The insurance industry got a wake-up call in 2017. AsInsurTech rapidly shifted from a buzzword toreality, many carriers raced to figure out how to bring thecreativity and agility of these new startups to their maturebusinesses.

One company's solution

At PinnacolAssurance, Colorado's leading provider of workers' compensationinsurer, we responded by building a brand-new company and digitalplatform in just 12 months.

We started in 2016, on the heels of our company celebrating itscentennial anniversary. We already knew that consumers have come to expect Amazon-likeexperiences for every purchase they make, insurance included.We knew we needed to continue to invest in technology for newsources of data and operational efficiencies. And we saw a clearopportunity in the small commercial marketplace, which isincreasingly populated by millennials for whom digital,self-service experiences are a way of life.

Related: InsurTechto 2020 and beyond

In response, we created Cake, our new InsurTech solution that hasradically changed how small businesses purchase and manage theirworkers' comp coverage. With Cake, business owners can now buy apolicy in less than five minutes online, generate and sharecertificates of insurance via email or text, and more. Launched inOctober 2017 — three months ahead of schedule — Cake's entrysparked a lot of curiosity and interest.

Creating a brand-new InsurTech startup wasn't easy. Here arefive lessons we learned along the way:

No 5: Move it offsite.

Make no bones about it: Disruption is a full-time job. It is virtuallyimpossible to achieve truly transformative innovation andrun an existing business at the same time.

For this reason, we decided to separate Cake from Pinnacol'sheadquarters and create a discrete team with their own resourcesand mission. Then, our chief strategy officer, who happens to be a20-year company veteran, was hand-picked to lead the newbusiness.

Related: Disruption in 2018 and a tale of twoindustries

No. 4: Hire a mix of people.

We knew that taking our best shot at competing with InsurTech startups meantmarrying their innovative spirit with our deep well of expertise.So while Cake is led by people with insurance backgrounds, we alsoactively recruit outside perspectives and skill sets.

Early on, we partnered with creative consulting and designagencies, and brought in a variety of tech startup veterans as wellas young professionals from other industries.

Our staffing strategy not only affected the product, it helpedus overcome some of the inherent cultural barriers to working ininsurance. It also has resulted in a technology-fueled ethos that'sat the heart of the Cake brand.

Related: 6 ways to tackle the insurance industry talentgap

No. 3: Move fast. Then try to go evenfaster.

The winners and losers in this digital race willlargely be defined by those who move at today's new speed ofbusiness. Unfortunately, speed does not come naturally to mostinsurance companies, especially large ones. This is one big reasonsmaller startups have been able to become so competitive.

Since incorporating Toyota Lean manufacturing principles intoour operations in 2014, Pinnacol has grown increasingly adept atfinding ways to improve processes and deliver faster. Theseprinciples drove Cake's development, and allowed us to get aproduct to market three months earlier than initially planned.

We also created an executive steering committee that was solelycharged with eliminating any barriers Cake employees identified inorder to help their team move even faster.

Data infrastructure can present another obstacle to speed. So wedecided to make Cake a 100-percent cloud-based product. We believethis is the future of InsurTech, and a competitive advantagerelative to the complex, legacy systems used by nearly allcarriers.

Related: Independent insurance agents have an edge in thedigital market

No. 2: Bring your board with you.

Your ability to move quickly will largely depend on your board.Management teams may think about our changing marketplace and itsassociated risks 24/7, but most boards do not. If you have notbrought them along to have a similar understanding of the digitalthreats and opportunities facing your organization, they will beless likely to make the timely investment you need to act.

Related: 5 hallmarks of insurance industry digitalleaders

No. 1: Make customers your primarybusiness.

We've spent a lot of time interacting directly with customers tomake sure we're building a product they love. Our newcompany aims not just to meet customers' current needs but also to satisfyfuture needs they don't yet recognize.

The example I like to share is that of the iPod: Two decadesago, I had the best Sony Walkman available. I was happy with theproduct and didn't think there could be a better one for listeningto music. But Apple set out to understand the customer experiencebetter than anyone, even better than customers themselves. (SteveJobs used to quote Henry Ford: “If I had asked people what theywanted, they would have said faster horses.”) As a result, Appledelivered a product that most of us never knew we wanted. Indoing so, they reshaped the music industry and created a legion ofloyal customers.

Related: It's the customer experience,stupid

Today's dynamic marketplace demands that kind of fascinationwith customers. We can no longer take insurance buyers for granted,even in mandated sectors. With small businesses far more likely togo out of business than to ever file a workers' comp claim, our jobis to provide value beyond our policies.

How can we exceed customers' expectations in addition toinsuring their businesses? We can use analytics to make the quoteprocess faster and easier, as well as to personalize the userexperience.

Exciting applications

Innovation is no longer solely a startup's domain; it's the newNorth Star for all insurers, big and small, old and new. Together,we can learn from and complement each other in reinventing ourindustry.

Phil Kalin is president and CEO of PinnacolAssurance in Denver, Colo. He is active nationally on health care topics related to data analytics, technology innovation and risk mitigation. Hecan be reached by sending email to [email protected].

The opinions expressed here are the author's own.

See also:

Deliver on a multichannel digital strategy — orelse

Today's connected insurance consumers expectconvenience