Can You Innovate Like a Unicorn?

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Title card, Wednesdays with Woodward (registered trademark) Webinar Series. Can You Innovate Like a Unicorn? Logos, Travelers Institute, Travelers, UConn School of Business MS in Financial Technology. Video feed, Joan Woodward. 

(SPEECH) 
Hello and good afternoon. Thank you for joining us today. My name is Joan Woodward, and I'm honored to lead the Travelers Institute, which is the public policy and educational arm of Traveler's Insurance. Today's program is part of our Wednesdays with Woodward, a series we started last year to explore issues impacting our personal and professional lives in these really extraordinary times. 

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Slide, Text, Connect Linked In Joan Kois Woodward. Hashtag Wednesdays with Woodward. Join our e-mail list institute@travelers dot com. Watch past webinars travelersinstitute dot org. 

(SPEECH) 
We're pleased you're here today and we hope you'll stay engaged with us. So check out the chat feature. You can join our email list. You can connect with me directly on LinkedIn or watch past webinar replays at the TravelersInstitute.org. A recording of the session also be available on that website. So, let's get started. As I said, the links will be in the chat feature. 

I'd like to share a disclaimer about our today's program.

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Slide, Text, About Travelers Institute Webinars. The Wednesdays with Woodward educational webinar series is presented by the Travelers Institute, the public policy division of Travelers. This program is offered for informational and educational purposes only. You should consult with your financial, legal, insurance or other advisors about any practices suggested by this program. Please note that this session is being recorded and may be used as Travelers deems appropriate. Returns to title card. 

(SPEECH) 
So, innovation has become a critical priority for businesses. The speed of change has accelerated, and if you're not staying ahead of the consumer preferences, you have risk of getting left behind, and no one wants that. So how does the company build innovation into its DNA, especially a company who may have been around for a long time like Travelers? That's a big question for us. And we're incredibly lucky today to have three fantastic speakers giving their unique perspectives on how we do just that. 

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Slide, Speakers. Four profile images. Text, Joan Woodward, Executive Vice President, Public Policy, President, Travelers Institute, Travelers. Kevin Smith, Executive Vice President, Chief Innovation Officer, Travelers, Sabine VanderLinden, Co-Founder, CEO and Managing Partner, Alchemy Crew, Beth Maerz, Senior Vice President, Platform Customer Experience and Innovations, Personal Insurance Travelers 

(SPEECH) 
We also want to give you some tips to do this in your business and learn from maybe some of our mistakes. So first, we're thrilled to have Travelers' own Executive Vice President and Chief Innovation Officer, Kevin Smith. Quite simply, Kevin is driving innovation and partnerships with all of our businesses and providing leadership on how we do that within speed, but also with impact. Impact and speed and velocity are very important when it comes to innovation, and Kevin knows all of these issues very well. 

He also chairs our Travelers Innovation Council and has a wealth of knowledge on the subject. He has served in a number of leadership capacities with us over the many years he's been with us. Most recently he led our international businesses operations in Canada, UK, Ireland, and Brazil. Thank you, Kevin, for being here. 

Then we have Sabine VanderLinden. Sabine is Co-founder, CEO, and Managing Partner of Alchemy Crew, a venture lab that's helping drive disruptive business models and using innovation and experimentation. Sabine has over 20 years of experience in insurance. She was the CEO and Co-founder of Startupbootcamp InsurTech in the UK and the InsurTech Hub Accelerator in Hartford, Connecticut. 

She has worked with over 30 global insurance companies as part of these organizations accelerating growth in more than 70 ventures that she's been involved with. She's a pioneer in building innovation ecosystems, a co-editor of INSURTECH Book, and a top 50 InsurTech influencer. Thank you for being here, Sabine. 

Then we have Beth Maerz. Beth is Senior Vice President of Platform Customer Experience, Innovation for Personal Insurance at Travelers leading strategy on new business capabilities and innovation efforts. Beth is recognized as a thought leader and a global partner to ensure tech startups around the country and around the world. She has influenced--she has influenced and transformed many in the insurance industry. 

She helps identify and explore new areas where Travelers can innovate to meet the future needs of customers and of our agents. Beth's many accomplishments include helping establish Hartford's InsurTech Hub, delivering a new insurance product here at Travelers for Millennials, starting our first venture with Amazon, and leading a traveler's partnership to plant more than a million trees. Welcome to our speakers. 

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Returns to title card. 

(SPEECH) 
I'd like to say a special thank you to our partner today for today's program. The Master of Science in Fintech at the University of Connecticut, which prepares students for the world of financial services technology, including InsurTech. We're grateful for John Wilson and his leadership, and welcome to all of our UConn students, alum, and faculty. 

So a note on our agenda for today's program. We're going to your opening comments from each of our speakers. And then we'll reconvene for a moderated discussion. Then importantly, we'll take your questions. So put any of your questions in the audience and the Q&A function at the bottom of your screen. And don't wait till the last moment. Put those in as we're speaking through the program. 

So before I turn it over to Kevin, I want to take a pulse of the audience. We've been doing these recently if you've been with me on our Wednesday sessions. We do some audience polling. So, everyone take a look at the screen. Our first polling question for everyone out there is, my current organization has a culture of innovation. Strongly agree, somewhat agree, somewhat disagree, or strongly disagree. 

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Text on screen. Audience survey question - My current organization has a culture of innovation.  Strongly/somewhat agree? Final Audience Response -  87 percent.  Strongly/somewhat disagree? Final Audience Response - 14 percent. 

(SPEECH) 
So your culture right now, is it of innovation or not? Let's see what the results are. So--oh, this is good news. So 50% and 37% agree, either strongly or somewhat agree. And we have a very optimistic audience with us today. So only 14% of our guests disagree with that. That's a fantastic outcome. 

