One of our most animated and most popular events so far – this, the second half of our ‘Reverse Pitch’ event from The Steelyard that we held on 24 September.
Matthew Grant is the chair, talking to Hayley Maynard, Chief of Staff to the CUO of Allianz ACGS and Karl Stanley VP Technology Ventures, Renaissance Re. Two great guests from two of the world’s biggest insurers.
You can find out highlights from every speaker on the night and what help they are looking for here on our events page. If you enjoyed this and haven’t found the first half yet – it’s episode 49.
Please do drop us a line if you like what we are up to – or what to know how you can get involved with InsTech London (made in the UK but connecting globally) to [email protected].
And we are still offering our Insurance Insider free copy – more details here – http://campaigns.insuranceinsider.com/instechlondon/
Listen here to podcast 51. It is also available on iTunes, Spotify and Podbean.
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Transcript for this podcast
00:32 Matthew Grant: Welcome to the Instech London Podcast. This is Matthew Grant and you can probably tell we’ve got a great episode coming up here. Now, this is the second part of our Reverse Pitch, recorded live in The Steel Yard on the 24th of September. This time I’m in the chair, interviewing first of all, Hayley Maynard from Allianz Global Corporate Specialty and then Karl Stanley from Renaissance Re. Both of them are talking about the challenges their organizations have and asking for help from the audience about where they are looking for solutions to some of those challenges. So, let’s get on with the show, but before we do, thanks to Insurance Insider, who are supporting our podcasts this autumn, and also as one of the sources of information that we rely on to bring you the most relevant news and our comments every week in our newsletter. And of course to our good friends PKF Littlejohn for sponsoring the whole event.
[music]
01:31 Matthew Grant: So Hayley, you are Chief of Staff to the CUO for Allianz Global Corporate Specialty. You came over to the UK from Australia. I guess you just got bored of the sunshine, did you?
01:46 Hayley Maynard: Yeah, yeah. Too much sun, it’s not good.
[laughter]
01:50 MG: Welcome to winter in the UK. So perhaps let’s just kick-off with a little bit about what you do in your role and also for those that don’t know or understand all the different parts of the Allianz Group, what does AGCS do relative to the others?
02:03 HM: Yeah, fair. Allianz is a behemoth. So first maybe I’ll start with AGC&S. So we’re the corporate side of the Allianz megalopolis. We look after the listed companies of the world. And my boss is the, as you said, the Chief Underwriting Officer responsible for specialty lines, so that’s aviation, marine, energy, entertainment, alternative risk transfer. So I guess basically my job is… There’s two components to it: There’s the external side which is bringing in information and relationships, so the information tends to be, what are our competitors doing, what’s happening in the market, is it growing, is it shrinking, what’s happening with claims, what’s happening with CNN losses? And then there’s the relationships. So what needs do we have internally, and who can we bring in to fill them?
02:56 MG: So you mentioned in there earlier on, did you say CNN is one of the areas you look at?
03:01 HM: Most corporate players probably exist for the CNN losses. So retail comes on CNN, like the TV station, CNN.
03:10 MG: Okay. Right. Okay.
03:10 HM: I don’t know, maybe it’s not here.
03:12 MG: So a CNN loss is something that makes it on to the news. Is that right?
03:15 HM: CNN is news.
03:18 MG: Yeah, yeah. I know. [laughter]
03:18 HM: Okay. So. I don’t know.
[laughter]
03:22 MG: No. I do know what CNN… [laughter] And he’s thinking like, “God, what have I let myself in for?” No. I get what… I knew CNN is a news station but what I was trying to understand is that you use that to describe items of loss or news, or news that would make it on to the news. Is that how…
03:42 HM: Yes.
03:43 MG: Yes. Just say yes.
03:43 HM: Yes, yes, 100%. You are so right.
03:46 MG: Just to make sure we understand the difference. So you’ve got the big corporate companies with the big losses, Allianz is also well known for retail as well. You’ve seen a bit of both, I think, when you were in Australia you were also looking at the retail side as well.
04:01 HM: Totally, totally. When I was in Australia, I was looking after small medium business, and then I moved into the strategy team, where I looked after marketing competitor strategy. But Allianz Australia, totally you’re right and Allianz UK, a very retail market. So you’re looking after consumers and SMEs, whereas the volatile business is consolidated to the large corporates, so retail kind of similar to banking, I guess, you have your retail consistent margins, and then you have your volatile business kind of sitting with the corporates.
04:30 MG: When you look at what’s happening in the Australia market around the use of technology and innovation in that SME and retail space, we can come back to the corporate in a minute, compared to what you’re seeing in the UK. I think sometimes for those of us who haven’t been over there and actually don’t necessarily understand quite how dynamic it is, what you can do in a kind of quite small ecosystem out there. There are actually some quite intriguing things happen that sometimes come back this way. So what would be an example of what you’ve seen in Australia that’s particularly worthy of note?
