The InsureTech Geek Episode 30: Engineering Risk with Gary Kaplan from AXA XL
On episode 30 of the InsureTechGeek podcast, talking about engineering risk with Gary Kaplan from AXA XL.
The InsureTech podcast powered by JBKnowledge is all about technology that is transforming and disrupting the insurance world. We will be interviewing guests and doing deep dives into specific technologies we see changing the industry. We are taking you on a journey through insurance tech. So, enjoy the ride, and geek out.
JAMES: Howdy, and welcome folks. Always good to have you listeners on board with us for another great episode of the InsureTechGeek podcast. This week it is cross over week! That is right. We are doing a crossover with our other podcast, the ConTechCrew, cause we interviewed an awesome individual. Gary Kaplan from AXA XL. He is their Construction Chief, and he has done just amazing things in the insurance sector and the construction sector, and we had a substantive conversation around insurance technology and around risk management, around his career and path at the world’s largest P&C carrier. Now with AXA, of course, acquiring XL Catlin. And then you guys know that acquisition. Now it is AXA XL. I cannot wait for you to listen to this conversation, that one of my cohosts from the ConTechCrew and I, that it is Rob McKinney, it’s another Rob, and I, had a fantastic conversation with Gary Kaplan, so I hope you enjoy it. And certainly, next week we will be back with another fantastic episode of the InsureTechGeek. Here is our conversation with Gary.
JAMES: All right. And onto our interview, our guest, Mr. Gary Kaplan from AXA XL. Gary, again, thank you for joining us today and glad you could join in from beautiful summery, balmy, Chicago.
GARY: I am actually in Naperville.
JAMES: There you go. Close enough.
JAMES: So, Gary, you and I have gotten to know each other reasonably well over the years. It is good to have you in the business. And for you to be so involved, both in construction and insurance, you are one of those other guys like me, who has a foot in both worlds. I am really involved in both construction and insurance. You are as well; you are involved in insuring construction and you also have a heavy hand in tech. Before we talk about that, I just want to talk about you. Where were you born and raised? What did you see yourself doing as a career and how would you end up working for the world’s largest P&C carrier?
GARY: It has been a long journey. I was born in Chicago, but I never lived there. I lived in the first suburb West to Chicago called Oak Park. Went to Oak Park high school. I went 60 miles away to DeKalb, Illinois, Northern Illinois University. Ended up with a degree in chemistry of all things, I was really interested in science and math. When I graduated, I needed to figure out how to do something more interesting than work in a lab. So, I took a job with a company called Industrial Risks Insurers as a Chemical Risk Engineer. And I crawled around refineries and petrochemical plants, utilities, coal mines, platforms. I did that for about nine years as a Risk Engineer and then started to realize that the real money was and the underwriting side. So, I made that transition into underwriting of energy risks centered property was the first thing I started in. And they all blew up. I mean, literally, it was impossible to make money in that business. I think the insurance companies still struggles with insuring those kinds of risks because the losses are so catastrophic. The first risk I ever wrote was Phillips Petroleum in Pasadena, which was the biggest on-shore loss ever. It was the first risk that I wrote.
GARY: Great start. But anyway…
JAMES: Way to go, buddy.
GARY: I spent a lot of time trying to bring the engineering focus into underwriting. It did not exist back then to the extent I think it needed to. So, I did a lot of work building underwriting workstations and tools that would help underwriters get closer to the right price. We came up with this term called technical price. That was a long journey.
JAMES: But Gary, before going on that I want to talk about that for just a second. Did you run into a lot of headwinds when you were trying to introduce the engineering mindset in the underwriting? Where there are a lot of guys that said, man, you do not understand insurance. Get out of here, Gary.
GARY: Yeah. I was never very popular guy. I mean, cause, for me it started… The transition was from cocktail napkins. When I first started underwriting, I found cocktail napkins in the files. That is where people took their notes. That is where they wrote down the price that came out of their head and things that. And then, early on, we started to see Lotus I, II, III, and then Excel. And we started to build pricing systems in those tools. Then Lotus Notes came around. I built the first underwriting workstation in the company in Lotus Notes. It was, it was amazing. I mean amazing at the time, what you could do with that, how quickly you could change things in it, but it was unsafe. You could not scale it up. So, then we had to transition into the web environment, which was always difficult. I think most of the pricing still gets done in Excel because it is so fast, and it is so perfect. But I went into home office, did a bunch of weird home office jobs. A bunch of startups. Started the technical center. And then I had a job called Strategic Initiatives Group. That was an interesting job cause I got to see the entire company. I went around to every underwriting unit and tried to help them get more profitable, working with a group from McKinsey.
