InsureTech Connect And The History & Disruption Of Insurance

INTRO

On episode 5 of the InsurTech Geek Podcast, talking InsureTech Connect and The History and Disruption of Insurance with Caribou Honing, Chairman and Co-Founder at InsureTech Connect.

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: Today we are excited to be talking with Caribou Honing. Caribou is the chairman and co-founder of the InsureTech Connect conference, amongst many other things that we are going to talk about. Caribou, how are you doing?

CARIBOU: I am doing great thanks and I am delighted to be were here with you.

JAMES: Man, we are thrilled to have you on the podcast. I am a super geek, I love all things tech, all things insurance, and I love a good conference. I have gotten to speak at other 400 conferences in the last 12 years and love a good get together. There are amazing energy and amazing connections that happen at these things. And we are going to talk about the awesome energy that is going to take place in a couple of weeks at InsureTech Connect in a minute but, before we do that Caribou, I would love to just talk about you. You are one of the people behind InsureTech, and I want to talk about just your background. You know where were you born and raised; I know you are joining us from Richmond VA today correct?

CARIBOU: That’s right, that is where I live.

JAMES: Awesome, and you have been there for a while but let us go way back, back in time and talk about where were you born and raised, where did you go study, what did you study end what landed you in this space as an influencer and key player in the InsureTech space?

CARIBOU: The fabulous life of Caribou Honing is what you are asking now for?

JAMES: Absolutely. Including, how did you get an epic name like Caribou?

CARIBOU: Well okay. So, we will go way back to the beginning. You asked to go back about 50 years now. And my folks were yes driving up to Quebec on a road trip. They stopped overnight in the town of Caribou Maine, and I am named the story goes, after the town where I was conceived.

JAMES: Yes!

CARIBOU: Now-now-now if you like that, this being a road trip, the standard joke is I am lucky not to be named Buick.

JAMES: Exactly, or Ford or Mustang.

CARIBOU: It could have been so much worse on so many different dimensions.

JAMES: Exactly. But that is awesome! But first off, a road trip to Quebec is always going to be fun and the food is going to be great because Quebec knows food, and number 2, you end up with an epic name for the rest of your life.

CARIBOU: Exactly.

JAMES: Where did you end up growing up?

CARIBOU: So, I grew up in upstate New York, outside of Albany.

JAMES: Nice.

CARIBOU: We had, when I was first growing up, we had 90 acres and 2 cows, it was a very formative time for me as you would expect.

JAMES: That is a lot of land per cow.

CARIBOU: That is a lot of land per cow. It’s a neat to wait to grow up, and the flip side of it is I like to say I never developed natural social skills, so any social skills I have I kind of learned a little bit more cognitively, but so it was a little isolating at times but it was also great as I named little grasshoppers that were going by and I played a lot of the grass and the nature and stuff like that. So now that we got that out of the way, I grew up in upstate New York, went to Harvard undergrad, studied physics and philosophy, I went from there from the University of Virginia, for law and business.

JAMES: I got to pause you; I have to pause you for a second.

CARIBOU: All right.

JAMES: Because you studied two very different disciplines. And I went to an engineering high school in Baton Rouge LA right where I grew up, and I took four years of college–level computer science in high school, and that was like what our whole high school was about, and my computer science teacher was an undergrad in masters graduate in philosophy. So, half of my computer science education was philosophy and I find it fascinating that you spent time both in physics and philosophy because there are not perceptibly connected but they are intertwined. And that must have been a great foundational education for you to study those two disciplines.

CARIBOU: I like your choice of words there, foundational. I tend to approach problems from first principles. Which sometimes slows me down, because there’s a whole lot of second principles is derive principles that can be very effective for problem–solving, but I like to get to the root base of these things and physics, I think of as the root base, the study of the first principles for the scientists, and I think that philosophy is that first principles look at humanities. So, where I see them tied together, I just have this appetite for understanding things at the first principles level. Again, sometimes it slows me down, sometimes it has me asking questions that are a little bit off the beaten path, but that is what I enjoy.

