Not every innovative, fast-growing technology company in insurance is a start-up. Mark Bates founded RDT in 1991, but he shows the energy, enthusiasm and tech-driven vision more commonly founded in early-stage companies. Mark has grown RDT to be one of the leaders in the UK providing the core underwriting platforms to 19 insurance companies and MGAs around the world. RDT is exploring new technologies such as voice, as well as creating its own consumer app.
Matthew finds out how (and why) Mark founded the company, what they are working on today and exactly why one of their clients is responsible for 50 million calls on the RDT server each day.
RDT is one of the many InsTech London corporate members. Find out more about what we are up to here on our website.
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Transcript for this podcast
00:10 Matthew Grant: Welcome to the InsTech London podcast. Matthew Grant here, and for this week's episode, I am talking to the CEO and founder of our corporate member, RDT, Mark Bates. Mark comes from that group of, what I call, the hidden insurtechs. Despite going for over 20 years, Mark and RDT have the energy and continual search for innovation that many seem to think that only exist in a startup. They're providing software to fast growing insurers and given Mark's own background in software, it's no surprise they're tapping into the latest ideas for customer engagement, claims management and efficiency. Our chat ranges from nuclear bunkers to Ed Sheeran. We're also delighted to be running an InsTech London event with RDT in March 2020.
01:02 Matthew Grant: Mark, welcome to the Instech London podcast. I've recorded podcasts in many locations, but I think this is the first one I've actually been recording in, what? I think we are four or five levels below ground in the Eight Club. What brings you into this place?
01:19 Mark Bates: Well, firstly, it's safe. If there's... Anything goes wrong upstairs... And I know... I mean, this is a really nice club actually and the sales guys use this because it's a really good meeting place for customers in the city.
01:34 MG: You've got a very well appointed nuclear bunker. You've got comfortable chairs and lots of coffee and drinks on tap. So I think we should be okay for the next 30 minutes or so. So let's talk a little bit about RDT. Now you founded it back in 1991, but as we've spoken about, you've still got the feel of a youthful startup and I mean that in a complimentary way. Can you just talk a little bit first of all, about what it is RDT does and then we'll come on to talk about what it was it motivated you to start the company all that time ago.
02:04 MB: RDT was founded originally, to provide software for the insurance industry and it's just continued ever since. And now we've moved into managed services. The software itself has expanded out significantly in terms of the type of customers that we support.
02:23 MG: And what was it that led you to launch it back in '91?
02:26 MB: I was actually working for Bank of America, analysing software, how new software could be used to improve efficiency within the bank. And I was approached by my dad's business partner who asked me to do a bit of moonlighting and evaluate systems that were available because they needed a new system to run their insurance syndicates. So I had a look at a number of them, they were all mainframe-based green screen type solutions. That's all that was around in '91. They had seen some of the work we'd done for the bank. One of the dealing systems that we had produced which was Windows-based, it was colour and at the end of the selection process, my dad's business partner said to me, "Really, I just want you to build us something". Didn't go down too well with my dad, he was a bit concerned about the whole thing. But yes, history has proved that it was a reasonable decision in the end.
03:32 MG: Yes, I know, absolutely. Just looking at your financials, you've got a very successful company. I guess, by that definition alone, you no longer qualify as a startup because you're actually, you're making money and you've got some quite good margins in there.
03:44 MB: Yes, and we've got about a hundred, nearly 150 staff now. We're in several countries. So Yes, it's a lot different to the way it was when it was three of us next door to a chip shop.
03:56 MG: So I know Markerstudy is one of your main clients. They've been growing quite a lot in the last few years. I think you've been growing along side them. Can you talk a little bit about what you do with them? And then any of the other main companies that you're able to talk about?
04:10 MB: Yes. So, Markerstudy, we love Markerstudy for numerous reasons. One, because they enjoy partnering with people and they encourage us to come up with the ideas that they can either use or not use. And we work very hard with them to help them achieve their growth aspirations which are significant and in turn that just helps us to be perfectly honest. So it's a relationship that's been going now for about 8 or 9 years. I believe when we started with them, they had about 30 or 40 staff. I think, in the whole group now, there could be up to 5000 maybe. So it's a massive increase from where we were, probably only about 1500 of those use the insurance platform. But it's still a massive shift from 30 or 40 that were using it when they started.