OK, next question for you. Since the onset of COVID, the pace of change in the insurance industry has decreased, stayed the same, slightly increased. What do we think? The pace of change in the insurance industry. 

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Text on screen. Audience Responses.  Decreased - 4.7 percent.  Stayed the same -15.8 percent.  Increased slightly - 42.8 percent.  Increased dramatically - 36.7 percent. 

(SPEECH) 
All right, let's take a look. Thank you all for your input here, it's helpful to us. Increased or dramatically increased the pace of change. So about 80% of us are saying it is definitely increased and some say increase dramatically. OK, excellent. So Kevin, what do you make of these results, before you kind of get into your presentation, does this surprise you here? 

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Video feed, Kevin Smith. 

(SPEECH) 
Well, first of all, thank you, Joan, for having me. It's a pleasure. I, like you, I'm pleased by the fact that folks are optimistic about the state of their organization, and so the mindset that folks have. I do think the years leading up to COVID, there was a pace of change that was certainly increasing, and I think what everybody just expressed around the experience of a global pandemic and the changes that it's brought to society, into business, I think that that accurately reflects it. 

I would have checked the last box on that one. I think it's accelerating and accelerating quickly. So I think our I think our audience has a finger on exactly what's happening. 

That's great, that's great. I would agree with you, and certainly we'll talk about this later, but the money that is flowing into this innovation space around the globe for InsurTech is really exciting as well, as well as all the thought leadership that's gone into it, especially in your case, Kevin. So thank you for being our leader on this. And I'll turn it over to you. 

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Slide, Text, Future is now. 

(SPEECH) 
Perfect, perfect. So maybe we'll--yeah. The future is, in fact, now. So like we were just saying, there was clearly an increasing pace of change in our industry leading up to the pandemic and the pandemic has just accelerated so many trends that were gathering pace beforehand. 

And so you are left with a sense that the future is actually not sometime down in the--out in the future, it's actually now. And so I thought what I'd do is just as a start off to the conversation is I'd lay out a few categories that we think at Travelers are an important change in our industry. And the first one is going to be certainly changing distribution. 

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Slide, Text, Changing Distribution. InsureTech, Full Stack Players, Alternative Platforms, Consolidation, Customer Preference. 

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So I think the first big shift within the context of distribution inside the insurance industry is clearly being driven by customer preference. So Joan alluded to that earlier. Society has adopted almost overnight a preference to transact digitally when it's easy and when it's available. And in our business, the same can be said as we transact business with our agent broker partners, for example. 

Now Beth Maerz, my partner at Travelers, has been at the center of a bunch of those efforts at Travelers, and she's definitely going to touch on more of that later. But what we've also seen, besides large established companies like Travelers, the desire for digital services has certainly benefited the many new digital natives that are out there, the InsurTechs and full stacks, that as Joan just referenced, have been fueled by, as recent as the first quarter of 2021, a $2.5 billion investment from venture capital, et cetera. That is interested in seeing that continue to grow apace. 

And so that was a record quarter for InsurTech investment, and it seems like it shows no signs of abating as we stand right now. And I know Sabine is definitely going to talk in more detail about that later. The second shift, though, inside distribution I think is really driven broadly by the growth of digitization across industries. It's the emergence of platform and ecosystem-based embedded insurance opportunities. 

Now some like Deloitte predict that to grow to maybe $100 billion market at some point. And classic examples of that that we're seeing in the marketplace are a cable company like Comcast offering insurance to their subscribers, or auto manufacturers bundling insurance coverage with a vehicle purchase. There's just more and more of that happening it seems like almost on a daily basis. 

And finally, the third big shift in distribution, of course, we couldn't talk about distribution without it, is just the sort of unabated march of consolidation that has happened and has been happening in traditional distribution for many, many years and only continues to accelerate. And of course, the recent biggest example of that would be the $30 billion Aon Willis transaction which is, of course, still pending, but is certainly a mega merger. 

So with big changes in distribution accelerating, you might ask, what about the insurance product itself? The risks that we're trying to cover and protect folks against and the products that they need to have? So 

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Slide, Text, Changing Risks and Products. Cyber, environmental, live insurance. 

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to me in this area, there's really three big areas to watch right now. The first is sensors. 

So sensors are increasingly everywhere and in everything. And the amount of data being generated to track risk exposure and to use for potentially for risk management and mitigation is unprecedented by orders of magnitude in terms of what used to be out there. So there's clearly an opportunity, and some might say a need to redefine insurance products to actually take advantage of all that data. And I think a great example that we're seeing in the industry right now is the emergence of what's so-called usage-based products that are definitely on the rise and they capitalize on all that data that's being thrown off. 

The second and related topic inside risk and product, of course, is cyber. With so much physical moving to digital, including, by the way, a lot of the workforce in the last 18 months, cyber is increasingly a critical risk factor for businesses and individuals alike. Recent incidents that we've all witnessed and experienced in sort of critical supply chain areas like energy and meat, software, and even in insurance and insurance broking only really begin to highlight the economic implications that cyber may potentially have or will potentially have. 

And finally, while I'm calling out some obvious risks that need a product focus on, you have to talk about whether. We're all watching the changing dynamics globally almost on a daily basis. It's almost on the news every day. And we're also beginning to, in the industry anyway, use really sophisticated tools like sophisticated imagery and analytics to augment our underwriting processes, to help us handle claims in the events of major catastrophes. And certainly we had Travelers are very, very focused on that. 

So the ability to understand and make decisions from huge volumes of data is really critical. And so that immediately takes you to the third thing I think that's really important, which is changing the environment around data and AI. 

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Slide, Text, Changing Data and AI, Risk selection, Policy Processing, Claims Assessment. 

