The Future of Insurance

While the show is on a break for a few weeks, I wanted to be sure you knew two things about ITC Las Vegas 2024:

• You can save $200 on registration thanks to the deal I scored for my listeners! Just visit http://www.future-of-insurance.com/itc for the discount code and a link to register
• If you're an insurance company executive, drop me a DM on LinkedIn if you'd like to be a guest on the show while I record in-person episodes at ITC on October 16th

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

Music courtesy of Hyperbeat Music, available to stream or download on Spotify, Apple Music, and Amazon Music and more.

In this quick episode, I share that I need to take a break from releasing episodes for a few weeks as my schedule hasn't allowed me to do any new interviews, and, in place of a new episode, I recommend a show you need to be listening to - "What's the Scenario?" with plrb.   To be in the insurance industry means understanding what insurance is all about and how complex the idea of coverage can be. Every week, the team at PLRB disucsses a coverage issue that came to them from across their members. The issues are really interesting, the discussion is rich and easy to follow, and it all just gives you a much better understanding of and appreciation for the work we do in insurance.   You can listen to "What's the Scenario?" with plrb on your favorite podcast platform (Spotify, Apple Podcasts, Google Podcasts, Amazon, etc) or watch it on YouTube.   This episode is brought to you by The Future of Insurance thought leadership series, available globally from Amazon in print, Kindle and Audible audiobook.

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

Music courtesy of Hyperbeat Music, available to stream or download on Spotify, Apple Music, and Amazon Music and more.

I'm joined my Insurance and Underwriting veteran and thought leader, Nick Lamparelli, for this episode as we discuss the ideas in the new white paper I'm publishing, "The Economic Viability of Insurance," available starting today for free at http://www.future-of-insurance.com/profit.

Highlights from the Show

• The approaches we have been using to stresses on underwriting profit historically have been cutting costs (focusing on expenses), taking rate, pulling out of markets or segments
• These approaches proved insufficient to deal with the scale of macro-level pressures insurers faced in 2023, and I would argue will continue to face going forward, like
  • Severe Convective Storms (SCS, or, mainly, hail) and other Natural Catastrophes driven by Climate Change
  • Social Inflation
  • Supply Chain and Labor Constraints
  • Inflation
  • and more
• We should be looking at new approaches, including
  • How we think about and respond to risk – tools we use to understand risk, select it intelligently to compete on, and harden it when we do choose to offer coverage
  • Move to next-generation approaches to rating that are more dynamic, allowing us to stay ahead of the need for rate change rather than respond far too late and insufficiently
  • Rethinking the products we offer to cover what have been come extremely different exposures from the ones our current products were designed for
• These solution can take the form of insurtech software or services; E&S/non-admitted product development; Parametric solutions to coverages no longer viable as indemnity products; and so much more
• Now is the time to really engage in the idea of doing things differently as we are seeing increasing difficulty in aligning prices that are affordable to buy coverage at with prices that are economically viable to sell it at, meaning the market may begin to fail to clear
  • If that happens, other capital can come in and solve for the need for coverage, increasing the pressure insurers have seen on the decreasing percent of risks that are insured against (measured by NatCat losses that are insured vs. not), as one method)
• Download the paper today, and share it with your network to get more people talking about how we can push our industry ahead.

This episode is brought to you by The Future of Insurance thought leadership series, available globally from Amazon in print, Kindle and Audible audiobook.

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

Music courtesy of Hyperbeat Music, available to stream or download on Spotify, Apple Music, and Amazon Music and more.

I shared some thoughts triggered by a recent conversation with an executive at an InsurTech solution provider who was voicing frustration with his perception that there seems to be a lot of talk that we are perfect or don't need to look to improve at many carriers. He was curious if this was my observation, as well, and what I thought we could do about it. One thing I know I can do is to talk about it, and help inspire all of you to push your organizations to be humble and honest so we can get back to truly achieving what's possible.

