Gregory Blanchard began his career in the insurance business as a claims zone manager and in product management for Progressive in 1978. Since then, he’s been in varying product management roles for American Financial Group, and the Allied Group, creating innovative nonstandard auto products such as the AutoMax agent network for 26 states. Today he is Associate Vice President for Nationwide Insurance in Des Moines, Iowa, where he established the company’s Powersports Products office. He works on providing new watercraft, motorcycle, and RV insurance programs for independent and exclusive agents and direct distribution channels. We asked Greg what gets his motor running when it comes to innovation.
“Innovations in Insurance” is a Q&A Enservio blog that interviews thought leaders working to improve the quality of work while managing change within their organizations.
1. Can you cite a good example of innovation in our industry with respect to property?
The innovation that is being seen in property today has been in the application of new pricing segmentation, largely based on types of past losses. For example, pricing segmentation is sometimes referred to as “merit rating.” It simply means that past losses are predictive of having more losses in the future. Insurers will typically apply a surcharge on those that have had prior losses that were not weather related.
Innovation is also coming in the form of predictive modeling and Big Data-based algorithms that seek to make pricing segmentation ever more granular and disciplined. Intuitive underwriting decisions are rapidly being replaced by data science, as we have already seen in auto.
2. What does “to innovate” mean to you? What jumps out?
“Innovation” is a disruptive finding, whether that be a product, or an approach. I use the term “disruptive” in the sense of disrupting the marketplace by enabling the innovator to seize new market share and at the same time providing a benefit to customers that they likely didn’t know they needed. It is also helpful if the innovation is difficult to immediately replicate.
Historically, such changes occurred fifteen years ago when credit report information was manipulated to develop a credit score. The first competitor(s) to do this significantly out price-segmented (based on loss potential) other competitors. Currently something similar happening now is the use of telematics, where the driving habits are being captured and loss potential determined based on those behaviors. Telematics has been much more quickly accepted by the market, so in a way, less likely to offer a disruptive advantage.
3. Where do you see the future of innovation going?
Innovation in insurance will likely be a combination of advancing technology and big data, but can also result from a competitor either producing a product outside the box of traditional offerings or one that gains regulatory approval not provided before.
4. What should companies do to cultivate a culture of innovation?
Many of the strategies stated at the Enservio conference can probably cultivate a culture of innovation, including celebrating failure and not discriminating against the likelihood of failure: allowing people the courage to try something new. Also, there must be the willingness to invest in disruptive change, and plain good old fashion chutzpah. However I do think developing a “culture of innovation” is often not the real driver. In my personal view, what is often the case is that one person takes a leadership role. That person may or may not be armed with executive power. This individual alone often drives innovation, and then the supporting culture falls in line to support it and to further develop it. Such leaders make things happen.