JAMES: You know my computer science teacher because he was obsessed with opening our minds way outside of computational sciences, he made me watch a movie that unhinged my brain called “Mindwalk”. Do you remember this movie?

CARIBOU: I cannot say that I have seen that one.

JAMES: It was based on a book called “The turning point” which is a nonfiction book by Fritjof Captra, who also authored “The Tao of Physics”. And “Mindwalk” is a movie that I, first off, I strongly encourage you to go watch it, it is a combination of physics and philosophy, the whole movie is about the philosophy of physics and of space. But it opened my brain on thinking and problem solving and questioning the nature of reality, which helps when you are trying to solve business problems and problems of, whether of business or industry, is to have like a foundational way as you have just described of approaching problems.

CARIBOU: That’s right. It helps you untangle. What is causing what? And then how do we model that out?

JAMES: Yeah.

CARIBOU: The philosophies are a lot of actual, like, what is the root cause, and then the physic is great training for modeling, for building a menthol model about how the world might work.

JAMES: Yeah, which is critical, the looking at it. The really old established, well–moneyed industry like insurance and saying how do we end up in this. How do we dramatically improve something this big and this complex?

CARIBOU: Exactly.

JAMES: Now, after Harvard, you went to one of my favorite combo programs. You got a JD-MBA from the University of Virginia and one of my favorite cities in America Charlottesville.

CARIBOU: Yeah. It was a great education and a great time, and you know a good way to sort of bridge myself from that abstract physics and philosophy into some crack for applications, let us say.

JAMES: Yeah that’s an understatement right, I mean so Z–EMP, can we talk about that on here, or is just that just taboo when we talk about, I remember that when I went there, no answer, that means we are not talking about it.

CARIBOU: Exactly.

JAMES: I love all the secret societies at UVA. I think it is fascinating and of course, you were there, oh my goodness, you were at UVA, maybe right at the tail end of when Dave Matthews was playing in the bars there?

CARIBOU: Yes, and unfortunately, I do not think that I crossed paths there. It is one of those things wherein hindsight I realized, oh my gosh, I was a little bit more insolent than I should have been, but yeah there are a few haunts that eventually I discovered where apparently, he was in his prime.

JAMES: Quite active yeah, it is awesome. So, walk me through MBA, Law degree, Harvard undergrad, what happened professionally between that and now that let you into InsureTech.

CARIBOU: Yeah, I would like to say I have had 3 acts in my professional career. The first act, coming out of grad school, was going to Capital One, the big credit card insurer bank, and I went there in 1996. And although most people today probably know Capital One as a big successful bank. At the time, it was a disruptor. And it had maybe 1200 employees when I started, and by the time I left 10 years later, it had about 20,000. So, we went through hyper–growth, which opened my eyes and taught me a few lessons onto itself. I took a year off, after a decade at Capital One, has a nice run of it, watched Netflix, played it with my children, and listened to the universe. It was productive and fortunately, the universe spoke to me, I reconnected with a couple of other former Capital One executives and we ended up creating a small boutique venture capital firm by trying to help another generation of startups take the lessons and battle scars we have developed from our time in Capital One, deploying data and information business strategies to the next generation. So that was a firm, QED investors, great firm, had an amazing time there.

As we grew, we had to the de-few partners, we started to specialize a bit at the individual partner level, and in 2015, I would like to say it smelled like something was interesting about to happen in InsureTech. We had already made a couple of InsureTech investments by that time, but it seemed like there was an inflection point about to happen, so I started to focus most of my neurons on the insured tech space. As part of that, I was looking around for a good industry conference where I could talk to other investors interested in the space, talk to the entrepreneurs building the next generation of interesting things, talk to the innovation executives from within the industry, couldn’t find any good conference like that, so I had a harebrained idea that since I needed this to exist for my day job, maybe I should just create it. Lucky for me, I got connected with a fellow Jay Winetroube, who knew what he was doing when it comes to try and build an industry conference like that, and we were able to collaborate and pull together InsureTech Connect.

