Scouting for Growth
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.
00:43:03 · Sabine VanderLinden
[00:43:03] S1: Yeah, no, absolutely. I don't think that the technology will be the blocker. It's more, I would say, the friction which exists in the market and, you know, what is good business, which is going to be the things we need to think about, which takes me to the broker, right? I mean, when you think about great underwriters who are there, how has their relationship with the brokers improved? I mean, do you have any feedback from the brokers who are actually working with insurers who are working with you?
00:43:35 · Amrit Santhirasenan
[00:43:35] S2: Yeah, it's a good question. You know, the broker relationship is so important and fundamental market. And I think, you know, if you come from outside the market, world is littered with casualties of people who just disrespected the role of the broker. We've said we would never do that. Right? We have active pilots with brokers today. I went to see one of them yesterday. I'm in New York today. Right? But right now... So I'll say this. Right? I think the brokers probably in the same way that the energy companies are the most motivated to understand renewable energy. Brokers are going to be one of the most invested groups of parties to understand algorithmic agentic underwriting technologies. And we talk to brokers who are super interested in the things we're doing there because they want to be just on the frontier, right? They don't want to just be a team who just shared the information with the underwriters to do this. So, you know, I think we're going to see breakthroughs in machine underwriting in the same way that we're seeing the brokers leading the smart follow, pushing the smart follow and algorithmic syndicates algorithmic underwriting capabilities forward. I think it'd be very surprising to me if we didn't see brokers at least pushing the frontier or leading parts of the machine underwriting, AI underwriting missions in our market as much as the carriers. To answer your question about, you know, how have we seen broker relationships with people who use our systems? You know, when I talk to them, they've often come to me because they hear, oh, we've heard about this Hx thing, right? And it makes it much easier for us to get the data out and to share the information. And it turns out you guys can do doc gen, you can do all sorts of other things. How does this work for us? So I think, you know, for the most part, and, you know, maybe I'm a bit biased here, you know, the brokers are interested because they're hearing a little bit about this naughty thing that's making the carriers more responsive and more capable. And I think, you know, that's a good thing, right? In many ways, it just feeds up the value chain to motivate the brokers to be able to do the same thing.
00:45:30 · Amrit Santhirasenan, Sabine VanderLinden
And I think that's been the core of the conversations we've had with the brokers is that, you know, they want to be able to in the same way that carriers want to respond quickly, brokers want to respond to RFPs very quickly, they want to be better at handling renewals. Brokers are a service industry. They want to service insights service insights to their to their clients. Right? And ultimately, they want to win more business. Right? They want to be there much more quickly. So, you know, it's not actually that it's not actually that different. [00:45:59] S1: No, it should not be that different. Actually, one thing which also come to mind is the challenges affecting us with regards to governance and regulation and explainability, right? When we think about those models, they need to be transparent as we just talked about, but also they need to be explainable, right? Fewer and fewer insurers will accept to work with companies which have what we call black box model, right? It has to be white box modeling. And so how do you ensure that you build trust with your clients and the regulators? Do you interact with the regulator in some ways, Amrit, to actually explain how your AI models are being built and to ensure that pricing and risk decisions are done in the right way?
00:46:52 · Amrit Santhirasenan
[00:46:52] S2: So we don't spend a huge amount of time directly with the regulator, you know, probably the exact exception being the supervisory body that is Lloyd's, but we've got a long relationship with, you know, we were with Cohort three for many, many years ago, you know, I think that, you know, probably not too unreasonable to we've say been one of the breakouts of the Lloyd's Lab. So I think, you know, so we don't interact with them directly. I would say that this explainability thing is never going away. It's only increasing our clients in any sector, you know. I'll give you an example. We are being pulled into and growing very significantly in the admitted markets in The US. It's an area where our technology is fundamental to many of our clients' plans to be able to address the explainability and to deblock the filing process because no one wants to get that wrong. Right? So I think in this space in this space, the pressure... The the market pressure is only going to increase, particularly if we want to see increase in service and response... And responsiveness at the same time as meeting obligations. And I think for us, you know, I'll give you an example. You can ask our underwriting agent, why is this price so high? And it can go inside our system, it can look at the algorithms, it can do many very sophisticated things. It can use tool calls, as they call them, right, in the AI partners. You can go and call many tools inside the Renew system to do that investigation. And I think AI has been a kind of breakthrough for systems that moved away from spreadsheets where you can follow the arrows, you can click the cells to more algorithmic ones like ours, which were, by design, more opaque. Right? That was a feature, not a bug in many places where people wanted to share their models and not have everyone see their IP. But now you get the best of both worlds. If you can ask an agent to say, well, tell me the key features that have led to this price going up. Yeah. They can go in
00:48:51 · Sabine VanderLinden
[00:48:51] S1: and inspect it. Yeah, that's wonderful. So, you know, we've talked a lot about the technology and the power of the technology, but we also know that we have a talent gap, but then we have a fear. We have fear of replacement. So what can you tell the market, right? The underwriters, so we are talking right now about the innovative underwriter, the one who knows, agentic underwriting is coming and they are going to be empowered to do things better, faster, but also be more profitable. Let's talk to the fearful underwriter now. What would you like to say to those who may think that the technology is going to replace them?