Ben Hubbard: CEO & Co-founder, Parsyl: Cold chains, Covid & parametric insurance

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Since forming part of the first Lloyd’s Lab cohort in 2018, Parsyl has established itself as an innovative technology company, global cargo insurer and more recently, a vital part of the fight against Covid-19.

CEO and Co-founder Ben Hubbard joins Matthew on Episode 123 to discuss the company’s rapid growth. 

Listen now for more on how Parsyl is using sensors to keep vaccines safe in transit, combining traditional and parametric insurance, and why companies no longer have to ‘ship and pray’. 

Talking points include:

  • Using data and automation to improve cold chains
  • Designing technology that users understand
  • Working with government organisations
  • MGAs and launching a Lloyd’s syndicate
  • Scaling at speed and future plans 

If you like what you're hearing, please leave us a review on whichever platform you use, or contact Matthew Grant on LinkedIn. You can also read edited highlights of Matthew and Ben's conversation below. 

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Cold chains, Covid & parametric insurance - Episode 123 highlights

Matthew: I first discovered Parsyl through the Lloyd’s Lab cohort, which was very successful for you I believe.

Ben: Lloyd’s Lab was a great opportunity for us. It helped to solidify our focus on insurance and develop some of the key relationships that we needed to get us where we are today. We continue to have a great relationship with Lloyd’s.

Matthew: You came into insurance from a role with the US government. What motivated you to start Parsyl? 

Ben: I’ve spent most of my career focused on issues of extreme poverty and worked with the Obama administration at the United States Agency for International Development (USAID), dealing with global supply chains around emergencies. 

A lot of that involved delivering essential public health services. The most acute example is delivering vaccines. Getting a cold chain vaccine to someone in the last mile is difficult. I saw opportunities to use technology and the Internet of Things (IoT) to solve persistent problems of getting life-saving products to people around the world.

I worked for the Clinton Foundation in Kenya earlier in my career helping to get life-saving HIV/AIDS treatment to kids. That’s when I first heard this expression ‘ship and pray’ in the context of understanding supply chain quality. That term still guides us at Parsyl and keeps us focused on what’s important. We’re using technology and building products that will collect meaningful data and put it to use managing risks so that hopefully “ship and pray” can be a thing of the past.  

Matthew: For anyone who isn’t familiar with Parsyl, what is it that you provide? 

Ben: We're a technology company and a cargo insurer. We have a solution for customers to monitor and insure sensitive cargo, typically temperature-sensitive perishables. 

Our monitoring and risk management solutions are used by companies looking to improve their cold chain, and we cover everything from life science and pharma products to seafood. The data we collect from our sensors give us a granular understanding of the risks so we can provide better insurance coverage, including new insurance products for shippers that are driven by data.  

Matthew: Can you give us a definition of what’s involved in a cold chain?

Ben: It’s been headline news recently with Covid-19. Cold chain is about keeping things cold from manufacturer to consumer, and in the case of vaccines, the world is learning that they need to be kept cold – and sometimes ultracold. There's really little margin for error and a near-perfect delivery is needed for the vaccine to be potent. 

With Covid-19 and the reality of distributing a vaccine literally everywhere in the world, these vaccines require sophisticated logistics and data. We're bringing the data, that's what we do, and we’re using that data to offer insurance cover behind it. 

Matthew: Talking about headlines, you featured on CNN recently. How does it feel to be part of the news these days?

Ben: There’s a lot of interest in cold chains and vaccine delivery and I'm happy to help bolster awareness. Everyone must understand that a Covid-19 case anywhere is a threat everywhere. We need to invest in distribution as seriously as we have in the development of vaccines. 

Where someone lives shouldn’t determine whether they get a vaccine; it also shouldn’t determine whether it works. We’ll continue to have resurgences of the virus unless we squash it everywhere, but poorer countries with weaker supply chains will have a harder time procuring and distributing the vaccines. 

Matthew: You’ve gone further on the insurance side than most organisations, with your own syndicate at Lloyd’s. What are you offering? 

Ben: We have a product called ColdCover, which is our perishables-focused product for the US and UK. That’s done as an MGA and we have some markets behind those products.

We launched Syndicate 1796 in December 2020 and it’s focused on insuring global health product distributions, with Covid vaccines certainly being a pressing need. It’s large in scope, covering 150 countries, and is backed by the US government via an agency called the Development Finance Corporation. It’s the first time a government has invested into Lloyd’s with capital and the syndicate is taking half the risk with the market. 

Matthew: You’ve also launched the Global Health Risk Facility. What does that involve? 

Ben: The Global Health Risk Facility is anchored by Syndicate 1796 and is comprised of nine other Lloyd’s markets and five reinsurers. Having been involved in different public-private partnerships and risk-sharing arrangements throughout my career, I look at the Lloyd's marketplace as a kind of playground in terms of possibilities. We’ve used the new syndicate-in-a-box mechanism and it’s been a great example of the Future of Lloyd’s.

Matthew: It’s really interesting to see situations where governments are funding or supporting insurers with risk capital, which traditionally they’ve been uncomfortable doing.

Ben: Most G7 countries have development finance institutions to support social and economic development in developing countries, with a range of products to support private equity funds, infrastructure, bank lending, SMEs, etc. 

They invest on commercial terms but with this mission in mind, so this was a happy meeting between what we were trying to accomplish with the GHRF and how the US Development Finance Corporation wants to use its capital.

