Property Risk Data

INTRO

On episode 25 of the InsurTech Geek Podcast, talking about Property Risk Data with Bob Frady from Hazard Hub.

The InsurTech Geek Podcast powered by JBKnowledge is all about the technology that is transforming and disrupting the insurance world. We are interviewing minds behind the technological innovations and doing deep dives into specific technologies 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: Man, always a good day to talk about insurance and in particular when it is summertime. I have got a guest from one of the most beautiful places in the country, Orange County, California, Bob Frady. How are you doing?

BOB: I am fantastic. Living the COVID dream.

JAMES: Right? I mean, so some beaches are open to others are not, or are they all closed right now?

BOB: I have zero idea. I am a hermit in my own home. I have a pool and a yard and a new grill. So, leave me alone!

JAMES: Nice!

BOB: I mean it I get to go outside.

JAMES: I literally just moved into a new house, a year ago. And it has a backyard pool, cabana grill. Like it has a whole combo thing. And I have a basketball court in the backyard, like a little half-court in the backyard, and it has got a little playground too, cause I have a 10-year-old who was nine at the time and she is still, young enough to enjoy that kind of thing. And I was like, thank the Lord. I have got something to do on my property. You know what I mean?

BOB: Oh yeah!

JAMES: It is amazing. I am so thankful. There are so many people around the world that have been locked in condos and apartments that, literally you can’t go anywhere and that’s tough man. So, you got your little Orange County backyard dreamscape, huh?

BOB: Yep. I really feel for people who have been tremendously impacted by this. And we are really lucky.

JAMES: Yeah.

BOB: Creating data takes focus, and when you cannot go anywhere, it just means you have more focus.

JAMES: Yeah. There has been a lot of really productive work going on in the last four months. Cause people are like, I mean, this is so fascinating. And by the way, of course, we have the illustrious, the most interesting man in insurance, Rob Galbraith, a good buddy of mine. Another Texa-gander, that is right, Texas and Michigan combo-ed into one. He is in Texas. I am in Michigan right now. We are back in Texas in a few weeks cause school is (quote-unquote) starting. Well, we will see. Cause the Texas Education Association keeps changing the rules every three days. So, we will see what it looks like on August 13^th. But Rob, good to see you.

ROB: Good to see you, James!

JAMES: You know Rob, it has been interesting, and you track startups and of course, you know Bob, you are a tech company, I am a tech company and insurance. What happens, and we are all old enough to have been through a few economic downturns. What happens every single time, people get laid off and they start idea-generating on what they want to do, and they start new companies. And so right now, we are already hearing of people splitting off and starting new ventures and getting started on new ideas. They have a lot of time to themselves, so they decided to whiteboard the idea and start writing code and connect with some buddies. It is usually pretty interesting. Two years after one of these things, because you have a lot of companies that come out of the other side, right? So, Bob, I am sure that is what you were referring to.

BOB: Yeah. Well, for us, we were a little bit further down the road, but even increasing the frequency with which we’re able to look at our own stuff, sometimes you get to create things and you sort of like, okay, I’ve done that. I have got to push it over here. Well, now I have all this time. Let us go back and make it better and better. And then you are right on the carrier side, you see some people who are like, finally, I am going to get out of here and do my own thing, which is great. But then other people who are still there, are like, it is time to go through the junk drawer of all the things I have always wanted to do, but I have been tied up in meetings for such a long time, and my budgets are going to get cut at some point, so I need to be more effective. And so, in some ways, it is a threat, but in other ways, it is a tremendous opportunity to do things better.

JAMES: Yeah. I think there is a whole lot you could say wrapped around that, like, we had this period of time in April and May where it was like Zumapalooza, and everybody is just like in video meetings all day because they are freaking out cause they cannot see people, and they think that the answer is to manage by zoom and it is like MBZ is going to be a phrase or like, we are managed by zoom, by just like zooming the hell out of our employees. And I think people have backed off a little bit, I have been in fewer zoom meetings weekly. I have seen the webinar count come down. People kind of freaked out and started doing a ton of webinars. Now they have cooled down on the webinars and it is like, they are starting to settle back. I even had a couple of people recently, Rob, that said, hey look, instead of zoom, can we just do a phone call? And I am like…

ROB: Old school.

