What Would It Take For Insurers To Go Fully Digital? with Ian Drysdale, CEO of One Inc. | Episode 499

SPEAKER_00: Welcome to the Leaders in Payments Podcast, where we talk to sea level leaders from across the payments landscape. We'll be discussing the products and services that impact the payment space today, as well as trends and predictions for the future of payments. We will also hear stories from our guests about their journeys to the top. SPEAKER_01: Hello, everyone, and welcome to the Leaders in Payments Podcast.

I'm your host, Greg Myers. And today's special guest is Ian Drysdale, the CEO of One Inc. So, Ian, thank you so much for being here and welcome to the show. SPEAKER_02: Greg, I really appreciate it.

It's great to be here today. SPEAKER_01: You were last on the show in 2022. Can't believe it's been four years. So you may be new to some of our listeners.

If you don't mind, can you give us a quick version of who you are, what One Inc. does, and maybe what's the one thing that's fundamentally different about the company compared to four years ago? SPEAKER_02: Absolutely. So One Inc.

is here to catch insurance up to electronic payments across the board and even exceed what's happening in e-commerce or happening in any digital payments infrastructure for insurance. We do both premiums or inbound payments, merchant acquiring, and we do outbound payments, which you might call issuing or disbursements, and we're doing it at huge scale. Our scale is reaching the scale of some of the major horizontal payment processors, and our growth rate is second to very, very few, over 50% a year for the last five years.

SPEAKER_01: How else has One Inc. evolved over the past few years? Maybe new capabilities, new partnerships, or maybe new parts of the payments workflow that you're now owning that you weren't before? SPEAKER_02: The biggest difference is our scale.

We now have 310 insurance carriers. We have 15 of the top 20, either for premiums or claims or both. We're doing hundreds of billions of dollars of payment volume annually. And in fact, I'm expecting any day now, we'll do our first billion dollar day worth of volume.

We have 1.2 million vendors in our payments network. So when an insurance carrier pays an auto body shop or a doctor or a lawyer, we already have them in the system. We have really expanded our scope.

Lien holder is an example. So 25% of U.S. auto crashes are total loss, and now we can pay off the car.

We support what we call mortgage E. So most premium payments are not paid by the cardholder. They're not paid by the homeowner, at least not directly. They're paid through the mortgage servicing company.

So we're now doing all of those in addition to looking after the homeowner themselves. So we've really widened what we're doing. We've built out our partnership with JP Morgan. They bank the vast majority of the large carriers.

So we are directly tied into all of their accounts at JP Morgan. We're up about 5x, and we've kind of gone from one of the solutions in the market to the solution in the market. So just like some other verticals where there's one player that is really starting to become the go-to, that's who Wanink is today in insurance. SPEAKER_01: Just to clarify, when you say insurance, it's health, auto, it's basically any insurance.

SPEAKER_02: We actually are predominantly property and casualty insurance, not health insurance. There are other companies that specialize in health insurance. We specialize in automotive, we specialize in workers' compensation, in homeowners, commercial insurance, jewelry insurance, pet insurance. We stick with property and casualty.

We're also doing life insurance now, and we're just on the edges of doing agriculture and farm insurance. Those are the areas that are most complex. Lots of people are all over healthcare insurance. We are the player for auto and homeowners insurance.

If you see an ad on TV, we call them Super Bowl insurers. We're either talking to them or they're working with one each other. SPEAKER_01: Okay. And you mentioned you do both the consumer side and the B2B side.

SPEAKER_02: That's correct. We do consumer insurance, we do commercial insurance, and when we do payouts, and we do a lot of payout, we're approaching$100 billion of payout a year. We are paying not only the consumer, we might pay them with PayPal, Venmo, push to debit, Visa Direct, MasterCard said. We are also paying them, we're also paying the Autobody shop and the doctor and the lawyer.

So we are working to completely handle the most complex payments in America. And it's part of the reason that the industry has been 20 years behind and is now catching up with the full digital infrastructure. SPEAKER_01: Well, that's a great segue into the next question. When we last spoke, you talked about digitizing a trillion dollars of insurance checks.

How much progress has the industry made since then? And what's maybe still slowing down adoption? SPEAKER_02: So when we started, the industry was perhaps 50% Czech. And that's still true in places all around the world.

In some countries, the last bastion of checks are insurance companies. At the time I talked to you last time, we had digitized 3% of the nation's volume in digital payments. And we're now at 8%. And I would say in the next three years or so, we should be at 20 to 25% of US claims where we are digitally making the payments.

We've gone from a player to the predominant player, and we're heading towards a world where we are becoming the rails for paying claims. SPEAKER_01: What do you think is keeping that from being 50% or 100%? SPEAKER_02: There's a lot of inertia. Also, I think the insurers are close to their banks.