I became the Chief Underwriting Officer for a while. I was always kind of amazed that they put the worst–performing underwriter in the whole company as the Chief Underwriting Officer. But that actually did happen. I did that for several years. Those were tough years. There was a lot of bad stuff going on when I had that job. We had Katrina; we had the Spitzer Investigations. It was a rough, rough time, but I worked through that. And then I finally took a job, I was called the North American Hoot, Head of Operational Transformation. I always thought that was a cool title for a job, but it was the worst job I ever took. It was all about cutting expenses and people’s jobs and I did not want to do that. So, I went to the CEO at the time and told him I hated my job. The hardest thing I have ever done basically is, admit that I was in the wrong job and tell a guy that, you know, you put me in the wrong job. I hate it. I really do not want to come here to work anymore.
But it was the best thing I ever did because he put me in charge of construction, which was awesome. I mean, I got back to the business side of the house. And at that time, this was when I was at Zurich, we were the biggest insurer of construction companies in North America and really in the world. And I learned a lot in those couple of years that I worked there. It was an amazing experience to be back out with customers. And construction customers are awesome. I mean, they all love the same things that I do. They like wine, like really good food, they like to go to concerts and football games and golf, and I was like, this is the job for me, man. I love this stuff.
GARY: And then, I do not know, the company was changing at that point. I was not in sync with where they were going, so I decided to get the heck out of there and try to do something in a new place. And I found Excel. Back then it was called Excel. And Excel did not do much construction. It was the perfect place to go and build nine lines focused business unit because I did not have to take business from anybody else. We did not have any, so it was perfect. A woman that I worked with at Zurich had just gone to work there as Chief Executive, and she knew me. So, I joined her and then we went on this growth path that was unbelievable for the last 10 years. We grew about 40% a year average since we started up at $0. And Monday, we will celebrate hitting $4 billion of gross written premium over those 10 years span. So, it is going to be a big celebration, on Monday. All our offices will be going out virtually to parties.
JAMES: Well, that is a big milestone though. I mean, 4 billion of gross written premium for an area that was not in existence when you got there. You were able to build an entire business line and do it from the ground up. That is got to be incredibly rewarding, plus you through all the acquisition, XL, XL Catlin, AXA XL. Now you are now you are part of the world’s largest P&C carrier. I mean, that has got to be exciting to be operating on a global scale you are doing now.
GARY: Yeah, I went through a few of those. I was at home insurance when Zurich bought them. I went through that. Did not go through many acquisitions of my 21 years at Zurich, but there were not a lot of integration issues for us over the 10 years. When we bought Catlin, they had a professional pollution group and we had to merge those two with ours. But then with the AXA transition, they were not in North America. So, there was not much integration that we had to do. And things did not change very much other than our names. So, and I thought that would take a while for the name to catch on because it is not a very recognizable brand in the US. It is the number one insurance brand in the world, but it isn’t in the United States. So, I thought it would take a longer time than it has to get the transition from XL to XL Catlin, to AXA XL. There is a lot of X’s in there. I will tell you what. It is crazy. But anyway, I think most people recognize, since we kept the XL name in there, they recognize that AXA is now the new owner of what used to be XL Catlin. So, it has not gone... It is caught on much quicker than I thought it would.
JAMES: Yeah. Which is not always the case. But what is the total premium? A $153 billion, for the whole company?
GARY: It is a big company.
JAMES: Yeah. It is a big company. So, there is certainly a lot of clout there. That is awesome. So, in all of that, now by the way, side note, and you touched on it briefly. We talked about your professional career and how you have been working on bringing an engineering mindset to underwriting and through product creation and insurance, and bringing engineers right into the middle of it. On a personal note, you enjoy going to concerts. I am just fascinated. What are your top two or three or four concerts you have ever been to? Since you have been to a lot.
