Podcast 43. Mark Geoghegan, Editorial Director, Insurance Insider

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Mark Geoghegan started his career as a broker in 1992 and has run Insurance Insider since 2008. In that period he has got to know all of the leaders in the London market and further afield. Over the years he has seen the industry try, but frequently fail, to adopt technology to try to improve efficiency, decision making and the flow of information around the market.
In addition to reporting on the core insurance activities and ups and downs of the market, Insurance Insider also follow what is happening amongst the new entrants and the established re/insurers. Mark and his team are frequent visitors to our InsTech London evening events.

In this episode Mark talks to Matthew about the changes he has seen in recent years that make him more optimistic that finally even Lloyd's, and the traditional specialty insurance market, is going to be able to fully embrace new opportunities in tech, data and analytics.
We also find out why the reinsurance market heads off to Monte Carlo in mid-September each year and hear a hint of the themes that will be discussed in the next few weeks.
At InsTech London we have been keen readers of the Insurance Insider for many years and so we are delighted that this episode also marks the first of the forthcoming series that is being sponsored by the Insurance Insider.

Mark Geoghegan, and the Insurance Insiders' New York correspondent, Bernard Goyder, also feature on InsTech London podcasts numbers 17 and 30 respectively.  As an InsTech London podcast listener you are now able to download a free copy of Insurance Insider here - http://campaigns.insuranceinsider.com/instechlondon/

Listen here to podcast 43. It is also available on iTunes, Spotify and Podbean.

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Transcript for this podcast

00:10 Matthew Grant: Hello. This is Matthew Grant, partner at InsTech London and on this week's podcast I'm speaking to Mark Geoghegan, editorial director of Insurance Insider. Now we are big fans of the Insider at InsTech London. We use them to catch up on breaking news from the global specialty and reinsurance markets, and as you'll hear from Mark you can usually find one of their team or Mark himself at our evening events. Mark is well known in the insurance industry and he brings a fresh, actually encouragingly upbeat perspective of how and why insurers, brokers, and even lawyers are finally managing to tackle some of the toughest areas to change when it comes to adopting new technology and how he sees them using data and analytics. And if you're wondering why so many insurers are hanging around Monte Carlo in mid-September each year, then keep listening. [

01:02 MG: We're also delighted to be supported by Insurance Insider for this month's series of the InsTech London podcast. And as a listener of our podcast, you are eligible to download one free issue of The Insider, which is normally paid for. You can find the details in the episode notes.

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01:26 MG: Mark, welcome to the InsTech London podcast. Great to have you join us. You've talked on stage, you've been at events quite a lot, but it's great to turn the tables around now.

01:37 Mark Geoghegan: Yeah, but this doesn't happen very often, so I'm looking forward to it actually, so fire away.

01:41 MG: How's your August been? Is the world of journalism a bit like politics, where you all take August off or have you been busy in the background working away whilst everyone else has been enjoying?

01:49 Mark G: Well, we have been busy. Well, we're camp followers so we just do what the camp does. So once the Q2 is finished we run away and take a break before Monte Carlo, which is the next... I'm sure we're going to be talking about a bit later on. So right now, we're in the pre-Monte Carlo phase when it's... There's actually a thing on our shared calendar that says, "No one is allowed to take holiday at this time," because it's a busy time.

02:13 MG: Good, well we'll come and talk about Monte Carlo in a minute, and as both you and I have been there quite a few times. We know it is not, definitely not, a holiday when you get out there.

02:22 Mark G: No way.

02:22 MG: But let's talk a bit about you. So you're Editorial Director of Insurance Insider. You started off your career in broking, I think you left about 20 years ago so I'm kind of intrigued, is there something that put you off of broking?

02:35 Mark G: Well, yeah, it's one of those things I suppose. It's the classic story people always say about insurance that they sort of come into it in a sort of secondary way. So I was a Spanish graduate, I really... My primary thing was I wanted to use Spanish. Also I had this secondary idea that I wanted to be a writer or a journalist, but I'd been very vague about that idea. What I had done is I'd done a Spanish degree, I'd lived in Madrid for a couple of years and had a great time, loved living and working in Spain and everything about it. And so when I went to the careers department when I had just graduated the question was, "Hey, have you got any jobs where you have to have a bilingual job?" And all the ones that came up were insurance related and funny enough... So, that autumn, after my final graduate summer, I was walking up and down Lime Street and in fact I bumped into two or three people on my course 'cause the insurance industry was hiring language graduates there front and centre, that was in the early '90s. So I did seven years of that, I got lots out of that. I got to live in Madrid again and I got a Spanish wife out of that, so that was very good.

