Digital innovation has been a focus at American Family Insurance since 2012, when its early-stage business development team began spreading one core message throughout the company’s C-suite: “innovate or die.” But at the time, American Family’s technology portfolio was not very robust, admits Ryan Rist, director of innovation at the Wisconsin-based carrier since November 2014.
“I stressed the need to have a team that would act as a test kitchen,” Rist, employed by AmFam since 2002 in multiple marketing and enterprise strategy roles, says.
That assertion led to the creation of his innovation team almost four years ago. Rist says his intent was to steer the insurer away from meetings and paper work towards building and testing concepts developed with input from policyholders. The group is now comprised of 15 technologists with expertise in electrical engineering, meteorology, chemistry and industrial design.
“We are not interested in playing small ball,” says Rist. Projects developed by his team are either implemented within the company or rolled out as stand-alone businesses.
His unit operates under the insurer’s business development division, while also serving as one pillar of AmFam’s overall digital strategy. The other components include a data science lab, venture capital arm—American Family Ventures—and M&A business, which acquired Homesite Insurance and The General, an auto insurance carrier, in 2013.
AmFam’s innovation team places particular emphasis on cloud computing, and the infinite resources that can be applied to the technology such as artificial intelligence, robotic process automation and higher-level programming languages like Python.
“How all these technologies come together is more of the focus than one individual piece of tech,” says Rist. “They lead to things like the connected home.”
The connected home is arguably AmFam’s greatest focus. The insurer publicly announced partnerships with Ring and Nest in 2015 and has privately tested an additional 20 to 30 companies’ products to date, Rist says.
Back in the fall of 2014, AmFam also teamed up with Microsoft to launch a one-time connected-home accelerator. More than 400 companies applied; 10 were selected.
“We learned a lot about the hardware space, while we provided Microsoft with knowledge about homeowners and tested startups’ technology on our customer base,” Rist says.
Through mentoring, startups also left in better positions than they came in. A couple, including Red Balloon Security, also received VC investments from the AmFam Ventures.
“AmFam Ventures has been a secret weapon for us,” says Rist. “They screen 2,000 companies a year and have met all the startups you’ve probably heard about.”
Rist says it’s hard to measure how much money AmFam has pumped into its innovation efforts since 2012 between acquisitions, venture capital partnerships, new hires and real estate investments. As an example, AmFam’s allocated investment portfolio has grown to $250 million, he notes.
The company is also awaiting the completion of “The Spark,” an eight-story building in downtown Madison, Wisc., that will be home to StartingBlock Madison—an initiative funded by American family to offer work space to startups of all sizes. The project has also received significant city, state and federal funding, reports Madison.com Rist’s team will move to the new location once construction is completed, he says.