The finance teams in insurance companies often struggle as much as others when it comes to identifying key business metrics and bringing together multiple sources of data.
Improving efficiency is one of the foundations of the "Future of Lloyd's" strategy and the 3rd cohort in the Lloyd's Lab brings together scale-ups rather than start-ups. Founded in 2010, Phinysys was chosen because of its record in providing systems to speed up and improve reporting capabilities to leading insurers.
In this week's episode Matthew is back in the Lab talking to Phinsys CRO Stuart Conibear and Marketing Director Ian Jones about what the company does, why they joined the Lab, and their experience so far. We also hear why Phinsys became a corporate member of InsTech London and what gets Stuart and his team to give up their evenings to join us at our events. Click through to Pedius, mentioned by Ian.
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Listen to podcast 45 here. It is also available on iTunes, Spotify and Podbean.
Transcript for this podcast
00:00 Stuart Conibear: The FD absolutely, the conversation is about making his or her life easier and giving them something that they've not seen before, because many don't know that these sorts of systems exist.
00:14 Matthew Grant: Welcome to the Instech London podcast. This is Matthew Grant, and in this episode I'm back at Lloyd's in the lab, this time talking to Stuart Conibear and Ian Jones from Phinsys. Phinsys is one of the companies in the third cohort at the Lloyd's lab. They started in 2010, and they're bringing together some of the key financial information that helps insurers get better and faster insights into performance. The most recent cohort at Lloyd's brings together more established companies this time than the prior ones. It's scaleups rather than startups. And their goal is to tackle some of the key areas that are going to be identified in the Future of Lloyd's paper released at the end of September, and efficiency is very much one of those areas. The Instech London podcasts are being supported by Insurance Insider this month, and the Insider helps us keep up to the minute with breaking news and insights into the global specialty and reinsurance market, and actually the new technology they're using as well. You can download a free copy of Insurance Insider from the episode notes with this podcast.
01:29 MG: Welcome to the Instech London podcast. We're back in one of my favourite places to do podcasts, the padded cell in the Lloyd's lab. You're two weeks into your Lloyd's lab experience. Is it a bit like going back to school when you're making new friends and finding out what everyone's been up to in the first couple of weeks?
01:47 SC: We've met far too many people. I've forgotten half of them already. We've a few foreign companies on the cohort which are easier to remember, and it's a huge number of people to add to my LinkedIn profile.
02:00 MG: Stuart, let's talk a little bit about Phinsys and what you do. You've got 27 employees now. You're focusing around financial accounting and regulated reporting and analytical needs. Could you just talk a little bit about what that means in practice, and maybe a word about some of the clients that you're working with?
02:18 SC: Richard had this vision, really. He'd spend many years inside ACE and Chubb building similar systems. We'd looked to kind of automate everything from front end systems being policy and claims systems, through down to the general ledger. And really what we're trying to do is remove the spreadsheets, the kind of small IT solutions that are holding data siloed and lots and lots of manual processes. We see ourselves quite niche. There's no one really doing what we do, certainly in the UK and in the London market.
02:56 MG: Well, you've got a pretty impressive list of clients, both what you've got on your website, Atrium, MS Amlin, Star, CNA Hardy, XL Catlin, Enstar, you've got a few more in there, so clearly you're doing something right. You've moved beyond the PSE, but for those of us that are not deep into financial accounting and how it works in the insurance world, could you give some specifics around what your solutions are doing that other people can't do, and how you're working with the whole back end and front end of your clients' systems?
03:29 SC: Yeah. We look at it on a product basis, so rather than building bespoke solutions for each client, we felt that we could design enough of a product that meant that each time we go into one of these customers, 80% of the work is already there, and we can spend the rest of the time focusing on what makes them unique, what policy admin systems they have, whether that's a London market system like Eclipse or something more international flavor like a Duck Creek or a Guidewire. Through configuration then, we can conform all of that data. Many of them have many different disparate underwriting claims systems, and we're pulling all of that information into what we consider a finance data warehouse. So something architected specifically for the FD and actuarial teams to give them what they need to look at the financial health of the business, to respond to statutory and regulatory requirements, and give management insight about how the business is being run.
04:29 MG: So we tend to think about the way insurers are looking at using technology, whether new or existing, and first of all make themselves more efficient. Secondly, enhance the data they've got, all the analytics they've got, by tapping into new sources of data, or thirdly, enable new insurance products. It sounds like the first one is your sweet spot, which is making business more efficient. What about the other two? Are you helping your clients tap into new sources of data? And are you helping them be able to underwrite new products?
05:02 SC: Absolutely, we're an efficiency play. We're all about doing things faster, more accurately, with less people. In terms of the insights that that data gives them, it's all sitting in one place. They have probably a far more granular view of the way that the business is operating, which lines are performing well or not, and the financial metrics that often aren't available when they're just purely looking at the kind of underwriting and claims, key performance indicators that most companies will have nowadays.
