Insurance — it is an essential financial resource that homeowners and businesses rely upon to navigate the uncertainty that comes with disasters big and small. While most people know how critical carrying insurance can be when faced with a disaster, few have a full grasp of the different types of insurance, why policies are structured in certain ways and how the ecosystem of insurance providers works together. But there is a reason for all these choices.

In this episode, host Maiclaire Bolton Smith sits down with the President of CoreLogic's Protect Division, Garret Gray to discuss the past, present and future state of hazard insurance as well as explore how technology will help this industry evolve into a more streamlined ecosystem

Maiclaire Bolton Smith:

Welcome back to Core Conversations: a CoreLogic Podcast, where we dive into the heart of what makes the property market tick. I’m Maiclaire Bolton Smith, your host and curious observer of all things related to property — from affordable housing to market trends and the impacts of natural disasters to climate change — I want to converse about it all.

Insurance — it's an essential financial resource that homeowners and businesses rely upon to navigate the uncertainty that comes with disasters big and small. The industry has come a long way from its origins. What began as a solution to protect globe-trotting, merchant sailors from the coffee-houses of London, is now a robust industry. From insurance origination to claims processing and physical restoration, insurance is designed to cover a broad array of assets from both natural and human-caused perils.

Garret Gray:

Wow. Thanks for having me, that's a great intro.

MBS:

All right. So, to get us started today, why don't you tell us a little bit about your background in the insurance space and how you use it to inform the direction of where we are going with CoreLogic in the Protect segment?

GG:

Yeah. So, my background in insurance is from the trenches.

MBS:

I love it.

GG:

I grew up in the space, been around the space for about 17-plus years. And most of what I did, in the beginning, was sucking out black water or getting into the crawl spaces of homes in full protected-

MBS:

Deep in the trenches.

GG:

Deep in the trenches. Learning it from a very hands-on perspective. So, most of what I've done really came from the contractor perspective, knowing really what it took to get work done in terms of settling claims. And so, I really focused in the early days on the business of claims settlement and what that means in terms of all the paperwork and the administrative work for getting that taken care of. And back in those days, it was very manual and very paper-intensive and very inefficient. Something that did not work well for both policyholders, adjusters and all stakeholders in the claims process. But over time we've been a part of transforming that and digitizing it, making it completely virtual.

MBS:

That is so great. And really the reason why we want to have this conversation with you today. So, just diving a little bit into your background because that's great-deep in the trenches. What makes insurance so interesting for you to... Why have you made this your life?

GG:

It really is something I sit and reflect on every once in a while. Why this area? Why insurance? It seems such a random place to really build a long career in. I think what really drove me to continue to innovate in the space is, it was the industry that really lacked a lot of innovation, a lot of the way people operated. And I remember adjusters would only receive faxes. And that's not that long ago for an industry that was really just bogged down in manual processes. And you look at what we get to do when we're serving the space is you've got people who are at their lowest point in their life sometimes. They've had their whole home destroyed and all of their possessions and their family videos and photos, little Tommy's teddy bear.

There's all these personal connections to people's most sacred items that are affected in this moment of peril. And being a part of teams that got these properties back to pre-loss condition, these lives back to pre-loss condition and all of the work that it takes to fund that and get that adjudicated through the claims process. There's such a human element to it that has really driven, at least, my interest in this space.

MBS:

That's so great. And you really resonate with me and with a lot of people because here at CoreLogic we say we help protect and restore properties. And that's the human aspect of this, this why we do this. Is we help people come back from when bad things happen to them. So, I want to dive into innovation. I want to talk about what the future looks like, but before we get into the future, just explain what does the insurance industry look like today?

GG:

And so, that's the lens that we put over all of our solutions. How do we make sure that those who are servicing the policyholder to get them back to a better state than they are prior to the loss, how do we make sure that they are freed up to provide that level of customer service? And so, where is insurance at today? Insurance is in the middle of that transformation, right? There's still a lot left to be automated, but there's a lot that we've improved over the last several years that have allowed the focus to return back to the policyholder.

MBS:

So, you mentioned about a few things there, and I love that you started talking about adjusters and different parts of insurance. Because I think a lot of people are familiar with, "I bought a new house, I need insurance for it. I have a pipe burst, so I need to get my pipe fixed." And insurance is something that we all have and we all hope we never need to use, but when we do need to use it, we're always in the state of, "What do I do with it?"