I had so much fun doing that, that I went from my second act of the venture capital site, for now, what I call my third act, which is a mix of different interesting activities, all pointing towards helping innovation, helping probably good people succeed at doing interesting things. So, I continue to outgrow the conference where I can, I work with the same team to create another industry conference called HR Transform, focused on the impact of technology on the workplace on the future of work. I am on a few startup independent directors of board positions, became a special advisor to a small boutique VC probably focused on HR tech of future work investments, and I would like to say besides that I mostly just spent my time talking with people and being a nuisance.

JAMES: Yeah and being a nuisance can be a good thing, it just depends on I guess your perspective, and what the end aim is. I have tried it myself on being a nuisance in many cases. I have served on City Council here in College Station Texas for six years and was one of the few people elected that understood risk management insurance and technology and embarked on a whole bunch of things, where I think quite a few people considered me a nuisance, but I was working pretty hard to try and modernize their risk management because a city carries an enormous amount of risk. It is astounding how much risk they carry. A city like College Station TX has 117, 000 people now. 121 000 sorry, but an annual budget of 365 million dollars in my 6 years running the budget committee, we authorized 2 billion dollars of spending and it was just amazing how much risk we carried. The size of risk and the frequency of incidents was pretty astounding and often with good intent being a nuisance, can result in some great things. It looks like that is being the result InsureTech Connect is you have grown into quite a deal.

CARIBOU: You know it is always very rewarding to see something that you put your heart and soul into doing well and succeeding and being something that people value. So, we started, the first event was October of 2016 which is not that long ago now, and we had about 1500 people attending. Which surprised us quite frankly was standing remotely. We were worried about whether the fire marshal might come in and complain. We saw that we tapped into something, and one of the most rewarding experiences in my whole career still, I recall taking a 100 pieces back during lunchtime, and you just sort of see 500 conversations happening among the people who were there. Most of those conversations would not have happened before we were pulling this together. That was just very gratifying for me. We had 3500 people the next year and 5500 people the following year and this year I would say we are on track, it is just a couple of weeks away, this year we are on track with about 7500 people to attend.

JAMES: You know I have spoken at a lot of conferences and a lot of events, and I have also run a lot of my own. That is a huge scale. It also puts you on a different scale, in just the conference facilities you have to book for something that big.

CARIBOU: Yeah some people like Las Vegas where we hold it, some people don’t like Las Vegas, by personal preference but the truth is there is only a handful of cities that have the infrastructure to support something like that, and there is only a handful of venues within those cities that can support it properly. So, we have been happy with Las Vegas, I think.

JAMES: Yeah. Yeah, it is Vegas or Orlando at that point. I mean you don’t have many choices, but what I am excited about with InsureTech Connect this year is, is you got people like the Co-CEO of Markel Corporation, you got the president of Allstate Personal Lines, you got the exact chairman Lennar cooperation, you’ve got the chairman and CEO of Star Insurance, you got the co-founder, I mean this is a who is who list in the insurance space. The director of business risk and insurance at Google, you know I can keep going on the list, of just the presenters and people that are going to be presenting and speaking here, much less the attendee list which is also a list of heavy hitters, so there is a lot of connections being made. I would imagine there is a lot of deals being funded at this conference though.

CARIBOU: I like to say that I want this to be an event where business gets done right? At the beginning of this podcast, you said you like conferences. I think you are, maybe not unique but unusual in that regard. I think a lot of the people dread conferences, and part of my commitment when we started this thing, as I only wanted to be involved in helping to create a conference that I want to go to.

JAMES: Amen.

CARIBOU: And what does that mean right? It is not about making a boondoggle, right? I do not want to take time away from my family to go to a boondoggle. I would rather go on boondoggles with my family.

JAMES: Yup.

