My friend and innovation expert, Nick Lamparelli joins me for the first episode of the second season of the show. He is one of the founders of the Insurance Nerds, and has been someone people from across the Insurance industry have turned to for guidance, insights and new ideas throughout his career.

Nick was the co-founder and Head of Innovation for reThought Insurance, a tech-centric MGA focused on closing the protection gap for property owners' exposure to natural catastrophes, and specifically flood exposures. Nick was a former modeling executive at QBE and Marsh McLennan, and has been a broker, underwriter and risk analyst within insurance for the past 25 years. Nick lives in Naples, FL with his wife and two little boys.

Highlights from the Show

• We are in a very interesting time period, and a second phase of InsurTech and the kinds of problems being solved
• This generation is more about partnership than it is about disruption
  
  • Everyone was waiting for tech companies coming in and disrupting insurance as it has other industries
  • The way insurance is about spreading risk inherently works against the Winner Take All aspects of other industries
• For some tech, there are benefits to a single (or few) provider innovating and making those innovations available to others, like in telematics with Cambridge Mobile Telematics (CMT)
• The old way of underwriting is based on an Actuarial model approach, using history, whereas today, it's about a data science, predictive approach based on actual risk behavior driven by IoT and Telematics, though it's still early days
  
  • Though early, the move has already started, and those not embracing it will be too far behind to catch up
• Not so long ago, it was ok to be a fast follower and let someone else take the risk before committing, but those days are over
• Nick shared an example of a property sensor (for a smart sump pump) that was used to identify a major water event, which happened to be Hurricane Ida bringing 10x the water to a home than it normally saw
• Today, many of the sensors and tools are too close to the event to stop the loss or mitigate it, but that's changing
  
  • Church Mutual's sensor program has generated a 3x return based on loss savings already, even just with temperature and water sensors
  • They spent $14m on the sensor program so far
  • You may not drive the loss down to $0, but you reduce them enough even with the current generation of solutions
  • Insurers can get caught up in who will pay for the sensors or the programs, but shouldn't worry about that as the savings will be there if they move ahead
• If you're not currently engaging in these things, you're setting yourself up to be a super commodity player in 10 years
  
  • That can be ok, but understand the strategy you're adopting by not engaging, and accepting that you will become a company that rents out your capital and claims servicing to consumer facing players who have chosen to innovate
• We talking about Evan Greenberg's comments at ITC 2021, which dismissed the InsurTech insurers as being just hype
  
  • Nick agrees that a lot of them really are just hype, and was an early author of thought leadership around Lemonade being hype rather than something significantly new or better
  • If you look at someone like Hippo, they're trying to do some different things, and that's less hype as there's a reason why they exist beyond just being yet another carrier doing the same thing
  • Nick did caution that Chubb is a bit unique given their scale, capital, the kind of CEO Evan is, etc, so Chubb may be special in a way many other (or most other) incumbents aren't or perhaps can't be
• Nick is hopeful that incumbents like Chubb take their resources and use them to help make it easier for new players to move the industry forward
  
  • Startups need capacity, capital, technology and building their business, which is too much for most startups to survive
  • Munich Re and Swiss Re have done a good job trying to nurture this
  • Being both investment and capacity, like HSCM, SCOR and others have done, can be incredibly helpful
  • There are too many cogs that can fail and bring down the whole thing, so what if the traditional players step up more?
• Nick and I have conversations like this every week – you should find someone you can talk about the changes in the industry, the dynamics shifting, and what we could do to work through the ideas and move yourself (and your business) forward

This episode is brought to you by Pinpoint Predictive (pinpoint.ai), and the book series, "The Future of Insurance: From Disruption to Evolution" by Bryan Falchuk (future-of-insurance.com).

Follow the podcast at future-of-insurance.com/podcast for more details and other episodes.

Music courtesy of UPbeat Music, available to stream on Spotify, Apple Music, Amazon Music and Google Play. Just search for "UPbeat Music"