GARY: That is a hard question to answer. And I get that a lot because I have been over 550 concerts. I got a drawer down here, that is full of all the ticket stubs. And, you know, people do ask me that a lot. I like rock and roll for sure. I go to the extreme. I like Blues. I do not like jazz. Do not like country at all. Sorry for you guys in the South, but a ZZ Top and Lynyrd Skynyrd is as this country as I get.
JAMES: Yeah. Country rock. Yeah, that is it.
GARY: Yeah, but I would say the two nights in 1977, I sat in the fourth row right in front of Jimmy Page at the Chicago Stadium. And I got to see Zepplin two nights in a row. And I remember him looking at us the second night, like, were not you guys hear last night? And those were pretty amazing shows. They used to play for three hours. I mean, Led Zepplin was amazing. They gave you your money’s worth.
JAMES: Nobody plays that long anymore.
GARY: But my favorite show is Jeff Beck. I have seen him 32 times. I love Jeff Beck. I think he is the most talented guitar player ever. I go into the Prague world. I like bands like King Crimson and Porcupine Tree and stuff that. That is kind of, it is a genre where middle–aged, white guys tend to go. And I see all my overweight friends there when they go to those shows. I have seen ZZ Top the most times as a band. My first concert was the Beatles when I was nine years old. I went with my mother and my sister, and that was pretty amazing.
JAMES: Wow. So, the first of 550 was the greatest rock band of all time.
GARY: And the really cool thing is the next show I went to, which was a year later when I was 10, was The Monkeys cause my sister like, you know she is four years older. She liked the Beatles and The Monkeys and that was it. And I found out years later that, Jimi Hendrix was the backup band for The Monkeys on that tour, until a week before they came to Chicago and they kicked him off because he was partying with the band too much. So, I almost got to see Jimi Hendrix as my second show. I was that close, like one week away.
JAMES: Oh my gosh.
GARY: That would have been amazing.
JAMES: It was when I saw you. I think I was actually in Nashville for your meeting, and there was at the Ryman Auditorium, The Happy Together Tour was going on. And I got in last minute and they had The Turtles closed it all out.
GARY: Oh wow. It must have been good.
JAMES: I know. I did not even know what was going on. I was just walking around after our meetings. We had a whole day conference thing and I was walking around, and I heard, “So Happy Together”. I mean, and it was like, what is going on? And I went in and it was everyone who was still alive from Three-Dog Night and The Turtles. And it was just like all of these guys that used to tour together in the ’60s, and they were there. They do it every year. It is the Happy Together Tour. And it was a while though. I remember that. So, let us jump back and let, Rob, I know he is got some questions for you. Rob, go ahead.
ROB: Gary, one thing I to go back to, you talked about the beginning of your career and the transition from cocktail napkins into the rudimentary basics of software. So, throughout your career, what would you say are the one or two most impactful pieces of technology you have seen for the insurance and or construction space, that really made a change?
GARY: Yeah. It is funny, reflecting back 41 years now. And I started, like I said, in really highly protected risk. And back then the technology was sprinkler systems and central stations and water flow alarms, smoke detectors, and things that. I mean, it was all analog, but it worked, and it worked well. I spent nine years trying to convince people to put that stuff in. I mean, the code sucked back then, and it was up to us to sell people, to make that kind of an investment. And, I think, over the years its construction, you look at those pictures from when they built New York and how those guys are sitting on the steel. They still have them in the Marriott, but I stay there all the time. I laugh every time I go there. And it comes a long way. You know, in construction, people are required to be tied off now and people are required to wear gloves and hard hats, safety glasses, and now masks, and social distancing and all that stuff.
The stuff that is going on right now just floored me. I remember the first time I met you, James was at the AGC conference somewhere. Maybe it was a New Orleans or something, and you were in the worst conference room ever.
JAMES: In the basement.
GARY: It looks something from a Vietnam medical camp or something, but I thought you were so interesting, and you were so full of energy in your presentation and you just blew me away with the kind of tech that was out there. I had no idea at that time, the extent of the changes that were coming in tech for construction. I had been talking to a few companies at that point and it had piqued my interest. First one that came to me was a call, a company called Weather Analytics. They are called Athenium right now. They are a good partner of ours. They are helping us build that ecosystem work. And then that I started to get this flood Rob, from the team that you were on with all those people. The risk engineers were starting to see all kinds of stuff that was interesting.
