Episode 4 with Tim Ash, CEO at Ash Brokerage

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Beyond the Challenge is a podcast where executives in the insurance and financial services industry share their insights and experiences. Hosts Kevin and Sandy Dougherty talk with today’s top business leaders about what keeps them up at night and the biggest opportunity organizations can capitalize on today. We encourage you to listen, share, and subscribe to our program.

Kevin and Sandy Dougherty each have over 20 years of experience in insurance and financial services, corporate leadership, and executive search. They’re the owners of Global Corporate Solutions and Global Corporate Leaders. Global Corporate Solutions partners with organizations to gain efficiencies and contain costs. Global Corporate Leaders partners with organizations to enhance and evaluate talent.

Beyond the Challenge podcast is sponsored by Exactuals, perfecting payments and the data driving them.

Welcome to Beyond the Challenge. Here are your hosts, Kevin and Sandy.

(interview)

Sandy: Today, we are talking with Tim Ash about the challenges faced by insurance carriers and producers in our new virtual environment. Tim, can you tell us a little about yourself and your background?

Tim: Thank you for having me on your podcast. So, a little bit about myself. I’m a Fort Wayne, Indiana, native, born and raised, haven’t really been out of Allen County very much in the 50 plus years I’ve been on this earth. And married, have three children, had our first grandchild. And I’m a second generation in the family business of Ash Brokerage. My father started it. We’re celebrating our 50th anniversary so, in 1971, my father, Jim Ash, founded the company and, you know, we treat this organization like it’s a startup. Even though we have 50 years of history, we’re constantly looking for ways to evolve, grow, change, and meet the demands of both consumers, advisors, and the insurance company partners that we distribute and work with. So, I’ve only known this industry. I’ve been doing it now for 30 plus years, and when you get to over 30, you get to add the “plus,” you don’t wanna give the exact number of years but, all fun aside, it’s the only industry I’ve known. I am very passionate about it. I think it does terrific social good. And our organization, from its humble beginnings to today, has grown to nearly 450 employees, of which around 300 are based out of Fort Wayne, Indiana.

Sandy: Thanks, Tim, and welcome to Beyond the Challenge.

Kevin: Tim, all sectors face challenges, but in insurance and financial services, the list seems especially long, between regulatory changes, economic uncertainties, rising consumer expectations, and a virtual selling environment. Can you tell us a little bit about the new trends you have been witnessing in the industry as a result of COVID-19 pandemic and does more uncertainty bring opportunity?

Tim: Well, that’s a good opening question, Kevin, and I’ll start with the second one, “Does more uncertainty bring opportunity?” You know, I’m a big believer that we’re all going to be going through many types of disruptions in our lives, whether that’s our personal or professional lives, and certainly I do believe that the more disruptions there are, the more opportunities there are to solve. The world doesn’t stop just because things have changed and, whether they’re political, economic, pandemic related, you have to keep marching forward and charging forward. And so that’s, you know, that’s really what we’ve done and some of the things, to your first question, that we’ve been witnessing in the industry as a result of COVID-19, we’ve seen processing changes, you know, underwriting change. We’ve seen insurance companies using more data and information to underwrite risks versus the traditional approach. We’ve evolved very much in how we interact with our advisors and I’d like to say we’ve become more of an education-oriented company. You know, I could take the whole podcast and talk about a lot of these things but there’s just been an enormous amount of change and with that change has come a lot of opportunity.

Kevin: What is your opinion about the future of distribution as we know it today? 

Tim: The future of distribution as we know it today is going to change dramatically. The insurance companies that we, you know, that we interact with are going to find it more and more challenging to be dealing with smaller organizations that don’t have the technology, don’t have the linkage, and so we’re going to see, I believe, a consolidation take shape in the distribution space. Whether you consider us a brokerage general agent or an independent marketing organization, doesn’t matter the label, we think there’s going to be significant consolidation. We’re also seeing it within banks, broker dealers, RIA firms that they want to work with fewer and fewer firms because of the complexities with new regulation and compliance, the requirements for privacy and security, understanding data, and they want to have one source and one resource for us to provide those services and many smaller firms have not invested to be able to provide that level of service. So we’re seeing that today. I think in the next three to five years, you’re gonna see dramatic consolidation.