05:35 MG: And who is it in the client that brings you in? Who's your typical point of contact when you're selling something?
05:42 SC: The FD, absolutely. The conversation is about making his or her life easier and giving them something that they've not seen before, because many don't know that these sorts of systems exist.
05:52 Ian Jones: I think the only other thing I would add about CFOs and FDs is that there's been quite a lot of research at EY, most notably, did a big survey on insurance CFOs and CFOs are taking on a much more strategic role inside the business now. I think it was 48% of CFOs said that they wanted faster, more relevant, more integrated financial analysis. So I think it's not just about number crunching now. It's about understanding what's going on inside your business so that you can make informed decisions about what you do in the future.
06:31 MG: Let's say a great business model if the buyer of your product is also the person that happens to have their hands on the company budget. Just on the challenges of legacy systems, and as we all know, insurers, you get a lot of stick, maybe unfairly, for the pace of change. Do you find you tend to get brought in to work on projects alongside existing systems, or other companies that are actually looking at replacing all of what they're doing on their financial accounting and bringing you in to do that?
07:04 SC: Historically, they just simply wouldn't have a system for areas that we're looking to address. They will be reliant on literally dozens of spreadsheets, potentially to solve some of these challenges. More recently, even the larger insurers that have something of a backbone of a finance processing systems, new regulations, such as IFRS 17, is meaning that they're having to rip up a lot of what they've done in the past. There's some huge budgets. I know SCOR recently released down in the rendezvous, that they've got a budget of 100 million set aside for IFRS 17.
07:47 MG: I think, we just lost half our listeners, Stuart, as they rush off to email SCOR to try and arrange a meeting to tap into that hundred million budget. So I do want to come back a little bit to the accelerators or incubators or however you choose to characterize them that you've been working on. So you mentioned PwC. We'll come on to Lloyd's lab in a minute, but I'd be interested to just understand the sort of motivation for a company that's got a very strong set of clients. You mentioned earlier, before you've got pretty strong inbound inquiries. Why would you then go and spend time working in a incubator, which have historically been more geared around helping early stage companies with some of the real basics about what is to talk to insurers and how to build a business? Isn't that a little bit sort of elementary school for you, given where you are in your own evolution?
08:34 SC: The way we felt to really grow is to find partnerships. And I spoke to all of the big players, KPMG, EY, Accenture. PwC was the one that kind of showed us the most love, and had already put together a program specifically for scale ups. We ended up coming out of that signing a joint business relationship. I think we were the only one so far on that cohort to do that.
08:57 MG: I'd just like to talk a bit about Lloyd's now. So on your website, you talk about working with risk exchanges and the Syndicate-in-a-Box initiative. For those that don't know what those mean, it'd be good just to get a little bit of a description of the term.
09:14 IJ: This is really very much about the future at Lloyd's. John Neal specifically has said he wants to see a 50% reduction in expense ratios over the next five years. And the future at Lloyd's is, has set its stall out to deliver efficiencies in the market. And we see ourselves as very much involved in that, as being part of the third cohort in the Lloyd's lab, which is very much focused on sort of mid and back office and trying to transform the way that the market operates. The Syndicate-in-a-Box is an exciting initiative that promises to transform the way underwriting is done at Lloyd's and particularly for smaller businesses. And the success of, I think, of the Syndicate-in-a-Box is that that has to have a level of automation embedded within it to keep those costs down and to make that model successful.
10:07 SC: So the risk exchange, there's two flavors to that. The kind of more simplistic class of business where that pricing can be driven by algorithms, whether it should be little or no human interaction. The complex risk exchange, which will probably be the next generation of PPL where more sophisticated class of business, they'll still be the interaction between broker-insured and carrier, those portals and the corporation in terms of how financial information will flow through the corporation and to all of the individuals. Same on the Syndicate-in-a-Box side. It's an exciting way for the market to open itself up to either MGAs that then want to take some capacity, improve themselves. Either new classes or products that want to have that opportunity to try their business plans, or even established players that want to launch a new legal entity to bring some capacity and to a fast-track system where they hope to go through all the due diligence in three months rather than 12. So a much easier way, almost like a sandbox environment, to bring new capital and product ideas into the market.
11:26 IJ: There's a suggestion that there will be more limited reporting requirements. That's what Lloyd's have said, but it'll be interesting to see what the impact of that is, because finance teams, in terms of regulatory reporting, that's probably the biggest pressure they face.