It mostly was wearables back in 2017. Watches and belts and stuff to put on your hard hat and vests and all that stuff. We would have interviews with those companies and they just were not very far along. They were not ready to scale up to a large contractor. So, it kind of just kept meeting with them. Then when I met James, I said, there is more to this than I know about. So, we started to make our customer council, the theme was always around innovation and technology. We have done that now for the last four years. So, we tend to find the companies that we think have the coolest technology that will have the greatest impact across the nine lines of business that we insure. And we bring them to our customers at those customer council meetings. We had to cancel that in April. We were supposed to go to South Carolina. That did not happen. So, we did it virtually. And we have been doing it now, literally every two weeks we have something called ‘Tech Tapas’, which this engineer that works on my team, Rose Hall, does it for me. And we bring in a couple of the tech partners that are in our ecosystem and we have them do 20 minutes with our customer councils. So, we are introducing more and more of what we think are the groundbreaking technologies to our customers. Trying to get them to adopt. That is the big game for us.
JAMES: Yeah. Let us talk about that. Why do you care if they adopt technology? I mean, why not just be hands-off? Obviously I am asking a little bit of a… I think I know the answer here, but I want to hear you say, why not just be a hands-off carrier and say, you know what, just pay your premium, we will pay a claim out of it comes in. Why do you care if they adopt technology?
GARY: Yeah, it kind of goes back to my roots. Why did I care that they put sprinkler systems in and alarm systems? Because, you have smaller losses, you have fewer buildings that get burned down. And for construction, our value proposition has always been around being the best at helping North America’s top contractor successfully build and rebuild Northern America. And that specifically, that success thing is the thing that it is the, really why do we come to work? We need to help these people maximize every dollar that gets spent on construction. And if we could put that the technology out there that will help them build better, safer, higher quality, a better schedule, on budget, we will maximize every single dollar that gets spent in construction at fixing this country. And there is a lot of money to be spent here in the next 10 years to get us to where we ought to be. We should not have a D minus rating on our infrastructure. It is ridiculous. The United States of America has a D minus rating on infrastructure. It is not acceptable. So, I think tech is the answer. It is it is going to accomplish a lot of things. It is going to help them build better, more efficiently with higher quality. It is going to prevent incidents and accidents. It is going to help drive down the size of claims and the frequency of claims, which is good for an insurance company, and a construction company, and for the owner.
JAMES: Sure. I mean if there is a self-insured retention or large deductible, they have a lot of their own money on the table as well. And even if they do not, their rates are going to go up. I mean, there are consequences, right? There are consequences. And I say this regularly, the biggest bucket of money that gets sucked out of contractors is preventable mistakes, right? Texas A&M had a $485 million stadium they built. They had a single death. It was settled out of court for $53 million. I mean it was an untethered worker fall. It was death, it was a preventable mistake. They could have used technology to prevent it, and it would have prevented a $53 million loss. And that loss impacted certainly the carrier and all the clients. I mean, it impacted everybody and much less, the ethics and morals of worker safety. It impacted that man’s family, deeply. And so, there are large consequences.
Let us talk about just insurance in general. And the role that insurance is playing, and I am a pilot. AXA is in the aviation market. I mean, there is a lot of things that as pilots they make you do, and then there is a lot of things that they give you better rates if you do. As far as training for example. Like carriers love simulator training. They are really encouraging pilots to go to SIM training because they know they can run through a lot more scenarios. That is a great example of a carrier, encouraging the use of very high-end technology instead of actually, they are encouraging it over training in the actual plane, because of all the scenarios they can run you through in a simulator. And what is interesting, and I want you to talk about the ecosystem for a minute. What you are doing it appears to me is putting together an ecosystem of technology providers and construction companies and connecting them, but not just connecting them so they can do business, connecting them so they can exchange data. And then you are using that to drive the cost of risk down at the same time as increasing their productivity. So, talk to me about the Genesis of this ecosystem and what it means for AXA XL, and what it means for your clients.