03:39 Mark G: So then, I started to think about this other thing I'd always wanted to do. I was working for the biggest privately owned... Well, the biggest broker in Spain by miles. It was a privately owned company, it was part of the Unison Group, so all the veterans out there will remember what Unison was. It was Johnson & Higgins, and Grass-Saviore and Youcken-Huben in Germany and I worked for the Spanish part of it. I'd loved insurance, but then Aon took us over and it was time to reflect. I thought I would take the redundancy check and be brave and go and do something before I got too old. But I'm really glad I went into it 'cause I actually went off to become a journalist, that was around the dot-com boom, which was great, which gave me another string to my bow which we can talk about later about InsureTech 'cause it does remind me so much of the dot-com times in that InsTech vibe that you've been so great at creating.

04:25 Mark G: It reminds me of my time as a very junior journalist working on a magazine called Web Space back in the year 2000, my first job in journalism. And it was going alongside things like First Tuesday. But anyway, I had five years out of, completely having nothing to do with insurance and working my way up the greasy pole of journalism. And then in 2005, a vacancy came up on a Reinsurance Magazine to be the editor. I'd never got out of insurance 'cause I found it boring, I just felt that I had this other itch to scratch and I hadn't quite scratched it with insurance and that's what I realized about insurance was all the new stuff. And actually the great thing about journalism of course is that you can ditch all the boring stuff because it's not... Things that aren't interesting aren't news, they're not features or they're not things that people are talking about. People talk about things that are new and interesting, and so great. So that really suited me and so then really looked back, having had all that insurance experience and reinsurance experience, it was really obvious. And then I had three years at Reinsurance Magazine, a great, great magazine.

05:22 Mark G: In that intervening time between '99 and 2005, the Insurance Insider in 1999 was really small. And I had never seen it in 1999 when I was actually a broker. I'd definitely seen Reinsurance Magazine sitting on little coffee tables in the waiting areas of the underwriting rooms, but Insider was nowhere. But when I picked it up as a competitor, as the editor of a rival magazine, it was a revelation. It had really come a long way in the five years that I'd been out of the market and it was fantastically well written. It kind of... Me as a practitioner, it's written in the right language. Anyway, it was one of those things, you kind of mark your cards, and the core of Insurance Insider I suppose is wholesale specialty and reinsurance business.

06:02 Mark G: The Insider came out of Lloyds of London, it was very much a London only thing in its very early days. It was much more... And very Lloyds focused back in its early days, but of course everything's globalized in that time, and so The Insider has as well, and of course we're now 50 people. We've got about 12 or 13 people in New York and that's growing all the time, so we've become a global business just like everybody else, the people we write about have become global businesses. You know, London went to Bermuda, Bermuda went to London, everyone went everywhere and so that's been a really, really interesting journey, the business is probably about 10 or 11 times bigger than what it was 11 years ago and it's still growing.

06:39 MG: Well, well done. I mean I'd say the broking world's loss is definitely, definitely journalism's gain. It's been interesting actually following Insider over I guess the last 20 years ago and I'd say you've certainly sort of grown up over time. I slightly miss some of the cheeky commentary you used to have but I guess there's a time and a place for that and now it's much more about getting quick insights and getting the news out.

07:00 Mark G: Yeah, there was a time and a place for that and it sort of ended. I think perhaps the early Insider some of it was a bit like a kind of Private Eye. It was very satirical, irreverent, certainly anti-establishment in every sense 'cause it was actually... The DNA of the Insider was names litigation groups, this was pre-reconstruction of renewal names suing their underwriters and winning and there was a newsletter around that and that's the kernel, the kind of core of the DNA of where The Insider came from. So being satirical and starting with a negative slant against the industry, there was a time and a place and we realised that we had to move on and yeah.

