technology and data to deliver customized communications engagement models, and experiences.
IIR: Does your customer engagement vision extend to prevention? It could be something as simple as providing useful tips and alerts on weather, for example in wildfire-prone areas.
RV: It’s actually something we’re passionate about. In fact, our mission statement—we call it “Our enduring purpose,” includes a phrase which is “To help members prevent prepare for and recover from life uncertainties.” I put it into a couple of different categories. One is helping customers know what to do and, two, driving the change. I’ve found that it’s not enough to help the customer understand what they need to do; have to make it easy for them to do it. We found this true for wildfire, which as you know, is a crisis here in California and in other Western states like Oregon, Washington Colorado.
It’s not always straightforward. For example, our customers said, “I’ll do whatever I can do to keep my insurance!” As it turned out, the discount program itself hasn’t driven as much behavioral change as we had hoped. So, we had to approach it differently. If the customer can just click a button say, “Yes, I want someone to come mitigate my house,” that’s a very different response rate than expecting them to go out and find a contractor.
So, we think about it a couple of different ways. One, we’re trying to do just-in-time mitigation. We have a third-party service that gets to homes right before the fire gets there and does some last minute preparation. We’re experimenting with some companies that do seasonal mitigation, meaning we can put certain treatments on your house, or preseason preventative care, whether it be a product they apply or preparing a property. And the next thing that I think we need to experiment with is helping people change the characteristics of their properties.
We’re also doing some work related to treating the macro environment. There’s been great work by a number of different organizations about what can be done to treat the forest to prevent these out-of-control conflagrations that have become more common—or at least to prevent fires from actually reaching the suburban environments.
In fact, earlier this year we announced a $25 million commitment to the California Wildfire Innovation Fund, which supports forest restoration-related economic development. Along with our investments in the Forest Resilience Bond and support of the Wildfire Interdisciplinary Research Center, we are committed to decreasing the severity and frequency of catastrophic wildfire to help safeguard people and property.