(SPEECH) 
So the pandemic has definitely accelerated digital investments and digital interactions, leveraging all this new data that I'm talking about, and very sophisticated AI. 

A good example of that is since the pandemic, we at Travelers seen a dramatic uptick in the adoption of virtual tools to be used in claim handling, and those were things that customers tended to be hesitant to use before the pandemic. But as they've adopted them--fortunately we had them ready to go, and as they've adopted them, they've come to really love them. And that's certainly a case where we see a lot of that not going back to the old way, but in fact, only accelerating. 

And it's not just in claims. We're seeing artificial intelligence used to fuel much faster decisions on the frontend of the business. Our recent partnership with Groundspeed is an example of that. It's allowed us to-- they're a really interesting startup. And it's allowed us to process new and renewal transactions in hours rather than in--rather than be measured in days. And so that really certainly accelerates what we can do in the business and what we can do with our agent--and broker partners. 

So these capabilities are helping us all get smarter, they're helping us all get faster. But the question really is, will that, in fact, be enough? And so that takes me to our fourth key item, which is, as ever, the changing cost equation of the business. 

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Slide, Text, Changing Cost Equation. Tailored solutions, agile delivery, lower cost. 

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So as these new InsurTech, full stacks, and startups that Sabine is going to speak to partner with and square off against the large incumbents, it's clear that the winners are going to increasingly need efficient operating models that not only are efficient, by the way, but have the agility to capitalize on evolving competitive dynamics as these new distribution channels evolve. 

They're going to need the agility to operate on lots of different platforms, increasingly embed insurance for new ecosystem partners, but all the while acquiring and servicing customers as efficiently as possible. And that's not an easy task for anyone, but certainly I think we've got a whole industry, as witnessed by the polling, that's beginning to be focused on it. So I think that's a really good thing. 

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Slide, Text, There are four key components driving innovation.  Image. Future, Discovery, Mindset, Velocity. 

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So how have we at Travelers tried to organize for success in this area? We're a 160-year-old company. I like to say we started out in the era of horse and buggy. So we're not unfamiliar with having to make pretty significant changes in how we do business and what we insure. But we really break it down--we break our approach down into four buckets. The first is really we call future. It's building a vision inside our organization of what we think the future will likely be, what the options are, and what the opportunities are. 

And we and we really start at the most senior level of the organization to do that, and we try to get--we work really hard to get everyone aligned around that. The second thing we've spent a great deal of time doing, and it's, in fact, how I first met Sabine many years ago, and that is finding and assessing capabilities and companies across the globe that can actually help us get there. We've moved out of the era of everyone building everything on their own to clearly an era of partnership, and we're leveraging capabilities that are just constantly being developed across the globe, and we're very focused on taking advantage of that when we can. 

The third piece is--that we think it's important--really important, actually, is experimenting with velocity. Not something that traditional insurance companies maybe were always good at, but we've definitely focused a lot of time and effort in making sure we learn how to do it effectively, because it's really, really important with such change happening around us to be able to learn fast and at a low cost in order to stay as agile as possible. 

And finally, in a large company like ours, we spend a bunch of time educating and sharing across our 30,000 employees. We think it's really important to bring all 30,000 along on this journey because it is a journey of tremendously dynamic change. Now one of the advantages that we happen to have is, as a large established company, is scale. And therefore, we've got the ability to invest-- position ourselves for the future. 

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Slide, Logos. Traverse, Groundspeed, Simply Business 

(SPEECH) 

And so let me just close my little remarks by saying, we think a lot about--increasingly about whether it makes sense for us to build or partner or buy. And we've done a lot, I think, of each. And three examples that are good ones, two of which I think will come up today, one of which I cited already, is Groundspeed where we partnered with a really promising startup. 

The first is Traverse, which I know Beth is going to speak about. That's something we built inside Travelers to be responsive to the dynamics that are happening in the outside world. And then the third is buy. A few years ago we purchased the number one writer of digital small commercial business in the UK called Simply Business. And again, because we've got the scale and the wherewithal to do that, we think a lot about those three options as we try to augment our skills and our capabilities. 

So in an environment that's this dynamic, both established players and InsurTechs are going to continue-- are going to have to continue to innovate to succeed. That's the one thing that's certainly clear to us. Now with that, I'd love to turn it over to Sabine to explore how successful startups have indeed done that. Sabine? 

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Slide, Text, NXT GEN Business Models, Lessons from the world of Unicorns. Logo, Alchemy crew. Video feed, Sabine VanderLinden. 

(SPEECH) 
Thank you so much, Kevin. And hi, everyone, I'm really thrilled to be with you today. So let's get started and let's find out how a unicorn innovates. 

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Slide, Text, What are unicorns and else? 

(SPEECH) 
So first I would like to start with a quick definition. So unicorn are high-growth ventures with a valuation of over $1 billion. And based on CB Insights, a variant of unicorns, includes Decacorns, or companies valued at over $10 billion. So think about Paytm, Grab, Didi, Uber. Those are examples of companies. And if you want to have a quick look at The Wall Street Journal, you will find that there is also $1 billion club that you can find there. 

And then you have the Hectacorns, or companies valued at over $100 billion. There were Coinbase on this list just a few months ago, which has been fluctuating, but you will find Tesla and the like of--and financial fewer companies at this stage. 

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Slide, Text, Where are unicorns located today? Map of the world. 

(SPEECH) 
Moving on, we are--where all those companies located? 

So today, well, no surprise, 60% of fast-growth companies are in the United States. So think about Brighthouse, Collective Health, Ethos, The Zebra. All these are located in the United States and are unicorns. 25% are located between China and India. Then we have AI-innovate in the AI space, and PolicyBazaar in the distribution space. 