07:41 Mark G: So it's a lot more serious, we want to be the paper of record, we break a lot of news and also we're much more analytical and technical than we ever have been and now with the resources available to us. We've now got a new launch called Insight PNC which is focused on the US market and that is from an analysis point of view, and that's people with pointy heads and spreadsheets and all that stuff that we never would have had in the early days of The Insider when it was hardcore news. But I suppose we're getting more and more sophisticated the way we are and also our readership is more sophisticated and expects a lot of us these days and of course we do a lot.

08:24 MG: Yeah, and what's interesting is as the insurance industry itself starts to realize the benefits of data, it's no surprise that from a journalisms perspective, the data journalism is becoming more and more critical as a way of having sort of fact-based commentary and helping inform some of the insights you're giving. Just on this as a way you collect the information and you mentioned there about talking to some of the industry leaders. But without giving away any state secrets, how are you able to break the news so quickly? I mean I've seen things that I knew about personally that I'd literally just heard about from the source and within five minutes, there's an Insider email going out telling the world. How do you get on top of it so fast?

09:06 Mark G: Well, I suppose it's knowing people, it's having that empathy and that level of trust that you build up over really, really long periods of time. That people who may be, of course, we're not in the market, we're just talking to everybody in the market all the time, collectively and then sharing that information within our team, in a collegiate way so that it's more efficient. We're all chasing down different leads, we share every bit of snippet of information we've got. This is how journalism works, you create a circle. I suppose I used to be an insurance broker and now I'm a broker of information, and why would someone take a call from the Insurance Insider? For one they're thinking it may be about them but often it's not about them, we're actually... We're verifying, we're attempting to verify information that we've picked up from somewhere else and they might be the sort of people who might want to know that.

09:57 Mark G: So the people who are likely to help us are the people who really value knowing what is happening and then that's the power of media is that your aggregating all that information and then sharing it. We've talked about disruption and technological disruption, that's something that's almost impossible for a machine to do, you cannot have that kind of trust relationship with a machine. So, I'm feeling fairly confident that those the social media lists of professions that are going to be out of business, maybe I think the brain surgeons are going to be out of business before Insider journalists.

10:29 MG: I love that quote, "The world will need journalists for longer than it needs brain surgeons." But no, it's actually very true and if you look at companies like Palentier, the California-based massive data science company, I mean they make a very strong case about the combination between very sophisticated technology, but they have their deployed engineers and without the people to run the technology, you can't get the good insights and journalism is very similar to that. But just talking a bit about technology and the people you're talking to so, I don't think there's an insurance company out there today whose leader is not talking about the benefits of technology and how they want to embrace change. But when you talk to them off the record and you've got a very good perspective across a whole range of different companies, do you think this is really at the core of their strategy? I mean are there people out there across the board that really are making the tough decisions about it or is it still very much in isolated cases where it has to happen it has to happen but otherwise people are much more focused on this more traditional ways of generating income through underwriting?

11:38 Mark G: That's a good question Matthew, I think you should become a journalist, so if it doesn't work out at InsTech you can come and join The Insider, but it's a really good point. Everybody knows that the wind has changed 10 years ago... Of course, we're at that higher end of the insurance market which has had a fractious, to say the least, relationship with technology with lots of big failed IT projects, transformation projects that didn't work out, over running and over budget and then not working and not being fit for purpose, that kind of stuff.

12:10 Mark G: But everybody knows the wind changed about three or four years ago. And so any public company needs to have, be ready for that question from an analyst or someone to say, "What are you doing about technology? What is your technological strategy?" But, there's a massive difference between knowing that you need to be seen to be doing something about technology and transformation and all that good stuff, and actually doing something about it. So there's a lot of window dressing, there's a lot of funds, a lot of... Oddly enough, there can almost be siloed technological departments that then the rest of the business can go around and ignore. So I would say it's far too early to say, because I could reel... We could reel off a list of who's made the most eye catching things? Who's done this and who's done that? But actually, it's... We'll only know in 10 years when some are streets ahead of others because of what they've done today and what they've done over these next few years with this crucial time that we're in, and some will be yielding fantastic dividends from all that good stuff that they've done.