JAMES: No, seriously. I ’m like, you know what…

BOB: I am not dressed for.

JAMES: Sounds great. You know, I’ve been dressing up every day. I’m an old ROTC cadet from A & M and I like wearing a uniform, so this is my Friday uniform. I really like my Hawaii shirt Fridays, but I was into that. Rob, have you seen that? Have you seen that Rob, where people were like, can we just talk on the phone and not see each other on video?

ROB: Yeah, you are spot on James. It is kind of funny because it depends on the group, it depends on the time of day. Are we talking about an early morning meeting or mid-afternoon and you can tell like, everyone is trying to figure out the protocol, and there’s kind of like a one or two people turn their camera on, but we do not get a critical mass and those people turn it back off. But then if you get maybe at least half the attendees turn the camera on and then everyone else has kind of guilt shamed into turning those on, so yeah. Very interesting time on the zoom meeting camera etiquette scale here.

JAMES: Yeah. They got to figure it out, man. There is a lot of etiquette about working from home. The sheer number of memes that came out. In the early COVID days where people forgot their camera was on. There was one lady, in the middle of a zoom call, started going to the bathroom, on the video camera. And I was like…

BOB: Oh yeah, I got three kids. I have had them all.

JAMES: Oh my gosh, the number of things kids have done, it has been amusing. So, let us talk about… Rob?

ROB: Oh, I was just going to say one thing I have noticed on a call this week, which I had not seen before. So, my background is just kind of my office, my bookshelf and all that and it is real. Like that is actually, I have not dressed up, but obviously, people have the virtual backgrounds, but I have seen people now toggling their virtual background based on what they are saying, be the theme of what they are talking about. One that was a bank lobby, and then he switched to a nightclub because he is now switching to talking about something with the music industry. And I was, okay, wow, and this is an hour. We are a little too far here.

JAMES: Yeah. So, guitar has been my Corona project and I went from never playing a guitar and, I have played piano my whole life. And I have been singing in choirs my whole life, but I never played guitar. And I love guitar, and I am a huge Led Zeppelin fan. And so, I have been working on different backgrounds that represent my love for Led Zeppelin when I want to get the lead out, and that has been fun. I was in a meeting the other day, and I had my Aggie shirt on, my Texas A & M shift on, and I had to use the bathroom like really bad like it was like an emergency. And I was like, I got to go, but everybody has their video on, and they said like video manage participation is mandatory. I am not going to explain what meeting this was, but I was like, what can I do? And so, I literally screen-capped my video. So, imagine I had my maroon shirt on right now and I had my Minecraft background on at the time, cause I love Minecraft. So, I had this on with my maroon Aggie shirt. And so, I screen capped it, made it my life background, and then I did this. (Demonstrating Smiling Face). And I stepped out. So, my virtual background was me smiling at the deal.

BOB: Stay focused!

BOB: Why are you staring?

JAMES: For those of you who cannot understand what I am doing, I literally screen-capped myself and made it my virtual background and I was smiling, so, it did provide the bathroom break I needed, and I got back and then turn live video on and no one noticed a thing, so, it was awesome!

ROB: You just need the animated gif version of that James, where you are kind of nodding, but have a concerned look on your face to cover all your bases.

JAMES: Yeah. And I tried to do that, but like I was doing it live and I could not figure out how to do the video editing, like while I was on video. And so, look, it was a bathroom emergency, it was the most I could do. Just a reminder for all of you out there and listener-land, that you can subscribe to our weekly email that has the show notes and the links in the email and the audio link and anything that we talk, about all by texting GeekOut to 66866. Make sure you never, ever miss an episode. We have a lot of really good folks on here, like Bob Frady! And Bob, let us come back to you. A Bachelor’s in Applied Economics – Cornell. Do you remember, did you watch The Office?

BOB: I did not watch The Office, although I do know there was a guy…

JAMES: Andy

BOB: who used to talk about the fact that he went to Cornell all the time.