Then Europe comes third with 9% of all these growth ventures. We have been really, really moving really fast during the past few months, and we have acquired a number of unicorn, including Shift Technology, Tractable, wefox, and Zego. So we are all very happy. 

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Slide, Text, Facts. 

(SPEECH) 
Moving on, we'll talk about the facts. 

There are 850 companies over $1 billion valuation. But I think right now, I was checking the numbers, I saw probably around 100 unicorns with approximately 40 Decacorns. On average, it takes nine to 12 new-- nine to 12 new unicorns per month. So we see on average 9 to 12 unicorns every month being created for the past five years. 

And when you venture is at the stage where it's going to raise $150 to $210 million, it is likely to reach its unicorn status. This is based on average. And it takes five years for a company to reach that stage after their series A. One thing that I love saying to startups is that they will need to reach a lot of investors for their funding run. So on average, a unicorn will reach-- will raise money from 18 investors. So they have to be nice to them. But when you look at a company like Grab, for example, Grab which has a valuation of $40 billion, grabs us up to 80 investors on their cap table. 

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Slide, Text, It takes a total of 7-10 years for a leading market player to achieve Unicorn status.  Bar and line graph. The vertical axis on the left is number of unicorns. The horizontal axis on the bottom is years from 2016 to 2021 Q1. On the right is number of years from 0 to 10. 

(SPEECH) 
So as we move on to the graph, it takes a total of seven to 10 years for a leading company to achieve unicorn status. And as you can see from that chart, it gives you an idea of the average time from birth, and then from series A level. And in 2019, this was the best year for companies to become a unicorn. It is predicted, though, that in 2021, will not be too bad of a year based on the numbers we are seeing coming through. 

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Slide, Text, Number of new Unicorns spiked these past few months. Line graph. A line increases from January 2020 to May 2021. 

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On the next chart, as you can see, the main reason that is the case is that investors are deploying capital--they had to. They didn't invest that much last year. And for the past few months, we have seen on average 30 to 40 unicorns coming to market. So a massive spike during the past three months, and I'm just waiting for the last number from June, which I was not able to get for you today, but it is going higher and higher. And it is probably because of the need for digitization as Kevin just highlighted a few moments ago. 

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Slide, Text, Types of Unicorn business models. 

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We have seen three to five years of digitization achieving just 12 to 18 months, and investors know that. 

So, what do they do, which is different? So I wanted to cover four main business models. So first, the tangible asset builders. They build, develop, and rent physical asset to market, make, distribute, and sell physical things. We are then the on-demand service providers which are individuals able to provide value-added services, and this is usually service per the hour. 

The advanced technology architects is all about technology. They develop, market, sell intellectual property, such as advanced technology with blockchain, AI particularly at the moment. Quantum computing would be another example. Marketplace and network orchestrators combine the power of networks within their networks that use participants, which are the value creators, and they are able to sell products, service products, and also build new relationship. 

One thing which is happening right now, which Kevin alluded to, is sustainability is a big opportunity as well. So you see as well that a lot of those ventures now are looking at sustainable investment, financing, and now insurance as part of their proposition. So here are a few examples of what those companies do. 

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Slide, Text, Example, Unicorns that reached the new status. 

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So when you think about tangible asset builders, think about Tesla. Electric cars, electric batteries. InsurTech, Metromile is using Onboard Device, OBD, within their cars to monitor driver's behaviors. When you think about on-demand service providers, think about services that are real-time, on your real-time. These Intel's on-demand components as part of the proposition. You have Grab, which also has a wallet-to-drive embedded insurance services, and Ethos in the life sector. 

When you think about advanced technology providers, think about companies which build, as I mentioned earlier, big data, AI, the cloud, quantum computing, blockchain all mixed together of two examples here. So SecurityScorecard in cyber, and Shift Technology combining capabilities to sue for fraud and claims. 

When you think about marketplaces and network orchestrator, think about those who are joining the--by including others as part of their ecosystem. Optimizing distribution and the service they provide for the community. In Europe, there is Zego for economic mobility. And Zebra--The Zebra in the United States for multi-insurance product distribution. 

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Slide, Text, What do they do well? Narrow focus. Hyper personalized. Hyper localized. Still international. Lead by serial entrepreneurs. Worforce of the future. Backed by astute financiers. 

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So when you look at what they do differently, five things. First, they are doing a few very things very well. And deploy one single digital platforms. Focus is key. And as part of their proposition and use digitization to improve the customer engagement--leaner, better, cheaper, to scale. 

They are led by serial entrepreneurs. Failing is part of the proposition, and they actually learn through failing to deliver around more and more complex challenges. They are building the workforce and the workplace of the future. They start with very few employees. They each raise the minimum viable product, and then they scale right. And they are backed by major financial and investors. They have to perform if they want to exit. 

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Slide, Text But not that simple. A Venn diagram with insurance finance and auto on the outside and tech at the center where they overlap. 

(SPEECH) 
But this is not that simple. So when you look at how the sector create, now they are overlapping. So if you look at insurance, finance, and automotive, for example, think about Grab and Zego. When you think about home and climate and insurance, think about people--Tesla. You also have views and Ring Labs, for example, which was acquired by Amazon as well in the US. 

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The labels are now insurance transport and sustainability with tech at the overlap. 

(SPEECH) 
And then when you think about insurance, transportation, and sustainability, think about Tesla. All are doing things which aims to drive friction-free and embedded experiences as well as serve underserved customer segments better.  

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The labels are now insurance transport and cyber with tech at the overlap. 

(SPEECH) 
So my final word in general, and regardless of business models, how performers look at the ecosystem. 