13:16 Mark G: But I think... The biggest change is not, it's not about money, it's about... It's cultural change and it's about almost forcing people to do things in a different way or at least to think about things in a different way or just bring in different ways of doing things and to bring in that idea of embracing that way of... A new way of doing things and that is the hardest thing in our marketplace, as you know. What's happening at Lloyd's now will be really interesting because the leaders will actually have a genuine incentive to invest. So if you spend $100 million on some new kit and it means that you write somebody at 100% and everyone else has to follow you. That you're now... And they're following you automatically in an algorithmic trade and now you're getting a real return on the fact that you can lead that business because you're going to have to write it electronically, you're going to have to do it instantly, not necessarily electronically, automatically and be out in the marketplace and actually binding that business automatically based on parameters that you've set.

14:20 Mark G: At least now we getting to a stage where I think we might be able to see that there's a genuine incentive, 'cause the problem we've had is, there have been no incentive to get ahead technologically speaking, other than on the risk side of things. And I'm sure obviously, someone like you Matthew, you know that when you're out selling RMS in the early days, this was a whiz bang that if the people who really understood it would be able to give themselves an edge. And there are similar businesses, like Sitaro where you're selling the fact that you're giving yourself an edge by being smarter than everyone else and helping you pick risk better, that's always been a good thing. But that's been something you can sell. But some of the more back end stuff, there's no incentive. No one's had any incentive, other than the platform's burning, which at a point now it's slightly singed where expenses have just got out of whack in London, now we've got an incentive. And of course, London has only ever had that incentive. It's like, "We will fix it because we are sinking or we are on fire."

15:19 MG: You make a very good point, which is, it's too easy to be critical on the one hand to say that large insurers or Lloyd's, are not changing. But the reality is, as you say, a large amount of that time is just trying to handle business as usual and incrementally things aren't failing, it's just little bit, little bit more each time, they're getting slightly worse. And unless there is something like Catastrophe Risk, where you can see a fundamental difference moving from a back of an envelope calculation to actually modeling the risk, which has huge implications, the use of capital, cost of reinsurance.

15:55 MG: And I think it's one of these things that people tend to overlook when any kind of innovation change happens, is that you do need to have that as a ground breaking explosive moment when things fundamentally change. And so, is there anybody specifically there, you would point to out of the companies you're talking to, say that they as individuals, 'cause you talk about culture, and culture starts at the top. But they actually get it, and yes, whilst there is no burning platform that means they have to change, they are looking ahead, they've got support of boards, support of investors, and they really are making a difference?

16:27 Mark G: Certainly there are some great MGAs that have done that because they've used that as their edge from day one. If you're an MGA, you know you have to be a better underwriter than the person providing you the paper. But also you need to be a better distributor, you need to be a more efficient underwriter because otherwise, you're just adding 10% or whatever cost on top of everything else and that isn't going to work. And your paper underwriter says, "Well, why do I pay 10% extra to get something I could do myself?" The whole point's that you can't do it yourself and you can't do anywhere like as efficiently or as well as the MGA you're giving that to. So some of those MGAs have been absolutely brilliant on that. You shouldn't be dismissing Lloyd's. It's so easy for us to do that and that's not fair, because you're talking about lots... There are so many streams of incremental improvements that are happening all the time, and all those, the type of operating model projects which are all coming on stream.

17:19 Mark G: The DA SATS thing for delegated authority underwriting, fantastic. Solving lots of really old problems. And the oldest one being electronic placing, finally getting over that hurdle with PPL, that was a really difficult thing to do. But see if we can... So now we're finally in a position where the London market is going to be approaching 100%. Everyone agrees now that is going to happen, 100% electronic placing, which is fantastic, 'cause that... A lot of people, I've lived through failed projects like EPS, which was Electronic Placement Support. Then there's the Connect Project, which was when I had just come back as a journalist, was just about to fall over then. Again, business... Things that have failed, high profile things that have failed and cost quite a lot of money and then made it very difficult for, politically, for any leadership in the London market to act and so we've had that fallow period after that. And now we... It's been very good to see the leadership really grasp the nettle and say, "We have to do this now, and... "

18:20 Mark G: And it's happening. But I'm really looking forward to your event actually, in September because now what we need... I think, what you need from a technological point of view is a solution. So in your event, you're going to do a reverse pitch where the industry tells people, tells the technologists rather than the other way around, telling the technologists what problems that need to be solved rather than the technologists coming up with the solutions and then finding problems to solve afterwards, and say, "Hey, I've got this really cool thing, can I apply it in insurance?" But I think one of the things you should... Well, somebody should get up and pitch, how do you get brokers to use PPL or Electronic Placing Systems for quoting? Because I would talk to someone of my generation, old colleagues and say, "PPL, are you using it?" "Yeah, sort of," in the same way, but they're not really using it. They're using it when they get a firm order and they throw it to the technician in the same way they used to throw a slip at them, we'd literally throw them, back in the old days, and say, "Off you go, I've closed this business, I'm going down the pub."