11:42 MG: Couple of interesting points there. These Syndicate-in-a-Box, and that point about where we are now in the Lloyd's building, people are maybe a bit uncomfortable about others coming in and competing with their business. But I mean, that's the reality of all, probably all companies successfully go through this period of disruption, it's self disruption. It's actually creating opportunities for people to, yes, compete and potentially cannibalize, but through that, you actually get more efficiency. So it'll be interesting to see how agile Lloyd's is able to be, and how welcoming they really are to people that are actually competing with the core business. And then risk exchange again, is yes, it's a really smart move because if you go back two or three years, people talking about technology is going to replace everybody, and they don't need to be underwriters. And the reality is yes, there are some things that can be commoditized and it should be, and it's simple.
12:33 MG: But actually in all areas of technology you find that many times you still need the human element in there, and you're increasing seeing technology being used to be more efficient, help triage risks, but we're a long way from replacing the underwriter. Kind of interested to hear how easy, or not perhaps, it is to plug in to the Phinsys products. This whole thing about interoperability and you talked earlier, Stuart, about some of the traditional highly costs involved with system integrators. How are you solving that problem and making it more cost effective for people?
13:07 SC: You'd like to think that the market and the systems in play here had lots of kind of API's, they don't. The InsurTech and some of the first movers are thinking more about that. Lloyd's is doing a good job of making a lot of its common services API driven, with a strong back bone there for how people will plug into the market and retrieve and push data around. But we're much more traditional ETL, Extract Transform Load, with more traditional technologies. It's proven we're very good at it, and we can take data... I'm talking very large volumes of data into our systems, process it and push it down to where it needs to be very effectively. APIs will come, but again until the managing agents and the larger insurers have got those sorts of things in place with their critical systems being their policy and claim systems. There's no point in us moving first on that.
14:08 IJ: Yeah, but creating a bridge between finance and actuarial teams as well, making sure that they're actually working from the same numbers. And I think there may be some, possibly some listeners who would recognize that that's not always been the case. People working with different types of spreadsheets, different ways of calculating numbers, and really what we're doing is instilling a discipline and a process around that to make sure that everything reconciles back to the same single source of truth.
14:37 MG: Yeah. I have a sort of fantasy film in mind where spreadsheets take over the world, and they're a bit like the classic cockroach after a nuclear apocalypse, that everything else is destroyed but the spreadsheet still survives, so it's good to hear there's somebody else... As much as we love spreadsheets, there's only a limit to how far you can go with them. So let's come back to Lloyd's lab. So I'm interested, what was the motivation for joining, and what does life look like now that you've found your desks and sharpened your pencils, and kind of figured out how to deal with all the people that wanna come and be your friends? So Stuart.
15:09 SC: There was the typical Lloyd's 101 and orientation-type meetings. We had a lightning pitch session with John Neal, so he could get up to speed with who we were. We wouldn't get close to the people that mattered and the Lloyd's and McKinsey people driving this strategy if we weren't in the lab. And for us to validate what we're doing, which we wouldn't have the opportunity to do otherwise, we felt if we didn't take the chance to pitch and get through that process.
15:40 MG: One of the values that Lloyd's offers through the Lloyd's lab is tapping into people working directly in the managing agent syndicates. Are you getting people coming in wanting to help you there as well?
15:52 SC: Yeah, that's been great. I think all of the cohort have got at least five or six different mentors from the market. I've been really impressed with the seniority of those people as well. Finance Directors, Head of Finance Systems, people that are specific to the area that we operate in. There's a mixture of people that want to help transform the market. They're passionate about that future, they can see the opportunity that new technology will bring, and mentors that can see problems in their own organizations, and maybe we are saying the right things to help them operate as a business better. So selfishly for us, that's great. It's an opportunity to work with them or the mentors that are just passionate about driving the market forward. They're opening their address books, they're introducing us to other people.
16:45 IJ: John Neal has come out and said that he wants to make some quick wins in the market and not just, I think, to make that whole initiative look good, but to actually start driving expenses down, which is a key objective. John Hancock, again, has said very recently the 2020 business planning process is going to have a continued focus on expense reduction. So the challenge, I think, is to make sure the cohort three in the Lloyd's lab really does actually start delivering tangible benefits.
17:21 MG: Are you building up to a dramatic Pitch Day in a few weeks' time with live rock and roll and purple flashing lights?
17:28 SC: We've got the dry ice on order. In mid-November, when it all comes to a head, we will have a demo day. We've got some ideas of what that would look like already, because 10 weeks will fly by. Yes, they want us to demo to an audience to show what we've achieved, but also to speak about what the future holds, because 10 weeks is very difficult. I know some of the old cohorts. They are literally building our product to the point where they have a minimum viable. We have products, they're live, they're proven, but there's other things that we want to prove with those products. And if we get the opportunity to work on any other future Lloyd's initiatives and do some integration or prove out a business model that will work, that would be really exciting for us.
