The Ins & Outs Of IOT & AI In Insurance

INTRO

On episode 14 of the InsurTech Geek Podcast talking about the IoT & AI in Insurance with Pankaj Parashar of Purple Ant.

The InsurTech Geek 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 with our own research and development team in technology that we see changing the industry. We are taking you on a journey through insurance tech, so enjoy the ride and geek out!

INTERVIEW

JAMES: Alright-alright-alright-alright, happy Friday! Feels like every other day, these days, I tell you what, Rob, I mean it’s a little bit like my favorite movie of all time, Groundhog day, sometimes it’s like, is it another day or is it the same day I keep on living over and over again?

ROB: It is either another day in paradise or another day stuck at home. However how you look at its James. Good to see you again this week.

JAMES: Yeah, good to see you too! It is, of course, beautiful weather here in Texas. It is hard to believe there’s a, you know again, we call it, I call it Voldemort, the virus that shall not be named. There is this crazy thing going on, out in the world the weather is about as pretty as it gets down in Texas, beautiful Springs weather, great fall, great Spring day and great sun shining day! But certainly, if you are out there in listerner-land, you are probably listening from home, or the home vicinity, or on a walk around your neighborhood. Distanced from everybody else on the sidewalks and doing awkwardly long pass by’s from people you are trying to, I mean it is a, it is a weird world right now, but today, we are not talking about that. We are going talk about tech, because tech keeps moving and some awesome-awesome-awesome innovations are going on Insurance Tech. And Rob I am super excited to have you co-hosting again for this episode of the InsurTech Geek, and this time we have one of your good friends, longtime friends Pankaj Parashar, from Purple Ant. And Rob I would just love to hear a quick word about how you guys met and how you all know each other.

ROB: Yeah, so Pankaj and I met a few years back when I was at USAA and he was at Cognizant and we we’re trying to figure out if there was a relationship that we could form between the two companies, and we ended up kind of, I don’t know how to describe it, Pankaj can do it, kind of noodling around on something, we kind of developed some prototypes and stuff that I think could have been really–cool and ended up probably being ahead of its time, and unfortunately it never took off, but we kind of worked together on this, so we have a kind of shared passion, and so we stayed in touch over time. He left Cognizant and started his own company Purple Ant. We will learn all about that today, and I wrote that book about the USAA and I started my new roll. So, yeah, we’ve kind of kept in touch. He hosts podcasts himself, called Purple Ponderings of Pankaj and I have been a guest on his podcast.

JAMES: Nice

ROB: So, I am about to return the favor and bring him on our Podcast.

JAMES: I like the alliteration, Purple Ponderings of Pankaj. That is a good one. So, Pankaj welcome and greetings. Where are you joining us from today?

PANKAJ: Thank you for having me, James & Rob. I am from, I am here in sunny Chicago. I wish I could say what you say right, so, you know about the weather, how nice it is outside, but unfortunately, we are in a little bit colder place. But I got to tell you, this is been one of those strangest winters, where it has not been that bad, right, it has been mild. We have other problems right, what is happening with the virus, so we are kind of stuck inside the home, and Chicagoans do not like it because for a change they could have been outside, right, meeting friends and colleagues So, glad to be here. Thank you for having me, and just to say, I just want to tell you what Rob and I was working on 3 years ago, Rob has found me. I look at that project and I called it the Sales Force for underwriting project, right, so that’s, we really, I think we were working on something groundbreaking, unfortunately the destinies and the stars were not aligned on that one, and we went different ways, but who knows, maybe one day we will get an opportunity to do something on those lines?

JAMES: You know Pankaj, there is a lot of projects like that out there in Insurance land. I remember my very-very-very-very first insurance client. I started JBKnowledge as a software development consultancy 2001 and we are about to hit our 19th anniversary. And my first big client was an insurance client and we designed and sat down for 14 weeks in a room. A very small room with a large white board and we wrote about a 450page document designing the perfect system for underwriting inspections, that would be revolutionizing it would revolutionize commercial and personal lines property underwriting inspections. The entire inspection process, it would have streamlined the whole thing. It was brilliant. It was a decade ahead of its time, and the guy that designed it with me, was the IT Director of this company. And we got the change to implement little tiny pieces of it but never the grand vision, because it got squashed by politics and a few other things, there, and it’s interesting I think there’s a lot of those kind of projects that could have been revolutionary and groundbreaking but it was the wrong time and-and didn’t take flight.