They are network orchestrator. They are driving value. They can achieve that two to four times higher valuation than their peers. And they are very few. Only to less than 5% of companies globally are top market performers within that unicorn status. 

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Slide, Text, Remember your customer is changing. 

(SPEECH) 
So I'll now hand over to Beth. Remember, your customer is changing. 

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Slide, 1. Text, Get outside. Quote, You can't wait for inspiration. You have to go after it with a club, Albert Einstein. Video Feed, Beth Maerz. 

(SPEECH) 
Thanks, Sabine. It's always exciting to hear your unique perspective on the industry. So, what I would love to share with all of you today is some thoughts around what we have learned on our own innovation journey inside of Travelers, and Kevin mentioned earlier that we've been on this journey for a number of years. And during that time we've had the experience and opportunity to learn a few things around what works and what doesn't work. 

So the first lesson--and we'll go through six lessons as we go through this presentation. The first one is to get outside. And in that, I mean none of us have the ability to come up with truly great new ideas by sitting inside the four walls of our own company. And I think one of the first lessons we had to learn as Travelers was that we had an opportunity to go to and learn from others around what innovation means, where the opportunities are in the industry for us to pursue. 

And some of those places where we went to learn for that inspiration were those that are leading innovation in other industries. Companies like Google, companies like Amazon. What could they help us understand and learn from their experience around what it means to be an innovative company? In some cases we spent a lot of time with startup companies, and Sabine has mentioned what that startup industry looks like for insurance. 

We found we had a real opportunity to learn from those new companies, some of which were just getting started. They might have only been one or two companies, but they had a unique perspective on our industry and could help us reimagine and rethink what the problem and pain points are in our industry and where we might build a new value proposition collectively for our shared customers. 

We also spend a lot of time. We have UConn here today as a partner in this panel. I would say that we learn a lot from our educational partners. Not only the new ideas that the students can bring, but also the research that our partners inside of education are doing that are looking beyond the three-to-five-year horizon that we tend to see our startup partners doing, but more of the five to 10 years. What should we be thinking further out about? 

So the one broad area there that I would say first and foremost as you're thinking about your innovation journey is, find those areas where you can explore what the opportunities really might be and move outside of those four walls, and move outside of traditional areas where you've gone for inspiration. Again, I would say our primary lens to the outside world has always been our important agency and broker partners, and we've continued to build on that and lean into it, but it's that plus what else? Where can we go to really understand the opportunities in the market? 

(DESCRIPTION) 
Slide, Text, Listen to customers. Quote – “Your most unhappy customers are your greatest source of learning.” Bill Gates 

(SPEECH) 
So if we move on to lesson number two, that next lesson--and Sabine leaned into it, as did Kevin, is really our ability to listen to our customers. And there's that Bill Gates quote there that says, "Your most unhappy customers or your greatest source of learning." Within Travelers--and I have the opportunity to also lead our customer experience teams, we've had a really robust voice of the customer program which has given us insight into where key pain points are. 

And as we started to look at that research, one of the things we saw was that our customers were really struggling with what we call our onboarding process, but becoming a customer of Travelers. And so we decided to dig deeper into what those pain points were. And so I thought I'd share with you a little bit of what we heard from our customers as we went into a deeper listening session with them. 

(DESCRIPTION) 
Video, A woman sits at a table with a man who listens to her. 

(SPEECH) 
I don't understand why there's so much paperwork. I don't understand why they can't condense it in some way. Even the format of the paperwork, why can't they make it to where it's like it's categorized--it's clearly categorized, and you know where to go. They could communicate it in a positive way--in a more positive way. 

So you can hear there the pain from that customer, and that was a snippet from hundreds of hours of videos and interviews that we did with our customers. And so we spent a lot more time reimagining what that onboarding process would look like. But first, we started with, what was she talking about? 

(DESCRIPTION) 
Numerous sheets of paperwork piled on top of each other. 

(SPEECH) 
This is the paperwork that we tend to see in the onboarding process for our customers. Lots of policy documentation, lots of things to sign. 

(DESCRIPTION) 
Slide, Screen captures from MyTravelers (registered trademark) mobile application. Text, Your quote, Welcome email, MyTravelers. 

(SPEECH) 
But what if we reimagine that right from the very beginning and we started with the idea of right at the point of quote? So as the customer is learning with our agent partners about what coverage options they might have, what could we offer them in terms of insight? 

How can we welcome them to Travelers and to their relationship with their agent in a welcoming way, in an email in an interactive way rather than through lots of paper? And what if the entire experience was digital, signing your documents, understanding your policies, and if we could present coverage in a visual way that was meaningful to a customer? So rather than talking about coverage A, explaining to our customers that it's really about replacing the value of your home. 

So we have continued to lean into that. We're actually in our third iteration right now of innovating around the customer onboarding experience and continuing to try to make that truly an opportunity for welcoming the customer and ensuring that they have the coverage they need today and into the future. 

(DESCRIPTION) 
Slide, Text, Challenge yourself. Quote, You miss 100% of the shots you never take. Wayne Gretzky 

(SPEECH) 
So if listening to our customers is lesson number two, if we move on to lesson number three, the next, I think key opportunity--and I saw some questions in the Q&A as well, how do you really think about moving at speed? The first thing is to set a challenge for yourself. And that might be bringing a new product to market inside of three or four months. It might be solving a problem that you never thought you could solve for. But it's that idea of saying, challenge yourself to do new things and challenge yourself to do things at speed. 

So in this case, what I thought I would share with you--and Kevin mentioned Traverse, this was a challenge that we set out for ourselves, for those of you that are familiar with our personal insurance product and the coverage that we offer, we tend to excel in the multi-product customers. Think married families with home and a car. 