Kevin: What do you see changing in insurance and financial services over the next three to five years?

Tim: I would say consolidation is going to be a very large topic on both the insurance company side of things as well as the distribution side. You have historic low interest rates and that puts a tremendous amount of pressure on insurance companies that are selling products in a spread, when they make their profits on spreads, or they have capital intensive products, low interest rates make it very difficult for insurance companies to produce a profit so I think you’re going to see insurance companies changing the types of solutions that they’re putting out there and shift more of the guaranteed portion and go to more current assumption and things that are less capital intensive. We just see that currently. And with continued low interest rates, that’s where the market is gonna be forced to. I also think you’ll see more mutual companies stand out and want to grow and expand because of their capital structure, their patients and their return profiles versus stock-based insurance companies. You’ll see more and more private equity enter into the space, as we’ve already seen. So those are the changes that we see forthcoming in the industry.

Kevin: What are some of the strategic decisions that carriers are facing today?

Tim: They’re facing, I would say, in the strategic decisions, the challenges that they have are where do they invest their dollars for the future, for the growth? Technology is one of them. How are they going to embrace and invest in technology that’s going to bring them up to current standards to engage with what that consumer demand is today? And I will say this, I would say many insurance companies are well behind other industry. If I were to look at the investment management world or you look at banking, you see the tools and technology that they have incorporated. Insurance companies are behind that and will need to catch up so I think that’s gonna be a strategic decision that carriers have to decide upon. Another is, I think, their focus. Where, instead of being a provider of multiple products or product categories, they’re gonna need to tighten their story and get into those things where they can have a dominant presence, have scale, because I do believe, as I stated, interest rates are going to play a very — it’s gonna be a very challenging time for carriers to manufacture product and do so in a profitable way.

Sandy: Tim, how has COVID-19 changed your digital transformation strategy and what changes are you seeing from carriers around digital transformation since COVID-19?

Tim: Our digital transformation strategy really didn’t change from COVID-19. It accelerated the plans that we had for that. We were already doing and had moved to virtual wholesaling about two and a half to three years ago and that was something that we saw on the horizon to improve our effectiveness and be in front of more advisors and show up when they needed us in the manner in which they did and through technology we found to be very effective and efficient. The other thing it has done is it tested all of our technology to be able to work from home. And within less than eight hours, we went from having 400 people in offices to having 400 people in their homes working and our technology worked flawlessly. You would not have known that we were working from home. So, we made investments in infrastructure and COVID-19, as I mentioned, was an accelerant in our digital transformation. It didn’t define our strategy, it just accelerated it.

Sandy: How do you see carriers dealing with their tech debt and investing in new technology and how are you at Ash dealing with it?

Tim: Well, carriers are handling the, you know, Fintech and Insurtech investing, I think, in different ways. Many of them have Insurtech and Fintech funds and we’re seeing a lot of insurance companies putting money into new ventures, new technologies, I think, to find ways to make it easier to transact, own, manage insurance and financial services products. How we’re dealing with it is we have consistently in our history set aside a certain amount of our budget, a pretty significant portion, I might add, into R&D, and technology is at the center of it. And so we embrace new technologies, in fact, we like to consider ourselves leaders in that space, whereas we see the industry has lagged in that adoption or investing, so we’re definitely making significant investments in that and see that being an ongoing and continuing thing. It will not stop.

Sandy: We’ve all heard the saying, “Data is the new oil.” As companies are investing more and more in data technology, can you share, in broad strokes, the types of investments you’re seeing?

Tim: We’ve made investments in business information, business intelligence, and data analytics technology that overlays all of the submission and information that we have and interacting in the placement of insurance and we made that investment now going on around three to four years ago and we’re seeing very, very positive returns come from that investment. It’s enabling us to interact and be smarter in working with our end consumer — excuse me, our end customer, who is the financial advisor, and also sharing that interaction with the insurance companies. So we are constantly providing feedback and our information that comes from our data is broadly used with the insurance companies and with the advisors that we’re doing business with.