05:03 HM: So there’s three buckets: There’s efficiency, there’s risk analytics, and there’s customer. And those from at least what I’ve seen in Allianz, those seem to be the three that we prioritize. And from a retail perspective I think a really exciting area is the efficiency side. And the insurtech that I saw get the most traction when I was working at Allianz Australia was a company called Checkbox. So retail versus corporate, retail sorted out the large scale IT largely much better so than the corporates. We just need to look at Admiral and Insurance Australia Group’s expense ratio versus Lloyds and Swiss Re Corp. This is just obvious. So, Checkbox, they’re not large scale IT, they sort out all of those niggly processes that sit in Dan from accounting’s email and in workbooks, Excel workbooks. And so they got traction all through Allianz Australia because there were all of these processes sitting in reinsurance, in technical, in sales, in legal, that we’re just, “Karen, why are you keeping that in your inbox?” And so, yeah, it got massive traction. Whereas Checkbox would be… And I think efficiency from a large… It’s a slower burn in the corporate market because we are less advanced, so it would require more investment.
06:21 MG: So efficiency, analytics and customer. I guess the point about innovation and inefficiency is something that maybe gets either overlooked or downplayed because it’s not as exciting as the brand new stuff. But you’re saying that Checkbox is you’re standing out because it’s actually making a big difference.
06:35 HM: Huge difference.
06:35 MG: Maybe you just threw it in there. But, maybe if Paolo’s still around and Jamie’s here so you know some of the things happening in the future of Lloyd’s around efficiency and cost reduction. Could be some lessons to be learned from Checkbox.
06:47 HM: Totally. Totally. But risk analytics. If there are any Insurtechs out there, I think there’s so much focus from a risk analytics on the retail market. We see leaders in the space like Cytora making big moves with QBE and we’ve spoken about them quite a lot. Super exciting company. But if I could, Palantir at AGC&S has probably seen the most traction from our perspective. And if I could give an example of the energy market. There are probably, I think, 400 to 500 refineries in total all around the world. They probably explode, maybe 15 a year. Maybe a bad year, 20, right?
07:31 MG: Sorry, just to be clear. So you’re saying if there’s 15 to 20 refineries that explode…
07:37 HM: Large losses.
07:38 MG: I guess the Saudis had three of those in the last couple of weeks. That’s a big number, though.
07:43 HM: It is a big number. But how many times in our lives do we have the potential to have 100% population sampling? Right? Why don’t we focus on understanding these bespoke risks and not just pricing better. But how do we turn these insights into actionable means that we can give back to our customers to change them from bad risks to good risk to make real mitigation possible? Because I think at a retail perspective, we’re constantly talking at a big aggregated level. I think about some of the major steps that we’re taking in Australia. Different data sets that were released like Geoscape, which kind of give building attributes data at a country-wide level. That’s cool, but I think that there’s a huge opportunity to understand bespoke risks and it wouldn’t take a tremendous amount of effort or innovation. You get a few major insurers to anonymize their data, throw it on a blockchain. I’m just saying maybe there’s other ideas.
08:45 MG: Blockchain. We haven’t had that word in here for a while.
08:47 HM: Nobody said it yet, so I wanted to throw that buzzword out.
08:50 MG: Great, and so just a request for the community here in terms of help you might need, or areas of innovation. What would be one or two things you’re looking for?
09:02 HM: I think the thing we’re super passionate about and probably everyone is and should be, is the customer. In retail everyone talks about products that transition through the life-stage of the customer, but we just don’t think about it enough in corporate insurance. Just as an example, saying with energy, if Shell decided they wanted to build a refinery, they would have to go to our engineering team and we would then issue, an engineering policy for the construction of that refinery. And then when they want to actually start using it, they have to then go through a completely different job process to ensure the same asset for its operations. Why don’t we just create a product that transitions through the life-stage of that business? It’s not just consumers that change, it’s businesses that change as well. And then, I guess, if we step that out at another level, how do we combine those services? Again, how do we again give insights back to our customers? How do we kind of wrap this all up? I’m not saying one insurtech or one start-up or one SME would do all of this. But I guess, how do we work better to really deliver for our customers?
10:05 MG: We’ve got time for one quick question, if anybody’s got anything for Hayley.
10:10 Speaker 3: Corporate is always about making things complex and difficult and I love the way you’re saying we should make it simple. But why is it that sort of 80% of the underwriting that goes on is repetitive? Yet the real key is the 20% and we still do the manual process of 80%. Why can’t we just make it simpler?