But we have an opportunity to have more products and more solutions for new emerging risks. Millennial customers, now Gen Z customers that are new to insurance. And what we set out to look at was, how can we bring a new product to market speaks to that market's needs inside of six months? And again, we started with understanding the problem. And so I thought I'd share with you what these customers told us about their thoughts on insurance. 

(DESCRIPTION) 
Video. Text, What are their thoughts on insurance? 

(SPEECH) 
So the idea of insurance is something that's like--it's like--it's a rip-off. 

Do you have insurance, by the way? 

I don't even know where I would start with that. 

(DESCRIPTION) 
A man looks up silently and makes a face. Slide, Logo, Traverse powered by Travelers. Article clippings. 

(SPEECH) 
So one of our biggest insights through that process of working closely with customers and primarily in the New York area was that those customers didn't understand the value of insurance. They certainly didn't understand the value of renter's insurance. Their perception of that was that it was something that their landlords made them take, not something that added value to them. 

And so we took a step back and said, what is really the key things that they're looking to cover for themselves? And what we learned was that they were really looking for coverage for the things that they loved. The valuable assets to them. Their phones, their laptops, their bags, their shoes, their golf clubs. The things that helped them experience life were the things that were the most important to them. 

And so we put together a new product. It's a product called Traverse. We entered it into the New York market with the idea of allowing Millennials to select the coverage that they were looking for and to cover the things, the events, the experiences that were the most important to them. And we got a lot of attention on that because it was truly a new market for us. We had a good experience in New York, but what I'll now say is, we also learn some things along the way, which is lesson number four. And that lesson is prepared to be wrong. 

(DESCRIPTION) 
Slide, Text Prepare to be wrong. Quote, Success is not final, failure is not fatal. It is the courage to continue that counts. Winston Churchill 

(SPEECH) 
So as excited as we were about the product, we also learned, once we launch the product into market, that there was some things we needed to change about that product. And I think this is, for insurance carriers, probably one of the biggest lessons that we all need to learn, which is if we want to move at the pace of change, if we want to move at the pace of startups, we have to be willing to put things into market quickly and then be willing to continue to evolve them over time. 

So the 100% perfect before it goes in really will take too long, and by the time we get that market in the problem--the solution into the market, the problem will have changed. So this idea that success is not final and failure is not fatal, it's the courage to continue really resonated with the team that brought Traverse to market. Because one of the things that we quickly learned is as insurance providers, we felt that it was really important to make sure that every base product had liability coverage in the product. 

(DESCRIPTION) 
Slide, Text, Cover what you love. Pay for nothing else. 

(SPEECH) 
What we learned was that that just didn't resonate with this market. They might want liability and they might choose to add it in, but they wanted the choice. And so we completely unbundled the product entirely. Customers can choose to add liability. They can cover one item, 10 items. They can choose to buy identity theft. It's really their opportunity to say what's important to me and how do I want to cover those things? 

We've since pivoted the product. We brought it now into Texas as well and we continue to see quite a bit of success in that marketplace, and we're looking for expansion of that product into other states in the not-too-distant future. So it's really about that idea of learning from those failures and saying, how do I continue to move the product and the solution forward? 

(DESCRIPTION) 
Slide, Text, Fall in love with the problem, not the solution. Quote “Innovation comes from saying no to 1,000 things.” Steve Jobs 

(SPEECH) 
So with that, we'll move right on to lesson number five, which I think probably everyone in the innovation space will say this in one way or another, but it's, let's fall in love with the problem and not the solution. And you see the quote down there below from Steve Jobs, which says innovation comes from saying no to 1,000 things, I will say--and Sabine and I spent a lot of time with the startup community here in Hartford, there isn't a solution that I have seen that I don't love. I love them all. 

I think that the startup companies that we have interacted with bring some new idea that we haven't thought with. But that doesn't mean I want to put them all into our business, because they don't solve the problems that I have. So the real challenge for us as innovators is to make sure that we're spending more time understanding the problem that we're trying to solve for than trying to put the solution in or finding a great solution and trying to figure out where it fits. 

(DESCRIPTION) 
Slide, Text, Claim Process. Event happens. Report Damage, Assess Pay, Repair. 

(SPEECH) 
And I will say, my partners in claim, if we move on to the next slide, are probably some of the best in the industry of doing this. If I look at our Travelers claim team, they are exceptional at really thinking through the problems and the challenges of solving for a claim event through every part of the process. Understanding how to get people to the event and to the claimants that have a challenge, understanding how to support our claimants through the process of reporting damage, making sure that we can assess and pay out on that, and then help support the repair process. 

And so that team thinks every day about what's the problem I'm trying to solve for and then how do I bring new solutions that, as Kevin mentioned earlier, can bring down the cost and the expense of serving that claim, but also significantly improve the customer experience and the speed by which we can do that? 

And they are not running after the next technology solution, but rather saying, how do those solutions fit into the business problem and the customer problem that I'm trying to solve for? So my lesson number five there would be, spend more time on really understanding the problem and breaking it down, and then finding ways to create solutions that meet that problem's core essence. 

(DESCRIPTION) 
Slide, Text, Innovators are everywhere. 

(SPEECH) 
And then lastly, the last lesson, number six, is that innovators are everywhere. We started it down this journey, and I think there was a bit of a question of, do we have this idea of the nebulous innovative people in Travelers? And my answer is fundamentally yes. I think that our challenge as leaders is to untap that innovation creativity across all of our teams and look for the opportunity to bring all of our employees into that spirit of innovation. 

What you see there on the slide is a picture of what we call our INJAM, Kevin and his team run every year, an Innovation Jam across Travelers. This year we're just in the start of it right now, and Kevin can check me on the numbers, but we run upwards of close to 1,000 employees being engaged in the INJAM every year. 