19:18 Mark G: And with PPL, it's bit like that, but then so... Well, you know, the technologist or the idealists would be saying, "Why aren't you using it for quoting your business?" And they'll be saying, "Well, in reality, my clients want 15-20 different options on everything I quote for them, and then the firm order comes in, and it's none of those, it's none of the above anyway, it's some approximation of all of them with a bit of a discount for the fact that it's a firm order."

19:42 Mark G: And they're never going to use it unless... Now we know that technology will come up with really cool solutions for this, at some point. At the moment, people still have to do all that stuff on the back of two sheets of A4 because it has to be done that way, because, they say, "Well, what about this? What about that option? What about this option? What about I do a low limit or I sub-limit that?" Sublimit the product recall, but then I've got a low-deductible. What... Is all that stuff happens, it happens all the time and clients want tons of options, so it would be unrealistic to expect a broker, when there's not even a firm order and there's no money changing hands to enter in 27 different versions of something when they know, only one of them is going to come in, if at all, obviously, 'cause you might not get an order anyway. So, that would be really interesting and then that would be the most perfect electronic revolution at that point, but I think we're a long way off that, but I think it's all about baby steps.

20:39 Mark G: So, I think the point is that we should never dismiss how far everybody's come. And just 'cause the fact that we've got a long way to go, you should never discount how far things have come. And obviously, that there is that problem in any syndicated market. You've got to go as slow as the slowest laggard.

20:57 Mark G: There's a big difference between a B2B technology when it's still a relatively small market with limited funds versus consumer applications and everyone's... So, all the people that are appearing to resist putting data in, they're all using an iPhone or some kind of phone and are used to using technology. So it's not a fear of technology, but it's just the reality, as you said, these things take a bit longer, that probably does need to... Almost that it does be to be a dual approach of doing it. Maybe after the fact initially, and then you learn, and they build and they evolve but I guess it's just yeah... It just sort of has to happen and people have to recognise, you can't get that straight away.

21:36 Mark G: Yeah, and it's tiny. It's tiny and it's complicated. So it's far more... It's totally logical that car insurance should be the first in it's... Goes digitally native and mobile first, and all that good stuff 'cause it's absolutely brilliant. I got some fantastic... My son was learning to drive, I wanted to put him on my car insurance, I realized that was quite complicated and I did something online and it was brilliant. And it was in the sort of lemonade-style, it was delightful. [chuckle] Literally, as a consumer I was delighted. I paid about... Four or five clicks got the whole thing done, and it was a policy that incepted on a Monday and then expired on the Tuesday, but brilliant, brilliant, brilliant. But that... It's much harder to do that in... If that was an oil rig and that was an oil rig with three billion dollars of cover.

22:28 Mark G: Well, yes, and also don't forget, Telematics has been going for 10 years, and it's only now that Telematics and actually back to the iPhone, because iPhones have become ubiquitous that people can use them for that kind of on-off... Sure they don't have to use it for everything. But yeah, I think that's what people forget, when these things suddenly start to become usable and easy to use, you think they've just turned up but actually they've been sort of working, they've been rumbling away in the background. On this whole Insure Tech movement, I think people now have at least stopped turning up at insurers and telling them they don't know anything and how ridiculous they are and here's my new solution.

23:02 MG: But you've been following us quite closely, you've been to our events, as you said you've had a couple of your events. What's your perspective on the role that start-ups and scale-ups have as part of really driving change in the industry and to the extent that large insurance companies are willing to take the time and the risk to work with earlier stage companies.