JAMES: It is all he talked about. He goes, did you know I went to Cornell? By the way, do you remember when I was at Cornell? And look, when I was at Cornell, we had this… And he was actually in the acapella group at Cornell. It was Andy, from The Office. I have watched every episode of The Office five times. Each. My daughter, my 13-year-old is like super-duper into it. I had already seen every episode twice. She is watched all of them, at least five times. I have watched a bunch with her cause they are so funny. And Andy is obsessed with being at Cornell. My own personal Cornell connection is it was my very first video conference. I am 41. So, when I was in high school in the early ’90s, we got on right after we got to high-speed internet connection, like the year we got it, there was a professor at Cornell that did video conferencing technology, and we got on my very first black and white five frame a second, video conference with a computer science professor at Cornell. And believe it or not, I was in the newspaper Baton Rouge, Louisiana Newspaper for having a video conference in 1994.

BOB: Did I tell you that I went to Cornell?

JAMES: Yeah. Did, you mentioned that is you were in an acapella group, kind of Andy? So, Cornell is a great school, you studied Economics, which I think is a really great foundational field of study for business and pretty much life in general cause you have to understand so much in economics. What led you from an E-Con degree to a CEO and founder of an InsureTech?

BOB: After I graduated, I went to work for a company in New York called National Decision Systems. (NDS) And what we did was geospatial technology before there was a name for geospatial technology. So, we did a lot of things like site selection for retailers, you know what is the traffic inflows and outflows, what is the crime, like things like that. So, I have always been a spatial type of guy. I ended up running over the course of 10 years, the Insurance and Investments Practice for NDS. NDS got bought by Equifax and eventually got bought by Clarita’s and big, big, long chain of purchases. So, my career has always been, how do I take data and make sense of it geospatially, rather than just either point by point or in general. And so, I ended up doing a bunch of stuff in the geospatial area.

Worked for Corelogic for a little while, my co-founder needed some help with some major accounts, so, he called me in to help him out. And that is where we met our third co-founder, which is Dr. Brady Foust, and then left that, did a bunch of marketing stuff and saw that there was a lot of new data and there was not a lot of new effort around that data to make it actionable and workable. And I thought, well, nobody else is going to do this, you know, it is a pain in the neck business. It is a humongous long sales cycle. It is really detailed work and we might as well do it. So, we built an MVP, we got a couple of people to raise their hand and off we went. And that was probably five years ago we had that meeting, and we will have our fifth birthday sometime next year.

JAMES: Did y’all work on it after hours, or was this something that you have done in your own time, and then you brought it together and bootstrapped it? I mean, what was the origin?

BOB: Well, what happened is when I was at another company, my former mother-in-law’s house flooded. And I looked up all the data cause I knew how to, and she was not in a flood zone, but she was right next to one. And I said, did anybody ever tell you that you were right next to a flood zone? And she said, nope. And the river did its thing, wiped out her basement. She was not insured for it. And I was like, man, that would have been good to tell people. And I knew there was a huge imbalance between what consumers knew and what insurers knew. So I figured that is a fun problem to solve. And then just decided to say, okay, it was one of those issues I could not quite scratch. And finally, I had a designer and I am like, okay, let us design something. Let us just put it down on paper. So, spent a few dollars doing a design and became the MVP. And then next thing you know, here we go. It was, and yes, we did work on other jobs, but it was always a part-time thing. And then I got fired from my last job.

JAMES: Nice

BOB: So, I was the first employee. Oh yeah. Yeah. I like people who get fired because it means they got a little fire in their belly. And if you could harness that properly, you can get a lot of productivity because a lot of times people get fired because they want to do things better. They do not want to keep the status quo.

JAMES: Did you have fire in your belly from that?

BOB: I had fire in my belly from a lot of things, but that was one of them. Yeah. It is like, it is interesting to separate out the business from the business. Sometimes life just tells you things. And life was telling me, you need to start your own business. You need to stop working for somebody else and go start your own business. And this was an opportune time. I had already been working on it. I was hoping to last another year at the job to make sure that everything transitioned nicely, but I was going to do it anyway. And so, I got fired and then became the CEO, employee number one.

JAMES: Okay. So, just so we can overview this before we hand it off to Rob. What does your product do? What is the core service offering for Hazard Hub? And then what is tell me about free home risk as well.