But this is interesting, you had a vision there and you have now obviously left and started you own business to carry your vision out. Before we talk about Purple Ant, I would just love for you to help us understand your journey. Where were you born and raised? And what did you think you were going to do? Most people kind of stumble into insurance, they do not like start like a 12year old saying, Daddy, daddy, I want to be and Insurance underwriter. I would have loved to be a Claims Adjuster You just, it is not like a profession kids are inspired to be in. And there are very-very few college degrees in Insurance, or InsureTech. So, what did you want to be, what did you end up doing and then what got you here?

PANKAJ: Yeah, how much time do you have man? This is such a great question because I can talk for hours and hours.

JAMES: Maybe-maybe-maybe 15-20 minutes.

PANKAJ: I think it is an important question James because I think that, before you talk about, with anybody about any topic, you got to understand where they come from, why they are doing what they are doing, right? So, this what I hear you ask which is very smart because that is what I do when I talk to people as well. I am from India. I was born and raised in North of India. So, I grew up in the foothills of the Himalayas. My memory from those times are, those were the times when there was no heating. There was no air conditioning. So, if it was 30◦ outside it was 30◦ inside right, so I kind of got pretty used to the Chicago like weather from very early on. My father was in a job that made him go around the country, so we had been fortunate to move every 3-4 years.

So, I spend time in the North, the South, the West. The only part I did not spend much time in was the East, but through that journey I did my Engineering, Electronics Engineering, completely by accident. I hated it. The only reason I signed up for it was because my parents that it was a good thing and a cool thing, and because I had no clue what I wanted to be, I signed up. And 4 years later I realized that I had a good seat. From there I went onto doing my MBA, and in my MBA, I wanted to join the Finance industry because that was the in-thing. Everybody was joining these Finance Institution; Investment Banking was cool. It so happened that in 1995 there was a stock exchange bust. Right, there was some scam, the stock markets died, and all the jobs went away. Just like how it is happening right now for a lot of the people and I had to Pivot. So, I went to a counselor and said Mr. Counselor, I do not know what to do, this job is gone, and he said you know what, become a sales guy.

And I do not know what he saw in me, but he said to me you know you should try to join these 2 technology companies in Sales. That would be good. I did not challenge him or asked him why or what and I joined one of them from Campus. Moved on to about 4-5 different Technology consulting companies so that’s what I’ve done, so in 2001 I came to the states to 1 of those companies who did an interesting experiment instead of just brining technologies geeks to come work on projects here, they got a bunch of us sales guys and I don’t know for what reason they thought that we could be successful in this country. Well thanks to them because I am still here. 19 years later. So that is me. And I would say in all these last years, I would say 10 or 15 years because in 2001 I sold into Westville insurance which is smart insurance in Cleveland Ohio. And this was by the way, I am just talking about only 2002, just cause 911 hard times economy not doing well. But you know this customer made a bet on me and that is why I just love insurance. It is almost like my first crush, right?

They gave me a great opportunity; I could back up my job and convince my company not to fire me. And something about insurance just kind of stuck on, right? So, in those days we did not have work ethical as such, but from that day onwards, for whatever reason, the companies that I worked for just kind of made me focus on the insurance work ethical and I have completely by accident stuck with them. Also, because it is an industry that all about data and because it is all about data it involves all these kinds of systems. There are these meeting consultants to help them out because there’s always a cool technology that’s coming around, and they realize that they need to do something with it so I met my co-founder in that way about 10 years ago and realized that I’ve been, you know we work well together. We kind of are good at figuring out something out of nothing. And maybe that is a good recipe of having us starting something on our own. So, that is the long and short of my crazy journey and I have so many stories but that is probably good to discuss over drinks so, I will pause there.

JAMES: Exactly, and you know, interestingly, I ended up getting my big crush on insurance because a friend of mine referred me to a company he had bought as an MNA guy. And I got to start working, and man there is so much opportunity here, there is so much to do, this is such an important industry. It is such an old industry. Dating back to the Babylonians, right? Insurance is fascinating, it has a rich and deep history and there is a lot to it. I have to as you. You know I have a lot of friends in India. I was on the phone with some very close friends of mine in Southern India the other day, and I have a call later today with some good friends of mine in Aurangabad. I always have to ask, what is your mother tongue? Are you like Lucknow or New Delhi or where you outer Panjabe, or what part of northern India?

