Dave Castellani on New York Life’s Business-led Path to Modernization

Dave Castellani on New York Life’s Business-led Path to Modernization

(Dave Castellani, SVP, Business Information Officer, New York Life. Image courtesy of New York Life.)

It may be a sign of how technology is evolving that Dave Castellani, New York Life’s top technology officer, goes by the title of Business Information Officer rather than CIO. It is unquestionably an indication of Castellani’s own career history and philosophy. He started his insurance career on the business side and has created technology companies as an entrepreneur focused on process improvement. In 1997, he and his partners launched Mi8, a cloud-computing company that rehosted popular software applications, creating interoperability between them and marketed them to small and midsized businesses. After selling Mi8, he started Qv21 data-driven platform for enhancing the efficiency of petroleum extraction and distribution. He served a combined 25 years at Prudential Retirement (Newark, N.J.) and CIGNA Corporation (Bloomfield, Conn.), and also held the role of Managing Director and Chief Marketing Officer at EWM, LLC, a wealth management firm based in Zurich, Switzerland and New Canaan, Connecticut. In 2013, Castellani took on the role of Senior Vice President and Business Information Officer, responsible for oversight of New York Life’s enterprise technology and IT governance. He was appointed to the company’s Executive Management Committee in January 2019.

Insurance Innovation Reporter: What would you call out as among the most important business-technology issues facing life insurers today?

Dave Castellani, SVP, Business Information Officer, New York Life: A couple of things. Financial services companies house so much data; wrangling that in a way that becomes useful and creates insights is a mammoth task. Forty years ago, when many companies were creating their systems and data storage, there wasn’t a view that data would be relevant outside a particular product. As a result, a great deal of data came to be sitting in disparate databases without a means for one to talk to the other.

The task is to factor the data for a single source of truth and then use as it as a form of intelligence. But the homework to do that is significant. Once you have a firm handle on internal data, the next task is to aggregate external data sources. You need make sense of all of those sources so that customers can begin to see data in one place. We have assets in all different “pockets,” but we need to pull that together to provide the customer with a full view of their financial picture. The ability to look at ways to optimize their investment and look for opportunities for protection is a gnarly task—because you’re now not just providing a client view from what assets you hold but a total view for all assets held by that customer. That implies a great deal of internal work and cogitation about what data aggregation looks like. The objective is to make the client experience more actionable and let them get the experience that they’re in control of their financial picture.

Of course, you also have to protect that data, which means investing in cyber security. Your reputation is at stake, so you have to invest liberally.

Another very important issue is modernizing our legacy environment, which commands significant spend and management attention, because that sometimes means retiring 40-year-old systems and de-risking the environment.

IIR: What’s an example of how these issues are shaping your agenda at New York Life?

DC: We’re moving rapidly toward data-driven underwriting—which means building an environment to be able to do as much underwriting for as many customers as possible without taking fluids. We can avoid that in many situations where customers are willing to give us access to medical records. It takes a great deal of friction out of the system. During the last three years, we’ve made very significant investments in a brand-new platform that can ingest this outside data quickly and efficiently and render an opinion on the risk immediately. In the past, the underwriting process took 90 to 120 days by the time you sent a paramedic, and got the data analyzed. With an electronic, data-driven process we can get the relevant records and instantly underwrite a customer.

This is especially relevant post-COVID-19. Who is comfortable having someone come into your house and associate with someone who is going to take blood and fluids? We feel very fortunate to have made these investments when we did, since we think that people are no longer in the mood for that kind of process. In this regard, I think that COVID-19 is a permanent changer of behavior. Talk about an archaic byzantine process ripe for change given the availability of data! Of course, you have to build the platforms to take advantage of that data, but we’re doing that, and it is a wonderful time to change the way we operate.

IIR: What are some other ways that the pandemic may be causing some rethinking of processes?

DC: I think it makes sense in this context to talk about technology as a tool to enable agents. This goes back to the social distancing, which I think will persist to a great extent. The challenge is to enable social distancing while preserving the intimacy of these relationships. When we deal with customers, they’re sharing some of the most personal details relating to death, business continuity, care of their family. The relevant products are typically purchased in an online transaction, but rather because of an intimate need. So, we have to enable the same kind of environment to allow conversations of that sensitivity and intimacy.

IIR: What kinds of technologies do you think will help to achieve that balance of distance and intimacy?

DC: My personal belief is that virtual reality and augmented reality will become a staple of how we conduct ourselves in the future as a sales and marketing organization. We need to create the feeling of being in the same room, to exchange documents and talk as if you were across the table with somebody. I think the demand for that capability will increase. Some will go back to other behavioral patterns after the pandemic, but there will be significant demand. You see some of this in Zoom meetings. What’s needed is the ability to mutually move documents around virtually, with provision for shared storage of sensitive documents—I’ll call that personal vaults of information where the consumer can decide to share access to certain things. That will preserve social distance while having the same competency in the planning cycle that we’re used to on a face-to-face basis.