BOB: Sure. Basically, we tell you all the bad stuff that can happen to a property. Wind, hail tornado, lightning, earthquake, underground storage tanks. Commercial personal does not make a difference to us. What we like to think of the insurance world as three different games. There is the pregame, which is I walk up to a building, what can you tell me about it? Not just about the characteristics of that building, but also what are the perils that might impact this building? The second is the end game. Something is going on. There is a fire, there is a flood something is going on. And then there is the post-game, which is the claims area. Something has happened. We live in the pregame. So, give me an address and I will tell you 800 pieces of data about that address, to give you a better opportunity to underwrite that and price that appropriately, or if you are on the agent side, to explain to your customer, here are the perils that are probably going to attack your property, why don’t you take some steps to make sure that you’re protected against those as much as you can. And, that is what we do in a very big nutshell.

And free home risk is for your consumers. Type in your address and get a scorecard. We always believe in giving this data to consumers, or insureds if you will, just type in the address, get a report card, and see what we have to see about your property. And a lot of times, interestingly, it is become not necessarily a lead gen tool for us, but a proof tool for us. So, people will say, well, what do you say about the property? And we will go run it, and if they like it, then they talk to us and if they do not, then they do not. That is okay.

JAMES: Yeah. And I ran my house on free home risk, just as a precursor on this, check it out. It is really fascinating what you can find out. It is these 34 risk checks completed, 20 triggers for your address. They were all green, and I look, I am a super geek, so I drone mapped my property before I bought it. I have seven drones. So, I went and mapped everything, and I did all the add-ins and drone deploy where I pulled a lot of data. And then I went into the GIS database cause I was on city council. So, I knew, I had more data than your average bear. I did not the city’s GIS database, but I knew where to find the public GIS database that was available to citizens, and I looked for flood map zones and hundred-year flood zones, which honestly don’t mean much in South Texas anymore, after we had 300-year floods, but it’s still good to know if you’re in one. And I love this because there’s a lot of people who really want access to this data, but they can’t, they don’t have the money or the time to build an application and build a data set as you do, and that is what I found so interesting.

BOB: Well, thanks. We like to think that all data is like a wild horse. You got to learn how to break it before you can ride it. And we are experts at breaking data, whether it is federal or state or local or data that we create that is what we do. So it is really difficult. We do not think about it as a special skill because we do it every day. But when you talk to people, it is really a special skill because even if you went to the city or the County GIS tool, sometimes it is just impossible to find what you are looking for.

I am reviewing fire stations right now, and you will go to a County website and it is like type in your address and find the nearest fire station. And it is like, just tell me where it is. So that they are presenting it logically to themselves. So, we have to present it logically to a lot of people. So, that is the thing we do. We wrangle that data.

JAMES: Rob?

ROB: So, it is great to have you on Bob. So, Bob and I go way back and InsureTech time, I guess.

BOB: Before the book. BB

ROB: Before the book, before the book. I was kicking the tires in a previous life, on Hazard Hub, and as a consumer of exactly the type of information that Hazard Hub sells. So. Bob knowing a little bit, right, from a carrier perspective as somebody that was a consumer of the type of information that you are selling and, having bought from some of your competitors and being really intrigued by your business model, there’s a couple of things. Number one, you guys truly are data geeks. And I remember you telling me, I kept saying, well, how do you deliver the data? You just say, API. I was like, AP what, what is this? We get our stuff on CD Rom, and we literally did. We used CD Rom at the time.

JAMES: AP what? Is that a special disk?

BOB: Okay, hold on a second. Let me tell you this story. I went to this place where I first met Rob, and I said, we deliver stuff by API, so you don’t have to get the file and then try to update it and then try to load it to your system and then it is six months later, and you are finally using the data you bought six months ago. And, Rob’s eyes got really big and the GIS guy with him, his eyes kind of rolled back in his head and he is like, oh shoot, I am going to be out of a job. And so that was an interesting dichotomy of the being a little bit too soon to the party. But yeah, we are super geeks when it comes to that stuff.

ROB: And you guys have gone beyond a lot of the standard, right? So, you have got information on wildfires and sinkholes and all this stuff that people care about, but you have got proprietary data as well, like on your fire hydrants and other stuff. So, you have got more accurate data in more than typically are the vendors out there, so maybe you can just kind of highlight what are some of those things that really sets you apart from a lot of the other competitors in the space and quite frankly, the competitors that have been there for a really long time and have not necessarily innovated the space over the last two, three decades.

