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17 minute read
This is the first episode of the Insurance Innovation podcast. Join Alan Edgin and Lane Kent, CEO of Independence Pet Group as they discuss the evolution of pet insurance and pet insurance marketing.
Hear about trends, new kinds of insurance, and the role of data in evolving products. Lane also elaborates on the culture of innovation at Independence and how they promote innovation.
Insurance Innovation, brought to you by e123 - the premiere life and health distribution management system.
Episode Transcript:
Announcer:
Welcome to e123’s Insurance Innovation podcast, where you'll hear tips, tricks and techniques for improving sales, improving profits, and achieving operational excellence. Each episode features an executive guest with a perspective to share an interesting story and great examples for you to think about. Please give us feedback on the show or talk to us about your distribution management system needs on our website at e123insuretech.com. And now here's our host, Alan.
Alan Edgin:
Welcome to innovators circle, our new series that focuses on the core issues of how to innovate, how to use data to innovate, and what the future might hold.
Today's guest is Lane Kent. Lane is the Chief Executive Officer of Independence Pet Group, one of north America's largest pet insurance and services companies. An insurance career spanning more than three decades, Lane's vision and leadership drive the company's dedication to elevate the world understanding of pets and how to care for them. Lane, thanks for joining us today. Can you spend a few minutes and tell us how you got into the insurance industry?
Lane:
You bet. Thank you, Alan. It's good to be with you. My insurance career started in 92 when I joined Mutual of Omaha. And I cut my teeth in travel insurance. There was a company owned by mutual Omaha called Tele-Trip. And my job was selling travel insurance through travel agents.
So I called on travel agents on the phone and talked them into offering travel insurance to their customers, which was a lot of fun. And then I, I got into senior market products shortly thereafter, with an emphasis on Medicare and long-term care related products. And and then moved on from Mutual of Omaha to New York Life to focus on long-term care. And then since then, my career has taken me to a number of different organizations, all really focused around supplemental health and accident products and a variety of different roles, from distribution management and product development to sales and marketing, and ultimately to operations in it and all the other functions that are necessary to support insurance operations. So been about a 30-year career now, and I find myself in the pet insurance space for the past three years. And it's been a wild, wild journey and a lot of fun. And I can tell you, as a friend, it's a lot more fun talking about pets than growing old and fall apart.
Alan:
I bet. Well, I was looking at your, your bio and it's very impressive. I mean, you've had a, like you said, over three decades and been President of some pretty big, big organization. So we're proud to have you as a guest playing our industry is, is some pretty unique characters and fun people who have you met who stands out to you as, as a luminary mentor or as a fun person who really understands what we do?
Lane:
But I have met some phenomenal people over the course of my career, as you can imagine. But I'll, I'll answer your question in the context of the most recent stuff that I've been doing. And that's really in the pet insurance space. What I love about this business is that people at it with a lot of passion for pets and, and, and seek to solve unique problems as they see them from their own perspective. And I came across a gentleman named Rusty Sproat, who is the founder of Figo Pet Insurance, who started it as an incubation in, in Chicago after getting out of the real estate market when that busted in the 2008, 2009 time frame. And he saw an opportunity to bring technology, you know, mobile applications and other technology services to an emerging product and market segment, which was pet insurance. And he built the brand fi go from the ground up to be tech forward, to be urban in its nature, kind of cutting edge, leading edge, and built that brand from the ground up to be one of the leading writers of pet insurance.
As an MGA, we met him because we were their underwriter, and then we eventually acquired that business. But him and, and his, some of his colleagues, Kevin Ludden, who's the Chief Brand Officer, who was with us until just very recently, you know, created the persona that they wanted to carry forward with Figo. And it just was really remarkable. Even the way they built the business, the technology that they used, the way they approached it, the way they approached their customers, was just fascinating to me, especially having grown up, you know, in, in some more stayed and, and, you know, not quite as exciting insurance products like longterm care, just the level of sophistication they brought to it and the customer focus. And it was really phenomenal to me. And, and really all driven by the phenomenal spirit and energy of rusty himself. He's a true entrepreneur and a really fun guy.
So to me, that's somebody that kind of jumps out. But as I said, I've met so many amazing people over the course of my career.
