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Some innovations are made by taking a given concept and advancing it to new heights. Others are made by abandoning the concept all together. ClarionDoor (Santa Barbara, Calif.) falls into the latter category. CEO Michael DeGusta’s technology career experience led him to question how insurers and their suppliers thought about technology. In an industry predominantly focused on ‘do-it-all’ systems, DeGusta realized that there needed to be a paradigm shift in how insurance technology was designed, developed, and distributed. Having begun his career at Apple.com, DeGusta became an insurance technology entrepreneur. In 1998 he co-founded and served as Chief Technology Officer of eCoverage, the nation’s first online auto insurance company. DeGusta then co-founded Steel Card, which was acquired by Insurity (Hartford) in 2006. ClarionDoor, founded in 2010, introduced a new perspective on insurance technology by providing a 100 percent cloud-native, API-first, intelligent product distribution platform while offering a great technology experience and an “easy-to-work-with” business model.
Insurance Innovation Reporter: What is the problem that ClarionDoor is dedicated to helping insurance carriers solve?
Michael DeGusta, CEO, ClarionDoor: Unlike other insurance solution vendors, ClarionDoor is focused and dedicated in solving one major problem facing insurance carriers today—product distribution. We believe that the main challenges for insurance companies are not with core systems—policy administration, billing, etc.—but with trying to get their products to market fast, distribute products to their partner channels, and selling their products. ClarionDoor’s products solve those challenges.
IIR: When it comes to insurance technology entrepreneurship, this isn’t your first rodeo. Tell us a little about your work at Steel Card. What were some of the most important lessons you learned about how to provide solutions for insurers?
MDG: At Steel Card we built an end-to-end policy administration system, as that’s what we knew, and that was the market demand. And that’s still the market’s habit! But it’s a bad habit: it’s impossible for one system to be the best at everything.
IIR: How did you incorporate some of the learnings from the SteelCard experience into the ClarionDoor?
MDG: At Steel Card, we learned that what’s holding back insurers isn’t their billing or other backoffice systems, it’s their inability to quickly and effortlessly do what they want with their insurance products, and the challenges they face getting those products out to all the channels and systems they want to consume them. So, at ClarionDoor, we set out to solve just that problem.
Other systems also maximize functionality—to win old school RFPs and the like. At ClarionDoor, we maximize flexibility. We believe technology should be liberating, not constraining.
IIR: There are quite a few hot trends in insurance technology at the moment, but you seem to have baked two of hottest into ClarionDoor’s value proposition: product centricity and cloud-native technology. Do insurers need to be talked into some of these approaches?
MDG: If you had asked me this ten or fifteen years ago, I would definitely said yes. However, we have seen a shift in the acceptance and demand for product-centric, cloud-native technology. More insurers are realizing the benefits that cloud-solutions provide and are beginning to understand how technologies like API-first are critical to being futureproof.
Part of the problem, though, is that there is still quite a bit of white noise from the vendor side of the industry. Many vendors throw around terms like “cloud-enabled” which confuses many insurers. It might sound like you are getting a cloud solution, but unfortunately it is not the same as cloud-native. So, there is still some education to be done throughout the industry.
IIR: With ClarionDoor, and other vendors with a similar approach, is the insurance industry moving toward the fulfillment of the promise of “IT doesn’t matter,” as Nicholas Carr famously put it?
MDG: It definitely seems to be trending that way, which ultimately is a good thing for the industry. I think it is important to recognize though that the demand and need for large scale IT divisions at insurance companies has drastically changed.
Over a decade ago, there really were no reliable options other than having everything—infrastructure, software, etc.—on-premise. Today with how cloud technology has advanced, there really is no need to be on premise anymore.
Despite that, there are still “problem areas” where insurance companies depend on internal IT, but it is more for maintaining the legacy systems that they already have, or trying to innovate in a system that, frankly, is not innovatable. Many of the legacy applications still being used by insurance companies today are so customized that they really have no other options other than to continue applying Band-Aids on the system, or invest in replacing what they have.
We understood this problem and recognized the shift in demand which is why we ventured down the path of cloud-only with nothing to install or manage.
The reality is that insurance companies were never structured to be IT shops in the first place, and the dated technology still in use is really distracting and preventing them from innovating their products, when it should be enabling them.