BOB: Well, I think there are a few things. The industry to a certain extent is satisfied with close enough, like, eh, it is close enough. And then, we had a customer who did an analysis of us versus another provider who’s three-letter acronym shall remain nameless, is, where is the nearest fire station? 30% of the time they did not know. And we knew where everyone was and it is like, how can you live with this as an insurer? And the answer is well because, that is the way we have always done it. So, the first thing that we look, at is we always want to try to figure out how to do things better. So that is why we build our own fire station database. We were joking around with the people from AIS about using their fire protection algorithm, and they said, well, really, you have to have the actual hydro locations to be within the letter of the law. And I am like, oh, so then we started building a hydro database of 3 million records. And now it is at 11 million records. So, we always want to do better and better and better. And then we went to a customer and they said, listen, these wind hail tornado models are great. But they are all like, 50 kilometers cells that are gigantic. I want to know the risk of lightning hitting this property.

JAMES: Yeah.

BOB: So, we went back to work, and we figured out all the math and we were like, okay, now we have the probability of wind, hail, tornado, and lightening at the property level on a one-year horizon. And people talk about… It is funny, you talk about floods. It is like that is a one in a hundred chance. There is a 1% annual chance of flood. In Texas, in some of the areas where you are, the chance of lightning is over 9% per year. And everyone is like, oh, that is no big deal. I am like, really? Are you kidding me? But this is the kind of stuff we are always trying to improve because we do not have the luxury of being a billion-dollar company. We have to be better than everybody else. And that is how we focus.

JAMES: Yeah. It is better. Interesting. I am geeking out pretty hard right now. We had some, on both this podcast and my construction podcast, micro forecasting technologies that had come on, that really get down to like this specific property weather forecasting, and what I like that you are doing is, you are taking a different angle on it. You are looking at the entire historical prevalence because the reality is that weather is an interaction of the atmosphere and the geography you are at, the land itself. And you acknowledge and look, as a pilot, that is certainly something I have learned the hard way, is, weather is a dynamic situation and certain properties are much more susceptible to wind and water, and it changes over time as their surroundings change. If you build a large building near a property, it’s going to change the dynamics of wind around that property and of flooding, because if you don’t have a zero rise ordinance, even if you do have a zeros ordinance, a commercial development can change the absorption rate of water into ground on nearby properties, which can increase runoff onto your own.

And so, like these things, it is such a difficult challenge. And it makes you wonder, like, I was giving my company, a 30-minute Ted talk this week. I do like these monthly Ted talks with my company on just the history of insurance. And we ran all the way back to Babylonian insurance, and you know, underwriting started, 4,000 BC. The Babylonians used to do bank loans that were forgivable if the cargo got seized in or out. And so, it was the very, very first insurance contracts were the ancient Babylonians. And because they sat between the two major trading bodies of water, and you wonder how they underwrote all this risk without access to any data. We have almost like an infinity data now, compared to the past, by the way, listening to y’all talk about like the past made me remember this song that I used to listen to in the ’90s since you’re talking about like CD ROMs.

I just want to point this out. Let me see if I can… Go back. Way back! Back into time! Y’all remember this song? Sorry, that was Black Street. Some of my favorite bands of the ’90s. And y’all are like talking about gripe on the CD ROMs and the vape free API. I mean, Rob, look, being slightly older than your average 20 something that starting an InsureTech, you have this benefit of a couple of decades of insight here. Is it not wild to you that we essentially have like mathematically speaking infinity data now?

ROB: It is crazy. And, yeah, so I talked to people about, and I am curious to get Bob’s side too. One of the things I talked about at The End of Insurance as we Know It is, you have got sensors. You have got cloud; you have got artificial intelligence and advanced algorithms. You have got this localized knowledge in a way that you have never known before, and then you have got that efficiencies and that might be back office, robotic process automation, workflow automation, and things like that. And so, there is a lot of things that we could not do in the insurance history before, and exactly what Bob says. It is like, we kind of do things in our industry because of the way we have always done it.

And we don’t necessarily appreciate all the emerging technology, that’s come our way to say, hey, all those things that you learned in your first five years as an insurance professional, the reason we do it this way is because we can’t do this, this and this. Well, that cannot do this, this, and this, those are all melting away. And so, I think we kind of internalize all of that, and then we are like, oh, we cannot do those things. And then we go for the next 25 years as an insurance professional, telling everyone why we cannot do those things. And so, it takes folks like Bob, coming on the scene and say like, I know you have been using this for a long time. I know you have been using your three-letter acronym, ratings, or whatever. But, yeah, Bob, I am kind of curious to your thought too, and maybe you can share about how does that conversation go with carriers and how do you… I know, right, it is not a one and done sales, as you mentioned.

