00:34:20 · Amrit Santhirasenan, Sabine VanderLinden
You know, was talking to one of our investors, Andreessen Horowitz, about the rise of the full stack AI native carrier. These are coming now and those companies will be actually probably a bit more permissive, little bit more risk seeking in their attitudes to use of the agents. And then we talk to some customers who are just like, no, no, no, no. Every time an agent does anything, I need to know about it. It needs to be logged and it needs to be auditable. So Our job is to make sure the framework exists, that people can choose their own adventure, they can choose their own degree of comfort, that we're able to service both ends of that spectrum. [00:34:56] S1: When you think about the underwriters, they want to spend more time delivering quality and they want to spend more time as well spending less time doing things which are mundane tasks. So how can customers using Hx redeploy their time better as underwriters to actually drive value for the business?
00:35:17 · Amrit Santhirasenan
[00:35:17] S2: Yeah. I mean, is the whole premise. It's a great question. It's the whole premise upon which our company exists, fits on, right, is that if you can shift the time from the mundane to the judge... To the differentiated, the impacts are very, very significant. Right? And, you know, you know, the studies from McKinsey talking about three to 6% improvements from loss ratio, you can take a conservative slice of that, which we do, and you still come up with a transformative impact to the companies. Bottom line. Right? So I think there's a couple of things there. I think this question of what do we do with the time we save is a cultural and kind of corporate, general corporate thing. You know, there's I always like thinking, you know, my job as CEO is to think about the company strategy. One of the key parts of company strategy is like, when you make an improvement to any system, where does the surplus accrue? Does the surplus accrue to the end users? Does it accrue to the company? Right? This is a really good example, right? Like, you know, if you free up the time for underwriters, you give them two hours back. What do they do? Do they spend more time on judgments? Do they spend more time on networking? They spend more time on TikTok? Right? Who knows what they will do? It'll be different for every individual. But I think one of the most important things that we do when we're thinking about the later stages of transformation with our customers is to understand what they want to do with that time. But sometimes that time will still be inside renewal, just be spent on other things, like maybe portfolio optimization, maybe more time on judgment, maybe more time reading the risk research and applying human in the loop. So my answer to that is a very typically actuarial answer. It depends. But it depends, I think, on the kind of the strategic direction that each client has with what they want their differentiator to be. The less cop out answer I would give you is that we see very clearly people wanted to spend more time on the risks that are borderline. Right? That's the thing that we want. The art of underwriting in a market that's turning is working out where to spend your time on, not necessarily on a per risk basis, but between the risks, right?
00:37:21 · Amrit Santhirasenan, Sabine VanderLinden
So going I have a much more high degree of confidence that this one I can definitely say yes to, and this one I can definitely say no to. But these, you know, they're 50% of the other risks where actually I'm not sure, I'm going spend much more time on the underwriting of those. And we think that just has a massive leverage, you know, over compounding renewal seasons, right? People spending more time on the risk that are the differentiators. [00:37:47] S1: Well, you are talking about renewal season and a lot of people were, I think, at the rendezvous just a few days ago. So how do you see dynamic risk assessment moving forward? Do you have examples as to where AI driven insight can actually improve decision making and what are your expectation again as we move to a world where agents are going to help us become better underwriters?
00:38:13 · Amrit Santhirasenan
[00:38:13] S2: Yes. Yeah. So I was a reinsurance pricing actuary for the first three years of my life. So this time of year is very familiar to me. I was embracing myself for very long days, long nights, weekends, evenings of underwriting and pricing work. So it brings back some nostalgia to think about that. So I'll say a couple of things here. I think, you know, what Hx doesn't do is pretend that it's like pulled the future out the universe. So I think we're at the very beginning of using AI for some of this portfolio optimization and insight generation. What I will say really clearly is it's no longer the case. When you started a renewal season in the past, you scrabbled around for absolutely ages trying to get all the risks from the last year, understand what your playbooks would be going into them. So I remember one of the renewal seasons I did myself, had 41 risks priced in like three weeks. It was excruciating. Was like, physics spending stuff, right? And I remember the time running up to pricing those, was like, I got 41 renewals. I need to go and get all the information from last year. And I need to at least have a set of opinions about which risks are going take my time, which risks I'm going to really want to be ready to fight for, which ones I'm not. Now, if you use a system like Renew, that's a database download. It's not running around copy off, copy off file, do not use, which folder is it, going to IT if there's an IT migration saying, sorry, can you give me access to the hard drive again? So I would say we are substantially better prepared in the era that we are right now than we've ever been. As for AI, well, what rich fodder that data is to ask an AI. So, again, thinking about our agents, thinking about our portfolio optimization systems, going forward, probably by the end of this year, you'll be able to ask an underwriting agent or certainly early into next year, you'll be able to ask the renewal, the Hx underwriting agent, which risks and things that you need to spend some time on, which rinky dinks or edge cases, as you said before, or strange things that we do last year during those renewals that we definitely don't want to get caught racing to the finish line at three in the morning again during this year.
00:40:27 · Amrit Santhirasenan, Sabine VanderLinden
And so, you know, I think we're going to be very, very clearly equipped substantially more capably this, you know, in the future to deal with these circumstances. [00:40:37] S1: I wonder how far transparency can go. As you are mentioning, the Hx agents enabling the underwriter to be more effective, but also probably more transparent with one customer. Me as a customer, would I be able to really understand my underwriting risk and actually like I would do with my health, know what are the things I need to do to improve my business so that I get better rate. So make it a little bit more external to the customer. I wonder whether that will be possible someday.
00:41:11 · Amrit Santhirasenan
[00:41:11] S2: I hope so. You know, our, you know, our long term mission at Hx is that if we can increase the productivity, collaboration, and sophistication of the way risk is priced and underwritten, well, then the world can take more risk. Right? Like, so our big mission is like, we will be very proud one day when the world takes a little bit more risk because of one little or a new model somewhere, Hx model, helping an insurance company underwrite that risk. So, you know, as part of that evolution over time, I do believe feedback loops are a key thing. Right? In the same way that there's insurers in The UK, Vitality is a famous example, right, that tries to engender positive, productive feedback loops between the underwriting and the customer behavior. Why shouldn't it be the case that you can say, by the way, you know, these 15 temperature sensors that we had in your energy, in oil rig, you had five near misses next year. Right? You need to change that. And obviously, there's companies like FM that have been doing this for years, right? Where risk engineering forms part of the feedback loop. But you would hope that we'd be able to share some of the insights from the pricing back. I would say the big block to this in my mind is not going to be the technology. It's going to be the competitive dynamic between insurers, the desire brokers, the intermediaries inside our very complex, very long value chain market, appetite and desire for them to socialize that information. And actually, quite frankly, health information can work because, you know, the big... Again, thinking about systems, one of the big things I like to reflect on is, is that system symmetric? Right? So are you going to get to a situation where you can share good news only or you can share bad news only, right? Like, the insurers going to go, by the way, if you keep doing this, we're going to make your prices go down. Who knows? Who knows about that? Those are very challenging questions to answer. But I don't think technology will be a blocker. I think we'll get more and more transparent ability for transparency.