Pricing, Data, and the Future of Insurance: A Conversation with Michael Nadel

Rutger Van Faassen (00:01.834) Hello and welcome to another episode of Banking on Information. Today my guest is Michael Nadel, who is a partner at Simon Kucher and the Head of North American Insurance Practice. Welcome Michael to the podcast.

Michael Nadel (00:16.908) Yeah, Thanks, Rutger for having me. I appreciate it. Rutger Van Faassen (00:20.

2) Now we ask everyone that same first question, so here it is for you. Michael, why do you do what you do? Michael Nadel (00:27.372) Yeah, you know, it's interesting.

I spent my career in the financial services space covering a lot of different topics bouncing both from consulting into industry. And the thing that, you know, I really love about the insurance sector is just really being able to impact you know, businesses and individuals at its core. Insurance really enables the business environment that we live in to operate. Individuals couldn't take the risk to go out and start their own businesses without the backing of insurance.

People couldn't buy houses without the backing of insurance because the risk of, you know, something going wrong is just so large. And so as a purpose driven industry, you know, I was really driven to that from insurance. And then from a consulting perspective, what I get to do is so interesting because I can really see the impact that it has on all the companies that I work with. And the ability to see that impact firsthand, whether that's helping an early stage company where to get off the ground and develop their monetization strategy or whether that's working with Fortune 500 companies and watching them change the way that they go to market based off the recommendations that we make is really impactful and it's something that I really enjoy as a part of what I do.

Rutger Van Faassen (01:42.846) Yeah, That is a very interesting intersection of insurance, where that really supports people to do things and help them with risks that are out there. But also your consulting part, you also like to help people and move things along. That is a great WHY.

Now, what is the number one challenge that you help your customers solve? Michael Nadel (02:07.086) I'm going to cheat and maybe give give two. And maybe I'll explain sort of where you know, I play within the insurance ecosystem.

And that's really the whole ecosystem across property and casualty, life and health and annuity, surety, warranty, InsureTech services, managed service providers. There's a number of things ultimately you know, that we cover. And so, when I think about the market, I really think about the producers, the agents, the carriers, the brokers, the people that ultimately Rutger Van Faassen (02:09.802) Mm-hmm, yeah.

Michael Nadel (02:37.12) sell the insurance. And I also think about the folks that sell things to those companies. So, InsureTech, the service providers.

And the way that we service both of them is a little bit different. So, on the carrier, agent, broker side, we're doing traditional sort of insurance strategy growth topics. That might be looking at the products for the insurance company itself, the home, the auto product, making sure it meets customers needs. It could be distribution strategy, making sure you're getting the customer the product in their hand in the right channels.

And so from a carrier and agent and broker perspective, it enables significant growth opportunities to really expand their services, their offerings, and their customer base. For InsureTechs and service providers, we're doing things that Simon Kutcher is very famous for, which is monetization strategies. It's a lot of work around pricing and packaging of offerings. In the InsureTech space in particular, that's really interesting because I go to a lot of these conferences and I spend time in the insurance community and it's just not really a hot button topic, but it's something that every insure tech or service provider and every business in the world has to think about, right?

And so I've gotten the opportunity to help some early stage companies figure out how to get off the ground and develop their first product offering and bring it to market. And I've also helped some of the largest companies in the insurance space, you know, redefine the way that they cross sell upsell and think about their base. Rutger Van Faassen (04:26.836) Yeah.

Two types of customers. right? Like The insurance companies themselves, and then the tech that helps the insurance companies. And yes, they have slightly different kind of challenges, but it is interesting to see how you help them both create value and create a better proposition that extracts more of the value out of what they're offering.

That is very, very powerful. Now, when that goes well, how do the customers... Michael Nadel (04:32.494) Yeah.

Michael Nadel (04:36.578) Yep. Michael Nadel (04:50.401) Yeah, absolutely.

Rutger Van Faassen (04:56.288) talk about that. What do they say when you deliver that value for them? Michael Nadel (05:01.

206) Yeah, so let's talk about the InsureTechs and service providers first. right? So, you if you take that story of the early stage company, this is a company who, you know, that I'm thinking of right now built an innovative new offering. right?

But they're not sure essentially, who in the value chain will buy it, what they'll pay for it, how you bring it to market. And ultimately, we did a number of studies to help them figure out the answer to that question. And as a part of it, they They then went to some of their first conferences with confidence around their pricing, the feedback that they had. came back to immediately and They were like, hey, this is awesome.