05:10 MG: Markerstudy is a MGA providing primarily motor insurance, is that right?
05:17 MB: That's correct, although those lines of business are going to start to expand now with the acquisition of Co-op. So, motor... But they also have insurance companies that provide gadget insurance, pet insurance. So there's quite a wide range of products that they offer.
05:36 MG: Okay, and so, your technology sits on the cloud uses Azure as the solution out there. But can you just talk a little bit about how that actually provides services to Markerstudy?
05:47 MB: So originally, the platform was provided to them and Markerstudy hosted that platform themselves. And so we provided the software, they run the platform. For Co-op, we're running the platform in the cloud for them. So we actually have a managed services company now anyway. So that's a new customer for us on that platform, and to be honest, that's the way that we see the whole market moving. I think all of our customers or the vast majority will be on that managed service within the next few years, just because it makes financial sense for everybody. And we can deliver change so much quicker to them as well.
06:31 MG: And in addition to Markerstudy, who else you are you working with?
06:35 MB: We've got a number of customers. So some of the more significant ones, RAA, Royal Automobile Association in Adelaide. They are the largest insurer by far in that part of the world. I think they've got 50 or 60% of the people who drive in South Australia use RAA for their insurance. So it's significant market percentage that they have. So they use our platform for managing their household, travel and motor books, so they are a big customer for us. We have our... A high net worth support for direct line is on Landscape. A customer such as Kitsune who are a new MGA, we've been working with them for a couple of years. That's a really interesting customer for us. That's all managed service sits in the cloud, very quick to change, quick to deploy. So that was a really good proof point for the new managed service when we set it up.
07:41 MG: And just on RAA, when we were talking earlier, you mentioned that increasingly you're seeing or you're actually building out capability for third parties to integrate into your solutions themselves and I think, RAA are actually using some of your APIs and interoperability to be able to do that, is that right?
07:58 MB: Yes. I think the way the market's going to move over the next few years is that we're going to see a big shift towards insurance platforms that become more and more open all be that in a secure and managed way. Third parties really should be able to access the insurers or the MGAs or solutions so that they can service their customers more effectively. So one example of that is RAA themselves, they are using all of Landscape's functionality but they are exposing a lot of that via their websites. So because we have a complete set of services now that allow you to manipulate the functionality within Landscape, they hook into those and it's a really quick and efficient and secure way of them building their websites.
08:54 MG: And Landscape is one of the products you offer?
08:55 MB: So Landscape is the administration and claims platform that sits behind all of that and it's really the APIs, the services expose that functionality. So because RAA have such a big website and they have so many products information for their customers, they have a content management solution. So it's quite quick for them to build the front end for the web, but then they need a secure way to hook through into the back-end administration system. So, for example, if they wanted to build a FNOL solution which they're doing at the moment. It allows their customer to register a claim. They've done that using the content management system and that just seamlessly hooks in to the back-end system so it can validate the customer. It can take details of the claim. It already knows if that claim is valid against the terms of the policy and it can set the next steps up automatically. It can tell the customer if it needs any more information. Yes. So that's how these platforms are starting to open up now to make... It's the journey and the efficiency for the end customer has to become more and more slick, basically.
10:11 MG: And FNOL, for anybody not familiar with that, is First Notification of Loss.
10:15 MB: That's correct.
10:16 MG: And we talked about legacy earlier on, but what are you seeing today with regards to how companies are choosing to both deal with existing legacy in terms of choices they've got about how do they use new technology to replace that or are they rolling out new technology and living with the old legacy but you're sort of trying to build out the new propositions on the new technology, but still can't totally get rid of what they've had before?
10:44 MB: So it's interesting. There are various products available now that help people get over the legacy situation. However, it's not a complete answer. So robotic process automation, you can build something really quite nice and slick for the customer or for a broker portal or whatever it is you choose to build. And then you could use some process automation to effectively... It's like a very slick screen scraping and automation. It looks like somebody's keying stuff into the back-end system, basically. It's not as deep an integration as you could do and ideally you would want to do. But it does give people a way out of the current problem which is if you're not offering slick solutions, you really are going to struggle. The analogy I use is Amazon. So we have High Streets which are now pretty much deserted and if you can go online on your phone, say I need this, this and this, and it's going to arrive, sometimes more quickly than you can get in your car, drive, find what it is you want and come back again. The whole paradigm has changed and you need to be able to do that to compete and if you don't, that's when you end up with empty shops. So the same is going to be true for all types of business I think, and insurance is no different.