Alan:
Yeah, that's fascinating. And, you know, I've, I too found that for some reason the pet insurance business seems to be a little more on the cutting edge of technology and innovation than, say, the old life and, you know, health insurance companies. And so I think you're in a perfect spots. Before we dig into some innovation, why don't you tell us a little bit more about Independence Pet Group and, and what you guys do and what market you service and what you're trying to accomplish.
Lane:
Yeah. You know, the best way to think about Independence Pet Group is, is somewhat of as a holding company. You know, we have an insurance company. We're going to add another one. We have multiple managing general agents, and we manage brands that we own, pet insurance brands. We also offer services and manage other companies, brands that we don't own. Sometimes we're just providing risk.
Other times we're providing administrative services and capital. And then we have a host of technology assets that sit around that our vision is to elevate the world's understanding of pets and how to care for them, as you read earlier. And our mission really is to strengthen a unique Bond between pets and their people with our innovative products and services. And when we think about the business, we think about the pet life as a journey, you know, from the moment somebody starts thinking about acquiring a pet all the way through end of life, and we want to be a part of that journey. We believe strongly that for most people, some segment of that Pet's life is going to include the need for pet insurance and maybe three or four or five or six years of the whole Pet's life. But we want to provide services that enhance the wellbeing of the pet, so that the pet owner, the pet parent, has as long and enjoyable a time with that pet as possible. So we want to bring other goods and services, you know, through a tech forward, sort of mobile enabled platform throughout that pet's life.
And that's, that's really who we are. We want to be a home for the best and brightest ideas and in the entire pet insurance business. And, you know, may the best ideas when, what markets do you serve? The way we think about the pet insurance space is it's multichannel. And so we have products that are coupled with retail partners like Costco. We work with affinity groups like AAA. We have products that serve the employer Channel.
We have a unique offering that we, we created the 1st of its and only of its kind, true group pet insurance product that can be sold through a benefit admin platform alongside all of your other health benefits. So that's an important channel for us. That's a market that we serve. A lot of pet insurance, probably 80 % of it is sold directly to consumers over the internet. So we have multiple brands that we sell that way. And we try to tailor the brands from a product and messaging standpoint to the unique attributes of the people that might be buying the insurance. And we think about those personas in terms of where they might acquire the pet, or who they would think of as a key influencer or on a decision to buy pet insurance.
So a breeder, or veterinarian, a rescue or a shelter, those for us are channels. And so we have products for each of those channels. And then we tailor our offering and our messaging to each of them as well.
Alan:
I think there's room for growth, right?
Lane:
Absolutely. One of the reasons we created Independence Pet Group was to bring together these assets and really lead and shape the market to the level of penetration that the more mature markets have seen, which is more right now, pet insurance is about a $4 billion market here in the United States. It's about 2% penetrated. There's about 80 million domesticated dogs and cats, which is our target insurance market in the country. And only about 4% of them are insured, maybe a little less in that so there's a lot of room growth. The more mature markets are in the 25 to 30% range. And so, you know, we think that there's just tremendous upside.
And, and we think about the business in terms of potential unlocks and what are the barriers to that growth? And we're trying to solve that on multiple fronts. Really it comes down to education. And people just don't, a lot of people don't even know PD insurance is available to them. They're not sure when they do find out about it, what it covers, what it doesn't cover. And so, you know, the whole industry really needs to do a much better job of positioning and explaining it and then having a direct value proposition. And again, we think we can do that in the context of more than just pet insurance, but pet wellbeing overall.
Alan:
You mentioned earlier that you guys have developed a group product for the ben admin systems. Are you doing that Lane, and is it a compulsory or is it more of a voluntary benefit?
Lane:
As a rule, it's a voluntary benefit. We have had a couple of employers decide that they want to offer it or pay for, for all of their employees, which is phenomenal, but mostly it is sold as a voluntary benefit.
Alan:
So alongside things like your dental and your vision and, prepaid legal and things like that, at e123, we think a lot about innovation and love to learn how others and industry experiment with new products, building distribution and tweaking their business model. So, so let's make a little shift here. How do you innovate there at Independence Pet Group Lane?