People are really resonating with this. I'm able to talk to the product, sell this thing. And this company in particular, a couple of months later actually got acquired. And part of the story was the ability to generate revenue early on and really show that there was a customer base that was willing to pay for this product.

You know, on the other side of the equation, if we started thinking about the carriers and the benefit that they get out of it, I'm often talking to them about sort of like market access and growing their customer base in an effort to grow premiums and ultimately do it in a way that's profitable. So I've worked with a number of carriers on some of these topics and one in particular that comes to mind was work that we were doing to try and lower the average age of the customer base of a specific carrier.

And so as Doing that, we redefined the product structure of the home and auto products that they were selling. And we did again, a number of market studies to predict what we thought would happen if we broke the product into a different, good, better, best type of structure. And at the output of it, it was really interesting because they ran a proof of concept and our predictions based off of the quantitative studies we ran during the work was almost spot on to market adoption.

And that's really cool, right? From a consulting perspective, when you go into something and you plan it out and then see how it comes into fruition, it's not only great Michael Nadel (07:11.604) for the team that works on it, but from a client perspective, it resonates so deeply to be able to go in and say, we want to accomplish this, and in such a short order, turn around and actually do it. Rutger Van Faassen (07:22.

996) Yeah. Yeah. So helping your customers sort of understand how they can grow their business, using data to do that, and then being confident in it. And also what you're describing with the, the InsureTech companies, again, nothing there it goes back to your expert advice, really helped them not only set the right pricing and the right sort of proposition, but also gave them the confidence to talk about it in the right way.

And I can see that that is very valuable. Michael Nadel (07:37.102) Yeah. Michael Nadel (07:50.

272) Yeah. And, you know, just On that last point, it just has really surprised me in the community that there's so much support and consulting services that are out there for, you know, you name it, but one of the most important, if not the most important thing for any service company product feature is the price that you set for that product. Rutger Van Faassen (08:02.954) Mm-hmm.

Michael Nadel (08:11.882) It's really the tip of the strategy spear ultimately right? It is the signal you're sending to the market. It's the way that you're going to generate revenue and ultimately profitability.

It's the customer acquisition strategy. And you'd be so surprised how often you know, people put all this work into developing something, marketing it, branding it. And then you ask how they came up with the price and it's sort of like thumb in the air and Hey, no one's complained about it yet. Right.

And so being able to be a strategic thought partner to that part of the space is really interesting and also enables me and my team to really see the full service ecosystem for the carriers that they support and how they procure these products, how they think about them from buying and using them from customers. And it's just really sort of a pleasure to be able to support that part of the ecosystem that way. Rutger Van Faassen (09:01.876) Yeah, yeah, no, you're absolutely right.

Everything has a price. right? And it is a very powerful mechanism that basically determines how much value you are getting from it. And it is interesting to see how it's sometimes overlooked, but it is a very crucial element of the whole mix.

Now, I like to do this thing called Futures Thinking. So we don't know what the future is going to bring, but we can think about a possible future. And I'm sure you do that quite often, even with your clients probably. Michael Nadel (09:05.

078) Right. Michael Nadel (09:17.922) Yeah, absolutely. Absolutely.

Rutger Van Faassen (09:30.528) think 10 years out. Let's put ourselves in 2035. What do you think the the insurance industry landscape is going to look like?

Michael Nadel (09:40.012) Yeah. So I'll start with the same, same way we've been talking about this, what the carriers, brokers and agents think, and then sort of the InsureTech community. And I think, you know, Obviously the most sort of pressing thing that's going on at the moment is advancements in AI and AI tech.

on the, On the carrier side, it's actually like it within property and casualty, maybe, you know, another piece of tech that's sort of actually changing more. If you think about traditional auto insurance today, You know, the insurer goes out and gathers a bunch of information on Rutger, his risk, you know, what's his driving history? Has he been in any accidents? And they're looking at the individual and assessing the risk.

They also look at the car and they say, well, how much is it if Rutger you know, ends up crashing this car or what ends up happening? But in the auto industry with the advancements in electric vehicles and self-driving technology, there's likely to be a really paramount sort of shift that's going to go on, which changes from ensuring the individual to ensuring the vehicle. Like it's not out of the question. If you think about like what the Jetsons predicted with the TV of you know, you walk outside and a car picks you up.