And that opportunity to really think about bringing people together, helping them really explore a problem, and come up with creative new ideas on how to attack them has been, A, delivered real value to the business, but has also given our employees an opportunity to think about new ways to explore a problem set. 

Within personal insurance we've done a lot of work. When we do different types of innovation efforts, we make a lot of effort to make sure that we're bringing people across all of our functional areas and from different teams to come be a part of that either for three months or six months or eight months. And that gives us the opportunity to send them back to their day jobs and use the skills they've learned in their everyday work. 

So the key message here is there's no magic person out there that is an innovator. It's really about how do we give individuals the opportunity in this space to be innovative? And with that, I'll turn it back to you, Joan. 

(DESCRIPTION) 
The four video feeds at once. 

(SPEECH) 
OK, terrific. Beth, Sabine, and Kevin, I mean, so much food for thought here. Very, very interesting, and different presentations on the forces of change. So let's get right into it. We're going to ask the audience one more question, folks. And please put your questions for our panelists in the Q&A function there, we have a few coming in. 

So the first-- the next question we have, which is the forces of change is most relevant for your organization where you're working right now? So changing risk and products, changing distribution, of course, for all our agents online, the impact of digitization and AI. Those are three very different forces of change, and let's see where our results have come in. And then I want to ask each of our panelists to kind of talk about this for a second. 

(DESCRIPTION) 
Text on screen. Which of the forces of change is most relevant to your organization? 

(SPEECH) 
So the forces of change, changing risk and products, changing distribution seem to be coming in, and artificial intelligence as well. That seems to have taken the digitization and AI. You want to speak to that, Sabine? Were you surprised by these results here? 

I'm not surprised, because the past year, we have seen an acceleration of digitization. And I can talk about investors. Investors have realized there's even more opportunity coming through. Three to five years achieving 12 to 18 months. So everybody had to digitize. And then when you look at how it's done, it's done either through automation. RPA, Robotic Process Automation. So your AI or risks is actually-- and analytics is part of the AI as well. 

And then lastly your bots, your engagement bots, which allows you to respond to client without using human effort. So yes, I can see that being important, but all of them are interconnected a little bit, I think. 

Kevin, anything surprising you here? What about distribution? Did you think it would have come in more? 

No, no, not surprising. I mean, I think all of them are all pretty significant forces. So it probably just-- probably determined by the demographics of your audience, Joan. 

Yeah. OK, another audience question, then we're going to get into some other conversations. So how much funding did InsurTech companies received in 2020? So even during the pandemic, how much funding--VC funding--this is all funding, all in for InsurTech companies. So what is your best guess here in our audience? 

(DESCRIPTION) 
Text on screen. How much funding did InsurTech companies receive in 2020? 

(SPEECH) 
All right. Coming in on the higher end, it looks like. Some say between $5 and $7 billion. So Sabine, what is the right number here and why? 

$7.1 billion. Why? Well, despite the fact that we had some challenges, investment came through last year in 2020. A lot of investors found out that actually there were amazing companies to invest in. And a lot of those investments went into very strong and solid companies. 

Now if you look at just this year--I checked the numbers before coming on to this webinar, nearly $9 billion has already been invested in InsurTechs to date. So that number will be surpassed this year. And then when you look at this within the context of FinTech, we are a drop in the water. We're only 10%. But imagine half-a-trillion is invested in FinTech and $89 billion has already been invested in FinTech startups to date. 

Great. All right, so let's get into some of the content here. Beth, I want to talk about your presentation. You said that some of the mechanisms for identifying areas that are really ripe for innovation, you showed us that hilarious video about customers talking about paperwork everywhere. But what have you found the best insights or inspirations for starting those innovation projects? Or forecasting where the customer friction points are? So the organizations that are listening in today, what are the baby steps to get started for identifying the areas that are ripe for innovation? 

Yeah. I would go back to the baby steps of where they're right for all of us really does need to be with listening to our customers. We just--we have to. That's got to be sort of step number one. The second step for that, though, I think is, again, challenging ourselves to get out of where we are today and start talking to those that could help us. 

I think when I think of it our agents and our brokers--and I know a number of them out there are doing it exceptionally well, Joan, because they're asking us to help, is, who are there partners that are bringing them the business? So what can mortgage companies and realtors and the personal insurance space tell them about what their needs are and how they're thinking about changing the customer experience? 

Who are the ecosystem players in their area that can share with them their own business model and can co-create with them on new opportunities for solutions for shared customers? I wouldn't--I guess I can't stress enough trying to seek out people outside of your four walls that have a point of view around what you are doing in your business and how you might change it or improve it. 

So I think it's a lot of those opportunities to really think about what else are you missing and who can help you identify those areas that you might be missing? 

OK, thanks. Sabine, a question to you about failure, and you've been in the innovation business for a long time here. You talk about failure in the context of innovation, but what's a healthy mindset for people listening in today about failure? Because you're taught in school, failure's not a good thing, but when you're trying to innovate, it's a good thing, and how many times do you get to fail before you have that one success? 

When you look at it from an entrepreneur and founder viewpoint, everybody wants to succeed first time around, but failure is part of building a backbone. So the way I think we need to look at failure is as a learning opportunity. And every time we fail, we need to capture this information to actually build stronger and better propositions and iterate over time. And I believe Beth and Kevin highlighted that through any organization journey, you are going to have successes, and you just have to iterate to actually get it right. 

So I think it's about also building humility around understanding what clients need and building some level of authenticity as well towards the customer. From within a big company's viewpoint, I know it's not good to fail, and no one wants to talk about failure. But I look at it as a way to codify and democratize knowledge. 

Because when you can actually enable people within your teams and across the business to participate through innovation, things which don't work the first time around will probably work the second time around. And one additional point that both Kevin and Beth highlighted is our customers are changing. 