10:25 HM: I’m on your side. I really am. No, it’s a battle we’re fighting. No, it is and I hope right now is the time for change. I mean, every day you’re seeing in the market. Someone’s pulled out of GIA in North America. Someone’s pulled out of Marine hold. Someone’s pulled out of marine cargo. At some stage something’s got to give and these excuses that we give: “Oh, the market wouldn’t let us. Oh, la-la-la. Of course we have to take the average clause out of our policy. No, we don’t. No we don’t. We need to be more customer-centric, we need to look at our expense ratio, we need to structurally look at the way we do business. And that’s why I said, sort of the efficiency side for us would be a slow burn, but come to us with better ways of serving our customers, of translating. I have a PhD in Econometrics so I’m not saying this lightly. Academia is nice, but right now we are in the world of action and maybe come back to us in five years when we’re making consistent profit and we can talk academies again. But yeah, let’s do some shit, right?
11:27 MG: Let’s do some shit. With that, we’ll close with Hayley. Thank you for joining us all the way from Australia.
[applause]
11:36 MG: So Karl, you’ve got a fantastic job and RenRe has sometimes been referred to as one of the early insuretechs when people sort of celebrate funding of 10’s or hundreds of millions. You guys started off with billions. You’ve built big tech. You’ve been highly successful. But I guess the question for you is, where do you go from there and what does that mean for you in your job to be the next frontier of innovation in RenRe?
12:02 Karl Stanley: Yeah, I think if RenRe were starting today, it would fit into that Insurtech booklet. I think at the time in The ‘1990s, that highly quantitative highly model-based way of underwriting was innovative. And obviously everybody does that now. Everybody uses models. There are huge companies who sell them, etc., etc. And so we have an interesting challenge where we’ve built a ton of IP and technology to kind of help us make the decisions we make. But we built this a long time ago and the technology has moved on. So renewing legacy is a big part of what we do. Just trying to modernize our systems and make them fit for purpose in the world we’re in now. And also the world has changed.
12:48 KS: RenRe was able to start quite successfully as a monoline. Florida property, cast Hurricane, yada, yada, yada. Over the last few years we’ve executed on our strategy to diversify, and we’ve consciously become bigger, we’ve done some enormous, for us, M&A. So integrating those companies, Platinum who we bought about five years ago, and TMR we bought about a year ago, bringing them into the fold and being able to take the best part of their culture, and bring them into what we do, and to be able to adapt our systems, to support the things that they do, is a big, big challenge for us and a large focus for me and what I do.
13:30 MG: Wow, so I’m glad you’ve managed to carve some time out tonight… And just, back on our acronyms. TMR, Tokyo-Maronium, Tokio-Millennium-Radium…
13:38 KS: Yeah, Tokio-Millennium-Radium.
13:38 MG: Good, so the innovation you’re doing, do you have a team around you, or is your role to go out and beg borrowers, or steal people and resources from the rest of the organization.
13:48 KS: Yeah, it’s a fair bit of stealing, going on. RenRe is a very lean organization. Which basically means that I don’t have a department, I am the department but having said that we’re a very collegiate organization. It’s not hierarchy, driven. So, for instance, for some of the investments that we’ve done, I don’t have a team of people who will do the due diligence and the law stuff, but we have a ventures team, and they will work with me on that. We have legal folks who work with me. I’ve done many projects internally where we’ve had engineering resources and underwriting resources, who’ve kind of come together. Sorry, I shouldn’t have said resources, I meant people, people. These people have come together to work on projects and it’s not necessarily part of their day job or part of their reporting line, but that is part of the way we work. I think there’s some saying from some business guru about how you can do great things as long as you don’t care about who gets the credit. And I genuinely think at RenRe, we’re really good at that.
14:43 KS: That’s one of our real strengths, is that people can take things that are like if we think about new lines of business… Obviously, if you’re an underwriter, you’re going to be measured on the profitability of your book and the size of your book, and how much profit you produce. But at the same time, somebody has to try the new things, somebody has to deal with the flood flashes of this world and so on and so forth. And I think we’re quite good at that forward thinking. About how this may not, it’s not going to look great on the, might not necessary look brilliant on the balance sheet today, but it might lead to something, in the future.
15:15 MG: Yeah, so you mean it would be like when you create digital partners, you’ve got the capital to be able to absorb I guess you could call them experiments. What would be an example of an organization or initiative you’re working on just now?
15:27 KS: Okay, so in terms of new products, we’ve been working with the InsurTech Gateway. So that’s one of the reasons I mentioned Flood Flash because they came with those. So we kind of kick the tyres on Flood Flash a little bit, and supported those, and we have looked into some innovative stuff around crypto-currency wallets as well. And even though it’s a very, it’s a slightly hard to understand thing ’cause there’s not much data there now and it’s also very niche, but you don’t have to be a genius to think that what we call crypto-currency now in a few years time, we’re just going to call money, right? I mean it’s pretty clear from what Facebook were trying with Libra, and the reaction from central banks around the world that crypto-currency will just become the mechanism by which money is distributed. I mean, well, it’s not a 100% certain but it’s…
16:17 MG: Yeah, I mean it’s…
16:17 KS: I would, I would bet crypto-currency on it.