BOB: Yeah. It is the long walk through the desert with a very small bottle of water, is how we like to tell people. And, I have asked, I have answered questions as basic as, what is an API, in which case I know we are not going to do business with them, but that is okay. There’s a couple of factors. It’s really three, as I see it, the first is that the insurance business has been successful for a long time, without data. Back to the days of the ancient Babylonians, because frankly, the law of large numbers is a fantastic law to have on your side. It is like, you could be wrong about an entire state, and the other 30 States doing great, you know, that is fine. So that’s number one. It is worked for a long time. The way it worked. So, I do not, I never get upset when people do things the same way because that way has worked. But I think the second thing is, it is funny you showed that Led Zepplin, the dirigible, blowing up. I wonder if that was most of the legacy carriers on the day that Lemonade went public.

JAMES: Oh. Oh, I got calls from my… Let us just say, I am not going to say who, or what kind of companies, but I got phone calls going, how on earth did they get that valuation? I mean, they are ticked off! In particular, if they are a publicly held insurance company, they are raging mad right now, and looking, cause they are of course peeling through some very red, negative financials going, what are we doing that we cannot get this valuation? And the stock is not tanked post IPO. And that’s interesting because the other SoftBank IPOs or attempted IPOs have not gone well, but this one has gone well, despite… if this were not a technology-centric IPO, it would not have gone well, insurance speaking. So you look at it today and it is still kind of hanging in there, man. It is wild. It is wild with what is going on with the markets.

BOB: I think that Lemonade and Hippo do two things really well. They do the UI and UX really well. They eliminate a lot of the friction in the process. And the second is that they manipulate data very well. They are very comfortable with a lot of data. And those two things are the real threats to the incumbents. It is not statutory, it is not regulatory, it is not the capital requirements. All of those can be overcome. It is how do you fundamentally change the interaction that people have. Like, I lived in my house for 10 years. I have never seen an insurance agent knock on my door. Never. So, I do not know any people who have insurance friends, who have tried to recruit me. So, I am going to the internet and that is happening more and more and more, not that the agents will not be important, but that is the thing that these InsureTechs have done really well, that should scare the pants off of the legacy carriers because they are so locked into their existing systems.

So, the first is that is one. The second is the, I forgot what the first one was. And the third thing is Amazon. Everyone is concerned about Amazon entering the insurance business or Google. Guess what? They are already here, but they are not here as a carrier. They are here as a technology provider that makes all these InsureTechs possible. Like we live on the Amazon stack and you could use Azure, or you could use Google cloud if you wanted to. But, back in the day, you had to spend hundreds of thousands of dollars just building your technology infrastructure. And now I can spend a couple of hundred bucks, get it right, and then multiply it by 10,000. And now I have essentially a supercomputer of capability. And that is a fundable change in the business.

JAMES: Yeah.

BOB: So, Amazon’s already are in our industry. They are just not where you think they are. They are on the backend, providing all this great technology to allow companies like ours to be small, but really, really efficient.

JAMES: Rob?

ROB: I am so glad you brought that up, Bob, because, I was having a conversation with someone that is a broker and he works with a lot small to midsize carriers, and agencies, and others. And was asking me, hey, Rob, tough market environment, all that. Did you see a lot of consolidation, do you think there is any hope for this small midsize guys says? I said yeah, we will definitely see some of that. That is what you see in every recession. I said, but honestly, the small and midsize guys, have access to enterprise software now that they would have never been able to afford and never had before because of cloud computing, right. And software is a service model, and so, exactly to your point like, these are the enabling technologies that are allowing companies like Hazard Hub and others to do exactly as you said, tinker, get it right, and then scale quickly.