Highlights from the Show

• The biggest danger to our industry is hubris - the sense that are are good enough where we are, or that we're so great, we don't need to open our ears, eyes and minds to feedback and insights from customers, employees, partners and peers
• I'm seeing more of this than I think we have a right to show, and it's holding the industry back
• I liken it to a bank robber who robbed 10 banks last year, and 5 this year, holding up their great achievement as if that was an acceptable end state
• Remember that we can and should respect our progress and improvement, but should never confuse that with being good enough to seizing on the true opportunity in front of us
• Get $200 of new registrations for ITC Vegas 2024 using code 200ITC1291 at vegas.insuretechconnect.com/register

This episode is brought to you by The Future of Insurance thought leadership series, available globally from Amazon in print, Kindle and Audible audiobook.

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

Music courtesy of Hyperbeat Music, available to stream or download on Spotify, Apple Music, and Amazon Music and more.

Adam Denninger leads Capgemini's global strategy for the insurance industry and manages its relationships with the insurance technology ecosystem. Adam has 20+ years' experience creating and delivering solutions at the intersection of business and technology.

He joins the show to share some of the perspective in their World Property and Casualty Insurance Report for 2024.

Highlights from the Show

• A focus Adam shared is the idea of being effective in underwriting
  • This is a combination of accuracy and speed
  • That's about getting better data and being able to act on it faster than we have in the past
  • To achieve speed, it requires changing the entire process for evaluating underwriting performance, changing risk factors and inputs, and changing products rapidly
  • Making this change is like doing open heart surgery on a patient who is actively living their life rather than being anesthetized on an OR table
• A major theme of Capgemini's research is the confluence of rapidly changing macro factors impacting losses
  • While each factor may have moved like this before, we haven't had so many factors moving at the same time to such an extent and at such speed
• Adam believes the industry needs to come together to create accurate, easily-accessed data sources for common things we all need, like natural perils
• Download Capgemini's World Property and Casualty Insurance Report 2024

This episode is brought to you by The Future of Insurance thought leadership series, available globally from Amazon in print, Kindle and Audible audiobook.

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

Music courtesy of Hyperbeat Music, available to stream or download on Spotify, Apple Music, and Amazon Music and more.

Edouard is the CEO of Stellantis Insurance, having spent his career building new ways to solving insurance-related needs globally. He is responsibile for creating insurance solutions to support Stellantis' growth objectives in their automotive business, where insurance can enable or hinder those aspirations. He formerly worked at Volvo and Stellantis' predecessor, PSA. He joins the show as he winds down his time leading Stellantis' efforts in Insurance, and on the back of a major announcement with Bolt on embedding auto insurance in the US market.

We met over a year ago when we were part of research Capgemini was doing on the future of Mobility and its impact on insurance as part of their World Insurance Report in 2023, which Lars Boeing joined the show to discuss. I shared my work on the Future of Auto Insurance with Edouard, and was excited to bring him on the show to discuss his take on the question given his rich background in the space and being a key driver in where things are heading.

Highlights from the Show

• Edouard began his insurance career while still in school, doing his master's dissertation on new entrants into insurance
• That lead to a roll at Volvo Group to setup an insurance business, which then lead to a roll with PSA (now Stellantis) to build their insurance business
• Why would car companies (OEMs) get into insurance?
  • Total Cost of Ownership (TCO) - if insurance for a given car model is too expensive, people won't buy your car, so OEMs want to work to control insurance cost as part of TCO
  • Diversification of Revenues - important in any business, and if you run it right, there's attractive margin in insurance
  • Opportunity - insurance is a way to demonstrate to consumers that you care, and the perception of most insurers is that they're against you rather than trying to pay your claims, so OEMs are well positioned to be the solution to that issue
• But can OEMs succeed?
  • They're very well positioned with existing assets – brand name with high loyalty and affinity, logistics and supply chains, key purchasing moments, repair and distribution networks, deep understanding of the physical product being insured, etc.
  • They have the assets and resources, but the remaining challenge is execution
• There's also a question of whether the OEM has to be the insurer, or simply partner with insurance providers and capacity
  • This depends on risk appetite, which is trickier in insurance since you don't know the cost of product until after it is sold
  • Stellantis has looked at multiple models, from building their own insurer to partnering with insurers to working with platforms like Bolttech in each of their global markets to meet local needs
• Partnership matters because, even if you have your own insurer, you cannot and do not want to take every risk that comes in
  • Car dealers still need to make the sale, so they need solutions beyond an OEM's insurer to be sure they don't get forced to say "No" to a customer who needs coverage
• We discussed whether OEM's push into subscription services means insurance mustbe part of the equation, but there are local regulations that need to be navigated that may not allow this, so Stellantis must have options for customers that could include an embedded insurance offering but has to include other paths
• The technology we have to enable new pathways for OEMs to sell insurance are completely different than ever before
  • It's important for insurers to create far more technical capabilities to partner with OEMs as most insurers currently are not flexible enough for most OEM needs
• You can get the report at future-of-insurance.com/capgemini2023
• Download The Future of Auto Insurance: Connected, Embedded, Subscribed for free today