And when you start actually seeing how to respond to the customer, you will never get it always right the first time around, because you need to have the people who actually empathize with the customer to limit potential for failure. 

OK. Thank you for that. So Kevin, you ran our international operations for many years, and you've led a delegation from Travelers of senior business people going to look at innovative companies around the world in the last five years or so. So what is the biggest catalyst for driving innovation into our business agenda? 

So you're head of innovation, but you have to be embedded in the businesses and help them understand that innovation is the key to their next success. So how does that work? Kind of the internal-- 

Yeah-- 

--as well. 

For sure. No, I actually think--and first of all, I would say every organization is different, every culture is different. The way company A and company B, the way they're wired, they're all different. And so I'm always hesitant to suggest that anything might be a rule, right. But I do think, as we think about Travelers, I think the biggest catalyst for us has been really getting organizational alignment from the top-down and having the organization really rally behind the direction that we're trying to take with our innovation activities. 

It's easy to run around and with great urgency and innovate, but it's another thing to actually be focused in the right areas. And I think the fact that we've really worked with the senior-most level of the organization to get a common view on what our strategic direction needs to be around a lot of these topics, that's allowed us to sort of line up the organization behind that and focus our resources accordingly. So I think that's been the most powerful catalyst to our ability to get things done. Besides, of course, the fantastic folks like Beth Maerz who are just tremendous catalysts in their own right as they drive their agendas. 

Great. Thanks for that. So we're going to get some audience questions in now. We're going to do some rapid-fire things. Sabine, this is to you. When's the inflection point when you decide to scale a company or project or products versus saying, this isn't working, I'm going to try something else? Is it always clear to your clients and those of you work that inflection point? Or how do you decide when you should move on? 

Well, working with a lot of startups, I think there is some aspect of a gut feel when something is not working. But if you actually use actually also the theory, you know usually products need to iterate every 12--eight to 12 weeks. And it needs to be validated with customers. So often the reason why ideas fail is poor product market fit, it's about the fact that we have a poor customer engagement journey, the client is not responding to the offer. And so you have signals, you have signals that the product is not working. 

I would say when we look at it from a set of viewpoint, when we did the accelerator, we will actually do it every three months. So I would say three months would be my limit to see whether something is working or not. When you look at more sophisticated products, you would actually can go up to 12 months, particularly because you need to test it in the market. 

When you look at it from an investor viewpoint, they calculate early stage 0 to 3, and then they move to 5, and then they move to 7. So that is another indicator. Not more than three years, but in startup years, I would say 12 months would be maximum. 

OK. Terrific. Thanks for that. Kevin, this is for you, coming in from one of my favorite people, Ronnie Tubertini in Mississippi. So Kevin, considering the changes in distribution in the future due to customer preferences, alternative platforms, and consolidation, assuming Travelers is evaluating and studying the agency of the future and its distribution forecast. So what does the agency of the future look like in your view? 

Agile, frictionless, and ever so much focused on the customer. No, honestly, I don't think we have enough time left to talk about that, but what I will say is that we've got a group of people that are actually very much focused on that and working with our distribution partners to help them figure out what that means for each of them. And so, I mean, that's a--we could actually do a whole hour on that, Joan, I think. 

OK. Ronnie, we'll give you a call and follow up with that. Another question. What is a full stack player? 

Full stack player is basically a--it's an InsurTech that has probably has sort of gone on from being distribution-only to actually providing their own insurance capacity. So they've got the full stack of capabilities from distribution all the way through to capital to actually take risk and handle claims, et cetera. 

All right. Another question. Probably to you, Kevin or Beth. How does Travelers gather all of these ideas? Do you have a platform like brightidea.com? Or is it our Innovation Jam? That you get the ideas and then you gather the winners--there's winners, losers in an Innovation Jam? How does it work, Kevin? 

Yeah. Well, the Innovation Jam is basically is one area that we try to generate ideas from. We typically focus the topic area to make sure that we're getting ideas generated in areas that we've got real interest in investing in. And we use a variety of mechanisms to do that. But we do use that as sort of a central rallying point sort across organizationally. Now Beth in Personal Insurance probably has some other things she does as she drives into idea generation throughout the course of her day. 

Yeah. I mean, going back to some of the learnings that we've had, is the teams do really do try to focus on the problem and then pull the ideas around the solution set into that. So the teams are really honing those ideas, so to speak, but Kevin, I think your team has done a nice job across enterprise of creating platforms like Kite and others that allow us to share ideas about companies across that. 

I think it's really got to be whatever works for you and for your own organization. We use a host of platforms technology-wise to support that sharing. Teams is one of them. But I think it really depends on who you are and how you're getting your process and your project done. 

All right. Sabine, a question for you. Fast forward five years. What do you see for the insurance industry? What do you see the biggest changes happening in the insurance industry? 

I think we are going to see more companies doing like what Beth did with Travelers. I think there will be more collaboration ecosystems. So when you start looking at where the world is going, ecosystems is not just an interesting world, but it's an important world now in our industry where insurance companies are realizing that to accelerate the ability to grow, they need to build growth ecosystems. So workplace growth startups which allow them to move much faster. So that is the first point. 

Then you are going to see more ventures, more big companies looking at building growth ventures as well and putting the capabilities together to do that. Because not everything exists. I mentioned the overlapping circle. Some insurance companies realize they need to enter new market to acquire new customers. And lastly, embedded. I think the embedded finance we've seen a few years back is coming to us now, too. 

OK, great. I cannot thank our partners enough and our speakers, but we have run out of time, and I would love to continue this conversation. Maybe in six months we'll reconvene and have you back and hear the new innovative ideas that are out there. So listen, thank you, all three of you.