12:15 MG: So the equivalent for an insurance company will be they'll have their floors where previously they had hundreds of people building code and supporting historic systems will now be the equivalent to the High Street today with lots of empty desks and boarded up kitchens.
12:32 MB: I think, actually, what's interesting is the investment that you need to make in technology and the people that you need has probably increased. It's becoming easier in a lot of respects to build more sophisticated applications but you can't stand still. You have to keep pushing forward. So, if you don't ultimately you will be selected against. So the buying process is very important, the claims process is very important. It's not just that though, the more information you know about somebody, the more accurately you can price, the more accurately you can handle their claim. You've got much better insight into the individual to know whether or not your price is correct, whether the claim is valid. If you're not putting that into practice, your competitors are, you will get selected against and your competitors will leave you with people they don't want to insure, and it will be subtle though, you won't necessarily see it coming, and I think there will be casualties.
13:44 MG: Yes, I know. Definitely watch that space. So Mark, one other thing that struck me when I was talking to some of your colleagues at RDT, was a comment that your servers run 50 million or more queries in a single day. I think it was even from a single client. And first of all that seemed to be a little bit far fetched 'cause that would imply almost every person in the country was hitting your servers every day. But actually, as someone explained what was going on with the technology I understood it slightly more. But can you just explain, make sure I get the same story from you about why they are so many calls on your servers in an individual day?
14:18 MB: Okay, so any given insurer if you centralize your rating process and it's the only way really to understand what is happening with the purchasing side of your business. So you need to see everybody and the details of everybody that's getting a quote and you need to be able to accurately price. So I think gone are the days where you can distribute your rates to people and allow them to make those decisions because you don't really see the data for what they're basing those decisions on. You'll get an EDI message that will come in, but there is so much data that is used to enrich the data that the client gives you in order to price accurately that centralizing your process means that anybody that you are giving the paper to. So if you do a deal with a third party that says you can sell our insurance products and here is the net rate. You can charge what you like, you can undercut that price if you like, or you can go above that price if you can make good money on add-ons, such as legal protection or other add-ons, if the broker can make more money doing that, then they can sell your product actually at a loss against that net price you don't really care.
15:43 MB: But when that broker sends the information to you, you need to be in control of that and send a price back. So what's happening is you're seeing when someone goes to an aggregator they might get three or four, five, six quotes come back. They're all different quotes, they're all different brands, but it can be the same insurer that sits behind all of them. So already, you might have five or 10 quotes come back for an individual that's the same insurer. Then, when you add to that the fact that you say, well what excess do you want and you have slide-y bars on the website and somebody changes their excess, you get hit with 10 more requests. So 10 more answers have to go back and so it goes on and on and on. So that's the reason that you see so many quotes. The benefit for the insurer, is that they end up with billions of quotes in their big data store that they can analyse so they can actually see the way people change things, how they manipulate things to achieve a better price, and they can use that information to improve the customer experience as well.
16:47 MG: Yes, and it's a really interesting use of data. I think most people, when they think about the data the insurance companies have, it tends to be on the actual policy data, or it's on the claims data but that's a Google-like way of looking at what people are doing in terms of asking the questions.
17:02 MB: Absolutely, and to be honest, you shouldn't really have to ask the questions at all because, you know pretty much everything you need to know you can obtain from various sources, electronically. People sometimes just don't remember, it's not that they're trying to evade, it's not that they're trying to get the price pushed down, they don't remember. If you have got access to that information, why ask that question? Identifying the individual and the item that they want to insure is the only information you need.
17:35 MG: Yes, and it's definitely a bit of an arms race going on just now and particularly, I think, in property, to get information about individual buildings so that an insurance company can offer a quote to an individual, confident, they've got enough information about a building. I guess a challenge still is whether that original data is going to be good enough and represent reality enough and therefore the right data to use to give the price, but certainly that's kind of where the industry is moving.
18:01 MB: Yes, and we've spoken to enrichment providers and work with enrichment providers who have obtained that kind of information from surveyors reports. So every surveyor report for every bank or lending institution that takes place on a daily basis, those surveyors’ reports are digitized and that data gets updated. So it's a pretty sophisticated system now.