This episode is brought to you by The Future of Auto Insurance: Connected, Embedded, Subscribed, which you can download for free today, thanks to support from Guidewire. This report is part of The Future of Insurance book series, available globally from Amazon in print, Kindle and Audible audiobook.

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

Music courtesy of Hyperbeat Music, available to stream or download on Spotify, Apple Music, and Amazon Music and more.

Ian is the co-founder and CEO of Koffie Financial, a finsurtech platform purpose-built for the trucking and transportation industry. With insurance at its core, Koffie's instant and transparent financial services empower truckers with the modern tools and technology necessary to drive efficiency and safety. He is an entrepreneurial leader at the intersection of data, enterprise markets and geospatial analysis.

Previously Ian served as founder/CEO of Urban Mapping, a web-based mapping platform he sold to Pitney Bowes in 2015. Customers included Tableau Software, Google, Microsoft, Apple, Facebook, Kayak, IAC, CoStar Group.

He has also served in a senior role at a startup that acted as outsourced research for the financial services industry, focusing on alternative data to generate alpha for hedge funds.

Highlights from the Show

• Ian has been a serial entrepreneur, including working in the mapping space and how powerful the meta data about locations, and how critical it is to have accuracy in the data
• He went on to work on catastrophe exposures, with a specific focus on how geology impacts earthquake losses, which gave him more exposure to managing risk and the impact of loss
• He was drawn to insurance after a stint offering data to hedge funds because it wasn't as 'I win, you lose' as hedge funds where insurers doing worse means they're helping others
• Koffie was founded initially to look at the difference in trucking equipment, and how that impacts losses
• They found that midsize and large risks were self-insuring and forming captives because insurers weren't meeting their needs, but small trucking firms (under 100 tractors) can't afford to do that, so Koffie focused on the smaller-end of the market
• After a year and half, they got capacity in place, required telematics for insureds (first dedicated equipment, and later with an iPhone app)
• While this was all positive, the business ultimately didn't survive, and was sold to Acrisure in early 2024
• Ian learned first hand something he calls the "InsurTech Paradox"
• Ian thinks, while we'll see a return of funding, it won't return to the situation where there are huge checks being written
• He also wonders about whether insurance should be incenting better behavior, even if it means the business that's insured doesn't work that day

This episode is brought to you by The Future of Insurance book series (future-of-insurance.com) from Bryan Falchuk.

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

Music courtesy of Hyperbeat Music, available to stream or download on Spotify, Apple Music, and Amazon Music and more.

Joshua Morey is the Chairperson of Ori-gen and President of The J Morey Company Inc. Ori-gen amplifies the voice of diverse communities throughout America by providing resources, services, and perpetuation planning for indepedent agents and brokers from diverse backgrounds. With offices in Hawaii, Los Angeles, Orange County, Torrance, and San Jose, California, Ori-gen represents a wide variety of personal, business, and specialty insurance from 40+ national and international carriers. He is a founding Board Member of the Asian American Insurance Network and Asian's in Insurance Podcast, and advisory council member of the Equity in Infrastructure Project. In addition Mr. Morey serves on the Board of Director’s for the US Japan Council (Executive Committee), Japanese American National Museum, Little Tokyo Community Council, and was featured on the cover of Rough Notes, and IIABA’s national magazine. He is co-founder of KODO Insurance Services (Insurtech) and Chairman of the Board of Arrowood Insurance Services. He has a B.A. in Business Economics, from Wheaton College and a M.A. in Intercultural Studies from Fuller Theological Seminary. In his free time he loves playing baseball and spending time with his wife and three kids.