And I do think that is a very underappreciated, dynamic. When we are talking about emerging technology, it is kind of, some of the stuff we have already talked about, but that enabling, that is necessarily behind the scenes is not necessarily consumer-facing. I think that is a great point. Bob, one thing I want to talk to you about it and ask you, you guys partner with a lot of different companies. I think you have been… You are all over the map. In terms of some of the names that you partner with and I see you’re constantly announcing new relationships with folks like Cape Analytics and other, so, maybe you can help break us down and I do not expect you to name every single company you partner with, but how do you think about your partnerships? What is your approach? I am just kind of curious, kind of your mindset, cause you have done a great job of really integrating with the broader InsureTech ecosystem.

BOB: Well, there are a few things. When you are a small company and you decide to take on $2 billion companies, you cannot necessarily take them on where they are strong. You have to take them on where they are weak. And the weakness in both of our primary competitors is partnerships. Ask any InsureTech who has to deal with one of the incumbents. And they are like, it is a tremendous pain in the neck. But we always looked at it like, I cannot afford to hire any salespeople. The ramp is too long. So, John and I do the selling for the company and we are pretty good at it, but I would rather have, 10% of, 500 salespeople than to have, 500% of one salesperson. So, our underlying idea is that we want the technology to do the work. And that applies to not only how we run businesses directly, our relationships with carriers, but also how we do it with partners.

So, the APIs plug and play. It is like, here is the API. You can sign up in a minute and off you go, and you are live. You are in the system. So, for us to onboard a partner takes about 10 minutes and that is something that had not been yet the industry before. So, we understand that. A lot of times, as a carrier, you do not want to knit together 25 different pieces of information to come up with an answer. You want somebody to do it for you. You want the component stereo. I mean, you want the combined stereo versus the component. And so, we partner with these companies who are already providing another answer. And our data helps to make their answers answer more complete. So, we plug into Cape, we plug into Betterview. we plug into SpatialKey. We just had our first Majesco customer the other day. We plugged into WaterStreet. We plugged into 65 different partners altogether. And it is because we know that people are not looking to us just as the absolute end answer. That they have more that they want to do.

And so, we are happy to partner. We do not have the extreme expense of a big Salesforce. We let the partners do that for us. Now, sometimes the carrier says, I want to deal with you directly. I do not want to go through a partner, because I want to control the relationship and we are allergic to not taking a check. So, if somebody wants to come with us directly, fine. We are even partnered with the Fenris company because the carrier wanted to deal with us directly and they use the Fenris company, and it is like, I do not want to partner with them, but the client wanted us to, so now we are partner with them and just keep growing it.

JAMES: It is interesting. I could definitely see some carriers and not just carriers, but just some potential buyers for you, feeling very threatened by you. Because they view this as a special secret sauce. And if they use you and everybody else uses you and you will have access to the same data, then there’s not much special left about them. At some point, you have to ask yourself, what is a company? Is a company just an aggregator of API data calls? I know I’m getting a little existential here, but what does a carrier, if they reinsure a lot of their risks and then they aggregate data through API calls from a bunch of data collectors, then what are they, other than a marketing brand, right?

BOB: Yeah, that is the interesting thing is, the other thing that the Lemonades and the Hippos of the world represent is the branding aspect of things. Brands are real. Bands count for a lot. And I have done a lot of direct and target type marketing in the past, and the more I do that, the more I believe in the power of the brand. So, the power of the Hazard Hub brand is, we try to tell you all the bad stuff that can happen. That is our brand focus, and we try to do it better than anybody else. That is it. Everything else derives from that, but you are right. It could become commoditized special sauce if you will, but we also look at it like, it is the application of the data that really matters because we not only give you the score of something, we give you all the inputs that we use to create that score. So, you can customize your own scores if you want to. You can really fine-tune that data. And what we see is that people who spend the time to fine-tune the data, jump ahead of people because they are smarter about using the same data than other people are.

And, and because we make our pricing model, basically once you buy three data elements, you get them all, it gives people a real playground for the opportunity to invent things. Like we have a client who came to us today and he said, I don’t want to give away any special sauce, but he says, if you look at the density of the hydro network in the fire station location, you come up with a pretty good approximation of what the protection is for that location. And I am like, we have been putting that data out for two years, and it is just taken until now until somebody finally got it. And he goes oh, that is a more interesting way to look at things. And, and so we just sort of sit back and wait. We do not push people. We do not make them do a minimum. We do not get up in their shorts about having to give us their data. We are just like, hey man, where is the data? It is tasty data, go get it!