PANKAJ: Well we are from Panjabe, so we are from the state of Panjabe in the North

JAMES: North-north, like the super North? Yeah, okay. Like Kim Shau Pradesh. Like up there, like way up there. Okay. Yeah. Awesome. I am a massive fan of Indian food. My friends from there have lectured me thoroughly on what is good Indian food and what is not, and it has been interesting in IT because you get to interact with so many folks from India and the technology business. And there is certainly a lot of innovation that takes place and over there and lot of opportunity and certainly a lot of people. You can imagine the problems that you see at scale here, are a completely different scale when you go over a billion people and you put them in an area like that. That is fascinating. So, what was the; before I hand over to Rob, what was the A-ha moment with Purple Ant. Like what was the thing that said it is time for me to leave a very large consultancy cognizant, who why the way has a huge office here in College Station Texas. What was the moment you said, I am going to head out from this big corporate world and go chase my dream now?

PANKAJ: Yeah, so the moment, the A-ha moment for me was this conversation with my current carrier right, the one covers our home & auto Policy. I was having a chat because they were, it was time for a renewal I think, and they were pushing this idea of a discount on my car if I put in this dongle and not that easy to put in, but I started, I got fascinated by that. So, what are you going to do with a dongle so I said look, we will monitor you all driving, and based on the driving, we will make decisions, and I said what kind of decisions? They said we will probably lower your premium. And I said great, and said what if my driving data tells you I ’m terrible?

JAMES: What if I am terrible?

PANKAJ: Yeah. Listen here is a secret which I do not want no one to know is that the stop-sign near my home, which is near an Elementary school, sometimes I do not completely come to a halt. I drive past that stop sign. If you are going to know that I am doing that, is there is a change that my premium will go up? They said yeah, I said alright. No, not comfortable, but I said look, I haven’t, what you have for my home? Because I’m spending 3 times the amount as a home owner the check that I write is 3 times the car insurance, so give me something for my home, because you know what, whatever is it that you have to keep my home safe, I don’t mind sharing that data even if you want to and they had nothing, right so that was what the A-ha moment. Rob was one of the 1st guys, Rob would probably still remember the time. We just started calling a bunch of my friends and said look, why is the industry not giving the home owner something to incent me to adopt this awesome technology which is available, it’s just emerging called Internet of Things, so yeah, that what was the launching moment for Purple Ant.

JAMES: That is awesome. Rob?

ROB: Yeah Pankaj, so a lot of people today met recently, have made that jump from corporate American to starting their own companies. Just having a conversation right before we started recording about, we feel like there is always like 2 types of individuals, right? There are individuals who they kind of know, they are not for corporate America from day 1 and so they start being serial entrepreneurs and other folks. I always admire folks like that, but then it’s kind of a different things when you’re getting that steady pay check every 2 weeks and you kind of grow up in a corporate environment, and then to make the leap after kind of being in that environment for several years, So we can just talk about, like, obviously you knew you were taking a risk, but I’m curious like what surprised you? What didn’t you anticipate when you kind of made that leap to be a founder?

PANKAJ: Honestly, I did not know what to expect. When I made that leap to a founder but part of me took some time to introspect, Rob right, and I did some introspection because I asked myself, what is it that I want to do and why do I want to do that? And so that, you know helped me get some talks around, the idea that I should take a change around myself right, up until now I’ve gone from a job to another job, I’ve come from education to sales, not because I wanted to do that, it just so happened but for once in my life I think I want to do something of my own. So that to me was the time that I took to reflect and the time to make the realization that I need to bet myself. If was going to start, I needed to take a bet on myself to see where I could go right.

So, to me the A-ha moment little bit later in the journey has been a pleasant one to realize that so many facets, so many things that I am not able to do that I love doing. Podcasting is one of the things which I would not have done have I not taken this jump, so that all’s all on the part about betting on myself and seeing what, you know discovering my capabilities, in areas that I never tried before, what that’s like. I think that is the part that is the nice part. The other part is all the learning part, I thought, believe it or not, I thought the idea that I had, I’m going be, damn it, one of those little pictures, you know with the stories that read of start-up artists. Maybe I am going to crush it like in 3 months.

ROB: It is like the Indian Zuckerberg. Yeah.

PANKAJ: But I think I realized painfully that it is very slow, right? The going is just, the outcome is achieved more slowly which is you got to be patient about the outcome. I call it the duality which is you got to be impatient with what you want you want to do, how many things you want to do, because you have to have focus and priority, but you’ve got to be patient with the outcome. Right, you got to be very patient with the outcome and enjoy the journey, right, so to me it is a process of self-improvement. There is so many things I have learned in this journey and there is so many things I am going to learn, and I am so excited, I am excited about that.