18:25 MG: Mark, you also released an app as well that I believe is white labelled for your clients to use.
18:32 MB: Yes, that's right. So it's interesting, I think the app because it shows you all of the capabilities of a good integrated solution exposed for a customer to use and get really slick. Not only purchasing but also claims handling. So the app is called TRiCE and it allows you for example, to get motor insurance and you only have to answer, I think it's six questions for short-term motor, I think it might be five questions. So, you put name, your postcode the last few digits of your driving license, so it works the first been out, and the registration number and bang. And the reason it can do that, is because of the data that it's pulling from sources all around the world to find out about the individual, the vehicle, or the house, or the destination you're flying to, if it's travel insurance. And it allows you to buy with literally Apple Pay, Google Pay, thumbprint and it's done, and it takes seconds. And that's a really interesting use of technology, and it just demonstrates, I think, a lot of the things that we've been talking about.
19:56 MG: And so anybody who wants to go and see TRiCE in action, how should they find it?
20:00 MB: The easiest way, triceinsurance.com, and either on the web or the app, they work exactly the same. You can get your gadgets, travel, motor, household, etc.
20:13 MG: And then just talk a bit about voice, that's so often talked about or increasingly talked about as the next big development for insurance. Are you doing anything in that area for your clients?
20:26 MB: Recently we launched an Alexa solution. So now the customer can ask, "Alexa what is my insurance excess?" "When does my policy expire?" "I'd like to register a claim." So the voice recognition is really good actually. And if you have a sophisticated set of services that will return the information in a secure manner that is being requested, you can put all manner of front-ends on them. And Alexa, the Google Voice product they are all quite straight forward actually to integrate. We can also push notifications back. So when somebody gets home, Alexa will be flashing yellow. So you say, "Alexa read my notifications," And it will say, "You need to send a copy of your driving license," or "Your car is ready to be collected from the repairer." So we can push notifications out. So it's interesting, it's just the way things are moving forward and we're constantly pushing those kinds of development boundaries as hard as we can.
21:37 MG: A technology question for you, so does that imply that somebody has to have already set up their Alexa to actually work with their insurance company? Because I, just to experiment before we had this discussion, I went and asked my Alexa to go and buy car insurance, and the response I got was playing songs by Ed Sheeran.
22:00 MB: Yes, so in that instance, you do, because it's accessing data that's personal to you. So about your excess, or when the policy expires, or it needs to be renewed. So you have to hook your Alexa account into your insurance account. So you do have to go to a web screen and then it will give you... You set a pin code up to protect that data.
22:27 MG: Okay, well when in 2020 I go and ask my Alexa to play an Ed Sheeran song, and it directs me to go and buy insurance, Markerstudy, I'll come back and ask for my royalty.
22:37 MB: Okay, it'll be quick. Your insurance will be purchased before the song finishes.
22:44 MG: You mentioned a bit earlier you have over 100 people now employed in the company, it's definitely, as I said, still got the kind of energy and enthusiasm of a start up company. How do you keep things fresh, and how do you yourself stay fresh after all these years?
23:01 MB: I just love technology, and I love seeing and thinking about the way you can apply technology to change things. I think the developers love playing as well. They like using new technologies, so it keeps them entertained and it keeps them fresh as well. We love customers who themselves are aggressive or forward thinking in terms of technology and how it can help their business. Because it makes everything so much... We all work together so much more as a partnership when that's the case.
23:34 MG: Have you seen a shift in how your customers, or potential customers are thinking about technology?
23:39 MB: Technology is tricky especially when you have large, be they legacy or otherwise, systems. Because people have to test, they have to prove things, it's quite difficult for them to test off to one side and then feed that into the main solution if it works without vast cost, it's put the brakes on many good projects. I think that's starting to change, people know they have to change, and they're starting to change the underlying solutions that mean they can be more flexible, because they have no choice. So you go back four or five years ago, we were talking to insurers about hosting their systems in the Cloud, everyone thought was a bad idea, No one wanted their data in the cloud, it was like, "There's no way." Now people are actually coming to us saying, "This is really good, could you do this for us?" So there's been a big swing, I think.