[chuckle]
16:19 MG: This is the fourth, this is the fourth discussion we’ve had this week, well let’s say the last seven days around crypto-currency. So, either it’s just becoming a self fulfilling rumour or there’s definitely something going on there. So when you talk about that. I mean this, and you mentioned the data there briefly. Are you, does the management of RenRe, are they comfortable backing a product, an insurance product. Where you don’t have lost data that’s quite I think the regulations are also quite difficult around that. Are they willing to give you some capacity and ability to go and test this out and learn as you go?
16:54 KS: To date… We’ve been doing that on a case-by-case basis. I suspect that over the next few months we’ll try to be more mindful and more organized about it, and try to put a sandbox in place where we can do those kind of things ’cause we definitely recognize, as an organization, that you need to do these things you need to experiment. Otherwise, otherwise you’re always going to be behind everybody else.
17:14 MG: Good, and then just as you’re here making your reverse pitch. What areas are you looking for help from in your work?
17:24 KS: A couple of things that come to mind. If anybody has a database of all the properties in Florida, Louisiana, and Texas and can tell me how far the ground floor is off the ground, I will pay you money for that now, if you have that. So, lots of people claim to provide these things, but having done a lot of testing, we haven’t found… We haven’t found a product that has the response time, the quickness of look-up, and the accuracy of results that we would need to be able to run our flood models, the way we’d like to. So that’s one thing, there are companies that are working on like, you mentioned Cytora and stuff earlier on they’re working on it, but nobody has solved that yet. It’s difficult, because it’s much easier to solve property characteristic problems that you can get from an overhead picture because there’s lots of satellite and aerial footage, but you need to basically send somebody around to measure the distance and it’s difficult. So that’s number one, the other thing I think would be really great. A couple of years ago, I was working on the Casualty Treaty Team as an analyst and speaking of the CNN events that happened. It’s a news station, by the way.
[laughter]
18:29 KS: The Volkswagen scandal broke, and our chief risk officer called the group and was like, “What’s our exposure to Volkswagen?”. So I was like, “Sure I’ll go find that for you.” and to figure out what your exposure to Volkswagen is across the entire book of business for a company the size of RenRe, it’s not trivial. It’s not like, it would be awesome if I could just type in, “What’s my exposure to Volkswagen?” into some system and get a come back, but no, I had to go interview some underwriters, look in various deals and various balance sheets. Turn up a lot of documentation, etc etc. It took a little while and quite a lot of manual effort.
19:08 KS: However, it’s not difficult to imagine a world where you have effectively what they call a data lake now, where you take all your data in and you have multiple ways of querying it. Where you can ask it in natural language, “What is… How many contracts do I have that mentioned Volkswagen?” and it’ll go and look at all the border rows, and it will relate them back to their underlying contracts and aggregate the stuff, and give you back the answer. And there are some partial solutions to these things that this company to do these things, some of them I think are represented in this room. But once again, we haven’t seen something that exactly neatly fits our use case. So there two solid gold ideas that people have…
19:52 MG: Fantastic… But had you been talking, or we had been talking 15 years ago, I bet we’ve had a very similar discussion, which is… I wanted… I’m pretty sure it’s out there somewhere. It can’t be that hard, and it just proves… Sort of having the vision and all the technology out there, something as relatively simple as saying, “What’s RenRe’s exposure… ” it still requires you to do a lot of manual effort. So, yeah, great opportunity for anybody out there that can help figure out what the exposure is, not necessarily to troll through your data where you may not have it in the first place. And I guess if anybody wants to go and commission people to go stand on floors in Florida, and figure out how high they are… I mean who knows there might actually be some money in that.
20:30 KS: Yeah.
20:30 MG: Good, well, Karl that was fantastic, thank you very much.
20:33 KS: Thanks everyone.
20:40 MG: Well, if that sounded like fun, it was… And it’s also worth listening to the first part of the event on episode 49. Now, we had over 20 different requests from that event, alone for help from people with technology offering to insurance. So take a look at Chris’s summary of the event on the website, on the specific event page for the reverse pitch. And if you haven’t been along to our events or not been for a while and are wondering what you’re missing, then you can see what we’ve got coming next at a www.instech.london. Also worth signing up for the newsletter, so you don’t miss the future events. And finally, if you are listening to this, outside of UK but have got plans to travel to London, let us know and we may well be able to get you up on stage as well. And of course, again, episode notes have got a link to a free copy of insurance insider.
Listen here to podcast 51. It is also available on iTunes, Spotify and Podbean.