Highlights from the Show

• Josh is a fourth generation Japanese American, with his great grandfather having immigrated in the late 1800s, and setting up an import-export business in Little Tokyo in Los Angeles
• The family lost everything when Japanese Americans were sent to incarceration camps during WWII
• Finding insurance the Japanese American community was next to impossible, so they started their own, and Josh's family started an agency, The J Morey Company, to serve the community, which he runs today
• Josh's story in taking over is similar to a lot of multi-generational insurance agencies, where the next generation may not be interested in taking over, can't afford to buy the business, or the business is no longer viable, which threatens the legacy of so many family businesses
  • Rather than selling to another agency, Josh worked with a consultant to find a path to keep the business in the family despite not having the financing in place to buy the business
  • That's what sparked the founding of Ori-gen, as a platform to continue the legacy of these companies
  • It's not just about keeping the agencies going, but to support the communities that rely on these agencies in the way his ancestors and their communities needed each other after WWII
• Josh has also tried to drive more minority involvement in the insurance industry overall, which stems from his sense that this is the best industry and best country in the world
  • That includes engaging the Asian and Pacific Islander community through AAIN (Asian American Insurance Network, where he's a board member), as well as partnering with other groups, like joining NAAIA and Ngozi Nnajiand her Black Friday efforts
  • Josh advocates for DEI efforts because, without them, the industry will miss out on great talent and different approaches that only come from diversity within that talent

This episode is brought to you by The Future of Insurance book series (future-of-insurance.com) from Bryan Falchuk.

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

Music courtesy of Hyperbeat Music, available to stream or download on Spotify, Apple Music, and Amazon Music and more.

Bill Pappas is Head of Global Technology and Operations, and is a Corporate Officer and a member of the company's Executive Leadership Team. In this role, he directs a team of more than 43,000 people responsible for technology development, infrastructure, information and cyber security, data strategy and analytics, customer service, operations, crisis management, business continuity and procurement for all lines of business, serving more than 90-million customers across 40+ countries around the world.

Pappas joined MetLife in 2019 from Bank of America, where he was the head of operations for the consumer, small business, wealth management and private banking businesses. In this role, Pappas directed a team comprised of more than 50,000 employees and contractors delivering integrated service and operations solutions to approximately 63-million consumers and clients. In addition, Pappas led the global business services team that provided integrated technology solutions across Bank of America.

Pappas holds a B.A. cum laude in government and an MBA in international business from Bentley University where he serves on its Board of Trustees. He also is a contributing thought leader as a member of the Gartner Research Board and the Forbes Technology Council. 

Highlights from the Show

• Bill and his team are responsible for everything tied to customers and their experience, and includes roughly half of MetLife's staff with about 60k people
• Bill has never seen the level of complexity, ambiguity and uncertainty that we have today at any other time in this 30 year Financial Services career, and there's a convergence of these things today that's quite different
  • Many of these issues – supply chain, inflation, political uncertainty, cyber – is the first time we're facing them, so there's no existing playbook for any of these items
• Customer expectations spiked in COVID, but haven't let up since then
  • MetLife has worked on the process to understand the customer needs, wants and demands
  • Then they look at product and process match up with those customer requirements, and then move to development where there's a gap
• This takes also look at staff, and how they're supported in supporting customers, so MetLife looks at how it creates and maintains a contemporary workforce, which is something that must be dynamic over time
  • How do skillsets evolve, and how do you ensure your workface has the right skills at any given time
  • Workforces are hybrid, have moving priorities and expectations, and decision making isn't as command-and-control as it might have been years ago
• They are deliberate in not having technology for technology's sake but only in support of the company's strategic objectives, which helps protect against siloed thinking for any one function
• Innovation is something they've moved to make it part of every staff member's work as part of the culture's DNA rather than existing in a specific team or group
  • They run hackathons, setup investment mechanisms for new ideas and more to ensure innovation is everyone's responsibility and they're empowered to deliver on it
• DE&I is important to MetLife and is part of everything they do, but they couldn't operate with such a customer focus without it and the diverse thinking and skills that come with it
  • For example, you cannot develop new, powerful tools like AI without different approaches and mindsets involved or you end up with something out of sync with your customer base
  • They see a shortage of women in STEM, and have been working with universities to drive more involvement by women in STEM career paths, and then looking at how to support them better through their careers; this is something they've also worked with other companies and non-profit organizations in the communities MetLife operates in to help make meaningful progress
• You cannot move the industry or the market on your own, so MetLife has chosen to convene the industry to help learn together and foster the progress the company is trying to make on macro-level things like talent, AI and more

This episode is brought to you by The Future of Insurance book series (future-of-insurance.com) from Bryan Falchuk.