JAMES: Okay. So, Pankaj let us get to the meet of the problem. The problem was that no insurance companies were offering a discount for tracking. One of the largest problems in home-owners insurance and home owning in general is water damage, right? And there was an interesting discussion today about a homeowner’s carrier that said, they are speculating that the current work from home environment will reduce claim cost, because people are home all day and are noticing water leaks. And a significant portion of water leaks occur while you are at work. So, water damage is a killer. Even a little leak can cause massive mayhem inside of a house. There are solutions out there that will replace hardware in the house. The hardware base solutions. You go to the water main and then you connect the flow meter and then you snap in that flow meter.

There’s a lot of IoT for the house and by the way, I agree with you, it’s ludicrous that they want to plug into my OBD 2 port in my vehicle and measure my driving, but which is by the way I will do when they force me to do it by the way. I will never do it until they make me do it because I like to use my 6.4-liter V8. I have a 454 horsepower 6.4-liter V8 on my Chevy and I use every horsepower of that and so I will not put this tracker on, but on the house, I have got IoT’s out the ying-yang here. I got everything from nest, everything from Seng, I have got every device you can imagine in this house, and I get zippo on my premium knocked off because I am constantly monitoring everything with this house. So that is the problem and then Purple Ant you said, I do not want to start a hardware company, you wanted to do what? You wanted to snap in with all the hardware that is already there?

PANKAJ: Yeah, so back to that A-ha moment, right? So the purpose of Purple Ant was to figure out what that product would look like, with someone like me as a home owner could use but then I wanted to go to the insurance company because I’ve been selling to carriers, I wanted to make sure the B2B is the way to go because if I could get 1 carrier to buy into my idea, they have hundreds of thousands upon millions of homeowners, so I can reach out to many of them. So, I started with the carriers to see why the carriers are not adopting to this technology and that interacting with them brought two insides on what is stopping the industry, why are they not adopting it. The first one was user adoption. They said that hey, we have tried sending these devices to a bunch of people for free. We have not seen the update that we thought we would. I said alright, that is a problem. The second problem was the cost, right, so a lot of these devices are a lot of money.

So back in insurance world, right, you got to look at nobody has put the equation together of how much is my expense ratio going to go up and what should my last ratio go down by to make this equation work for us, right because at the end of the day, economics need to be in our favor. So, we said alright, those are the 2 things we heard of from every carrier right, so now let’s look at what can Purple Ant do to solve this 2 so we started off making sure we understood exactly is stopping the industry and solving that and then using that learning to build the product and the platform that we’ve subsequently built. So just talking one by one. The economics are very important. So, depending on the property configuration, and depending on the premium, there is a way for us to back into a number, which is the cost, I call it the cost of the mouse trap. You got to make sure that whatever is the mouse trap that you are putting in it cost lesser than the premium that you are picking up to save that peril from happening.

So, with that inside what we realized there is no perfect device out there that can be a one size fits all. It’s different devices on different technologies that work better in certain, in different configurations, so if I’m an insurance company and I believe in this technology, I need to have this ability to have different kits, different hardware kits to be able to be deployed in different configurations. That was an inside we got and we said alright, if that’s the case unless I am world’s smallest awesomest manufacturer who can build anything and everything, you know and then I’m not that, so the next best is to figure out, can I just work with what’s out there right, that fits in this requirement and make it work for the carrier. And we found a way. So that was one inside. So, I am going back to the user adoption. This was fascinating right. So the user adoption which is all about consumer behavior James, I think one of the biggest learning for me has been how much important it is to understand the psychology of the buyer, the end customer and two things came out when we started doing that interviews and research. One was that most homeowners do not get up in the morning and get excited about a water sensor.

JAMES: Yeah. I mean I do, but I recognize I am in the significant minority on that one.