Sandy: How do you show ROI on new digital technology?

Tim: We measure return on investment in new technology in a variety of ways. We built our own agency management system and data analytics that sits on top of that technology. So, we measure things like cycle time, placement rate, number of touches, the efficiencies that we gain from making the investments in the technology. I can use one simple example, transitioning to just one simple thing like e-delivery. We measured that. It improved our cycle time by five business days and improved our placement rates by around 3 percent and those two small numbers meant nearly seven figures of bottom line impact. We are constantly looking at how do we invest, but more importantly, how do you measure that return that you get on your investment in technology and we’re doing it in a variety of other ways.

Kevin: What is the best decision that you made that had a positive impact on your career?

Tim: The best decision that I made in my career was probably around 20 years ago. As we were starting to grow, we probably had around 50 people, I made the decision to start something that’s become a core foundational thing in here and that’s called our Friday morning meeting. I’ve delivered over 1,200 to 1,300 Friday morning meetings to our entire staff so it’s, to me, the best decision was creating and keeping and connecting to a culture and a team, bringing a purpose-driven approach to what we do and why we do it, and having our people see the importance that they have in delivering the products and services that we offer. We’re not just here doing a transaction, we’re here impacting lives, and that’s become core and foundational to our organization and is a hallmark of our culture and our core values.

Kevin: What advice would you give to someone looking to get into the insurance and financial services industry?

Tim: The advice I’d give someone entering the financial services industry and/or the insurance industry is, well, first of all, I would say, I think you’re making a smart move. I believe there’s going to be an abundance of opportunity in this particular industry, whether you’re going into financial planning, wealth management, insurance, or a combination of the three. But I would say that you have to have patience. You need to commit to it and give it three years. The first year, you’re going to, you know, you’re gonna skin your knees, and the second year, you start to get your stride, but by the third year, if you stick into it, you’re gonna have and be a part of an industry and a career that gives you time, freedom, flexibility, and the ability to impact people’s personal situations and just do this magnificent social good. And so that would be the advice that I would give.

Kevin: From a business standpoint, what keeps you up at night?

Tim: What keeps me up at night from a business standpoint is — and I think that question leads to what are you worried about. I don’t go to bed worried about this business. What I go to bed thinking about and that keeps me up at night is how excited I am about opportunities. I can’t turn my brain off to think of the many ways that we could be doing more and more things. And I’m — having been in this business 30 plus years, I’m more excited today about our opportunities for growth and impact than I was when I first started. So that’s what keeps me up at night is positivity and more opportunities than we can shake the proverbial stick at.

Kevin: What is the single best opportunity that the insurance industry can capitalize on today?

Tim: I would have a hard time placing it on a single best opportunity. I would say there are multiple things. One is education. We have a large protection gap that’s been talked about in the industry for a long time but without educating the consumer and creating awareness around owning life insurance or doing financial planning or retirement income planning. There needs to be more of that. The second thing is the industry has made it too complicated to acquire, own, purchase, and service insurance products and it has to be simplified. It also has to be integrated. It has to be integrated into that individual’s life and/or that advisor’s ecosystem. And that’s where I think — those are the top two things I would indicate. And the third is we are going to go into the next 10 years with very, very big headwinds, I believe. I believe we’re gonna see income tax rates go up, capital gains rates go up, estate tax rates returning and going up. I don’t believe we’re going to see, as we have experienced the last 10 or 12 years, an increase in the DOW or the S&P fivefold, and I think the industry manufactures products that can help Americans, that can help people with a lot of these concerns. So, the industry needs and can capitalize on that. The tax advantages we enjoy in life insurance as an example is just one. So that’s how I would answer that.

Sandy: Tim, thank you for your time today. It’s great to learn more about how carriers can turn economic uncertainty, rising customer expectations, and technology challenges into better customer solutions and higher profits.

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