So, I think a lot of people probably are familiar with claims management because, heaven forbid, if something happens, you need to deal with the claims. But you are very familiar with another part that people don't necessarily think of and that's restoration. So, I want to talk a little bit more about restoration. Can you talk a little bit more about what is restoration versus claims management — or underwriting for that matter when we're about to talk insurance — but why you really wanted to focus on this and really make it your career and your life?

GG:

Yeah. So, I think there's many components to insurance, right? You've got underwriting and pricing price to risk. Anytime there's a claim, you have the claims management. And then you got the actual restoration, which is the work of putting the homeowner or policyholder back to pre-loss condition. And in a lot of ways, I don't want to say it's the most important work, but it's the work that has the most human element associated with it, right? I think it's really important that we have better tools to make sure that we're better matching potential policyholders to policy writers. And I think that has a human component, too. I moved to the LA region recently and finding somebody who would write a policy given my proximity to a wildfire risk, difficult, right?

And so, anytime I've had a chance to talk about this, I've brought this up. But I think the better that we're able to help match people looking for policies and people who are willing to write those risks. There's a big benefit there, and I think we're definitely focused there. But when somebody does have a loss and you need to match them to a resource, a contractor who is best qualified to handle that particular type of loss, that has the best sort of statistics in terms of their previous SLA Management, and their speed at getting the job done, the quality of the work that they did, the way that they wrote their estimate, all things that we help drive better outcomes for in our claims management and restoration solutions.

But then, taking that data and figuring out how to best match a particular policyholder with a particular provider, hoping to get a better outcome just purely by matching the right people together. There's a lot that we can do and do do to both match the right resources and then guide everybody through that process in such a way that we're able to drive better outcomes for both the policyholder, the carrier and frankly, the contractors or service provider who are trying to get that work done.

MBS:

So, one thing I'm going to do, you did use an acronym there and I always like to make sure we stay on top of these — SLA?

GG:

SLA, Service Level Agreements. So, essentially the Service Level Agreements that people will greet you and say, "Hey, I will spend an estimate within 24 hours." Things that keep the claim moving along. And so, we do a lot to both make sure that those are well-identified and well-articulated and then tracked so that we know who's living up to those Service Level Agreements that they're agreeing to.

MBS:

I'm glad you just defined that because that really is what we want to focus on, is the helping part. And it really is helping drive things and connect things too, from whether it be the service provider or the contractor for the policyholder and help connect everything all together. And we're going to talk a little bit more about the entire ecosystem in a minute, but more than half a year ago now already, you were the President of Next Gear Solutions, which was acquired by CoreLogic, and you've come in and now are the President of Protect. Can you talk a little bit about what Next Gear Solutions brought to CoreLogic and how this marriage of the two together now really does help provide a new industry standard of what we can offer the insurance industry?

GG:

Yeah. So, I think if you think about the traditional CoreLogic assets, especially around the really vast amount of data that we have both in property and in terms of underwriting and hazard and risk. And then you look at the newer assets that CoreLogic bought even before Next Gear around estimatics and claims management and then you now look at what CoreLogic bought with Next Gear, and that really completes the full life cycle of a claim. So, if you go all the way to underwriting and now all the way to claim settlement, we have a solution that focuses on every aspect of the claim. All the way from pricing the risk and then now to settling once a claim actually materializes. And then that feedback loop of all that exhaust data, being able to re-inform the process so that we can have even better underwriting data, is really exciting.

And, and we're still at a very nascent phase of starting to connect all these dots together. But if you lay it all out and look at what the actual restoration data that we now have from the Next Gear claims platform and understanding how claims are getting settled and how claims are getting adjudicated and the performance metrics of the contractors who are doing those claims, and you can connect that to our dispatch capability and our ability to really inform and change the claim outlook throughout the entire claim. It's a really powerful set of tools that really connect together in a way that I think is extremely unique. Because we as Next Gear had the largest group of contractors using our tools, and then you take that and marry it with this really incredible property data and weather insights, and you look at all the different things that we uniquely are positioned to create as a result. It's what's made me so excited to one, take on this new position and to think through all the ways that we can change the way this space operates over the next coming months and years.