Lane:
Well, for us, it starts with having a culture of innovation. And so we also have innovation as a value. We start really with the people that we bring on board. You know, we, we screen for that kind of mindset. We want to have people that are entrepreneurial in their nature and are creative and, and curious intellectually. And then we give them tool sets in the space to try things. And then we, you know, we celebrate their failures as much as their successes.
We have an innovation laboratory, which is kind of an interesting way to think about it's a theoretical laboratory, but we have a way to incubate ideas and give them, nurture them a little bit and give them some opportunity to succeed. And then we just take them along their journey where we start to invest in them. And then we, we measure their success and watch them kind of go through operating at scale and then, you know, fully launch them. You know, insurance, as you know, Alan is a difficult space to, to invent in because there's a lot of regulatory overhead and, and it takes a while to get products approved. But in [the] pet insurance space, there's a handful of states where it's easier to get a product launch. So we use different states, some of those states as pilots for new product innovation. We also do a lot of testing and innovation around our mobile technology and the way we market.
And you can do a lot of A/B testing and messaging and click through rates and when people open email and when people respond to things that you send them. So we're constantly thinking about tweaking those things and, and just getting smarter in our use of the technology that surrounds the insurance but again, it starts with, with having the right people and then giving them the freedom to invent and then, and then having, you know, formalized processes for evaluating that through its life cycle.
Alan:
So what's on your wish list for information to help you adjust or innovate faster.
Lane:
Yeah, that's a great question. You know, for us, customer segmentation models that that can help us understand the propensity to buy and retain products, you know, those are things that will help us create new and different products. And then also targeting our messaging. So those are the sorts of things that are on our wish list for information that's all supported by technology and systems, obviously. So, you know, we're starting to introduce ai with things like symptoms. So somebody can, you know, put in some conditions they're seeing in their pet and try to understand if it's an emergency that they need to run to the vet's office right now, or is it something that can be treated safely at home for a while and wait till the doctor opens the next day? We want to use machine learning for the customer journey to predict when planes are happening, to predict when there's an increased risk of relaxation, to optimize the product offering.
And then we, we've made significant investments in mobile apps. We have a thing called the pet cloud, which is kind of your one stop shop for everything for your pet, everything from filing and managing a claim to finding a dog friendly park. And we will use the pet cloud to drive acquisition, to improve retention and create new sources of revenue and value with all the data that we collect through that data architecture, data platforms, we're leveraging a lot of salesforce assets for getting a common view of the customer, as you can imagine, based on our, the description of our business that I gave you, we've got customers coming at us from a variety of different angles through different products and services, but we want to have a common view of that customer so that anybody in one of our service Centers would be able to see any and every interaction with a single customer, regardless of whether or not they have an insurance product or they have a microchip that's registered with us, or they have lost pet recovery service. So we're investing in, in a lot of the technology that ties those elements together. And we're using a lot of sophisticated and cutting-edge things from salesforce to do that. Salesforce financial services, cloud marketing, cloud, the CRM. And eventually, you know, it'll bleed into our core insurance operations as well.
Alan:
Yeah, that's, that's impressive. And we both know, in the insurance world, you know, one of the secret sources that you're always trying to figure out is, is the lifetime value of that client of that pet for you group product. And I know it's relatively new, so you might not have a pretty good to handle on it. But what, what do you think the persistency is for that product?
Lane:
We think about persistency in terms of average duration. And the average duration of the individual products is a little over four years. We believe that the group product will persist a little bit less than that, just because simply people may leave their employer and they will have the opportunity to convert that to an individual policy. But experience with circumstances like that, with disability and other products that I've had experience with over the years, you always see a little bit of a drop off when you compare it to an individual product. So we're hoping that that persistency is, or the duration, I guess, is a better way to put it, you know, hangs around in that three and three and a half year range.
Alan:
I know you mentioned that the bulk of your business comes from direct to consumer, that there's not a lot of agent involvement, but for those agents that you do have, have you tried any kind of innovation in regard to commissions and, or advances anything unique with that?