We partner with a number of them. So they have either large loans or large depositories with their banks. And the way banks work is they want the fees from those insurers, right? So they want them to work with them.

But that keeps them stuck to whatever that bank happens to offer in terms of electronic payments. So I think that's a barrier. I think that inertia is a barrier. There are lots of pressures on insurers, whether it's climate change or the cost of health care or the cost of auto parts or large legal awards.

And those are all putting massive pressure on insurers. So they have to be very cautious about where they spend their money. And what they found with us is they get immediate payback by eliminating checks, by eliminating a lot of the fraud associated with checks and heading into our direction. We're also solving for all the edge cases of insurance.

Insurance is just full of edge cases. So if my home's damaged to the 250 or$100,000 or$200,000, not only do I have to sign the check, my mortgage company has to sign the check. And we can digitize that now. But those edge cases have held back insurers for years.

And it's the entire weight of the industry together through One Inc. that are solving those edge cases. Whereas an individual insurer working with a bank that serves many different industries, Greg is going to have a tougher time with that. SPEAKER_01: That makes sense.

Well, you mentioned fraud. So how is fraud risk evolving in the insurance payment space as everything moves to digital, like we're talking about? And what does that mean to how your solutions have to be built? SPEAKER_02: Fraud and insurance is different.

Nobody ever stole a credit card to buy themselves a homeowner's or an auto insurance policy with their own real name on it. That's yet to happen. So all of those companies out there, like count and so forth, that sell to e-commerce, trying to avoid somebody who's trying to buy a big screen with a stolen card, that doesn't really apply to us. What applies to us is claims fraud.

So somebody says they have a broken leg or they were in an accident that they weren't in. And the other thing that we see is identity fraud. So account takeovers, somebody intercepting a payment, a check that's going to either, say, an autobody shop or to a consumer that goes to the wrong place. So when you're paying out like us$80 to$100 billion a year, you really don't want it to go to the wrong place.

That would be, Greg, really bad. Right. So we've become very, very good. We're not perfect, but we've become extremely good at ensuring the money goes to the right place.

So our losses to clients in the last year have gone down about 90%, and they're heading towards 0.0009%. We are getting exceedingly good at making sure it goes to the right place and preventing fraud. We are surprised from time to time.

And we learn, but we're getting very good at identifying who we're sending the money to. We're getting very good at putting in advanced fraud controls to make sure somebody hasn't intercepted a check or another form of payment and that they're redirecting it, like Frank Abignail in the movie. SPEAKER_01: Okay. Is AI playing a role in that?

I mean, most conversations I have around AI and payments as a whole, fraud comes up as one of the first use cases. So just curious. SPEAKER_02: We are continually reviewing all of our payments to identify trends. We often use various kinds of AI to do that.

We use a lot of automated systems that embed AI to find fraud or fraud patterns, and then we stop those payments. One of the things we have is an operations center. And if the payment looks weird, we start making phone calls. And I've sat down and listened in on the calls with our experts who take a look at those strange transactions and call to see if that person's real or call publicly available information to find out if that's real.

Each representative, each one of our specialists finds two to three fraudsters a week. And when we find them, we turn them off for all 310 of our carriers of our insurance companies, and they can't go to the next one. So we are amalgamating that data. We're putting that data together and using our expertise together across the industry with our clients to try to eliminate as much fraud as possible.

We'll never get there. It's one of those things, but we believe it we're becoming amongst the safer solutions that's out there. SPEAKER_01: Yeah, and all I hear is fraudsters use AI, so it's kind of like you're always trying to catch up and fighting the fraud. SPEAKER_02: I have seen very elaborate spear phishing against me as a CEO of a payments company and some of our people.

And again, we just continue to work at it. We send out fake ones to our own employees to see who clicks on them and coach them. We're on the watch because we're a target. It's like they say, we're where the money is.

So we have to be super cautious. SPEAKER_01: I understand. You recently released a new data report on the gap between consumer expectations and what carriers are delivering when it comes to paying their insurance premiums. So what stood out to you or surprised you the most about that report?

And also what surprised you about how policyholders' expectations have changed over the last few years? SPEAKER_02: I think about my own kids who are 22, 24, and 29, and they don't write checks. They are digital first. They're interested in a seamless, frictionless experience.

They view certain payment brands to be fashion items, whether it's Venmo or Cash App, these are fashion items. It's part of their identity that they use certain payment types. They expect the same thing from insurance companies. And insurance companies often go with what their banks offer.