MBS:

It really is the way of the future — everything an end-to-end solution. So, I think this end-to-end solution for insurance is what is driving a lot of this excitement because that's something that historically in the industry has never been available. So, I think historically when people think of insurance — and you've touched on a lot of this today, everything's been very segmented, it's been like, here's your underwriting, here's your claims. You need to get a contractor you're on your own, figure that out. And now this is really about connecting all of that together in this one big, broad insurance ecosystem from end-to-end. So, why is that so important?

GG:

Yeah. In a weird way, there's been different elements that have wanted to stay disconnected on purpose. So, for example — this is in the contracting world — carriers used to say that if you're doing the mitigation, I don't want you to do the reconstruction. And there was a reason to say the way you do the mitigation, if you know, you're doing the reconstruction, you might actually create more scope as a result. Maybe you'll do more demolition than you needed to because you're going to do the rebuild. And so you were a conflicted party. And what's interesting is now that we've got technology and our audit capabilities, we can actually assess that out and see who's doing that and prevent that from happening on the front-end. And then we're able to say, "Okay, let's get a single provider," because when those things are controlled for, we actually get a better customer outcome by having a single provider.

And so, we're letting technology be the referee so that we don't have to worry about conflicted parties potentially inflating the scope. And so, in the end, what we're doing is getting to fewer people involved in the claim, which gets to better outcomes. We're still controlling against potentially bad behavior by a service provider. And so, I mentioned that to say, as we get to less and less connection points, meaning there's disparate systems or things that are not connecting with each other well or not talking well, we can get to better outcomes and then control for all reasons why you might have wanted to keep those things separate. So, is it important to have a feedback loop from what's actually happening in claims into underwriting? Absolutely. And so we should be making those connections. If we can get to a better knowledge of what it would take to actually restore different homes, given the rapidly changing inflation that we have and the different costs out there to restore properties, if we can get that into underwriting models, we should be doing that.

And so, I think that it becomes pretty obvious, the more that you can embrace a particular platform and then use all the interconnections to get to better outcomes, that's something that carriers are interested in doing.

MBS:

Yeah. That's really interesting. I had never thought about that perspective of maybe conflict of interest of having multiple people involved. And I guess the question then leads to, by having more of a connected ecosystem, will it actually help or maybe lead to fraud? Will it maybe help with more fraud? We've talked about that with insurance claims before, and I guess that just comes up.

GG:

Yeah, I know. It's a good question. And it's one that I think you look at the tools that we offer and it's scrubbing a lot of fraud and having disconnected players actually led to more fraud. For example, when you did have... or fraud is maybe a strong word, let's just say inaccuracies.

MBS:

Okay.

GG:

And so, I think when you look at and compare estimates, you go, "Gosh, we can see that there was duplicate demo done in the same room in the same area." Two different estimates, right? By two different players. We know that it's not true. We know only one of them could have done this demo, but we're finding this demo in two different providers' estimates. And the only reason we're able to find that now is because we have these 360 tools that, where we scrub the estimate and compare it together and go, "Gosh, how's it possible that demolition was in this exact same room by this provider." And then they, somehow the next provider did demolition too in the exact same area. And what it was is that it was a common thing that could be done. So, they both put in their estimate, but in the end, we know only one person did it. So, that kind of capability for us to scrub that and say, "Look, this is a flag. This shouldn't have been done."

It lends itself to say, really it would've been better to have one provider there the whole time because we would've been able to make sure that they only charge for it once. And now we don't have to determine who accidentally put it into their scope. So, I think that's one example of having less parties involved and having a more streamlined approach but using technology to make sure that we are reducing the inaccuracies, and getting to more accurate, fair, faster settlements is better for everybody involved.

MBS:

No, that's great. Do we have any metrics on maybe how things have improved or do we not?

GG:

Yeah, so there's about a 10% inaccuracy that we've been able to... Which is pretty significant, when you think about the level of inaccuracy that we're able to scrub out. And a lot of times inaccuracy is by mistake. And so, we're able to give contractors feedback instantly to say, "Hey, look. We think these are things that maybe should not have been in the estimate that don't make sense one way or the other." And inaccuracy can be both levels, right? It could be people forgot to put something in, it doesn't always mean they over-scope something. So, these estimates are relatively complex to put together, and so our tools pretty consistently find about a 10% inaccuracy that they're able to scrub out in the initial process. Where the adjuster 50%+ of the time doesn't have to touch it to get that to be fully accurate in compliance.