23:25 Mark G: Well, first of all, I would like to say, I love coming to your events 'cause again, it reminds me of our early time in the early... Late '90s early 'naughties' when I was just starting out as a technology journalist. They were things like First Tuesday, there were these happenings where people would just get together and talk about interesting things and maybe somebody would put their hand in their pocket and buy a few drinks and usually maybe that was a lawyer, or consultant or somebody who would invite us all along. But the journalists, the entrepreneurs and the people with the money, they're the venture capitalists and people were all mixing in the same room. And that's what the kind of vibe I love about coming to Instech, it's very raw, it's real, and it's genuine love of... It's the genuine enthusiasm for the... It's absolutely real, and it is on a Monday night. It's people who've come out on a Monday night, and it's not glamorous, in that sense, it's not... It's real and it's roll your sleeves up, get involved and get to know people and find out about stuff and meet some interesting people, get some good ideas as well.

24:31 Mark G: I learned this at one of your events, actually, you do a start-up, but probably, most start-ups are born out of people who are utterly frustrated with the industry that they're working in. They think sometimes it's the only way I'm going to get this done, is by leaving my job, because I've been trying, I've been on at my boss to do this for the last, God knows how long. Been through every divisional meeting and then it's got, finally got put up to the board, and the board didn't really understand it. And then they said, "How will all this work?" And then it sort of became political because there are two silos that were both competing for it, or didn't know who was going to be in-charge of it, or who was going to have the incentive. Are there any, were there any incentives to, who's going to profit from this, or who's going to have to bear this on the P&L at a cost and all that kind of... You get in all that politics, and actually, suddenly it...

25:18 Mark G: Might make a lot of sense just to down tools and go. You can only sometimes follow those kind of ideas as a start-up. And so many of them are really collaborative and really smart. Things that will make you better Underwriter. Insurance companies are going to always be in the market for things that will make their underwriters make better decisions, things can help you process your policies better, that's absolutely brilliant, I mean everyone's going to love that and of course, you know from your background in RMS, if you can navigate the catastrophe risk problem better because you've got fantastic models that are really accurate, it's always been that way, it's just more prominent at the moment, because I think some of the benefits are far more obvious now and the usability has really got there, and smart phones are particularly exciting and...

26:06 Mark G: The fact that the data is suddenly becoming more available from the Internet of Things, that power stations and oil tankers and super tankers and particularly for me, a great moment was at one of your events, where I was again, sitting from our lofty heights of specialty and syndicated global type risks and re-insurance risks, we were wondering, it's all very well, personal lines is really interesting and then we went to an Internet of Things evening at your event, Instech, and people were talking about platforms and somebody had a Fitbit for pets and I was thinking God, this is not really my kind of scene.

26:44 Mark G: And then suddenly, someone stood up and talked about how their biggest client was the Port of Amsterdam and suddenly I woke up and said, "This is really interesting." This is somebody using Internet of Things technology to deliver insights on risk management at a port with big ships going in and out and stopping them bashing into things. It was brilliant and suddenly I thought, this is something that my readership really probably doesn't know about and needs to know about now, and realizing. And the fact there've been so many really interesting applications within Marine and with everywhere else it's going to... It's absolutely it's really, really interesting times.

27:22 Mark G: Yeah, and there's a whole thing now actually about learning from different areas, it's rather like the micro-insurance happening out in African and other areas where they've got very efficient ways of selling insurance bundled into seeds and fertilizers and then monitoring rainfall and then if the rainfall goes above a certain level, you get a pay out straight to someone's phone. And yes, so a lot of it, technology starts here and comes back in again. But I think, the other thing just on these startups. What's interesting is, as you said, the people doing it are often coming out of industry and actually generally, the average age of somebody doing a start-up is 43 it's probably even older in insurance and so it kind of brings us onto another theme which is start-ups aren't just kind of conventional InsureTech ones but Stephen Catlin's set up Convex, Steve McGill's set up his new broker. What's your sort of, what's the lessons you would take away from what they've been able to do and also how they are approaching it along this whole theme of technology and data.

28:20 Mark G: Well actually on the technological theme, I think both of them are both incredibly anti-legacy. We'll see what happens if they ever feel that at some point they may have to buy something. But they're very much in two minds about that when you see someone like... What's really interesting with Stephen Catlin, massively experienced veteran of the marketplace, has got a totally horizontal, enterprise-wide outsourcing deal. And he's saying that that is... So they're outsourcing everything that is not core function and core function is you know underwriting, underwriting and paying claims. And all that back office is being completely outsourced and probably all the data and all that good stuff. But that is giving him a three point, he's saying that that's giving him straight away giving him a three point expense advantage, which is a lot.