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

Music courtesy of Hyperbeat Music, available to stream or download on Spotify, Apple Music, and Amazon Music and more.

Richard McCathron is CEO and President of Hippo Insurance and has served as a member of the Board of Directors since February 2017. Prior to Hippo, Rick held senior executive positions at various insurance companies including First Connect Insurance, Superior Access Insurance and Mercury Insurance Group.

Rick is both a Chartered Property & Casualty Underwriter (CPCU) and a Certified Insurance Counselor (CIC) and sits on the board of directors of Spinnaker Insurance Company and First Connect Insurance. He is an advisor for several other InsurTech companies and holds a BS in Finance from Oregon State University. 

Highlights from the Show

• Rick's insurance career spans a lot of areas, including different carrier functions, distribution and more, and has been at Hippo for 8 years, including his current role as President & CEO
• 2023 reminded Rick of the Northridge Earthquake and the impact that had on the industry
• Hail was a major driver of loss in 2023, which coincided with a trend to buy net quota share insurance (QS with a cap for CAT losses) and Excess of Loss (XOL) coverage above that
• There weren't big events that would trigger XOL coverage, but the small losses exhausted the QS coverage, so many carriers found their balance sheets impacted
• There's a fundamental shift in insurance around our financials but also consumer behaviors
• The pricing pendulum swings wildly because cost drivers move fast, but rate filings and approvals move slowly
• Tech solutions at carriers are helping to narrow the time gap to help with this, especially tech-driven carriers like Hippo
• Hippo also mixes its approach to the market between their own product, their fronting business that brings in revenue from other players and lines of business, and their distribution arm, First Connect, that brings commission revenue from selling other carrier's products
• Growth in this context is imperative to be about profitable growth, and Hippo has focused on this now, whereas there was an initial push to grow, generally
• That means having more specific offerings to specific buyers, like those who would adopt IoT to protect their property
• Embedding insurance into new home construction, but using its agency to ensure they don't end up with aggregation issues when working with a builder to insure a new development
• Rick watches reinsurance profitability as a sign of where primary insurers will end up since there's a disconnect in when reinsurers move prices and when primary insurers are able to price that into their filings
• The fundamentals of insurance aren't changing, but the rate of speed that you have to adjust how you write and the customer demands and expectations continue to change constantly
• Rick shared his view on AI, where it is real today, but the AI being used now won't be anything like what we will use in 2 years given how fast it's evolving
• The traditional coverages the industry is selling are increasingly disconnected from what the exposures they insure are and what consumers actually need for protection (and the affordability of the coverage they can get)
• People want genuine customization in all aspects of their lives, and to know that what they're getting is genuinely built for their needs
• Embedded insurance – we have to meet customers where they are, like embedding pet insurance in the adoption process or the purchase process for homes or cars
• Remembering the fundamentals, but that there's a customer at the other end of this, and we have to serve them if we want to ultimately succeed
• We talked about being proactive on claims
• Using Parametric coverage is one way to do that since coverage can be delivered instantaneously (or very quickly)
• Reaching out to customers when we think there's likely to be a claim (like when there's 2" hail in their area), which historically people think leads to buying claims, but Hippo has seen that the claims would come in anyway, but they'll come later and with some form of representation (attorney, public adjuster), so you end up paying more for the claim in the end than if you had handled it correctly from the moment the loss occurred.

This episode is brought to you by The Future of Insurance book series (future-of-insurance.com) from Bryan Falchuk.

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

Music courtesy of Hyperbeat Music, available to stream or download on Spotify, Apple Music, and Amazon Music and more.