PANKAJ: Yeah you recognize and there is a few by the way but all the ones who had a leak, who had some damage. They get it. They are like dude, sign me up, I am there. But vast majority, I am going to say 90% of the people do not think about it. They think about video. They are more worried about who is showing up on my porch and pushing the doorbell and I have a video and I will spend hundreds of dollars a month on that solution, but I am not excited about, so, they had to figure out why should I as a homeowner be excited and motivated to do something with my water sensor. So that was the inside that we picked up, so we said look, we got to make it easier, we got to give an incentive. That incentive could be a financial incentive, right so in making sure that there is a saving that the homeowner gets in exchange for them activating and deploying. And the other problem was deploying these devices. So you’re a tech, you’re a geek, you’ll get it, everybody with setup instructions I’m sure you’ll be happy to spend some time figure out, what do I scan, where is the QR code, where is the APP, what is the next step. What a lot of the homeowners you I think Janitors, I think Baby Boomers for sure, they are not very comfortable with technology. You cannot ask them to hey, do QR Code scan and things like that so we said alright.

To solve that problem, why don’t we pre-configure the set and send it to them? So that way they do not have to worry about configuration. So that we take that away from them. The next thing we like to do is if someone is just pure lazy right, they don’t even want to unbox and plug in which is, you know should take more than 5 minutes so we thought about how can we now have someone coming in and helping them out without adding any cost, so for example if a home inspection company is coming your way, you could tie up so that’s what we did right. We tied up and said hey if a home inspector is going in at no extra cost, you would be able to unbox this kit for you. So long story short, I am going a little bit in the going a little bit into the weeds, but it is coming back out.

User adoption is a problem we tackle from different lenses. We applied different lenses and said look, we got to do a number of these things to make sure that I as a homeowner is motivated. The other interesting thing was the one thing which was positive in us building the user use case was alignment in the outcome. The one thing that home insurers, the carriers and the homeowners agreed upon was nobody wanted to have a claim. They didn’t want to have their premiums go up, they didn’t want to have damage so we said let’s make sure that whatever it is that we put in that there is a workflow that can A-confirm there is indeed something happening, and B-just gets them the intervention and the help they need because that’s what helps prevent the claim. So, you kind of look at it very holistically and again this was the system integrator you know the Cognizant cap Jim and I had on which is what we have been doing. Solve the problem. Do not just look at a service or a product.

JAMES: That is awesome. Rob?

ROB: Pankaj I love your story and what I love about you getting into some of the details is that is what makes it very real. I see so many founders and technologists and entrepreneurs out there, and they diagnose some problem and some opportunity, and I do not know if I ever-ever in hundreds of conversations I had with founders said, oh that is not a problem. Why are you trying to solve that? The diagnosis is almost always correct. The challenge is whatever your initial thought is to what the solution is, is almost always wrong, so you just got to almost iterate and iterate and iterate and get to that level of, what are the incentives, and what are the barriers to adoption and what are the roadblocks and they can seem relatively minor when you have this big problem that you’re trying to solve.

And it is so critical to the success or failure of your company. So Pankaj you and I have talked about specifically from and insurance standpoint, the level, this is a paradigm shift right, this isn’t just like a keep pricing, keep underwriting the same way that you’ve always done it, just add data from census right, this is a whole different mindset. I do not need to look at the age of the home anymore as a proxy for how likely it is to have a water leak. I have devices. They can monitor the waterflow every day and tell me when something is adrift. We have talked about this concept a near miss index. Maybe you can share just a little bit like what is the potential of this technologies and what type of inserts can people get and how do you see this revolutionized the world of property insurers?

PANKAJ: Yeah, no that is a great question Rob. Your right. I will talk a little bit about that near miss index I just wanted to highlight a couple of things that the insurance industry will need to do right, in truly adopting this technology, so the first thing is the mantra. We all hear prevention is better than cure, and it’s even more applicable in these days with the virus and you’ve seen how some countries have been able to keep a lid on it and some countries have not and it’s because prevention is better than cure, so if you think about insurance and you think about the operating model in an insurance company, they’re not set-up based on this guiding principle that prevention is better than cure because they build on a reaction. So, they build on, I am going to sell a product, and I am going to interact with that customer only when it is the time of renewal, or if they have a claim. Other than that, there is not interaction at all right, so I think one of the challenges the insurance companies have phased and are realizing and figuring out is that here is an opportunity for IoT to completely transform and to completely change that, and to really have an interaction. Have a reason for interaction which adds value. That is the key thing. Adds value to the homeowner.

