Fortune 100 company Nationwide keeps its #1 position in the US pet insurance market through continuous investment in emerging technologies and insurtech startups, as Vice President Mike Fulton explains.
America’s Nationwide has a long and noble pedigree as an insurance and financial services provider. A mutual, set up in 1925 to protect Ohio farmers, it’s morphed into a Fortune 100 company through expansion and acquisitions, including, in 2009, Veterinary Pet Insurance (VPI), which had issued the country’s first pet insurance policy to canine star Lassie (or, at least, one of them!) in 1982.
Since VPI came on board, Nationwide has grown to become the biggest pet insurer in the States, and it’s where much of the company’s digital innovation is now focussed as it strives to keep up with an unexpected COVID-19-shaped spike in demand for cover.
As a nation, Americans have been slow to afford the same protection to their pets as they have to other areas of their lives – the US languishes near the bottom of the world league for insuring man’s best friend and other animals, at under three per cent for cats and dogs. But a recent survey by pet care technology firm and Nationwide partner VitusVet has found that the bond is getting stronger between people and their animals, as they help them cope with the challenges of a pandemic that has already claimed more than 130,000 American lives. And, perhaps because of the heightened sense of risk, they want them insured.
Mike Fulton, an associate vice-president at Nationwide and part of its technology strategy and innovation team, knows that embracing technology such as open application programming interfaces (APIs), will be a prerequisite in its quest to hold on to its mantle as the sector’s top dog across all categories of financial services.
“It’s really about making sure that you’ve got the right operational backbone in place, and then you’re able to interact, through APIs, with your digital platform. That gives your digital platform the flexibility to change, to support new products, to do all the
things you want to do to be able to innovate,” he says. “If you don’t have an operational backbone that’s API-enabled, that has the ability for an organisation to connect their digital platform into it, it’s really tough to do the innovations you want to do.
“We’ve just completed a transformation programme where we have re-designed and re-implemented our operational backbone for the pet insurance business. That is now stable, productive and allows us to have a base to work off, so we can connect to a new digital platform for the pet business, which will help us to drive more innovation across the organisation. We’re really excited about what’s to come.”
Already, Nationwide’s technology tie-up with VitusVet allows policyholders to use a mobile app to file pet insurance claims. Such is its success that, earlier in 2020, VitusVet was able to announce it had surpassed one million pet insurance claims filed through the app on behalf of Nationwide. Fulton says there is firm evidence of what he calls a ‘pandemic pet boom’. “We’re seeing a huge spike in people onboarding onto the product, it’s been a big growth area for us over the last five years, but the pandemic has really caused a rise in new policies,” he says. “It’s starting to cause a big spike in claims, as well.
“Our pet claims team, pet IT team, and technology innovation team are partnering on some unique uses of artificial intelligence (AI) in the claims space to try to really drive productivity and speed into claims processing for the pet business. We’re trying to figure out how to make that overall experience better, even in the context of a business that is growing 10 to 20 per cent, year on year, which is hard to keep up with.”
That feeds directly into Nationwide’s new development focus – a shift from payout to prevention, which is expected to be financially beneficial to both the company and its customers. Fulton says: “We believe that the way that technology is maturing allows us to better understand the environment our customers live and operate in. We can now leverage our 96 years of history, of claims data, to help predict bad things that might happen and proactively protect people from them. That’s been a big shift for us.
“The other shift is this element of extraordinary care. Nationwide has always been a big believer in taking care of our customers and providing a premium customer service, but we’re trying to take that to the next level, to imagine new ways of coming alongside our members, and providing something that surprises and delights them in moments of need.” He cites an example of this in the pet health sector, where Nationwide, although not yet at the stage of incorporating genetics, is looking at a range of other innovative ways
of protecting pet health. “We are having some conversations about the potential role of wearables in the pet space and how they could play a beneficial role for pet owners by helping keep their dogs and cats healthy and safe,” says Fulton.