GARY: We have been on this data journey for my entire career, trying to get the maximum amount of the data that we collect as an insurance company. And we do collect a lot of data. You think of all the customers that we have and all the information that flows in. And we struggle. We have struggled for a long, long time to get insightful information out of that data. And then along comes the changes of the last two or three years, which has been weird, where data sets are just getting thrown together. And magically these insights are coming out of those data sets, data lakes, whatever, all the terminology you guys have. It is always interesting. New stuff comes out every time I am on one of the seminars, but yeah, the ecosystem really was… It is only two years ago when I heard that word for the first time, from a guy named Doug Alexander. He is in our IT department. And I said ecosystem, man I took that in senior year in Northern in Biochemistry. I do not remember an ecosystem being something you talked about in biology. And I had not heard that term used very much until about two years later when he talked about it, I did not even know what it was.
I knew this tech thing was going on. Doug thought that the construction team, because of our singular focus on this industry would be a good place to start. I said I would love to do that. We pulled a team together, we talked about what it might look like. It was really fun at that time cause no one had a clue what this thing was going to turn into. I mean, literally. I wish I knew you back then. Cause we probably would have gone faster. We did work through it and we figured out what we wanted it to be. And like you said, yeah, there are sets of data that I kept thinking, if we could pull these things together and match them up, we could get unique insights that could be helpful to construction companies. From the very beginning, we took a customer first kind of approach. We made everything we did, all the time pilots that we did along the way, 90-day pilots, we always did with a customer. And we had a process in place where you would pick the right customer, bring in the technology, try it out for 90 days. Get some good feedback and then move from there.
So, we have made it about the customer’s problem. Trying to figure out what they needed to solve, what issues they had. And then this thing morphed into the kind of a way of providing a very unique tool to a group of people at our insurance, the risk manager, the safety director, maybe the project superintendents, where they could get an online, real–time view of risk in their project portfolio. And that to me seems to be so cool and cutting edge. You think about risk engineering, Rob, when your time as a risk engineer and my time as a risk engineer, you were just guessing where to go. I mean, data was not telling us which sites to go in and visit. Which customers to go ask more questions. So, I started to see a way of transforming the risk engineering group. I have about 30 people on that team. And if we could start to use the risk meters and the dashboards and the alerts that are coming through this ecosystem, as a way of informing our risk engineering team, where to spend those precious dollars to get on planes or go visit plants, or even get on a call and talk to somebody right now, that would be different.
Exceptionally more proactive in how to start utilizing very limited resources to try to maximize the success of a project. And the contractor has that very same issue. There are only so many safety people, right? There are only so many superintendents. So, if we could inform them through this manipulation of data sets on where they should be paying attention, we could start to impact the loss. We call it a loss ratio, but it is the measure of success on the insurance side of the house. We could drive those loss ratios down. In other words, reduce the number of claims and the size of claims so that they could have lower insurance premiums, higher–quality projects, and more successful projects.
JAMES: Yeah. And it is an interesting position that AXA XL is in because of the size and scope and scale of your organization and the size and scope and scale of your client organizations. You can move knobs and levers that almost nobody else can because what we are talking about is not just dramatically reducing risk and their cost of risk, cause you are doing both. You are also talking about moving some needles on premium if they choose to adopt these things. And that gives contractors… I run into this all the time and in our advisory role with contractors is, what is in it for me question that always comes up with contractors. What is in it for me. Why should I do this? Where is my return? The owner’s just going to make me reduce my pricing if I implement this technology and you are saying, hey, there can be immediate return. And you are starting to see this in other lines of business, like auto. If you put this dongle in, plug it in your OBD II–port, and you let us collect data. If you are a good driver, then we are going to lose your premiums by 20 you know, whatever the percentage is that Allstate and State Farm are reducing premium by. So, there is a precedent in insurance for reducing premium if people are willing to adopt better habits and connect their technology. It is already happening heavily in auto, somewhat at home. And it is interesting to see you applying that concept to a much more complex space in building.
GARY: Yup. I think it is going to be the new norm now for the liability side of the house. The insurance marketplace is hard right now. It is difficult to place coverage for excess liability insurance, driven by what you talked about at Texas A&M or the University of Texas, where they had that $53 million settlement. That has become kind of the new norm. They call it social inflation or nuclear verdicts, but it is just in the last year, become a phenomenon. And it is in the price right now of excess insurance is way underpriced through everybody in the marketplace. So, contractors are struggling right now at being able to place the amount of capacity that they used to have for the liability exposure. I think accidents are being driven largely by auto exposure. So, I, think the telematics thing is going to comply into this space quickly. It has to. That is always the answer, James, when the insurance companies cannot make money or do not make money, you have to change something.