So, now let us come near miss index, so this is the used case that you and I had discussed. How would a near miss index help both the homeowner and the carrier so think of it this way. I have, let’s say a device which is going to detect a leak that happens under a kitchen water sink, right, now if the home owner is not at home, the leak happens, it soaks and it gets into the, you know the floor below, this floor is wooden, so now there’s mold and this was not discovered for, many days because home owner was, maybe they were out on vacation, they was out of town visiting family, whatever, so that’s the current problem. It is just not detected, that is what is causes the damage the tens of thousands of dollars. Nationally I think the average for homeowner is about 10 000 dollars. In n small commercial context in properties, it is probably 30,40, 50 000 dollars so it is a humongous problem. But let us say with this technology, we are not able to know that there is a leak which is happening. And let’s say every time there is a leak that happens we’re able to get to the home owner or the property owner and tell them, look a leak is happening, can you conform that there is a leak that’s happening, and they go and they confirm yes, there is a real leak and it’s not an accidental spill, because that is possible too right, a sensor will pick up any let’s say any information related to a water leakage.

So, we want to make sure that it is indeed a leak and not just an accidental spillage. That is step 1. Step 2 is, if that happens, let us get the handy man in, some carriers told us, look at that point we just want the homeowner to be able to connect to our claims department and we will take it on from there. Now let us say these leaks are happening. They have now become a claim. But over a period of 2 days, I know that several leaks have happened and given the fact that this is a 30-40 year old home, by the way this is all public data, there’s a lot of public data around from when the house were built, who built it, was the material used, and now we’ve got our division intelligence, software computer telling us that look, the change of claim has just gone up from 30-40 percent to 80-90 percent because of all these factors, and all because there’s a strong correlation as well, and so now that gets into, what you’ve very nicely described as the near miss index because now carriers should care. Because if it is not done properly, it is going to become a claim. So that near miss index becomes a critical inside or and input. How that helps the carrier, is it’s easy for them to intervene, award the claim for that specific home owner, allows them the opportunity to go 3 other home owners that they have as customers in the same sub-division because they know the houses were built around the same time, by the same person and there’s a good change that the pipe might be a problem, right? So maybe here’s a link to Amazon, and it’s all automated, and all of a sudden, there’s value to the home owner as a customer because you see, hey oh, my carrier is sending me some valid information that say I have to look at this, because if I don’t look at it, there might be a leak or a water damage coming in.

So that is another inside that that near miss index gathers. The third thing is, if there is a new application that comes in from that sub-division, now can apply that same intelligence that is inside, to generating the code itself for the homeowner. So I think it’s just a variety of applications of just that 1 idea of near miss index we’ve since kind of validated, solved the other ones as well, and I will stop there because James, as you said, I’m not going to get into Purple Ant product and solution, I want to focus and make sure that people understand the approach we are taking. That to us is more important. That it is a holistic approach. We need to take a holistic approach if we have to see success of these this technology and in its entirety not just, hey I’m going to send our device and it will work by itself, it’s thinking and into who’s going to be adopting it, why are they going to be adopting it, both at the property owners prospective and also at the carrier right? The carrier is the underwriter who is going to take some meaningful insights out of it. So, the claims department that needs to now tweak their operating model a little bit. Are this the actuarial people who will be interested in those correlations, so there is a whole lot of alignment and identification of that value that needs to be done. I can go on and on Rob, you know me, I will not stop.

ROB: Yeah, it is all good stuff, Pankaj, so quick follow up and then I will have James join in. Personal lines or commercial lines. Where is the bigger opportunity?

PANKAJ: Oh, yes. Here’s the biggest, people calls in start-up life, it’s so vivid, we designed our entire approach philosophy product for personal line carriers, and late last year, as the beta customer, we kind of started showing, here’s the product and this is what we are going to start to do. About 6-8 weeks then I found that it was mostly commercial carriers that were talking to me and I started to know why. And then 2 things came out. 1 was that, remember about that problem that I said about the cost? Well in the small commercial context you have a little more leigh way because probably premiums are higher and even though the property configurations may not be different, their appetite to now exhumes all that cost is much more partible right and that context. So that was one. I think the other one was I heard similar pain points.

So, pain points were, there was just too many device manufacturers out there. The device diagnostic that Purple Ant talks about this makes sense. Very beautifully put by another carrier, they said look, as a we have something going on with our auto sight on IoT’s, we got something going on property side with the water, you know we have something going with temperature because now they use gas for a restaurant so temperature sensor. They were also doing workers comp and they’re also doing life so all of a sudden you have this possibility that exists that you if I as a customer have all these different policies and right now being sold as different products, but at the end of the day, it could be 1 carrier and 1 customer, right? So with this IoT claim you now have a unique opportunity to gather real time data to make those underwriting decisions, and if I’m someone who is forward thinking as an end customer, maybe we’ve now set up a play where, there is very, where we’ve reduced the risk of what those Potential perils could be that I could phase. I think in commercials by the possibilities are more so again, so long answer, but yes, it is more commercial, or more–small commercial than personal lines as you say it.

