The Honda Civic of the Insurance World

Speaker A: Foreign welcome the insurance technology podcast. I'm your host, Reed Holdsworth. Joining me back again is Luke Magden. Luke, welcome man.

Speaker B: Oh, thanks Reed. Great to be back, dude.

Speaker A: So, uh, it's been a bit since we've caught up. It's actually been a bit since we've actually like really caught up. Like um, we haven't really run into each other for a bit. So this would be like a really good catch up.

Speaker B: Yeah, no, I'm looking forward to it.

Speaker A: In the last, in our last interview we talked about a lot of cool stuff. A lot of cool stuff you're working on. And um. Yeah man, just like tell me a little bit like what you've been up to, what's been going on.

Speaker B: Yeah, so I mean, you know, I think the last time I was on I uh, talked a little bit just about uh, my two cents about sort uh, of core insurance software, property, uh, casualty policy administration software, stuff like that. And just that you know, we had been uh, you know, a combined ratio. Right. The company uh, co founded and operate. We had been, you know, really, we've always said why don't we just give this software away for free? Like why are, why does it command the giant cost that it costs from a license perspective? Why are these implementations, you know, so many tens of millions of dollars when it's just sort of core commodity software? Um, it had always been a wrap. It was sort of an interesting thing to talk about, sort of on, ah, on podcasts and in interviews. But uh, since we've uh, since we've last spoken like we've actually done it. So, so you know, we've got a product, it's called os. We've done sort of the official launch, uh, for it, uh, we got marketing campaigns running for it and uh, you know, we've got people using it now. So you know, I guess, uh, you know, hold on.

Speaker A: Okay, so for the listeners, catch them back up to say what you just said. It's like build spilled software technology that's a policy administration system.

Speaker B: Yeah.

Speaker A: Almost give it away, right? Yep. And, and well, maybe, maybe not, I don't know. And then um, and then really, because that's really your business is helping implement and do all this.

Speaker B: Okay, let me give you you'. So, so, you know, since the last time that I was here, you know, one of the things that we talked about was just, you know, our concept of combined ratio, that core software for insurance companies should be free. So like my 2 cents about that really quickly is, you know, you've got these big Giant companies selling commercial off the shelf software for policy, administration claims, all that stuff. It costs millions of dollars in sort of recurring licensing. Right. Like these are all SaaS products. Now you're really paying millions of dollars a year to rent that software. Then on top of that they're sort of shunting you off to their, their system integration partners, their SI partners where you spend tens of millions of dollars to implement that software. Right.

Speaker A: It's not like a lot of case, some cases hundreds of millions of dollars, 100%.

Speaker B: And I will tell you, having spent my whole career in this space, it seems ridiculous. Like it just, it doesn't seem that there should be sort of that much money involved to that many different. So you know, combined ratio solutions. Um, you know, while it was never our dream sort of we started this company as a services company, as a technology services company and then we've been very good at that. We like the services work but we've always stayed away from doing system integration with sort of the big software companies. It just wasn't, we didn't like it. It's a race to the bottom and we're not crazy about many of those products out in the market but we wanted to grow our services footprint and so we were sort of at this crossroads and one of the things we said is um, we ended up with some intellectual property that we had built, sort of fully built and architected for a cloud based policy, um, administration solution. And we said, we looked at going to market, we were like well let's go to market like everybody else, let's earn some money. And it was just exhausting as we sort of went through what that would be. And one day we just sort of said why bother with this, right? Let's just give this software away for free. It is a commodity. It's not sexy. Right. It is back office insurance processing. Let's give it away for free. We, let's let people completely own it themselves, take it, do whatever they want and then let's just offer the services around that. So as opposed to having, by the

Speaker A: way, I just want to say for a lot of people that don't know and know in a lot of people in the policy administration system space, there's a lot of customization that needs to be done to those solutions. So it's a huge pain in the ass, um, for somebody to go and get, to get the software. It's not like it just turnkey for people that don't know. I'm going to tell.