29:11 Mark G: Again, I think Steve McGill's very... Would be loathe to get into too much legacy as well. But it's quite interesting. So you've got industry veterans who've been given a blank sheet of paper and plenty of funding and saying, "Right, if I redesigned my industry from scratch today, this is where we are." And so that they're state of the art and the three points off your expense ratio from day one is not a bad win.

29:40 Mark G: And very, very interesting also Stephen put it in this way, he said that of course so... I asked him this, "Isn't that a big risk outsourcing the whole of your back office? What happens if it's not there anymore?" And he said, "Well, obviously we've done all of that and the regulator would have asked us about that and our investors know about that also about that but we've got all the contingency planning and everything's all there. But at the same time, you don't forget what the advantage is of course it gives me the computing power that I would have only had if I was a two billion dollar business because I would never have been able to afford to do this, it's stuff that I've got much more powerful databases and computing crunch power than I would ever have had in a million years if I was doing this myself as a small business which currently has not very much income." So the fact that he committed to outsourcing means that the outsourcing can give them that global power and that cloud power that they would never have had so, really interesting, really interesting.

30:41 MG: Yeah, I mean, Amazon and Google who we've had on stage and are coming back actually, that's really what they're interested in insurance to a large extent, AWS and the Google Cloud Platform, they recognize that that's what they can offer. And I think, I completely get why Stephen would go down that route because if your technology back-end provider doesn't work, then you switch them out and get somebody else but if you've built a whole business around that then it's really difficult. And I was talking to somebody yesterday from one of the large insurance companies that's actually working with Palantir and they said one of the biggest benefits they get from working with Palantir, is that if they want something done, they ask for it and they get it done and if they go to their own internal IT department, it goes onto a waiting list and it takes them six months and they get back a sort of much worse version of what they thought they wanted when it's too late. So I think that's, back to our earlier conversation about how the established insurance companies, that does feel like that is a...I wouldn't say it's an emerging threat because you saw this back 10 years ago with the Bermudan reinsurers coming after some of the big CAT losses, but the ability of someone to come in with not just hundreds of thousands of dollars of funding but billions of dollars of capital and funding, is potentially a real threat. If you can reduce those costs off your bottom line.

31:57 Mark G: Yeah no, it's a massive advantage. Also yeah, the other thing that Steven said about that was that it's culturally interesting, because you've got that... Because it's horizontal, it avoids all your silos within your business, and the way that your Finance department might have had this IT project and then your Underwriting department's got an IT project, your Claims department's got another IT project, and they probably don't even all talk to each other. It's all being done by the same people. They might be able to... There might be synergies or there might be cross-fertilization and things that you can... While you're building this you can say, well actually why don't we plug that into the underwriting right now. So you get some of those, again, group silo removal by having something that's horizontal again, which could be really interesting.

32:39 MG: Good, well, so just changing tack a bit. You're off to Monte Carlo in, I guess what, a couple of weeks now. Bizarrely Monte Carlo seems to arrive at the same time there's some major industry event, in fact this year, it could be happening. There's three large hurricanes making landfall. But for those who haven't been out there and worked as hard as you have over the years, could you just say a few words about what happens at Monte Carlo and then just some of the themes that you think you'll be hearing from the people you are talking to.

33:07 Mark G: Oh yeah, yeah well... If you've never been to Monte Carlo, it's been here for about 60 years. It used to... In the days of currency controls and expensive air travel, or probably sea travel, it was a really efficient way of bringing the whole world together 'cause literally everyone would go. People who buy reinsurance, people who sell reinsurance, people who broker reinsurance, and people who service those reinsurance, would all be able to go and talk to each other. And I suppose it's strategically placed, just in the middle of the third quarter, you're starting to look towards your first of January renewals, but you're talking in generalities about things you might be doing. The fact that... Whether you might buy a bit more reinsurance, or you might buy a bit less, or you might be wanting support for getting in some new line in your territory.