JAMES: That is fascinating I have looked at both and there’s huge opportunity in both places, right? What is most interesting to me is what I always thought would be a hard a hardware problem is turning out to be mostly a software issue. And look as a guy who has been writing software since I was 11, lifelong software nerd, it is exciting to be that it is a software problem and not sensor problem because the sensors are cheap to manufacture now. There is easy to install and there is a lot of them. You can get sensors for just about anything in your house now. It is the software looking at everything. But it just kind of bring it all home. What is the result look like when someone gets on top of this? Let us say that their carrier does not discount premium for and on their own, they want to get this technology in their hands. What is the result look like? Is its lower total cost of ownership because their cost of risk is lower, I mean what is the, at the end of the day, what is the result?

PANKAJ: I think the result is both. I think it is an improvement of the bottom line improve loss ratios. I also think that there is a positive impact on the all-round combined ratio because this is also a good growth story for carriers. So, imagine if I am in the commercial context, if I am a broker and I have got 2 policies, 2 products to sell to my customer who I have a relationship with. 1 that offers IoT and 1 that does not offer IoT, I think the IoT 1 is going to be more attractive for both me and the broker and the end customer, because it is lower risk, lower premium. There is a value that has been established, so to me that top line impact to the carriers as well. But I’ll use this opportunity to just jump and share a little bit of a vision that I have, even further down where I think insurance could go, with this IoT play, is this scenario where, if you think about a property, there will be an IoT play Inherently with all kind of sensors already in the home, protecting all kind of risks, and then carriers would be writing a policy what these sensors can cover.

So maybe at that point the only policy looks like is liability, right? What if I am a homeowner and I go all crazy, when I start vacuum things around and destroying things? It prevents that or anything other than, IoT can predict. It is all about connectedness, so, walls, ceilings, and sometimes appliances, if these things fail, we will know that they are failing, and we can take the action. I look at it as maybe, I ask people, how long do you think that stage is going to come? I do not know, 10 years, 15 years. But who knows, things maybe faster than that. I am sort of hoping to. But yeah, long story short, there is a bottom line, top line, we call it a loss prevention retention and acquisition play.

JAMES: Nice, so let us bring it home Rob. I would love to hear your thoughts. What is, this is the now, he is rolled this out, it is a product on the market right now. Rob, what do you think the future looks like in this regard? IoT, sensors and Data for homeowners?

ROB: Yeah, the analogy that I often use when I am given keynotes and it is the 1st chapter in my book the end of insurance as we know it, we talk about the world of maps. And so when we think of maps we used to go to AAA, one of the road trips as a kid, right and yet paper maps and we have all kind of used them, most of us a certain age and older use those, and if you think about it like those were used by ship captains and others so one of the first things people do is if they come to America right, folks from Europe, they created maps from the land and they would send it back to India and Spain and whatever, so perhaps it has been a technology that has been with us for centuries. And in the last 10 years we all use the magic thing called GPS. It’s a sensor and it’s on your phone, it knows here your traveling and it’s sending all the information from your car, up to the cloud, the cellular networks, it’s been processed by artificial intelligence it’s been back to your phone and this beautiful user interface, it doesn’t seem beautiful but it does take millions of possible combinations and there is a two or three that gives you the times and all that.

It is intuitive and easy to use so I will ask people who uses paper maps still today? And most people, there’s a couple of hold-outs that will raise their hand but, no, maps has kind of largely gone away for life and we haven’t really, I don’t know that we’ve had a moment of silence for maps, or kind of buried them, they’re gone we just moved on and it’s been kind of seamless and so I very much see that all happening. And I do not know how you get from point A to point B, the future that Pankaj was describing but so intrusively better. It is certainly better than things like age, gender, marital status, they used to use for driving. We all know an 18-year-old single male is a worst driver on average than a 35-year-old married female, but we also know some 18-year-old single males are very responsible drivers, probably not a young James Benham, right?

JAMES: No!