They are often in their seat for 20 or 30 years, so they're not 22 years old making these decisions. They're not really positioning themselves for that Gen Z and ultimately that Gen Alpha future client. The insurers that know how to do this. And, you know, I think about Hippo, which is a modern insurer and insure tech for homeowners as an example, one of our clients.

Their clients are expecting the most modern payment types, whether it's Apple Pay or Google Pay or PayPal or Vedmo. And we work to digitalize all that. And at the same time, we're keeping the consumer out of the loop if they're being paid by their mortgage servicing company. So when we compete in the marketplace against a Stripe or a Global Payments or somebody like that, we're offering MasterCard Visa, Amex Discover, and digital payments made amongst the players in the industry.

Consumers are looking for convenience, they want flexibility, they want to be able to pick their own billing date, which is the number two thing they're looking for after choosing their own payment type. They're much more willing to pay a fee. I see this with my own kids. They don't think twice about paying 1% or 2% as a convenience fee for basically anything they buy, whether it's a restaurant or what have you.

That is something that's becoming more prevalent. And they want help resolving failed payments. They are looking for that seamless experience. And if there's a problem, they want it to be handled.

One of the things we do is we use network tokens with Visa and MasterCard and Amex and Discover and so forth, so that the cards are always automatically updated. Even if the card is lost or stolen, it is always up to date and that goes through, and they don't have to worry about it. SPEAKER_01: My youngest is 22, just graduated, and she's the same way. I mean, everything's done on her phone.

If there's any friction, she's on to the next thing. She wants to pay the way she wants to pay. I feel like that generation is really driving a lot of what the payments industry is doing as a whole. SPEAKER_02: It is absolutely like that.

When my daughter had to get her driver's license at age 17, and I told her she had to go down to the DMV, she just didn't understand. Like, why can't I download an app and get my driver's license? This makes no sense. I don't want to go do that.

So they're looking for a fully digital experience that's completely seamless. And insurers are very focused on losses and underwriting and all these pressures I talked about earlier. And getting that digital experience right has not been a priority, but is becoming a priority, I think, especially as millennials enter the management ranks. SPEAKER_01: What does success look like for One Inc.

over the next, say, three to five years? And has any of this vision that we've talked about changed since we last spoke? SPEAKER_02: Absolutely. So we're going to be supporting many more use cases, such as subrogation, where one insurer pays another insurer if my car hits your car, hits a third car, right?

We are going to be supporting that with our 310 carriers interacting with each other. We'll be supporting that use case, but there'll be many, many other use cases that are just not supported by regular payments companies because they just don't exist in other markets. I also expect us to double digitalization, not only from say 8 to 16% over the next couple of years, but to 20 to 25% over the next three to four years. We are greatly increasing our reach in the industry and how digital it will be.

There will be a world where everything's digital. And we expect that there'll just be no more paper in the industry. So what success looks like to us is just becoming the standard rails in insurance for all the participants, doctors, lawyers, auto-body shops, glass, and anybody else in the industry, banks, all the players at once will be paid through the One Inc. network.

SPEAKER_01: One final question before we wrap up. So for payment leaders that are listening to the show today, what's the one conversation that you think the industry needs to be having that we're really not having? SPEAKER_02: Here's the question When is an insurer going to write their last check? Or if you're in another industry, when is your industry going to write or accept their last check?

When is it that you will eliminate the ability at your business to write a check or accept a check and be fully digital? Now, this is happening around the world. It's largely happened in Sweden, almost 99%. It's nearly happened in the UK.

Canadians are writing 10% the number of checks that Americans are per capita. We need to ask ourselves when are we going to get away from an inherently insecure payment method, which is the check? We've all seen the movies where people will change an amount or they will change the recipient or both, or they will steal it out of a mailbox, or the check gets lost in the mail. Have you ever heard that, Greg?

SPEAKER_01: Yeah. SPEAKER_02: We need to ask ourselves when are we going to divorce ourselves from this ancient payment method? We don't have tube TVs anymore. We don't have rotary phones.

We don't have horses and buggies. But for some reason, we're still writing checks like we did 150 years ago. So what's the one conversation we should be having? When are we going to write or accept the last check?

SPEAKER_01: Well, I think that's a great question. It's a great way to end the show. I think it leaves people with something to think about, that's for sure. So, Ian, it was great catching up with you again and learning about what you guys are doing in the insurance space.

So thank you so much for being on the show today. I know your time is very valuable. So again, thanks for being here. Greg, thank you very much.

And to all your listeners out there, I thank you for your time as well. And until the next door. SPEAKER_00: Thank you for joining us this week on the Leaders in Payments Podcast. Make sure you visit our website at leadersandpayments.

com, where you can subscribe to the show and where you'll find our show notes. If you enjoyed listening, please share on your social channels as well.