CARIBOU: I want to make something where the business is getting done. And that can take the form of people coming up to speed, people consuming the content that we have on stage and we must have luminaries on stage like you have pointed out. But it’s also about helping people do you have the conversations they want with people who they already know they want to meet with, and try to move deals forward, and the sale in deputy, of meeting people you don’t know yet, and you don’t know that you want to meet them yet. But it turns out you do. And that is serendipity is very powerful. There is a whole set of anecdotes we collect around people meeting at ITC and the business deal happens as a result of it. And then again that is very gratifying for me. We are going to spend time helping to create this thing. I wanted to be moving people’s agendas forward and, in that way, maybe helping the industry forward.

JAMES: That is a wonderful segue. Let us talk about the industry. Why insurance, obviously you spend a lot of time in the financial services space with Capital One. And you had to peel back the onion and it is kind of hard to spend time in financial services and not touch the insurance space heavily because they are so intertwined. But why insurance, why tech applies to insurance, why does it matter?

CARIBOU: So, I will start with a little bit of why I am involved here and there are a few reasons. One is, just from a skills perspective and the mental model perspective. Having spent close to 20 years on the banking side of the world and Fintech investing and all, I do not believe I know all the answers about how InsureTech is going to play out. What I do believe I know from my time on the bank and the Fintech side, is I do know most of the right questions to ask. And that you know is 2/3 of the battle typically and so, and then I quite enjoy the learning experience. Okay, I think I know the right questions, but I am going to learn a whole new set of answers that not all new to me at least, and I enjoy that learning piece of it. I also like insurance as a product, as good for people and society. I like to joke, you never hear anyone say, oh I am just up to my eyeballs in insurance, or I am on such an insurance treadmill that I just cannot get off. It is rare that people truly over–insured in a bad way. People are rarely being oversold on insurance. That makes it a very good product and I quite like being involved in helping move an industry forward that has such a fundamentally good product for people for the consumers out there.

Now at the industry level, when you say why InsureTech, why now? You know that is one of the questions too. And my answer to that is, there is this whole pent upset of technologies, ready to be deployed, it is like water behind the dam and it is finally bursting enough to get out. And I can point to, not just like the web or the Internet, which by the way in my view was plenty strong to transform banking, but did not transform the insurance sector, it took not just the Internet and the web but also smartphone penetration being near–universal. And cloud computing becoming now finally mature for the enterprise to use and drones have been there like all these technologies are ready to be deployed and are quite powerful for information business like insurance. So, I think that is what is pushing things to be in the last few years ready for InsureTech do you have an impact.

JAMES: Yeah, I speak a lot and have spoken a lot about the conversions of a suite of technologies that once they arrived simultaneously, allowed for products to be developed that was much bigger than just some of the parts. So, if you look at the miniaturization of imaging, cameras, imaging sensors, the dramatic increases in the speed of wireless chips, whether there are cellular, Wi-Fi, or Bluetooth. You look at the miniaturization of gyros and accelerometers and sensor arrays. The proliferation of multi geek fiber Internet robotics significant advances in software, where machine learning can the masses and development of the cloud. All of that happened concurrently over the last three decades. Of course, it has foundations that go back to why more than three decades. But in the last few years, we have been witnessing it and I have been in business for 20 well 18 years, just under 20 years and I have been writing software since 1991.

So, I have been able to witness this happening and it is amazing now what can be developed in the timeline it can be developed in. Just blows away previous standards of software development and hardware development lifecycles because you are standing on the shoulders of giants and you’re able to lease this technology in fractions of an hour now, through cloud leasing and even equipment lease and it’s just a barest the entry or lower, the technology that’s available is higher and you got this ancient industry in insurance that is just ripe for change and you have the whole suite of technologies that have arrived simultaneously to make it possible.

CARIBOU: I agree. I have been nerding out on class curves lately, looking at okay yeah, Moore’s law.

JAMES: Yup.