JAMES: Yeah, it is. It is a fascinating time right now in insurance technology. This week, the only article we really have time to cover this week. A rapid quoting insurance startup out at Columbus, Ohio. We are not talking about nationwide. This is another company out of Columbus, Ohio called Branch. Has raised $24 million this week, co-founder and CEO, Steve Lekas who spent 18 years in the insurance industry, estimated the company could grow to 150 employees, from currently 25 by middle of next year. He says he already has a thousand policyholders signed up. 600 in Ohio and they have licenses to write in Arizona, Illinois, Missouri, Ohio, and Texas, so keep an eye on this one. They are trying to be another pure digital, rapid signup, all-digital, no broker, InsureTech, out of Columbus, Ohio, which is insurance city USA. And if you watched, one of my favorite books that became a movie, all about virtual reality in the future of the world being on virtual reality. You guys know what movie I am talking about?

ROB: Ready Player One?

JAMES: So, Ready Player One is the movie, it is a book about the 1980s, but anyway, it is about the future that is obsessed with the 1980s to be clear. And in the future, the world’s VR headquarters is headquartered in Columbus, Ohio, so I thought that was fascinating. But this one is Branch Insurance, pay attention to them. They raised a bunch of money. This is the deal. The old mainline insurance companies are not going to get left out of this, because they are the funders. New York-based, Greycroft and HSCM in Bermuda. This is the insurance investment arm of Hudson structured capital management. So, there is some old school money that is investing in this new tech. They are like, hey, look, we cannot be left out of this. And our companies are not doing this fast enough. And so, but a lot of these companies are leveraging tech like yours.

BOB: Yeah, just like ours.

JAMES: Exactly, exactly. And so, we will leave it at that. It is really exciting because now, y’all hit it on the head and I am going to wrap with this. When I started JBKnowledge, I had to buy servers and I had to build a server farm. And we had to write every line of code. We could not reference third-party object libraries. We could not go in and call APIs. We had to build all of our own data sets. We had to build all of our own data structures. We had to build our own database. You literally write about 75% less code than you did 19 years ago when I started JBKnowledge and, you do not have the capital upfront. Now, your overall hosting costs are the same, as what I paid in inflation-adjusted dollars, except, it is prorated over time and over-usage. I had to get and buy all of it upfront. And so, the barrier to entry now is so much lower and there is so much more capital available, cause interest rates suck. So, money is looking for a home. And so, there is just a lot of crazy stuff all happening at the same time.

I love what I am seeing. Go to freehomerisk.com and run a report on your own house. And when you’re done with that, go to Hazard Hub, and if you’re the type of the company that could use this type of data, and really could leverage it into your product line, go check out hazardhub.com and you can check it out the tools they have there, you can look up the executive bio’s you are going to read through and, the free homework, that is a really cool example of how you can see what kind of data they can produce. Obviously, free home risk is not through an API, it is just through a public website, but you can experience what you can get through an API. Bob Frady. Thank you for being on the show today. Any closing comments for our listeners?

BOB: The one thing I will say is that I think it was a national underwriter just published a list of the 10 fastest growing PNC carriers for homeowners insurance. Three of the top seven are Hazard Hub customers.

JAMES: Nice.

BOB: So, if you want to be where the growth kids are, come on over.

JAMES: That is great. That is awesome. And, Rob Galbraith, thank you so much for being here today. Appreciate you. Any closing comments?

ROB: Absolutely. So thrilled to have Bob on, as I said, he is a grizzled veteran of InsureTech now, and I miss seeing you at the conferences, buddy. I miss golfing with you, for sure. So hopefully we can do that again sometime

BOB: Oh yeah. Hopefully. It was a pleasure being on. Thank you both very much.

JAMES: That is awesome. So, and to you out there in listener land, again, appreciate it. Listen in next week, we have another great episode coming up and as always, this is The InsureTech Podcast powered by JBKnowledge.com. It is all about technology that is transforming and disrupting the insurance world. I have been your host, James Behnam with co-hosts. Rob Galbraith, endofinsurance.com. Thanks to Jim Greenly, our podcast producer and Kara Dalton-Arro our creative producer. And thank you for joining us today. We are taking you on a journey through insurance tech.

So, enjoy the ride and geek out, and see you next time!