In the future it wouldn't be crazy to say we don't actually own cars anymore. We sort of borrow them. We we let that use the free time to pick up other people. Whatever that ownership structure looks like.

And so if you think about the insurer's perspective, you're going to start from moving to ensuring the individual to probably ensuring the vehicle. Which again means you know, from the people that sell data and analytics and things into the insurer today, they're going to have to come up with a whole new set of products, around you know, helping the insurer to assess that risk correctly. And that's just going to be a huge shift in the market, the way people live. You know, It's really sort of a taste of the future that I see coming from an auto perspective.

Michael Nadel (11:45.624) On the InsureTech side, I think it's really interesting and I will touch on the topic of AI, know, and large language models and some of the tech that's coming out around there. I think there is going to be such an emphasis and push towards data as being the valuable asset. know, Traditionally people have built software with a very specific purpose.

You build these beautiful UI and user experience flows and screens. you know, At the end of the day, some of that becomes a bit of a commodity. right? Because you might've built a graph that you think is interesting for me to look at from an analytics perspective, but the reality is with these large language models and their ability to produce insights.

I just want the data and I want to manipulate it in 10 different ways as quickly as possible. So the monolithic software application that's really driven much of a lot of industries, but also the insurance industry, think about policy administration systems, agency management systems. At the core of it, it's really just a data transfer mechanism. And I think like AI is going to sort of change the face of software pretty dramatically.

And so, you now I think these InsureTechs really need to be focused on getting unique data insights, less than focusing on building the prettiest application that looks the best. Because to me, that's what's going to become the most valuable here, you know, in a couple of years out. Rutger Van Faassen (13:20.234) Yeah, no, that Very, very interesting.

So your first point around kind of like how much more autonomous vehicles, how that's going to change the dynamic there in the insurance part. And then also how AI is going to dramatically change how people will use software and how it's much more going to be prompts driven. right? And making the user, put the user in the driver's seat and not necessarily the cookie cutter, kind of like, Hey, this is the report that I thought of for you that you're going to have to look at.

It's going to be much more the user deciding it. Michael Nadel (13:38.839) Yeah. Michael Nadel (13:45.

472) Right. Yeah, exactly. mean, that, that used to be the benefit. That's what sped up my workflow, but now I've got my own sort of workflow capabilities.

And so that just becomes a little less useful. Rutger Van Faassen (14:00.052) Yeah. So if that future becomes reality, what can we do today to get ready for that?

Michael Nadel (14:06.764) Yeah, I I already see it, right? So I do a lot of demos from people trying to sell me things, right? that make my services better.

And they often will show me you know, these pretty screens and look how good our tool looks. And the thing that I'm immediately asking them for is, you know, is the data that you have proprietary? Where are you pulling this from? And if these things are coming from publicly available sources or things that I could get at.

Rutger Van Faassen (14:12.51) Yep. Yep. Rutger Van Faassen (14:25.

93) Do it. Michael Nadel (14:32.65) I can just start to, you know, I'm not a developer, but with these large language models, I can quickly spin up an API that can pull you know, from these data sets myself and essentially recreate a lot of these applications. So again, like if I were these companies, I would be trying to acquire and hoard proprietary types of data sets, keeping them very close to the vest.

In terms of the way that you enable customers to use access or relicense them or reuse them and hold on to that data. The same way sort of these sales compensation data sets and things have done over time. They collect this information and they allow you to use it for a purpose, but you're not allowed to sort of use it for anything that you want to do or reuse it with a different customer. I think that same kind of mindset Rutger Van Faassen (14:55.

882) Mm-hmm. Rutger Van Faassen (15:02.602) Yeah. Yeah.

Michael Nadel (15:25.774) is gonna start to proliferate itself a lot more throughout these software oriented companies going forward because the black box needs to maintain some of its opacity in the future, I think. Rutger Van Faassen (15:40.48) Yeah.

No, very, that's very interesting. So think about proprietary data because it's so easy to access publicly available data. that it is really try to build a moat around that. think that is a very good, um, idea for that.

And that's probably also a good point to wrap up this episode. Thank you very much, Michael, for being on the podcast today. Michael Nadel (16:00.45) Yeah Rutger, Thanks for having me.

It was a great conversation. I appreciate it. Rutger Van Faassen (16:03.978) Perfect.

And until next time, choose to be curious.