CARIBOU: Occupational power, but then there are all these other places where the same kind of exponential cost curves or improving and, it starts to give you a crystal ball, I kind of know where the cost of business is going to be in five years give or take. Now, what is the business implication of that? One of my favorites is the unlike sciences part of the world, sequencing the human genome, which is falling faster than Moore’s law price off a transistor. But you know for the health and life insurance world, I think that starts to have a whole bunch of implications, not just from a technology perspective but from underwriting and even a business model perspective perhaps.

JAMES: Yeah, the cost, just the cost of, think of how critical storage is in computation right? It is critical. The cost of storing a GB, 20 to 25 years ago was $500 and it is now less than a penny. It far outstrips Moore’s law. It is like the cost curves for the cost of transistors and the cost of storage and the cost of a gigabit per second of bandwidth is astonishing. And they are truly exponential at this point. Peter Diamandis I am sure you are familiar with, talks about this a lot in promoting abundance theory in recognizing that, the now and the future or more abundant than any news agency would like you to believe because the popular if you could call us theology is that the golden era was that of our grandparents and things have gotten worse and life is less prosperous and things are going to continue to get harder and there’s a lot of people who like make a lot of money on fear–mongering. The reality is we work fewer hours with higher output for far fewer costs. I mean, the productivity curves are outrageous the amount of free time that we have and the amount of innovation and technology and the cost of technology.

There is a fascinating chart us all wants Caribou on the price of Lumen of lighting. It started in the year 1300 when you had to use whale oil for this. And it used to be outrageously expensive. A severe luxury to like things. And of course, now it is so low that it is hardly even computed, but that was a key driver in learning cause people could read when it was dark. Just all of this has been happening and insurance to me is a fascinating industry because of its history. I mean the first, I am not sure how deep you have gone into the history of insurance but, the very-very first insurance contracts or about as old as the society itself. They used to be called bottomry contracts, the ancient merchants of Babylon use these. This was not kidding. 6000 years ago, then they would be alone, that if the ship were lost at sea, the loan did not have to be repaid, and the interest on the loan amount helped cover the insurance risk.

CARIBOU: Fascinating. I have run across a few other sorts of archaic perhaps insurance forms in terms of, I think my favorite is a Tontine, which if I try to define, I will probably mess up but folks I am sure can Google what is a Tontine.

JAMES: Yeah.

CARIBOU: It is a fascinating or archaic insurance contract.

JAMES: Well what is says though is that the ability to share risk is fundamental to being able to operate as a society. So, if it co–developed with society, this must be an important problem for me and you to be involved in, right?

CARIBOU: That’s right. That is right.

JAMES: Yeah, which means it is going to be fundamental to establishing the next generation of society. So, let us talk about the future then Caribou. You are running arguably the largest insurance technology gathering out there, and with some great people, cofounding and go running and there is some, I don’t want to take away from the other people that are involved in the events as you need a lot of staff to drive it too. What do you see next, like what is on the horizon from an insurance technology perspective, what is the hottest stuff you see right now, and then what is the hottest stuff you see coming next?

CARIBOU: So, there are a few technologies that heavily impact right now. I am most obsessed with APIs. Like the automated programming interface is the glue that connects different systems in a kind of a modular standardized way. And APIs had a big impact on the banking side of the world, and there are thousands of APIs now publicly available for people to use. And I think it probably runs in the dozens or maybe hundreds in insurance. But the shift of the insurance technology stack from an API approach, I think is very impactful for the industry structure even. It is not a technology strategy, I would like to say, it is a business strategy masquerading as a technology strategy when you build your business around APIs. Because it means that you can start to assemble the best class solutions, it means that you are not trying to integrate anymore, you are just making use of other company’s capabilities through an API’s, which is usually creating a ton of friction out of the system.