33:56 Mark G: Anyway, it was an efficient way of getting around the market. It becomes... So it's done in the format of a happening that is not really organized but it's sort of organised, but everyone... Everyone does speed dating and organises their own diaries, and you do half hour slots on the hour, on the half hour, all day, breakfast, lunch and dinner, and with a few cocktail parties thrown in. But it's actually extremely hard work running between meetings, trying to get changed for dinner and trying to find out where your next meeting is, and bumping into people. But it's invaluable obviously as a journalist, we're absolutely in clover, we love it.

34:40 Mark G: We're going to be taking about the impact or otherwise of Hurricane Dorian which is currently scheduled to be Cat 4, which is four out of five... Very damaging hurricane, which could be hitting West Palm Beach, which would be a very expensive place in the East Coast of Florida, north of Miami. So we were talking about that because generally, you're talking about... It's a time to talk about markets and we're talking about a market that has been losing money, a market which has discovered it's discipline a little bit in the last 18 months, where some of the... Some of its major players have been restructuring their books, cutting back on different things, and where the ILS market, which is the insurance link securities market, has had a difficult time. It's the first time that some of its capital would have dropped in the last... Since it's really got going 10-15 years ago.

35:39 Mark G: And now we'll be looking at what will that be happening... How will that affect the market place, because we've got... We could have capital locked up, we could have ILS funds looking to reload capital. That means going back to their investors and asking for more money, because some of that capital, even though they may not have lost it, it might be locked up and not moveable because it could be subject to a loss if the loss got worse. And we've had a problem in the last couple of years where some of the... Some of the losses have got worse, we call that "loss creep," particularly in Florida where a lot of plaintiff lawyers love chasing after hurricanes and give themselves a good pay day.

36:19 MG: Mark, it's been great catching up, and I just wanted to say thank you very much to you and Insurance Insider for sponsoring our podcast, and also, really appreciate you spending time with 200 of us in a railway arch in London alongside the Thames rather than going home to your family in the evening, I'm not quite sure how you explain to them why that is more preferable than seeing them, but obviously, they are...

36:40 Mark G: Well, they're great. But I get them... It's only once a month. So, we're just really glad to be associated with what you're doing 'cause we get a lot out of it, that's the thing, we get a lot out of it. You're the real expert. So, what we're really doing is trying to look for the parts of it that we can apply to our subset of insurance, and it's only a subset. And it's that specialist end of insurance and we're always looking for what is our angle. And obviously you're far more... You're the much broader church. And that's why I think we've got a good symbiotic relationship, and so long may it continue.

37:16 MG: Fantastic, yeah, and also increasingly we're seeing people coming in from outside of the insurance industry that have got great access to clients, good technology, good data, you know, kinda hit the ground running which you tend not to come across elsewhere. There's still quite a lot around the startups but... And there's still very relevant but... We're going to see a lot more this year from companies like Safety Culture that have recently joined up who do a lot with audits for large commercial buildings, and companies that actually got some really useful data for insurance. So, well, that's tremendous. So, Mark, if anybody wants to find out more about what you're up to or Insurance Insider, what's the best place for them to get access?

37:57 Mark G: Go to Insuranceinsider, all one word, dot com, and there there'll be free trials and all sorts of things. It is a paid-for product, but you can get a free trial for a while before someone asks for any money, and you can check it out. And then cajole your CFO to get a company-wide subscription, that's what you really need to do.

38:17 MG: And well worth it. Well, brilliant. Well, thank you Mark, and I'll let you get back to planning for Monte Carlo. We'll see you in a few weeks at the Steel Yard.

38:25 Mark G: See you soon, bye-bye.

[music]

38:31 MG: So, as Mark mentioned, we have our next event coming up on the 24th of September at the Steel Yard in London, where we will be holding a reverse pitch. So this means that as a change to our normal schedule, when we have technology and data companies talking about what they're offering, instead we're going to be hearing from insurers and large corporations about some of the challenges and opportunities they have and what they need help with in data and analytics. Places are filling up fast, you may still have a chance to register for this event. If you miss it you can of course, hear it coming out later on our podcast. Next event after that will be on the 22nd of October. To register and also to see what we have been doing at prior events and everything else we're up to at Instech London, go to www.instech.london.

39:22 MG: And finally, don't forget, if you want to get a free copy of Insurance Insider, you can see the details in the episode notes for this podcast.