And just raising premiums, is never the right answer. It has to be changing behaviors. It has to be convincing people to do stuff that that is good for them, that they will not do it without you pushing them. So that is the whole notion of it. I used to have to talk people into putting in sprinkler systems, which is a no brainer nowadays. We have to continue to try to convince construction companies to use this technology that is available because they are going to benefit. I have seen some of your cost–benefit analysis. It pays for itself. Very quickly.
JAMES: In months, usually. Not years. It is pretty amazing. And that that is just on the productivity savings. That is not including the big bucket of preventable mistakes. And that is why it is so interesting, because you are saying, look, this technology suite pays for itself just in productivity savings. Then look at all the mistakes you are not making anymore. Rob spent years and years and years as a safety director, walking around job sites. And he was in the preventable mistake world. Rob, I know you have got some thoughts on this.
ROB: It is very interesting to hear about this ecosystem that you are building. And I am very curious about your thoughts. Let us dive a little deeper on the future workflow for those risk engineers, because in my prior life, as James went out, when I was a safety director, I had to physically drive to a job, walk around and look when I was a risk engineer, you had to go and see. Do you think in the future, will you use more of that technology from your side to virtually walk jobs, to go through datasets of photos of videos? How will the risk engineers work with the contractors, closely more through technology. What do you think?
GARY: Yeah. Yeah. Well, we had an interesting workout in February before all this stuff went down. I had all the risk engineers come into Chicago to do a workout. It is a GE practice where you spend two days to try to envision the future, and with a few projects to do. And I think they had maybe five or six projects that came out of that two–day session that we’re going to take all year to finish lo and behold, they finished them in the last 90 days cause they were all at home. And we’ve gotten so much work done. I mean, my backlog annually is about 50 projects. It has been that for 10 years. Almost half of them are gone and done. And we are way ahead because all the risk engineers travel. They had to go to see the customer. They had to go see the customer. They had to go to the projects and a lot of my underwriters travel too. Cause, we are very focused on our customers. We sit with them, talk to them. All of a sudden, I got all these people with all this extra time that is working from home, using new technologies.
Thank goodness we just put Microsoft 2016 in with the Teams thing. That was a lifesaver for us because it worked so well and has allowed us to not miss a beat. Most of my people were working at home anyway. The risk engineers always worked from home. So that was not a new thing, but yeah, I think that the ecosystem, we have got industry benchmarking in their dashboards, we have got alerts. If you think about it, if you get the right tech stack on a project, it is having a risk near there, 24/7. It is eyes and ears, and even your nose, I mean with the environmental sensors. I got people out there sniffing stuff now, you know what I mean? The technology can do anything that a human can do. Now I could have the risk engineers become people that respond to what the data is telling them. I mean, they could start to use things like SmartVid IO, where it tells you, you got wood ladders or you have got people that aren’t wearing their masks, or you’ve got people that are at elevated heights that are not tied off. What is it called? Vinny, I think.
JAMES: Vinny. Yeah, it is their AI super, but he prefers to be called Vincent.
GARY: So, we did not intend this, but our soon to be artificial intelligence, maybe we are calling Tammy.
JAMES: There you go. Maybe Tammy and Vinny we will get married.
GARY: We even got a cute little robot picture that, we are using to show off Tammy. I think you saw it the other day. Anyway, I do think the risk engineering has got to change. I think the risk engineers are going to be incredibly more impactful because now they are using data. How often did you get to use data as a safety guy or as a risk engineer? Not really, right? It was mostly about capturing data and creating data. Now, we are at this point where we can get fed that data. And then, yeah, I am not going to have to fly to as many sites as I used to. I am not going to have to do that. I mean, I think that the future going to look very different when it comes to how we utilize people’s time and energy. And we are going to base it more on data than we have in the past.