18:14 MG: Is there anything you see that will enable you or the industry to change dramatically, with regards to either efficiency or work flow or access to data?
18:26 SC: A lot of the London market. The capital is coming from large US insurers which don't care that everything is driven by bureau messaging, and you need to wait for the last day of the month to start to close your books. They need solutions for that, and a daily financial close is something that starts to get spoken about now. That is something that the FD will be conscious of. They want up to the minute details about the performance of the business and the financial state of it, not the end-of-month plus X working days to close growth-seeded reserving, etcetera, which is the norm in the market at the moment.
19:07 MG: I'd be interested to hear from both of you. When you look out there at all the people in this... Whether it's in InsurTech or just regular tech, and if anybody can tell the difference, please write in and we'll give a prize to the best answer. Who... Either who do you like the look of, or what characterizes companies you think are actually succeeding in this space?
19:25 IJ: My daughter is deaf, and she's grown up now and very independent. But one of the biggest issues that she has where she's still very dependent on her parents is just the small matter of phone calls. She can't make phone calls, she can't receive phone calls, so visits to doctors, hospitals, banks, etcetera, are very difficult to arrange. And there's a start-up in... Based in Rome actually, in Italy called Pedius. They enable deaf people to make and receive phone calls without the need for third-party help. So, I think tech obviously has the capability to transform, or make social changes and improvements. And that's one, as I say, very close to home.
20:13 MG: Well, thanks Ian. We'll make sure we put Pedius' link in the episode notes, as anybody can find that. Stuart, what about you?
20:20 IJ: The ones that seem to do well... I see people come in from other markets and talk about disruption and have a very clear business plan, but dumb down insurance and specifically the London market and get into a lot of trouble by over-simplifying what they think they're looking at. They struggle, they pivot, they struggle a bit more, and they pivot, and then a lot of them exit. But the people that take it seriously, that there are clever individuals in the insurance market that have been trying to crack this nut for a long time, realize the complexities. It isn't at all as conformed as maybe the financial services and banking space, and it's all about networking and relationships, and that goes a long way with the technology as well, and partnerships and eco-systems of services is the way forward.
21:17 MG: Yeah, it's definitely the reality, although I’ve got to say I do have a slight affection for the disruptors of 2016, and I still think there's some space for people to come in and, albeit naively and maybe a little bit annoyingly, come and tell everybody what they're doing wrong. And I suspect, as you say, quite a lot will fall by the wayside. Now and again, we'll see some ones that actually make a difference. So, yeah, bring it on, disruptors. We might be rude about you, but we still need you. Stuart, you mentioned InsTech London in there. We're delighted to have you as a corporate member, you've been to a few of our events. We're delighted that an organization that's still in its early stage is spending money with us. You give up your Monday evening to go hang out in a dark night club with 200 other people, drinking wine, and what's that all about? What brings you along to our events?
22:05 IJ: So, I've kind of done it on my own back, previously. I know yourself and the other founders for many years, and we operate in a few different cities. London, by far, has the strongest community of InsurTech firms, and it takes a lot of effort to build that community. New York, on paper, they've got more InsurTech firms registered but zero community, because no one like yourself and Paulo and Robin have taken the effort to try and do anything. There's some others, where Hartford and one or two individuals are really plugging away to build that, and supporting that, I think, is very important. And where as I've done it on my own and taken huge value from the presentations that you've put on, I met some very interesting companies. Joining as a corporate member allows me to invite others in the team that are interested in the networking and what they'll learn from listening to other people's ideas and business models. So, yeah, we're thrilled to have the opportunity to join and allow some of our team. It's knowledge sharing, and it's effectively training for them because they will hear a lot of things that will impact the way that they work for us and new ideas that they'll bring to the table.
23:26 MG: That about wraps it up. So if anybody wants to come and see you, presumably they can find you in the lab, but what's the best way to connect with either of you two?
23:35 IJ: LinkedIn, we'll be in the lab. Half the time, probably, we'll be back on Fenchurch Street and offices the other half, or wandering around the market.
23:43 MG: Might as well let us know how you get back to that queue of people all desperate to see you. But thank you again, and I really enjoyed getting some more insights into what's happening in the lab.
23:52 SC: Thank you, Matthew.
23:53 IJ: Thanks, Matthew.
23:55 MG: If you'd like to hear more about companies at the Lloyd's labs, you can hear my interview with the team at Describe Data, who talk about their experience in cohort to earlier this year. That's podcast number 40, and you can even go back earlier then that and hear me talking to Dickie Whitaker, CEO of Oasis Loss Modelling Framework. And Oasis is actually in cohort three, alongside Phinsys and that's podcast number 32. Now if you're interested in what we are up to at Instech London, you can find us at www.instech.london and you'll see the records of our events for the last two years, write-ups and the companies we've met with, and you can register there for future events.