American Modern’s Rios on Innovation

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Q1: In your view, what has been the greatest innovation in the P/C insurance industry in recent years? Explain.

Rios (American Modern): Mobile technology and social networking are changing everything. Customers now have the ability to do so many things, like file a claim or pay a bill, on their personal devices. That gives them the power to interact when and how they want to with an immediacy that provides a sense of freedom. That’s really upped the game and upped service expectations as well.

Q3: In your view, what innovation or innovator outside the insurance industry has had or is having the greatest impact on the P/C insurance industry?

Rios (American Modern): Geospatial technology has allowed us to know so much more about our customers to their benefit. For example, we know the location of a home in relation to the potential perils it faces. That helps insurers more readily assess variables such as distance to coasts, wildfire exposures and flood zone perils.

Q4: Describe one or more ways in which your company encourages innovation. (Feel free to describe any elements of the culture or process.)

Rios (American Modern): Innovation is all about culture. At American Modern, we strive to have a culture that encourages people to speak freely, that is populated by people of diverse backgrounds and points of view, and that is inclusive. That’s how we encourage innovation. You can’t teach it.

Q5: What is the biggest obstacle to innovation within the insurance industry? Explain. What is your company doing (or what can the industry do) to overcome this obstacle?

Rios (American Modern): We, ourselves, are the biggest obstacle. Too often in the insurance industry we say something can’t or won’t be done. When I went to an online direct-to-consumer startup personal lines insurer 20 years ago, people told me I was crazy, that no one would ever buy insurance on the Web.

(Editor’s Note: Rios, who started his career at Allstate in 1985, went on to become chief underwriting officer of Homesite Insurance in 1999 and CUO of United Services Auto Association in 2007, before joining specialty insurer American Modern in 2011.)

Q6: Do you believe the next innovation to impact the P/C insurance industry will come from inside the industry or from an external innovator? Why?

Rios (American Modern): I think the next innovation to impact the property/casualty insurance industry will come from an external innovator or external disruptor who sees things and says, “Why don’t you try this?”

Look at what Uber is doing. That’s why it pays to network, to get to know people outside the industry. You never know where the next big idea is going to come from.

Rios (American Modern): My role in leading innovation involves inspiring people to stay uncomfortable with the status quo, encouraging them to always be in student mode and asking them to question everything.

Q8: What is the best book you have read about innovation? The best course or seminar you have attended? What was a key takeaway from the book or education session?

Rios (American Modern): The book that had the most impact on me was “Freakonomics” by economist Steven D. Levitt and journalist Stephen J. Dubner. It forces you to look at things from a different perspective.

I also like to read biographies of people like Churchill, Lincoln and Eisenhower. It’s amazing what they went through. They always reinvented themselves.

Q10: Have you ever collaborated with market competitors to move an innovation forward? If so, why did collaboration make sense in this situation?

”We, ourselves, are the biggest obstacle. Too often in the insurance industry we say something can’t or won’t be done. When I went to an online direct-to-consumer startup personal lines insurer 20 years ago, people told me I was crazy, that no one would ever buy insurance on the Web.”

Manny Rios, American Modern

Q11: Outside of providing risk transfer solutions, what are the most likely areas in which insurers can be innovators? Can P/C insurers disrupt other industries or provide noninsurance solutions by applying innovations developed through their core skills in underwriting and risk analysis, settlement negotiations, catastrophe modeling, environmental science or other areas?

Rios (American Modern): Through research by the industry-funded Insurance Institute for Business & Home Safety, insurers can help trigger innovative changes in building materials and techniques to advance disaster-resistant construction.

See related article, “Collaborating on Risk Mitigation: American Modern and IBHS.”

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