JAMES: Well, Gary look at what is going on, and certainly, I am a fan of looking at what is going on in the consumer and personal line space, to look at what is going to happen in commercial lines. You can already, from for many homeowners and auto policies on your phone, collect data on the accident, and no one has to visit anymore. I mean, there is a substantially less, a fewer number of claims where insurance companies have to go onsite to view it, because now there is a ton of data collection technology to take photos and video, and even scans of what is going on a claim site, whether it is an auto accident or a home incident, and then people do not have to travel out there anymore. It is just different. And when you look at the sheer volume of technology and drones, robotics, security cameras, I mean heck, the new iPad that that is arriving at my office here in another couple of days has a LIDAR baked into the iPad.
You can now 3D scan, just with your iPad, with the hardware included on the iPad. There is just an overwhelming sea of technologies that allow you to remotely collect the data that a person would have normally had to attend a job site in person to look at. And it does not mean that we should not ever, for my listeners out there who are concerned that no one’s ever going to walk on a job site again. That is not what we are saying. We are just saying we can reduce the frequency of visits. You still have to get eyes on every once in a while, but you can get, arguably, a lot more information when you snap into all the different data collection tools that are collecting data on the job site. I mean, just weather analysis Gary has been interesting to see how that is completely changed. And then safety analysis. Analyzing every word that is said or written or spoken inside of a safety report and then analyzing it for context and tone. And what is going on in those reports is a big deal.
There are some great technology providers out there, like NoteVault, which just had a big exit that last week they sold. But NoteVault does voice recording and then they analyze all these voice logs for all the activity that is going on and looking for things hazard, air, issue, warning problem, stuff that are an underwriter’s dreams, and a claim specialist dream. So, it is interesting to me, the nature of people’s daily jobs and how that is going to change too Gary.
GARY: I agree. Even claims adjusters. You think about it, we had a big hail storm last Memorial Day. That is why those guys are out there painting my house right now. It took me a year cause I am not here to fix it.
GARY: We had this big hailstorm and State Farm showed up one day, and two guys in the van and, I like to watch what they’re doing, just because I was an engineer for so long, I watched how they put the ladder on the gutter and how the guy clipped it in had these special shoes to walk around on the tiles, so you would not slip off. The other guy walked around the outside of the house, I guess, checking the windowsills. And they, two of them went back in the trailer and 20 minutes later they popped out and they had a 15-page report with everything in there, add a check. And then used satellite imagery to estimate the size of my house because they had a picture of it. It was a mobile office. They did the whole thing right there on my driveway and they gave me a check. And I was like, this is unbelievable. You guys have come a long way. And I think that is even going to change more. I was watching something from maybe, was it DroneDeploy? Is that the software company?
GARY: The ability of now, a claims adjuster to inspect your roof. You do not have to go up there anymore. My kid bought a drone this weekend and he was checking out my roof we just put on fom the hailstorm. I mean, it looks pretty good.
JAMES: Yeah Gary you know, my very first gig in insurance was building software for roof inspections for carriers. I do not know if I have ever told you that. But that was my very first gig. Was those RFO4 roof reports, and I think that is what it was called. I have to wind back my brain about 16, 17 years to 2004 when we built this inspection system. And my friend that was on the project with me at the time, and I said you know, in a few years, people are not going to be climbing ladders to look at roofs anymore. This is not relevant. And as soon as the FAA allows non line of sight drone flights, you are going to have claims adjusters who will be able to launch a drone and have it fly over, scan, and come back and then issue that the check. And in many cases now, and I read an article yesterday Gary, that there are private satellites now over every square foot of the United States every day.
In other words, we are not going to have to use drones for all of this because we have super high revs satellites that can take a shot that day from that particular square foot of land. And, then you can have all the photogrammetry. So, there are really interesting things happening where I think you are going to get to like, either claims auto adjudication, where it just automatically pays out. Like they will know there was a hailstorm. They will do a snap satellite photo from the next day. They will bring it in. They will run the claim. They will pay it out. I mean, it will be paid out electronically. It is going to be wild. Rob?
GARY: You know those Sci-Fi movies you see when they put some people on Mars, or the moon or whatever, they always have a dome, right?
GARY: People always live in a dome.
GARY: And the dome monitors everything that is going on. There is going to be a dome around this planet.
JAMES: Yeah. Yep.