24:33 MG: And what about at the board level, or the CEO level? Because it seems like one of the challenges is technology keeps moving, and no CEO can hope to keep up with it. They've got to rely on their CTO or CIO to make the decision. Are you saying that they're starting to move to a combination of more confidence in their team to make the right decisions, and they themselves are getting better at understanding? You mentioned Cloud for example, so there are still some issues with cloud that was almost certainly a scepticism in the past because people didn't understand the security, they're worried about the access to it. But generally, at the level of people who are making decisions, and also querying their team who are making decisions, are they better educated now on how to move forward, or is there's still a basic challenge people don't really understand enough about the options they've got to be able to make the decisions themselves?
25:25 MB: Across the various insurers we work with, the insurance we speak to, there is a range of understanding and opinion. So there's everything from insurers that totally understand where things are moving. If you have software that has all the testing built into the software itself, so that when you release something new, if that is hosted in the cloud somewhere, it's a bit like with your phone, the software just updates. You don't really question it. You don't sit there and say, "Woah well, I'm not going to use this now." or "I'm going to stop it installing it, I'm going to install it on a different phone. I'm going to test it when I'm a 100% sure." You just expect it to update and work, and now that you can get to that full-enterprise grade commercial software, I think there are definitely some insurers that see that now, and they can see how fast it enables them to make change and to start to push boundaries. There are other insurers that don't see that yet but I think that's a journey that everyone has to go on, because it's quite a leap of faith. You have to see it working a few times.
26:38 MG: And hopefully, the boards of insurance companies won't have to rely on their teenage children to help them with the upgrades to their iPhones like some of us do.
26:46 MB: Well, yes, this is why I believe that partnerships are important because, to a degree you have to trust your partners because there's no way... We struggle to keep up with change, which is why partnerships for us, is important with technology partners. So the insurance company or the brokers or whoever it is, they're really going to struggle to keep up with change.
27:13 MG: What are some of the themes that you find particularly interesting from a technology perspective or indeed from an insurance side as well.
27:21 MB: I think interconnectivity. The ability for one system to talk to another, to manipulate another system is going to become really important.
27:32 MG: You look out there at the people you choose to partner with, do you see a lot of choice now about potential partners out there?
27:39 MB: There's some really good companies out there who are specializing in high tech areas that then need to feed back into the main insurance ecosystem. And, we can't do all of that, it's pointless us trying. So, our focus has been to make sure our system is open enough to integrate very quickly to those players. So that's our big push really, for 2020.
28:06 MG: And Mark, you have signed up as a corporate member of InsTech London, thank you very much for that. And actually, you're also going to be sponsoring one of our events next year on lessons to be learned from technology in the motor world. What was it, after all this time out there and obviously some great successes, not only growing your own companies, but actually working with companies that themselves are growing, that you felt it'd be useful to get involved with a community like ours?
28:35 MB: So we love technology, we love working with the insurers, so we just get on and do that. So, historically we've not been amazing at self-promotion. This works for us on two levels. So firstly, it tells people what we do, but more than that, it introduces us to other partners in this space. And if we go back to what I was saying about integrating with those insurtech players, that's very important for us. As you said before, insurance and technology. But, having said that, because of the pace of change, there is definitely a split now between the back-end platforms and the really cool tech. And it's merging those two things together, it's going to become more and more important. So that's why InsTech London was an important step for us to take, I think.
29:28 MG: No, well thank you Mark, for that. And, I think there is a potential to build, I was going to say the dark web version, but it doesn't sound quite right. The problem with the insurtech as it has been defined for the last few years, is it tends to give too much focus to large amounts of funding, disruption... And disruption has got its place, but it's also at the same time, almost totally overlooked people like yourselves, and there are many other organizations out there that are frankly just getting on with it and building great solutions with great partners.
29:58 MG: And it's certainly one of the things we're doing more of in 2020 is surfacing those companies; both those within insurance and those from outside of insurance that are actually building the technology and doing the work and making the changes. So, it's great to have you as part of the community and actually to be able to do more with you into the course of next year. Mark, thank you very much.
30:19 MB: Thank you.
30:23 MG: RDT are one of over 100 corporate members at InsTech London, and we're working with almost every leading insurer in the UK, as well as many of the best technology companies new and old. So come along to our event if you're in London, look at our InsTech London event schedule, or find me on LinkedIn, or just drop me an email at firstname.lastname@example.org. And finally, not forgetting Insurance Insider for their support. Take a look at the episode notes for a link to their website and a free copy.