ROB: Then we have some 35year old females that you would not want behind a wheel either! So, since I can now see their exact driving behavior, why would I use their age and gender and marital status as a proxy for how they drive? I can directly observe how they drive. It is the same with all the devices and sensors and the use of AI that Pankaj has been talking about, so it clearly is better. It is superior kind of managing risk. The question is, how do we get from that old map world that we are stuck in today, to this new GPS world of tomorrow? And that is the part I think will be interesting over the next decade to see how it plays out.

JAMES: Yeah, young James Benham drove a 115 mph and hit my governor chip on my 95 Ford Mustang, on a 2 line undivided river road in Baton Rouge Louisiana regular basis, so I’m super happy there was no dongle to track my driving activity, and I have not said any words for the death of paper maps. I will say I still own them, and they are still in the glove compartment of my truck. Just in case things happens. I have got active maps on my old area paper and I am a pilot too. I fly. And all my flight charts are digital now. They are on my I-pad and my I-phone and their synced with my plane, so, my GPS has all my charts synced from my phone to WIFI connection with my plane and the phone. It is pretty amazing technology actually, and I still carry the paper charts, because if the fit hits the shan and I am in the middle of nowhere, I am going to want to know where I am. So, I will say I still carry the backups. So, but that being said, the future is bright here, Pankaj let us wrap it up? What is next for Purple Ant, I see what is on the Website, you talked about what you have, you know lets wrap it up for our listeners, what is coming next, you know for home sensors insurance?

PANKAJ: Absolutely. And by the way my website is pretty outdated, I could not keep up with it I put in some content about 9 months ago. What’s next I think is that Rob alluded to it right, so we spend some time thinking about what is that next small step, because the future is very-very interesting and intriguing and everybody knows IoT is coming, but it’s taking some time for people to figure out exactly what that use is so we are helping, what we have is a 3 step phase which we use to describe how we help carriers figure out the questions that they need answers to right, so we follow the planning phase, the pilot phase, the launch phase. We’re doing it with a couple of carriers, and we’re excited about this future right, so everything I talked about is reflective of the, it’s not learning that I had a year ago or 6 months ago, it’s last week and even this week so we’re rocking and rolling and taking every learning that we’ve had working with a couple of guys who I think to want to see the way we want to because not everybody sees the way we do. Like I will tell you there are some carriers today that are on the path of hay let us figure out the right device. So, it is a hard way to play for us and when I meet those people, I say good luck. We are not that company. We’re the company that is betting on the overall behavior change and what that’s going to take what to change the behavior, hardware, software, analytics, insights, whatever it is for both the carriers and end customers so that’s what’s next for Purple Ant, I’m excited.

JAMES: Awesome. Sounds great. Well look, we appreciate your time. Rob and I love taking about InsureTech and this is an exciting topic. I am looking forward to the day when I can share data on my house, because that does not bother me, and I can get a premium discount. Put Cincinnati insurance on your target list because that is who my carrier is. Hopefully, they will get serious about it.

PANKAJ: Absolutely! By the way, one of the things that we learned, and we built is a consent management interaction right, so just like you, there are many people out there that want that get that and see it happen. Hey, take my data, give me a discount. So, we kind of launched that from our standpoint, Cincinnati is on my list to call, I will talk to you off-line because they sound like somebody who should be on the Purple Ant conversation.

JAMES: Yeah, they and they are a great carrier and they cover a specific type of property I had to get covered for so, they are good in that regard. Well look, thank you so much, best wishes with the business and everything else and thank you for joining us today on the InsurTech Geek Podcast

PANKAJ: Thank you

JAMES: And Rob, as always, brother, my fellow Texa-gander, thanks for joining me today and I appreciate you taking time to geek out with us today!

ROB: Always happy to ride and happy to ride shotgun with you James

JAMES: Alright brother. We are going to do it literally. When this thing lifts, I am coming over. We are going to do a carpool karaoke version of this, driving around Texas and I am going to every stinking Taco place in San Antonio because I am severely Taco deficient right now and it is driving me crazy! Awesome, well thank you so much, and thanks to all of you listening to the InsurTech Geek Podcast powered by JBKnowledge.

It is all about Technology that is transforming and disrupting the Insurance world. I have been your Host James Benham. My Co-Host, Rob Galbraith, that’s endofinsurance.com. Thanks to Jim Greenlee our Podcast Producer, Kara Dalton-Arro, our Creative Producer, and thank you for joining us today for our discussion with Pankaj Parashar from Purple Ant.

I look forward to talking to you soon or taking you on a journey through Insurance Tech so enjoy the ride and geek out!