Lane:
Yes we have. We sort of had to because the economics of pet insurance for most agents is just not that compelling. You know, average premiums annualized for an individual pet insurance product is in the 600 to $650 range. Average commissions are in the 15% range. So, you know, when you do the quick math, there's not a lot of juice in that squeeze. You know, you made a comment earlier about lifetime value and persistency. So we've done a lot of modeling around that, and have used advances as one technique to change that.
We've also front-loaded commissions. And so we take a little bit more of that persistency risk by doing that. But you know, particularly as you get into the employer market, when there can be multiple layers of distribution, it all has to be satisfied to get excited about the product. Front loading or heaps commission is a terminology that you and I are probably familiar with from years past, you know, we've experimented with a lot of those different types of models. We've also done some experiment patient with technology to make it easier for producers to generate proposals and deliver proposals and get approval and sign off from the customers, so that we're making that process as seamless as possible. And then a lot of our investment has gone into the technology that sits behind it. Most of are the products where we have a broker involved or in the employer space.
And so we've invested a lot in payroll deduction that takes the pain of getting premiums collected and reconciled out of the, the realm of the HR professional. And then, then by default, then the agent is out of that picture as well. So we, we try to make the whole experience as seamless and painless as possible. So while the dollars aren't that big, when you get to volume, you couple that with speedy process, and then you start to front load some of that, it does start to make sense. And for them to invest their time and energy in it.
Alan:
Let's pivot, if you will, to talk about data in a way. Insurance products are made out of data. And it's kind of the light blood of the industry, but everyone uses it, you know, completely different. So Lane, when you think about the most important aspects of data for your business, what, what comes to mind?
Lane:
Yeah, two things for me that we're really focused on right now, one is actionable insights, and the other is value creation. When I say actionable insights, what I mean is, in especially like when you think about the actual real world, you get these massive spreadsheets with numbers and columns and rows and rows and rows and rows of data, what we really want the data do to do is talk to us, you know, what should we be gleaning from things when we see them and how quickly can we act on those things? So a lot of our emphasis right now in our investment is around visualizing data and then bringing it, you know, simplifying it to the point where the people that can make decisions around it have what they need to do that. And then because of the nature of our business and all of the service offerings I mentioned earlier, we're going to have a treasure trove of data that could be valuable to business partners and people that we don't work with today. You know, new puppies going home. They all need food, they all need a bed. They need something to chew on, they need a leash.
Those aren't things that we really want to get involved in, because they don't generally specifically relate to wellbeing, but they could be very valuable to the manufacturers of those things. So I wanted data to be organized and available in such a way that we can get value out of it.
Alan:
So along that line, what challenges and be faced trying to tame this data beast?
Lane:
The biggest challenge we've got right now is the way Independence Pet Group was formed, is a series of acquisitions. So as you can imagine, we've got disparate systems. There's different levels of sophistication with using visualization tools. Like power bi or tableau or things like that. And so we've got, we've got this, you know, vast estate, if you will, of different technology assets. And that makes it a little difficult to get the, you know, the data all working together so that you can start applying things to it, like ai and machine learning. So you can get the insights that you're looking for.
And then you can have data scientists start to solve really complex business challenges. So our biggest challenge right now, and what we're spending a lot of time on this year, is just organizing data, making sure that all aspects of our business are using the same sort of terminology. So data governance is really big an emphasis for us right now. And then, you know, layering on top of that the most current visualization tools.
Alan:
So do you consider outsourcing some of your technology needs? Or do you just think it's something that your internal organization can satisfy you guys with?
Lane:
Yeah, the thing that, the way we think about it is that we want to invest in things and have internal staff where we can add long-term value, where we can create long-term value. We don't want to add what I would characterize as unsustainable operating expense. So if we've got a project that's got a duration that's, you know, shorter in nature, a couple of quarters a year, maybe. And then that work is going to be substantially complete. We wouldn't really want to hire people to do that if we can find so talented and skilled people that would do that on project level basis. And we've got some fantastic partners that we lean on heavily for that stuff today. The other thing we think about is speed to market, right?
We may have all the talent and capability internally to do something, and we may believe that it's got long-term value creation associated with it, but if it's going to take us three months to get to it where we can have somebody else get to it next week, that's always something that we'll consider. We want to be nimble. We want to be quick. So that's part of the consideration as well.