In December 2019, Nationwide opened a new innovation centre, The CoOperative, in Columbus, Ohio, close to its HQ. While this ‘design thinking space’ will initially be used by Nationwide and its associates, the goal is to use it to engage the community, as well as hosting events that attract innovators from all over the country and the world to Columbus, which is already a thriving fintech centre where Nationwide is one of the biggest employers.
The Co-Operative is intended to accelerate innovation across Nationwide, which began its fintech journey as the first major US insurer to launch an app for iPhone users, creating a platform for members to start the claims process with a photo, find agents and receive quotes, in 2009. Ten years on and 2019 saw a flurry of innovations including the launch of SPIRE, an ‘easy-to-understand digital
auto insurance platform, built on fair and straightforward principles’, accessible from a smartphone.
The company also announced a partnership with Slice Labs to develop on-demand rideshare insurance solutions for drivers who work for transportation network companies, such as Uber and Lyft. Meanwhile, Nationwide’s venture capital team made several investments, including into Upstream Security, an Israel-based company working in cybersecurity for connected vehicles; Socotra, a California insurtech startup developing a technology platform that will let insurance providers deliver new solutions faster than ever, based on customer insights and feedback; Betterview, a geospatial predictive analytics platform; Nexar, a bolt-on technology company that transforms regular cars into smart cars; BlueVine’s small business online lending platform; wealthtech Blooom; marketplace Insurify; online, AI-enabled small business insurance platform Next Insurance; digital insurance agency Matic; and Sure, which offers specialist personal business lines.
The company’s SmartRides and SmartMiles vehicle policies are black box data-driven to help reduce premiums for those who demonstrate safe driving techniques in the case of the former and those who commonly only clock up low miles in the latter.
In the business insurance sector, Nationwide has partnered with Intuit QuickBooks to develop its Business Solutions Center Digital Assistant. The app uses AI, coupled with Nationwide’s extensive Business Solutions Center library of curated content and a policyholder’s QuickBooks data to provide customised advice on a variety of topics related to running a small business.
Fulton says Nationwide’s technology and digital development teams, which encompass 10 full-stack engineers, employ a six-step programme when devising innovations, those being concept, canvas, pitch, learning plan, prototype and lessons learned, which combine to bench-test crucial elements such as customer feedback and, vitally, viability.
And while successes such as its small businesses app make it to market after undergoing that process, the company is not afraid to pull the plug on ideas that fail to tick all the boxes.
“One we stopped along the way, for example, was a project called Trip Replay,” Fulton explains. “The question we started with was could we create a visual representation of an auto accident from the connected car and telematics data we had from the vehicle? And so we spent some time looking at the data we had, we went through our process, created a prototype, put it in front of our analysts, and what we found was that the ability to visualise the accident just from sensor data was interesting, but it wasn’t fundamentally a step-change benefit to our claims analysts. So we killed that project and put it on the shelf. Sometimes innovations go all the way, sometimes they don’t, and you just have to be OK with that.”
Continuous technology innovation will be needed have to keep in-step with a fast-moving world. Challenges now being thrown up as a result of climate change and technological advances in other industries, such as car makers, says Fulton.
“We are starting to see an increase in weather-related events and in their severity: a lot of hurricanes, tornadoes, a tremendous amount
of wildfires, and the impact of all those on the homeowner is increasing,” he says.
“In the auto space, we are also seeing an increase in severity. We’re putting more and more technology into our vehicles, and
so, when you do get into an accident, it’s a lot more expensive to fix. That technology hasn’t yet progressed to the point where it’s starting to have a measurable impact on the frequency of claims but it is already having a measurable impact on the severity of claims.
“So, trying to get the pricing right, trying to get the value equation right for members, is probably the number one thing we’ve been trying to address from a Nationwide perspective.”
This article was published in The Insurtech Magazine: Issue #4, Page 4.