Three Innovation Lessons From Creators Of Disruptive Insurance
Three years ago, Co-operators —one of the largest underwriters in the Canadian insurance industry—took a leap of faith on an idea that completely subverts the way insurance works. They decided to mess with the concept of time.
For almost all of modern times, insurance has typically been purchased on annual cycles. You purchase coverage for the year ahead not knowing what could happen to your car, your home, or your business. Hopefully you won’t need it, but it is there just in case.
Yet there is a growing set of cases where that year-based precedent doesn’t fit anymore. Should you have to buy a year’s worth of coverage to rent out your house just for the summer? What if you want to try selling homemade goods at a farmer’s market—must you shell out for a full-year policy to just give your hobby a try? What if you only need insurance for the two months that you plan to do a home maintenance side gig?
Enter a new category of insurance products: Personalized insurance on demand. In this new world, customers can get insurance just when—and at the right level—that they need it.
Co-operators was one of the first movers in this space, launching a satellite called Duuo in late 2019 to tackle this digital future. It wasn’t an easy decision to make: investing in on-demand and short-term insurance is as much a cannibalizing threat to its existing business lines as it is a growth opportunity. The new start-up would have to fight hard to survive, as history shows it is exceptionally challenging to launch new brands and deliver consumer trust in the financial services space.
Despite these challenges, Duuo has rocked the insurance world. In just three years, Duuo has built a series of iterative MVPs and established over 200 partners as it creates never-before-seen on-demand insurance solutions. Its core product is a subscription insurance for self-employed and gig workers that automatically adjusts insurance coverage based on how much income comes in.
We sat down with Peter Primdahl, VP of Emerging Business Models at Co-operators, and Eric Tyndale, who heads up marketing and sales at Duuo, to hear what lessons they’ve learned about what it takes to be an innovative leader within both a large company as well as in an industry that is often resistant to change.
1. The hard part about leading innovation isn’t coming up with the idea—it’s managing relationships, messaging, and execution.
Leading innovation can be some of the most challenging and lonely work in the corporate world. Why should the company divert funding from profitable business lines to experiment with unproven ideas?
“When I took this job three years ago, I thought the most important part would be coming up with an innovative idea,” Primdahl said, reflecting on how he landed upon episodic, on-demand insurance after a winding and circuitous route. “But the most important part is actually more pragmatic: how you communicate your story, message your mission, and keep your staff engaged.”
In his initial pitch to the executive team, Primdahl shared his view that it was important to invest now because there was opportunity they could capture as a first mover. He needed to be optimistic about the opportunity, yet realistic about how long it might take before they achieved profitability. It was a careful balance worth getting just right. To their credit, Co-operators leadership quickly “bought in” and even liked the idea of testing something outside their day-to-day operations.
Years later, he notes that being deliberate and thoughtful about communication is still as important as ever. “As an innovator, there are so many divergent opinions that you have to appease on any day. You always have to manage upwards and compete for funding and entice people to invest in your business. You have to walk an extra ten miles just to survive.”
Primdahl’s advice to other innovators on how to manage expectations is to create the framework that you want to be measured by. Tell them what is realistic to expect within the first few years of a new venture.
2. Don’t be product-led or technology-led. Always be customer-led.
One of the things that Co-operators does exceptionally well is grounding its innovation in real customer problems, not just trendy technologies and buzzwords.
Co-operators uses a customer insights framework called Jobs to be Done to help understand its market and where to focus. By investigating what “jobs” gig workers were trying to get done in their lives, Co-operators learned about how insurance fit into modern lifestyles and what needs were being unmet in the Canadian economy.
“The big breakthrough for me was to see us as a facilitator of what people really want to do,” Tyndale said of the insurance company. “People need insurance because they want to do something else that is more fun than buying insurance.”
Perhaps, for instance, they need to tick a box in order to hold a wedding or rent their home on Airbnb. Integrating this insight into Duuo’s values and mission statement helped clarify product, message, and positioning. Jobs to be Done helped reframe the question from “what should we build?” to “what are people trying to do, and how can we help them do that?”
Jobs to be Done also helped Duuo isolate the exact problems that they needed to solve for gig economy workers, such as managing the stress and hassle of unpredictable income. Variable income is challenging for insurance to deal with; it is hard for applicants to guess what their future income could be, and it is hard for insurers to correct for actual figures after the year has been booked. This insight sparked a subscription-based policy that retrospectively rates and applies credit on a forward basis without changing the policy coverage. That means that if you didn’t work in July, then the insurance premium you paid is automatically adjusted and applied to August.
3. Build structures to protect new ideas.
New ideas are fragile and easily extinguished, but the way that some corporations approach them can make them seem monstrous. Reality check: new ideas are more like gnats than grizzlies. They aren’t going to kill a successful organization.
Primdahl and Tyndale recommend building protective moats around new ventures. For Duuo, this meant making it a satellite separate from Co-operators. They staffed the team with some internal transfers from around the parent organization, mixed in with new faces. This freed the Duuo team from processes that have been built to protect the core organization. As a separate organization, they could truly challenge the industry standards in these new markets.
Safety goes in many directions, and this structure did three things well. First, it protected Duuo from being constrained by the attention of its own parent company, as new ventures in a legacy environment so often are. Second, it ensured brand safety to Co-operators, which could be shielded in case the venture didn’t work out. Third and most surprisingly, the satellite separation made it easier for people to help Duuo. “People can give their best advice when they are freed from their current constraints,” Primdahl wisely noted.
Leading an innovative organization has never been more important than it is now. You can cultivate that innovativeness in your own teams by being deliberate about your messaging, using customer research to guide your new thinking, and building in structure to protect fledging new ideas.
This piece was written with my colleague Jennifer Luo Law.
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