And then I think it is now starting to give rise to another key trend. I begin to see it called embedded insurance or invisible insurance. Where an insurance provider attaches their product either as a separate purchase or not, into someone else’s product or someone else’s customer experience, customer flow. And you can think about this and it is being around in various forms before if you think about it, you are in line at Best Buy and the cashier offers you a product warranty. That is embedded insurance so you can if you are buying a ticket on Expedia and they offer you travel protection, which is embedded insurance. But those usually require some kind of actual integration so there is big friction. It is big, it is a dead conversation and APIs are now allowing that to be much more fluid, much lower obstacle to even trying out, hey maybe your customers would like to buy our insurance. So, I think you are going to start seeing this embedded insurance notion proliferate all over the place and that in turn is I think is because of APIs.

JAMES: Let me pause you before you jump into AI. API’s are important, and I am also seeing a proliferation of RPA bots that are scraping systems when API’s do not exist. I am seeing it all over the place in insurance. Carriers, TPA’s, brokers are using tools like your UI path to build RPA bots that just log into systems when the system does not have an API.

CARIBOU: Yeah and I there is so much value in being able to connect systems that they jump into a sort of middle state until the end state is ultimately available. Make sense. It still makes good economic sense.

JAMES: Yup.

CARIBOU: This is the difference though between what an InsureTech startup, which is starting with a clean state, building out its technology stack, building out its platform, and in an existing and incumbent carrier or broker has to deal with. The incumbent has is a successful big business. That is a great thing, but it also sometimes hamstrings them. In that, they cannot just sort of rebuilding it with the most modern sort of tech stacks approach. They got to it invested in sort of Mid-States and that will create a ton of value for them, but there is an additional layer of flexibility and efficiency that I might argue that the startup working with a clean slate can achieve that’s better still.

JAMES: Yeah. That is awesome. And I interrupted you before you were continuing about AI. I am assuming that is what you were headed towards.

CARIBOU: That is where I was going. And when you asked me what is going to become the hottest technology. AI has already become important today. It is not something to be ignored. If you give me a choice, of acronyms, I lean towards API in the short to medium term and then AI in the medium to long term in terms of impact.

JAMES: Yeah.

CARIBOU: And I think there are interesting examples, where, back to your compounding benefits of these technologies, I think about the proliferation now of satellite imagery of rooftops. Terrific. But there is so much satellite imagery of rooftops that it is hard to ask humans to process all of it, that were in places where you would want to. And that might be where AI or I prefer the term machine intelligence can start to filter through and scan for it. In some cases, maybe even better than humans can, even aside from the fact that they can do it in greater volume cheaper in 24/7. So, I think that AI or machine intelligence, as it continues to mature and improve better and better. And I do not mean some sort of general intelligence. I like to use the analog of the Terminator. I do not think we are ready anywhere close to having Arnold popping in the insurance world. But I do think that focused white-collar tasks can be offloading quite often now.

JAMES: Yeah. We are seeing it happening more and more, and they are using deep learning tools and machine learning and general AI, Ray Kurzweil, Peter Diamandis, they estimate 25 to 35 years for general AI to become practical. And that is assuming a lot of things happen. What we are seeing right now is specific forms of AI, like deep learning, machine learning, image recognition, NLP, natural language processing that is being used to uncork these gigantic reservoirs of data to use the technical term data, giant lakes of data, right that, that have existed in unstructured format for so long that we have never tapped into. I mean, we have been doing a lot of experiments with claim file notes, because there are just terabytes and even exabytes of data locked up in these free texts notes that humans do not have time to process, and it is amazing the results you get in analyzing the likelihood of a claim to be expensive when you can tap into the free text that is typed in there. It is, it is pretty astounding.

CARIBOU: I was on the venture capital side when big data was word of the day. And, I think that when was that, five, six years ago, big data was overhyped to the point where I ended up publishing an article in defense of small data. But I do think that when you married big data sets, and some of this machine intelligence, that is kind of what was missing, from enabling big data to live up to its hype.