MBS:

Okay. That's really interesting. And really a benefit of having this connected ecosystem in this end-to-end solution where you can streamline and eliminate inaccuracies from happening. Sometimes in this podcast, I like to say, "If you had a crystal ball and you could look into the crystal ball, what does the future look like?" And I think specifically, you've talked about how things have evolved really in a short amount of time too — from everything being paper to where we are today. If you think specifically about the restoration side of things, what do you think the future looks like?

GG:

Well, first of all, part of the catalyst for things to speed up so fast. So, we were already on this train of going to more virtualized flows, more digitized last manual workflows, but then this little thing called COVID happened and its-

MBS:

Pandemic-driven innovation we call it.

GG:

Yeah. But COVID changed everything really quickly. Essentially, things that were already in flight sped up really fast because insurance carriers very quickly had to send their adjusters home. They were not working in the office. And they were also not going out to the field. For a long time adjusters were not able to go into people's homes and yet restorations still had to keep happening, right? People had a pipe break or they had a fire or some sort of peril. It wasn't like they could just say, "Hey, we're going to wait till the pandemic is over to start the restoration process." That still had to keep moving forward, and carriers had to very quickly figure out how to operate in a world in which adjusters could not get into people's homes. And they still had to conduct business. And so, it wouldn't make sense for carriers to say, "Hey, we're just going to have zero checks on this. We're just going to do whatever the search provider says." That wouldn't work. And so, it really forced the need to kind of embrace a lot of these tools, which they were already in the process of embracing.

And so, when I'm talking to people about where is the industry going? Well, one thing I am confident of is that while COVID accelerated the direction towards more virtualized processes, I don't think it actually changed the trajectory. And what I mean by that is, I don't think we're going to reverse once COVID is over, right? And the reason for that is that these were not new ideas that people had never considered before that were only applicable to COVID. These are ideas and working styles that were already in the process, but carriers tend to move slow and COVID forced them to move fast. And so, I don't think like there's a good reason to think that they're going to reverse. In fact, I think it's only going to continue to accelerate. And so, where is the industry going?

I think if you're a contractor, you have to recognize that there's going to be more and more of these technologies thrust upon you to help virtualize the process. And if you're anti or change-averse, then you're going to have to struggle with, "Do I stay inside the ecosystem or do I move outside the ecosystem?" There are some contractors that live outside the ecosystem and they do just fine, but I think that the pool of claims that will exist outside the ecosystem will shrink. And so, if you want to have access to as many claims as possible, you need to be inside the ecosystem. And so, you need to be fast-adopting these new technologies so that you stay open to as many of these claims as possible.

And carriers themselves are going to have more and more players that are trying to solve this digitization and virtualization problem for them. And so, there's going to be more competition for them. CoreLogic is one that has definitely gone all-in on this as with the acquisition of Next Gear and Symbility and others. And so, I think we'll be trying to be at the forefront of taking the best data and the best claims workflow solutions and digitizing this process for carriers and getting into better outcomes that way, but there'll be others. And I think you'll even see some of our competitors step up given our recent moves. And so, there's going to be a lot of innovation in this space, both AI, ML, computer vision. There's just a ton coming down the pike. So, machine learning and AI, Artificial Intelligence, these are acronyms I just used, but essentially our tools that are scrubbing for the estimates use these bots, which are essentially algorithms that look for the fact that you have duplicate demolition, for example. Artificial intelligence can take that to a whole other level and even be predictive about what needs to be in the scope based on certain attributes about the loss.

And so, what this means is that technology is going to play a bigger and bigger role in how work gets done. And so, the more you're at the forefront of being a part of that, it's easier to keep up with the learning curve. If you stay resistant and say, "I'm going to be a late adopter," it's only going to become more and more to learn. And so, I think as you're building businesses or you're thinking about your claims platform or you're thinking about how your adjusters or your estimators, or whoever you're managing is doing their work. Integrating technology into it, trying to keep up with the state of play, I think is an important part of your strategy because it's only going to get more fast-moving.