Speaker B: Yeah. Which is why I'm Being more. Right. The biggest lie told on the sales uh, cycle when you're selling these and I've worked for a lot of different companies buying and selling these uh, software is that no, no, no, pay the money. We've got templates that will match your insurance products and we'll be out to market in three months. Like that is never the case. I typically don't believe that these big guys can do six months. I think it's 12 months. And it's because yeah, if, if it was so standard like, like insurance would be uh, a commodity business right now. Now granted I do more on the commercial side, more on the excess and surpl. Those folks are out there making money because they've got very specific niches. They've got very specific like secret sauce that they have. It takes time to implement all of that and that it drives ridiculous budgets. Like and I'm sure you know many people probably particularly on the underwriting side, you know the people who own profit centers, uh, insurers, like they want, they're like well I'm doing this, let's just get it. They get everything done and then they talk to it and it is like well that's going to take nine months and $2 million. Like that's what we see sort of everywhere.

Speaker A: Yeah, there you go. Yeah, no 100%. That's, that's what I'm saying man. So, so that's pretty. So, so okay, so what's happening? So like are you doing that? Like what?

Speaker B: Yeah, so listen, uh, OS policy, which is our cloud based policy, uh, administration solution, um, we launched that uh, a few months ago. It is out there. It is 100% open source, 100% free. You could go to combineratio.com you could click the link, you get access to the GitHub repository for the technical folks there. But like you can, there is, we have no um, ownership of that any longer. We have sort of given that to the industry. We got sort of ah, you know, a big push that we're doing for it and then if you took it we would love to do the professional services. We're very good at it. You know we do project like rarely do we do a project that takes more than you know, three, maybe six months depending on what it is. We've got sort of like a hosting uh, solution too if you wanted sort of enterprise, you know hosting uh, solution. You uh, know we handle that. But like really our thought is, is that it doesn't make sense, you know for, for a risk adverse industry. It sure feels like insurers are willing to give a lot of trust in these software companies and put all this money in and they own nothing, right? Like, like if it's a SaaS based solution, you own nothing. At the end of the day, huge investment, that software company could change their mind, right? They could go in a different direction, they could get a corporate acquired and then like, where, where do all those customers end up? We have seen this time and again in the industry. Uh, our thoughts about it are don't spend all that money on this investment. Don't take these huge risks. Take something off the shelf, use it as a starting point, leverage us or whomever you want to help, make it exactly what you want. And then you can own something, you can be done with it. This can be sort of a checkbox commodity. And then take your budget, take your time and your, your thought, you know, the room you've got for, for strategic thinking and, and focus on the stuff that you actually think is going to make a difference, right? Go actually fund and focus on your AI strategy or your distribution technology or any of that, like back office insurance policy software. That is not sexy. And um, maybe people would argue, but I don't think it's ever helped anybody make any money in the real world.

Speaker A: I wouldn't go that far. Come on, man.

Speaker B: Well, I think the software companies, oh, I mean, listen, the software companies are making a ton of money, but I don't think an insurance carrier has ever purchased a policy administration system. And then all of a sudden, you know, their combined ratio drops that next year. Don't think it happens. I think it is always just an expensive necessity.

Speaker A: Yeah, no, I'm with you. I'm with you, man. Somebody's going to throw a brick through your house.

Speaker B: And I appreciate, uh, I can appreciate that this goes against, right, 30, 40 years of conventional thinking in the industry and that a lot of people have built careers doing this. And that's not just like the software side, right? It's for every CIO that just signed a $50 million project with, you know, one of these big insurance companies, one of, I'm sorry, technology companies, one of these big consultancies. Like this is a threatening thing, it's an unpopular thing. Um, I don't know what to say about it. It just, you know, there was a time when we all paid for email and then all of a sudden one day all personal email providers were free. Nobody, um, would pay $10 a month just for, you know, an email address anymore. I think this is the same Thing Policy Administration Solutions specifically is a commodity and there's no reason it should cost you $50 million to get in the door.

Speaker A: Wow. Yeah, well, you know, the thing is, man, to really unseat that though long term, um, there's so many big relationships between those system providers, let's just say, and all the sis and the SIS with the C level and you know, it, like, especially at the, at the top, top level. Um, I could see it though. I could see it happening. I, I could see, like I said many, many years ago, um, this is what a chord should have done.