JAMES: Because there is no possible way to do anything with these giant piles of data unless you had a machine peeling through it 24/7 or a million machines peeling through it to be more realistic. Something that has happened recently. The last few years that I would be interested in your take on, and it is not something I would have expected this early in the cycle, but it has happened. So, we have got to talk about it. Software guys backed by technology VC’s and private equity groups have decided to not just start InsureTech companies that are vendors for the insurance space, but to go ahead and carry a risk themselves and become insurance companies that at their core are tech firms. And it has been interesting to see these come around because you typically, when, let us say we were talking about insurance tech eight years ago, you were thinking, okay, well you are starting a software company. That software company is going to build technology. They are going to then license that technology to a bunch of traditional carriers, brokers, TPA’s, pharmacy benefit management companies, etcetera, they are going to license it; they are going to use it to improve profits at their company.

And now we have seen a whole crop of companies coming up that said, you know what, we are software guys. We are technology guys, but instead of selling to the insurance business, we are going to go ahead and compete against them and we are going to go in and carry risk and we will use re-insurance were to do all these other things. But they ended up hiring instead of working for the insurance companies, they end up hiring experienced insurance executives, bring them over to a tech company, and they started carrying risk. I mean, we could talk about a lot of examples, but the one that immediately comes to mind is Lemonade, right? These are fundamentally technologists that hired insurance folks, started carrying risk, and then built an insurance company with the heart of a tech firm. What are your thoughts on this advent of true InsureTech companies that are not just tech vendors but are actually carrying risks?

CARIBOU: It’s a big topic you’re teeing up there, and I like to describe it as, particularly when an insurance carrier or reinsurer talks to a startup, one of the first questions they both need to ask you as well, are you trying to be part of my supply chain or are you trying to ask me to be part of your supply chain? I think that there is value in the InsureTech’s who are really B2B companies building that technology to make the insurers or the brokers more effective, more efficient. I think that great companies are going to be built there, and by the way, having invested in a few companies like that in the past, up until recently, I will say it has been a very slow, difficult slog doing that BizDev to the insurance companies. Insurance companies have a timescale that is different than a timescale where those kinds of B2B InsureTech need to operate.

If you do a go to them from the first conversation to a pilot in six months and pilots who will roll out and another year after that, the insurance company might feel like they are moving at a pretty good clip and the startup might feel like they are bleeding capital every day, that they are waiting for it to go through. And that may have been part of the motivation why some of the startups as well, we could build this software and sell it to the carriers, but it is just going to be so slow. We might be a lot faster if we supply the software ourselves and learn these other skills around things like distribution risk and so on. I think that there is a quote, from a Netflix executive, that I have used liberally. I have stolen Luber liberally around, no Netflix asking does HBO become Netflix faster than Netflix becomes HBO? Which business model can adapt the competencies of the other business faster?

JAMES: Yep.

CARIBOU: And so, I think in some ways it is a question of to what extent can the insurance companies embrace the kind of innovation mindset and replace their tech stack. What kind of pace can they do that? What kind of speed can they do that? Can they do that faster than the software guys and gals out there building the customer–facing InsureTech startups and build the risk and distribution competencies that they need to augment their technology competencies? Now, it is not binary. It is not either–or. There will be winners and losers in every category here, I believe. You know I do think that we will have to look closely yet at the same key metrics that tell us whether a traditional insurance company is succeeding, combined ratio, loss ratio, things like that. Those things matter for the customer–facing ones too, right, but as for the customer–facing InsureTech startups as well. I think great ones are being built among the software people. And look, I think some interesting century-old incumbents are leaning into the opportunities presented by technology quite well.

JAMES: Yeah, it is a fascinating foot race and it is not a slow foot race. What is going on right now is the same thing that you are seeing in many other industries, and I love your Netflix quote because it does describe this challenge – who can adapt quicker. Can the tech guys learn insurance faster than the insurance guys can learn tech and can in not just learn, learn, adapt, and rollout, right? And then ultimately, can they solve the needs in the market faster?