GARY: There is no place to hide, the imagery is going to be so good that it will be virtually impossible to rob a bank.
JAMES: Yeah, well, Elon launched more satellites this week. His goal is to have 30, 000 to 40,000 Starlink satellites around the planet providing ultra-high-speed internet coverage. And I guarantee you there are more sensors on those satellites than just a radio relays. I guarantee you there is probably a little cheap camera sitting on, or not so cheap camera, sitting on every one of them. Rob, bring us home. What are your final thoughts or questions?
ROB: What it sounds like what I’m hearing from Gary is, with the use of new technology for the insurance space, in regards to construction, you are reducing the overall frequency of physical visits, but you’re increasing the focus to when you do have those interaction points, you’re bringing real value by saying, listen, here’s what we’re seeing in the data that you might want to take a look at versus, when I was trying to be a safety director with paper-based forms and Excel spreadsheets, I spent hours trying to come up with relevant things to bring up to the team, but they just looked at me with eyes crossed. But now with the technology, you really can bring true value and show them, hey, here are some red flags you need to pay attention to because based on the models that you are building, you know when you are going to be paying out on losses.
GARY: Yeah, it is pretty cool. I mean, we just rolled the ecosystem out. We are piloting it with six of our best customers right now, but already in there, at this early stage, we have got a big claims database. It is every claim we have ever had, and already the benchmarking that is coming out of that claim set with the other partners that we have in that ecosystem, is groundbreaking risk engineering information that we never had in the past. You literally can now compare yourself to the whole rest of the industry. It can tell you which days of the week have, how old the employees are that have the worst losses that each day of the week at what temperature, it is just amazing. The depth of the benchmarks that we have already built–in there. And I could see that being a completely different way of having your toolbox talks. You would know at your company, that Mondays are the day somebody between 20 and 30 is going to get injured because the temperature is 90 degrees or high higher.
And it already is telling us that young people have more injuries in hot weather. Old people have more injuries and cold weather, which is pretty, it makes a lot of sense, but knowing things like that are really cool. Rose gives a good example of, if you have a building and you have the sensors in there, and you know that also one of the sensors tell you, you have high humidity. Now you have the project management software that tells you that that building is not bending closed, and you have the weather information that tells you that it is raining. It kind of, you do not even need to respond to the sensor because that there’s water in there, cause it is raining. That is the kind of insights. “If this, then that” I think they call it. There’s a software company that we met when we did the cool ecosystem work that was really cool. But that is the logic that we have to keep thinking about. How do we compare these data sets now that are in the data, to give us insights that could help the contractor be more successful?
JAMES: Yeah Gary, I interviewed a group, WINT, Water Intelligence, and they use pretty standard flow sensors, at the head end of every floor of a building. And they just measure how much water, and they can actually, so they are not going into every place that water comes out. They are just going into the main standpipe, the main area, and every floor, and they are snapping into one place and measuring water flow. Depending on the type of water flow, they can tell if it is a toilet leaking or a sink, somewhere on that floor, they do not know where on the floor, but they can say on the third floor, you have a leaky toilet.
JAMES: And because they know through machine learning, they have been able to look at millions of different instances of water leaks. And of course, as you know, water is a huge problem with claims. Huge, huge. Water destroys buildings faster than just about anything. And, so, it is interesting that it does not require a ton of hardware. It requires some really good software.
GARY: They are our partners in the ecosystem. We love those guys.
JAMES: Yeah. I do too. They are incredible. Great discussion this week. And Gary, thank you so much for joining us today to talk about AXA XL and what is going on with the construction ecosystem and connecting risk and technology and construction together. And certainly, thanks for the conversation. And thanks for all the work you do in the industry.
GARY: Yup. It was good talking to you guys. Appreciate the invite.
JAMES: This has been the InsureTechGeek podcast powered by JBKnowledge, which is JBKnowledge.com. It is all about technology that is transforming and disrupting the insurance world. I have been your host, James Behnam, JamesBehnam.com with my guest co-hosts this week, Rob McKinney. Thank you to Jim Greenly, our Podcast Producer, Kara Dalton-Arro, our Creative Producer, and Adéle Waldeck, our Transcriptionist. We are taking you on a journey through insurance tech to enjoy the ride, and geek out.
See you next time!