Consider the fact that the computer screen hasn’t changed in a decade. I think the demand for 3D on screens will come fast. As technology leaders we need to be involved with these emerging trends and how to apply them to our business needs. In that regard, I would say that with the pandemic we’re not in a “business-as-usual” environment, and that is an accelerator for the work that we need to do.

The pandemic, as bad as it’s been, is putting the right challenges on the table. In addition to what we’ve discussed, it has forced us to reconsider the way we did our jobs. We used to scurry around and get on planes. I feel more productive when I can do something virtually and not get on a plane to California. I want the experience to be crisp and with the feeling of side-by-side communication. Technology today provides the tools to make that a reality.

IIR: Looking back before the pandemic, how have the challenges and opportunities created by technology and consumer behavior influence how business and technology interact at New York Life?

DC: New York Life has done very good job of creating right bridge between business and technology—such that it might be hard to distinguish in most meetings who comes from which side. This is why I call myself the Business Information Officer. I wanted to send a message that this would be different technology organization, and when you think about agile, it’s a business- not a technology-led approach. When establishing needs and priorities for technology development, we do it in MVP [minimum viable product] fashion, which allows us to continually innovate along a given value stream. Technology must give constraints, but I cannot think of a successful project that hasn’t been business-led from the beginning.

Technologists need to quit playing the game of creating acronyms and jargon that make communication difficult. They have created barriers by making it seem too complicated, enforcing a kind of blissful isolation. “If I make this complex, I can run my organization without interference. If I make this really easy to understand, I’ve let you in where you can challenge what I’m doing and question the cost.”

IIR: The power of esoteric terminology to exclude?

DC: Yes. At the end of the day, it’s not my money or people. Technology organizations should create very strict architectural standards while embedding all the technology resources in the business. We have worked very hard to place our technology resources in the business, armed with our standards to keep it sound—not with a department behind a desk telling you why it can’t be done.

When I started in this role years ago, the only thing I wanted to do was break down the barriers between a separate technology department and the business and establish a business-led technology organization. Technology has a fundamental job in driving the standards, security, protection and control, the management of software, vendor relationships, data centers, etc. However, the development side needs to be business-led.

IIR: Is this kind of transition harder for life insurance than property/casualty?

DC: Yes, for some reasons it’s slower in life, but all insurance organizations need to be more nimble, flexible and move faster. Insurance may be the last bastion of resistance, but disruption will happen. Here at New York Life, Joel Albarella [SVP, head of New York Life Ventures] has changed the culture as much as anything, because we have put innovation at the forefront. And innovation isn’t done just internally—we’re using a lot of joint ventures for faster speed-to-market.

IIR: Let’s go back to legacy system modernization and New York Life’s approach to that.

DC: Our approach is to do a thoughtful dismantling of our legacy environment. It might take five or even 10 years to do it, but the “big bang” approach is very dangerous. The alternative is to undertake a systematic dismantling based on security protocols, de-risking or some customer related factor. It’s a question of how you set the right priorities for your modernization strategy versus the old waterfall big-bang approach. There are hundreds of examples of failure when you approach it that way. A systematic pruning of legacy to get to a manageable level is in my view the sensible way to approach this. This is an area where we’re going to spend money and a lot of time, but it’s going to be very deliberate.

IIR: Let’s conclude with a discussion of New York Life’s overall evolution from a business-technology standpoint. Where does NYL stand in its reorientation from policy- to customer centricity, and what does that mean for the roles in the business and technology departments?

DC: Critical to any such journey is having a skilled group of personnel adept at reengineering and simplification—taking friction out of any process. This is the very thing Amazon been very skilled at doing: “If it took 12 steps, how to do it in three?” People will say they’re skilled at process improvement, but I’ve met very few truly gifted with that talent. So, it’s a matter finding those people and unleashing them on organizations like ours that have been highly successful at doing things a certain way; people who can challenge the status quo and can communicate effectively.

I would add that I don’t like when people ask, “What’s your digital strategy.” I like to talk in terms of the practicalities of “What is the problem, how are you going to solve it, and what will the world look like as enabled by technology?” Organizations typically apply new technology to an old process and get a faster bad process at greater expense.

My message at New York Life is to say, “Don’t tell me your technology needs, tell me your problems.” Then we will work on the technology to solve the problem. We could call that step number one. Step two is to take an agile approach: don’t bite off too much at once but pursue change in incremental steps. Step three is making sure, while you’re making these changes, that you have a deliberate, executable plan to actually eliminate legacy. You have to prune in order to effect a new program. Every project that comes for approval, there’s a business case: new applications, products, services—but you have to say, “Here is the legacy that we’ll retire.” That must get built into the business case. Everyone is good at building; few are interested in killing code.

LifeTech vs InsurTech with Joel Albarella of New York Life Ventures