CARIBOU: And I would also be mindful that it is not binary just between the insurance incumbents and the InsureTech’s. There is a third category out there. Which are these tech Titans, whether it is the no Googles and Alibaba’s and 10 cents or some of the Fintech folks who have been very successful? I am biased, but credit karma is very near and dear to my heart. At InsureTech Connect last year, and Lynn, the CEO of Credit Karma, announced his sort of one click, a multi–quote on auto insurance, available to is what 5 million hustlers who not only were getting their credit score from Credit Karma, but also we’re getting monitoring of their car value, and he is got 80 million customers overall, something like that. When you get these tech Titans, who bring many of the strengths already around the technology, the modern technology stack, the innovation mindset, and have the resources that are on par with a hundred-year-old insurance incumbent.

JAMES: Yup.

CARIBOU: Wow. Now, that makes a very formidable competitor.

JAMES: It does, and it is difficult. I mean, the barriers to entry into risk space can be high. I mean, you have got to have a lot of capital and a lot of experience, and you have to have some seasoning to be able to recognize risk. There is got to be something, there. And so, you are seeing a hybrid approach, in some cases, and I agree with you, it is completely not binary. And this is not a simple either-or statement. But it will be fascinating to witness the outcome, and of course, for all of us who were involved in the space, either from an investment perspective or a development perspective, or both, to see what happened. I think in the end, one of the beauties of capitalism, those in the end who can provide the most value to the customer, most likely will prevail. But in the end, the customer will most likely win. They will get a better product delivered faster, most likely for a better price. At least that is what we are seeing right now.

I mean, I just take my drone insurance. I am a commercial drone pilot. I am a commercial pilot as well; I fly airplanes and I fly drones. And the difference in how I have to buy insurance on my airplane to how I have to buy insurance on my drones is staggering. One is a very antiquated process for aviation. And one is very, very modern with drones. I buy drone insurance by the hour and by the location. I use Veri-fly and it is integrated with drone deploy. I buy the insurance for an hour for a one-mile radius, and then I go fly for that good job, and then I am done. It is fully insured, but I do not need insurance and I am not flying it. And boy, airplane insurance is not the same way, but it is fascinating to see on the consumer perspective, how much better certain experiences are getting and of course, the price and cost impact of that.

CARIBOU: I believe what is so interesting about that example, by the way, I know Veri-fly, and I believe last time I checked that Markel, the commercial insurer in my hometown now in Richmond Virginia, is providing the paper for it.

JAMES: Yup.

CARIBOU: So yeah, kudos to Markel for partnering with startup and kudos to Veri-fly for partnering with an incumbent.

JAMES: Yep.

CARIBOU: In a way that enables new products, that in theory, I suppose they could each eventually get to on their own, but in practice, it is greatly accelerated to the benefit you, the insured that they are working together.

JAMES: Yeah. That is awesome. Well, let us wrap this conversation up with InsureTech Connect. Just a reminder to everybody if they have not registered yet, and they still want to go to this, it is September 23rd to 25th, at the MGM Grand in Las Vegas. The website is InsureTechconnect.com. Do you have any final comments for those listening out there that may want to attend the conference?

CARIBOU: I would say it is going to be a place where you can see things that you will not see elsewhere. It is got a very international aspect to it. And I think so much of the innovation happening in InsureTech is not limited to just the US. I think there is was great benefits you can get from that perspective, we have made it so it is a conference that I want to go to, and there are not many like that, so I hope it is a conference that other people want to go to as well.

JAMES: That is awesome. Well, I cannot thank you enough for jumping on the show with us. Caribou Honing, you are a fascinating discussion and I have appreciated your time and you sharing your brain space with us.

CARIBOU: Well, it has been my pleasure. I appreciate you having me with you.

JAMES: All right. Thanks, Caribou.

The InsurTech Geek Podcast powered by JBKnowledge is all about technology that is transforming and disrupting the insurance world. I have been your host, James Benham. I have been joined by Caribou Honing. It has been an awesome show. Thanks for joining us this week. I look forward to talking with you soon.

Remember, we are taking you on a journey through insurance tech, so enjoy the ride and geek out!