Electronic Chat with Michael DeGusta, CEO, ClarionDoor
Staff Writer | August 03, 2020
Michael DeGusta is CEO of ClarionDoor, a cloud digital distribution platform for insurance. A successful entrepreneur and consistent innovator in the insurance software industry, Michael co-founded web-based policy administration pioneer Steel Card (sold to Insurity in 2006). In 1999, Michael co-founded and was Chief Technology Officer of eCoverage, a SoftBank/RRE/E*TRADE-funded startup that was the nation’s first online auto insurance carrier. A Stanford alumnus, Michael began his career as web production lead at Apple from 1996 to 1998.
You started your career at Apple in the late 1990s. What led you to the insurance industry?
After my time at Apple, I co-founded and was CTO of eCoverage, the first true online insurer, backed by E-Trade, E-Loan, and SoftBank among others. Initially, we thought we’d just “web-enable” an existing insurance software package, but looking at the archaic offerings on the market, it was clear that wasn’t possible. So, we built everything from the ground up, and it turned out to be a far more interesting and challenging project than what most of web programming was about in those days: content sites and shopping sites. While eCoverage was a victim of the dot com bust, it was clear there was an immense need for and massive opportunity to provide great technology to this industry that technologists generally overlooked.
Part of your company’s focus is on managing general agencies (MGAs). What’s the importance of the role MGAs play in insurance, and how do your products help them deliver their services?
Recent trends in insurance distribution find many insurers expanding partner channels as a means of growth, if not straight-up survival. Managing general agents (MGAs) have emerged as a major part of that model by offering traditional insurers and other capital sources the ability to rapidly and expertly find markets for new products.
MGAs confront some highly technical challenges. They often handle complex, niche programs that many systems can’t handle without extensive, expensive customization. And, MGAs frequently have to rekey into, or integrate with, multiple carrier systems in order to determine appetite and pricing for a single risk.
ClarionDoor MGA Hub (CD MGA Hub) is a flexible platform that enables MGAs to automate the quoting of traditionally hard to automate programs, as well as do sophisticated exposure monitoring and aggregate tracking for contract compliance. CD MGA Hub simplifies and streamlines the entire quoting process, providing MGAs an instant market appetite just based on class code and without having to enter any submission data. It was important to me that we create a solution which enables MGAs to enter quotes once and get real-time indications from all of their carrier partners.
From your perspective, what is the biggest impact insurtech has had on traditional insurance?
Insurtechs are challenging the way traditional insurers think about and approach insurance as a whole, from product design to data utilization to customer engagement.
One area in particular focus is the insurance quoting process. We have already lived through the time-to-quote battles, epitomized by GEICO’s 15 minutes or less and Esurance’s 7 minutes or less campaigns. And now, insurtechs are taking things to a whole new level, leveraging technology and third-party data sources to minimize consumer inputs and fill in the gaps. Branch Insurance is a perfect example. Branch has created an experience where consumers get a full, bindable auto and homeowners’ quote in seconds just by entering their name and address.
How has the pandemic changed the insurance and insurtech markets, and how do you see it evolving through the end of this year?
From a coverage perspective, it seems certain we will see more pandemic-related options coming to the commercial lines market, though the inherent super-catastrophe nature of a pandemic will present some complicated challenges from a pricing and limits perspective.
On the personal lines side, while some companies gave a one-off rebate due to reduced driving, if usage-based insurance was more widely in place, insurers would have had a more automated and precise way to handle the situation.
Finally, I think the pandemic has demonstrated to everyone in the industry that “going digital” really is possible and fine. We’re now entering the 4th decade of discussing “digital transformation” and it is finally time for the industry to stop talking about it and take real action to address their technology deficiencies.
Technologies being used throughout the value chain are being tested and evaluated for their future preparedness. Can it be managed 100 percent remotely? Can it be accessed anywhere people happen to be stuck? These questions, combined with all our personal experiences during this time, really demonstrate that it’s time to get everything to true cloud-based solutions, like ClarionDoor. Anything less is a business risk.
What tech tools are on the horizon that you predict will play a pivotal role in insurance in the future?
This question gets asked quite a bit, and right or wrong, the answer is very often artificial intelligence (AI) and machine learning. I think it’s great that the industry is talking about these technologies, but the reality for most insurers today is that robotic process automation (RPA) is what is having a real impact, while other technologies, like blockchain, are still largely in the speculative stage.
We think the companies that are going to succeed aren’t the ones that adopt specific technology X or new dataset Y. The winners are going to be those who realize that technology is constantly evolving and that systems need to be selected and designed to maximize flexibility and minimize time to market for all the myriad of changes that are coming in the years ahead.
On the AI front, there are already dozens of new AI-driven data fields insurers could be using. But, if each one is a year-long process to evaluate, adopt, and integrate into your platforms, you’re going to lose. Instead you need a flexible, schema-less platform that allows you to test and learn.
RPA, on the other hand, is really all about automating old systems that lack modern APIs. So, you should be asking, “How do we never have to deal with this again?” The answer lies in making sure that your new systems are 100 percent API-first and always. And that doesn’t mean just transactional APIs, but every admin screen, every configuration option, and every part of the release and promotion process. Platforms like ours (ClarionDoor) work that way, and it means you can automate all sorts of product change and potential innovation going forward.
What are your plans for ClarionDoor over the next few years?
ClarionDoor has always been a groundbreaking insurance technology company. We introduced a cloud-native, API-first, rating engine at a time when most insurers still insisted solutions should be “on premise.” And, to this day, we continue to lead the industry with our proven technology. We’ve recently added highly-sophisticated, real-time exposure monitoring and aggregate tracking that’s only possible with the power of the cloud. We will continue to invest in making our omni-channel, digital distribution platform incredibly flexible, deeply intelligent, hyper-efficient, always API-first, and truly real-time.
Other companies are just trying to build newer versions of the same old, failed approaches to insurance platforms. We’re trying to fundamentally change the way insurance companies think about their technology.
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