I spent last week at the Opryland Hotel in Nashville attending the AppliedNet 2018 user conference with about 4,000 other people. Because of some signals I picked up, I anticipated a significant announcement by Applied Systems. I wasn’t disappointed.
Toward the end of his opening keynote presentation, Reid French – CEO of Applied Systems – announced a “nine-figure” investment by CapitalG (Google’s investment arm) into Applied Systems. I had the opportunity to participate in two press briefings totaling almost 2 hours as various members of the press and industry analysts asked questions about the details and impact of this investment by Google.
French was also gracious enough to carve out 30 minutes in his full schedule to talk with Ryan Deeds and me on our Digital Broker Podcast. I highly recommend you listen to the interview to hear from French himself the details and implications of this investment.
Following are my early impressions regarding the significance and potential benefits to the industry and agents and brokers as a result of this announcement.
For Applied Systems and Its Users
It is important to understand that this deal was finalized just ten days before the conference. So, the answer to all the questions around “what’s next” is “we don’t know yet.” French was quite clear that a product enhancement roadmap has not yet been developed. However, he also talked about Google technology that would make sense to incorporate into their management system platforms. These include:
Google Search: Google is the top search engine worldwide. They know something about how to find information quickly. Wouldn’t it be nice to have a Google-like search capability built into your platform that would allow you to search for a piece of data in a field or a phrase in a document anywhere in the system?
Google SEO: Because Google is the top search engine worldwide, understanding how to optimize a broker’s Internet presence is key to being found by the online consumer. Add Google advertising training and optimization, and this could be a powerful combination that will help bring more agents and brokers into the “digital age of insurance.” Will there be more seamless ways to bring the consumer who is starting their search online into the agency’s marketing and sales process?
Gmail and G-Suite: Many organizations use Gmail and G-Suite as their office productivity platform. It is reasonable to expect that these tools will be integrated into the Applied Systems product line. Again, no specific commitment or timetable yet.
Data Security: We all know how important it is to protect client data from hackers. While Applied spends a significant amount of money on protecting data in their cloud platform, Google offers a white hat penetration testing service. French said, “They offer it, and we are taking advantage of this service.”
Machine Learning: Google Dialogflow is an open source platform for implementing machine learning technology created by Google. As an example of how this Google partnership will work, French said that they are “taking our high-end system developers on Epic and in November they will go to New York to attend Google’s machine learning boot camp that they run for their internal employees. They teach them. It’s a way for Google to get their technology down into a vertical market. It’s a way for us [Applied Systems] to leverage that experience that is only available for their internal team. The industry deserves the ability to use this kind of technology. It sets up Applied really well for the digital age of insurance and hopefully the next 35 years.”
Google Duplex: You may remember the demo of Google Duplex using a human-sounding chatbot to make restaurant reservations. Google Duplex is an automated personal assistant that was demonstrated at the Google I/O 2018 conference. Watch this video to see the demonstration. I need to be very clear here – this is my speculation of what might be possible when Google technology is incorporated into an agency management platform. I have no inside information and this is NOT an announcement by Applied of what they’re going to do. However, why wouldn’t they at some point in the future?
Recruitment: Direct access to Google engineers and their technology will provide Applied a powerful recruiting tool. What software engineer doesn’t want to have access to the best of the best?
What about your data?
French addressed the question of Google’s access to data head-on. “If you were to be misinformed, you might say that CapitalG made this investment in order to get access to all of the insurance data that exists in the Applied Cloud or our customers’ applications. The short answer to that is, no, Google has no rights to the data that exist in the cloud or is our customers. That is specifically called out [in the agreement]. This is just not accurate.”
He went on to say, “The other comment is whether Google is making this investment to learn more about the insurance industry to ultimately cut out the agent in some way. You would not have spent nine figures as an investment if you were not focused on helping the agent do well, so Applied can do well, so their investment can do well. This is a classic CapitalG investment. They have a vertical market software company that can leverage the assets that Google brings to bear for this particular vertical. They picked a leader in that area to invest.”
What’s in it for Google?
The second press briefing included Jesse Wedler, Principal at CapitalG and the point person for this investment.
CapitalG is the investment arm of Alphabet, the parent company of Google. CapitalG has invested in a wide range of technology companies.
The industry has been asking the question “Is Google getting into the insurance industry?” at least since 2015 when the first announcement about the Google Compare platform was made. I wrote an article – The Googlization of Insurance – that was published on LinkedIn in July 2015 that detailed my analysis of the Google Compare platform and why I did not think this move was a threat.
I asked Wedler, “I understand what’s in it for Applied. What’s in it for Google?” In response he offered several observations:
- This is a financial investment and, by leveraging Google technology, they feel it will positively impact their investment.
- This is a long-term investment.
- They have taken a minority position, which is their practice. They do not take a majority position in any of their investments.
- They “never invest in anything that would be competitive [to Applied Systems].”
- They will have a representative on the board.
CapitalG currently has financial investments in two companies related to the health insurance industry — Oscar and MultiPlan. This is their first investment in the property and casualty insurance industry.
A couple of key comments Wedler made stand out:
“Our investment [in Applied Systems] will only do well if the channel does well.”
“We are believers in the independent agency channel.”
For All Agents and Brokers
Those of you who are not Applied Systems clients may be wondering if, and how, this announcement might affect you. Following are a few of my thoughts and why this announcement is important to everyone:
Competition: I know the offices of competing agency and broker management systems were buzzing with the news of this announcement. Some vendors have gotten complacent. They have a captive marketplace, and because agencies don’t change their management system platform very often, there may have been this idea that it doesn’t matter if we keep up with technology changes. Every agent and broker will benefit from this competition.
Validation: I know some skeptics will not agree with me, but I view this investment by Google as a validation of the long-term importance and viability of the independent agency channel. All agents and brokers should see this move as a positive investment in your future. This also means you cannot be complacent.
Open Platforms: Google has built their technology on open platforms. Web services and APIs are a natural part of what they create and how they operate. I hope the mindset of creating open platforms will infuse our industry. To learn more about why APIs are essential to your organization, I suggest you listen to this episode of the Digital Broker Podcast.
Pressure on Carriers: Many insurance companies are behind the times. They have an ancient technology infrastructure that doesn’t allow for the types of communication connections that are increasingly vital to engage with the digital consumer. Some are upgrading their systems, but it is a massive undertaking. The Applied-Google partnership will put even more pressure on insurance company CIOs to invest and improve their platforms.
I do reserve the right to change my opinion as we learn more about the details and implementation of incorporating more of Google’s technology into the independent agency channel.
Agents and brokers cannot sit back and think this doesn’t affect them. It does. Those organizations that realize this and take concrete steps to improve their digital presence will be better positioned to win the hearts (and pocketbooks) of today’s consumer.
“The next ten years in insurance technology in the US and Canada will be super exciting. Lots of change. For those agencies and brokers that go after it, they will be more profitable, they will be bigger, they will be more web savvy, and their customers will be happier and stickier. I honestly believe all of that is true.” Reid French
This TechTips is already three times longer than average and I’m sure I did not answer every question you might have.
What do you think? Please leave your comments and questions, and I will address all of them.
PS: There were quite a few other announcements made at AppliedNet. Following are links to the Applied Systems Press Releases on these announcements:
- Applied Systems Acquires Dynamis Corporation
- Applied Systems Announces New Digital Agency Capabilities
- Applied Systems Expands eSignature Partners