Alan:
Yeah. And, you know, just to put a plug in for e123 - that's usually one of our big attributes, and that's one of the reasons we usually get awarded with accounts is just to speed to market. We were asked by a large national name carrier several months ago, could we, could we work on one of their projects? And we said, sure, and, and we did. And it was something that we literally did in a month that their own internal it team said it would be 18 months at a minimum. So using 3rd party vendors sometimes for speed of market is certainly, is certainly a key and a so thanks for, for, you know, discussing your data needs and, and what's going on.
If you could just get into your crystal ball just for a moment, what do you think the future holds?
Lane:
Wow. Well, in the pet insurance space, I see massive product disruption. What I mean by that is the, the products right now all kind of look pretty similar. And I think there's going to be an explosion of innovative ideas. You're going to see pet insurance show up, as I'll give you an example, you'll see it show up almost like travel accident insurance, where you, you know, it's included in your, in your credit card as an added benefit, or maybe a membership to an, an association like AAA, where it's just kind of a core benefit there. I think you're going to see accident only type products. You're going to see catastrophic products where somebody's willing to take the 1st several thousand dollars of risk, but they don't want to, you know, have the, yeah, the $10,000 or the $20,000 bill there's also going to be a significant race to what I call the top of the final, you know, with, with more personalization and a fully digital mobile experience.
But everybody wants to try to capture that relationship with the pet owner or the pet parent at the moment they acquire the pet. And so that, that's going to be, and, you know, people have different needs to want to do that. People that we all be competing with don't really necessarily want to do that to sell insurance, but we're still going to have to get in front of that pet parent as early as possible.
Alan:
It's interesting that the pet insurance is on the cutting edge, but at the same time, you've rang up, old insurance ways of selling with catastrophic insurance and accident only types of insurance. So it's funny how it still kind of rolls back to some of those fundamentals. So what trends are you most excited about?
Lane:
Well, one thing I've learned about this business, is, and I really didn't have a full appreciation for this until the last couple of years, but people love their pets and will do anything for them. That's not necessarily new. It's a revelation for me, having now been inside this business for a few years. But what's changing is that the rest of the world is catching up to that. And that is new. What I mean by that is you're seeing pop up of pet resorts, pet spas, pet friendly hotels.
There's an explosion of health care services now available to pets, massage therapy, I've seen people getting bypasses and stints set in. There's all sorts of sophisticated cancer treatments for animals. There's mental health. It's emerging. So you're seeing an investment in healthcare longevity. I'm even seeing smarter homes and workplaces, a very sophisticated pet relief area. I just walked past yesterday in the LA Airport. It's like the whole world is catching up to the fact that people don't just love their pets. They want to have them with them all the time. And the world is really not well equipped for that today. But that is changing very quickly.
Alan:
And that's really even on the on the side of my wife and I, we have two dogs that we adore. And, it's to the point now when we go on vacation, you know, the dogs are coming, and so we have to find a pet friendly facility that that'll [provide] us service. So, yeah, I agree. And it seems like there's always been people that have been fanatical about their, their pets, but it just seems like it's been an onslaught the last few years.
Lane:
So, it’s great time to be a dog or cat in this country. And, and, yeah, yeah, I agree.
Alan:
I agree. I'm signed up, I will certainly patronize you guys. For sure. We really do appreciate you spending a few minutes with us and sharing your thoughts. To me, it's fairly obvious that in Independence Pet Group as a great business model, you're a great leader. And, and you guys are going to be a force to be reckoned with for, for years to come.
And I really like what you guys are doing, how you're thinking, you're thinking out of the box. You're, you're trying to improve not only your mousetrap, but the, you know, the pet industry as a whole. So I appreciate that. And I really appreciate you spending a few minutes with us.
Lane:
Well, thank you for the kind words, Alan. And, and it's been talk to you, as always. Thanks for the time.
Announcer:
Thanks for listening to this week's episode of insurance innovation brought to you by e123. We hope you enjoyed the show. Please provide feedback and let us know topics that would inspire you on the website at e123insurtech.com, home of the premiere life and health insurance distribution management system. If you'd like to be featured as a guest or tell us about someone you'd like to hear us interview, please reach out. We'll see you next time.