MBS:

And I think it's a theme that we've heard across the board in all industries is first of all, that pandemic-driven innovation — industries were on a path of things being innovative and COVID just expedited all of it. And people needed to have these extra innovations to be able to continue to do their jobs during the pandemic. But I think you touched on a lot of really exciting things about the future, about this connected ecosystem, about all of this innovation. To wrap up here with one last question, my thought is, what are the challenges with all of this? Because with innovation, there are always challenges with this new connected ecosystem going back to those people that wanted to write things on paper to where we are now, what are the biggest challenges with the future?

GG:

Yeah, I think the biggest challenge is getting people who've existed in a certain paradigm to change. And change when it's not perfect, right? Nothing that is technology-based works perfectly all the time. There are challenges about the landscape that you have to deal with. So, there's connectivity issues sometimes in terms of, do we have Wi-Fi or do we have cell connection? And so, it's really easy to attack the technology and say, "Oh, this is going to take longer," or not realize that we're putting more work into the front end because we get less work in the back end. And so, I think that the biggest challenge is user adoption and getting people trained and embracing the change. And I've been at that for 17 years. It was something that in the very beginning, what we were asking people to do, looking back on it now was a lot more difficult than what it is today.

And I think regardless, we always struggle with that change, and I think all of us are change-resistant. And so, I think my biggest message to people is: You have to look at where things are going and technology for all of its challenges is going to continue to inform this process. And I still see certain individuals who are like, "I'm not accepting email, I'm not accepting anything but a fax." And it's just like, gosh, those people are starting to have to retire because they're not keeping up with the fast change that's happening. And so, I think recognizing that change is coming and being willing to embrace it, not just tolerate it is what's going to lead to more successful claims departments and more successful restoration companies, and all around, I think technology is here to stay and it's going to keep driving innovation and change in our space. And the faster people embrace it, the more likely they are to be successful in whatever the new world brings

MBS:

Technology is here to change. And that's such a positive note to end onto. And I think if we look back, it's knowing your past to protect your future, and that's what this is all about. So, I know I said that that was the last question, but I do have one more because something else that comes to mind is adoption. And sometimes with challenges, it's not just that people won't adopt it's that they actually can't. So, we think of maybe some smaller businesses, mom-and-pop versus the big entities maybe can't adopt. So, what are your thoughts on that?

GG:

Yeah, so I love this question because I actually look at technology as the great equalizer between the mom-and-pops and the larger chains. And so, here's why, because if I subscribe to a lot of this technology, one, a lot of this technology that CoreLogic provides is as a pay-per-transaction. So, it actually lowers the barrier for people to get... A lot of times they're only paying when there's a claim that they're going to get access to. And the profit margin on these claims is such that the very small nominal fee that we charge is definitely not a blocker, but what it does do is it gives access, right? So, if they're signed up, if they are providing a good service, if they're hitting service metrics in a way that is competitive to say a bigger player and is actually doing a better job, then on our dispatch algorithms, they're going to get more work, which will help them build their business.

So, a lot of times I talk about multiple ways of people building their businesses and one is marketing through compliance, actually doing really good work, which then gets you more access to more work. And so, in this case, yes, are there fees for the technology, of course, but the benefit to building your business is actually much cheaper than the candy dropping and donut dropping that businesses have traditionally done to try to get more business in the door. They can actually just do their work in a more efficient way, do it in a way that's recognized where they actually now get plugged into an ecosystem and able to get more work based off the good work that they've done in the past. So, I look at this actually as the opposite, as it's not a barrier and more of an enabler to get more people into the ecosystem, improving themselves and getting to build their businesses through doing great work.

MBS:

Really an incentive for many people to just jump on.

GG:

100%.

MBS:

Garret, thank you so much for being here today and for joining us on Core Conversations: a CoreLogic Podcast.

GG:

You're welcome. Thanks for having me.

MBS:

And thank you so much for listening. I hope you've enjoyed our latest episode. Please remember to leave us a review and let us know your thoughts and subscribe wherever you get your podcast to be notified when new episodes are released. And thanks to the team for helping bring this podcast to life. Producer, Jessi Devenyns, editor and sound engineer, Romie Aromin and social media duo, Sarah Buck and Makaila Brooks. Tune in next time for another Core Conversation.