What resonates here is that we weren’t asking government to take all of the risk. We had lead market syndicates stepping up and saying they were willing to put capital at risk on an equal basis with government capital. That means everyone’s aligned around getting the job done and it sends a strong message to governments about the insurance industry's ability and commitment to solving big problems. 

Matthew: You touched on your ColdCover product earlier. Can you explain how it works?

Ben: ColdCover encompasses a couple of different things. It includes more traditional “all risks” transit and stock throughput policies found in the marine cargo market, but it also includes unique temperature-specific peril coverage, including the first parametric cargo product to be offered at Lloyd’s. 

For our parametric product, we use a sensor to drive the payout and the indemnity, mandate the number of devices to be included in the consignment and define a trigger based on the quality standards of the product. The sensor does the work and we provide a streamlined, fast payment with no adjustment process. 

Matthew: Is the parametric cover in addition to existing insurance, or a standalone product that relies entirely on a parametric index? 

Ben: Companies tend to pair it with a traditional risk policy, but it can sit alone. In addition to getting paid faster and not dealing with a long adjustment process, goods are covered against the actual conditions they experience. That can only be done because of the sensor.  

Traditional marine cargo policies rely on an objective event to approximate whether spoilage has occurred. For example, most policies will include a mechanical or reefer breakdown clause that’s activated if there's a failure in the equipment for 12 or 24 continuous hours. For a lot of perishable shippers, those clauses don't help because their products were destroyed well before that. As a result, they end up eating a lot of uninsured losses. 

Being able to measure exactly what’s happening to their product against what it can withstand gives them specific coverage for what they’re shipping. We can only do that because the policy is linked to the sensors.

Matthew: How does it work in practice? Is the sensor set on a package or within the cargo container? 

Ben: The sensors are placed as close to the product as possible, ideally into individual boxes. We take a risk-based approach that looks at a customer’s claims experience, the risk on different shipping routes and how many sensors are needed for the parametric cover. 

For our parametric product, we mandate sensors on any shipment that we’re going to insure. Payment is triggered if a certain number of sensors register an event. 

Matthew: How do health workers check that the temperature for the pharmaceuticals hasn’t been too high?

Ben: We keep it simple. We use single-use, low-cost devices for temperature sensing that are thinner than a domino and that last for 100 days. There are very clear visual and audible alarms on the physical devices. We’re using modern interfaces and designs that users would be accustomed to on their favourite mobile apps. 

If there’s a breach, we guide them through steps to take and the actions are logged. We’re now getting frontline intelligence from humans on what caused the temperature event and what they did about it. It’s another source of data to use for improvements.

Matthew: How do you capture the data? Is it done in real-time or downloaded afterwards?

Ben: It’s typically offloaded on a phone at the end of the journey but we also have low-cost gateways that do it automatically. We use real-time devices in some cases that beam the data up to the cloud using cellular networks. Either way, it hits our back end, and our algorithms determine if there has been an impact on the product. 

Matthew: Presumably, whoever uploads the data needs to have some knowledge on how to do it?

Ben: All they have to do is scan a QR code. Or they plug in a gateway and it’s done automatically. Our system is architected in a way that allows the data to be easily moved to the cloud and analysed and integrated with other data sets. 

The gateways are little router-sized devices that just plug into the wall at the warehouse, listen for the sensors arriving and automatically offload the data. 

Matthew: One of the challenges in the traditional insurance market is they get lots of data for claims, but it can be difficult to use that if there isn’t also information about the original insured to compare against. It’s difficult to know how bad or not bad that event was. 

Ben: Exactly. Traditional insurance has the component that payments are determined by an actual loss or damage, with the insurer adjusting and verifying the loss. Parametric payments are triggered by an event exceeding a threshold but may not be an actual loss; what’s different about Parsyl’s product is that we’ve combined the best of both things. 

We make a fast payment based on a trigger event that is measuring actual product loss, and because we know the value of the product, that payment is directly correlated to the pure loss. 

Matthew: How often do the refrigeration devices fail and lead to payouts? 

It varies on the strength of the supply chain and the age of the equipment. We do see a strong correlation between equipment age and performance and we track and scorecard things like the make, model and age of cold chain equipment. It's also important to remember we're dealing with humans. Doors get left open, vaccine boxes get left out and anytime a vaccine moves, the risk to it increases. 

One thing we’ve learned from our data is that speed matters. The faster the product moves through the supply chain, particularly once it gets to what we call the last mile, the lower the risk of spoilage. We can see spoilage reduced by as much as half depending on the speed at which the products move. 

Matthew: You mentioned the importance of speed and Parsyl has grown incredibly quickly. How have you built and scaled the company?

Ben: I’m one of an incredible 40-strong team at Parsyl and I have two co-founders who come out of relevant industries in technology. Alex Haar was a product manager at Google and ZestFinance, which does a lot of machine learning underwriting for credit, and Mike Linton came from a supply chain technology background. The three of us have built this company together, leveraging what we’re good at. 

Our mission has attracted great employees and partners that have helped us along the way, including Lloyd’s, great mentors and investors. One thing I’ve learned building a company is that it's a team sport and I'm just happy to be part of this team that we built.

Matthew: Parsyl is now a corporate member of InsTech London. Why did you want to join the community?

Ben: We’re always interested in talented people who have a background in insurance but also understand technology and products. InsTech London is a great network for us, as we’re in Denver but operate so heavily in the London insurance market. We’re excited to be a bigger part of your community and to get to know the other members.