Speaker B: Like, don't get me started this. Like, boy, I don't know who's running that organization anymore, but I don't know.

Speaker A: Well, Peroni's out, apparently. I don't even know. I don't, I don't like, follow it, but I don't. Somebody new, I guess. I don't know.

Speaker B: Yeah, they should reach out. Quite honestly, they should 100% reach out. Don't get me started. Take OS policy, put all of your Accord forms both in an ingestion and an output in it, and then as part of that subscription to Accord, give everybody core software like they should do it. I, uh, would love to have a conversation. Software's out there, it's free, and then all of a sudden you have a real asset that's not just fillable PDF forms. But.

Speaker A: Right.

Speaker B: To go back to your prior point too, about like the relationships. And you're right. And for the record, what, uh, what we have is not for everybody. If you were, uh, an insurer that had a very standard commodity line of business or book of business that, that had a lot of content. There are, there are software companies that make more sense. If you were writing ncci, Workers compensation, personal, auto and home, there are maybe some, some faster, more expensive, but, but more turnkey solutions out there. So I, uh, think the big, like the software companies will always sort of have a place doing sort of what they're doing. But I'll tell you, in terms of like the relationships with the big sis, this to me seems like a slam dunk, like why someone isn't picking up the phone. And I know many of these sis, right, and, and calling me and saying we want to start our own OS policy practice, they could cut out the software company. They could cut them out and do all of this themselves. Because I think that many, many of these big projects really start with the SI relationships before they get to the

Speaker A: software 100% they do.

Speaker B: The SI could have something and just cut that hole out, move faster, have more control for the, for the relationships on like, particularly like bigger companies, the bigger CIOs. I mean, I think that's a tough one. I think that you've got people who have asked for a lot of money for a lot of years and then to go and say, well, I like this free one. Now I think that that's tough. But, uh, I'll tell you, someone spent 10 years at a carrier in it. I think that what we could give, particularly the big guys an opportunity for is to like once again run an IT organization that is an engineering shop. You know, I think that the insurance companies have seeded engineering talent to software companies. And I think that, uh, it makes me hard to understand what modern IT organizations do. I think they typically become babysitters of vendors and they become like whiteboard architects of how systems plug together. Now I spent many years as a whiteboard architect. I have a lot of respect for that. But I think that this is an opportunity for insurance companies to sort of say, listen, we could have like our real engineers really working on this ourselves. We could sort of take control of this process and we would give you sort of a starting point so you're not trying to reinvent the wheel by building something from scratch for $30 million, six years. Start with what we've got and then, then you could innovate yourself. But just my two.

Speaker A: Yeah, but you really, in order for that to work at all, uh, it's got to be like an industry standard. Like everybody's behind it, people are contributing to it a bit, you know. Yeah. What you think, like I do lines of business are going to come out? Like, there's just, there's just stuff you got to do.

Speaker B: I mean, uh, I think so. And honestly, like where we're really focused, like we're down market. Right. Like, like I will say that our sweet spot is, you know, $3 billion on down, uh, in terms of, uh, you know, the carrier side and then, you know, MGAs, MGUs, program administrators, like these are the folks who want to own something, have no patience for sort of like the big consulting view of this world. And those guys are willing to contribute to a community. And honestly, when you look at like how mutuals have come together and some of these other organizations to build technology, Ivan's right, back in the day was sort of companies sort of coming together. I think that, I think that like, listen, and you know, some of this is optimistic still based on sort of what we're seeing, based on the deals that we're closing right now. I think that we're going to see a groundswell for these smaller organizations operating in niches who really focus on, on underwriting. I think that those guys want to underwrite. They don't want to worry about this nonsense. I think that we're going to get enough of those guys that all of a sudden that's going to sort of, you know, bring that. That'll be the community that sort of coalesces. And honestly, for me, I don't ever need the big guys. Like, um, I'm. So we're here in Hartford, Connecticut. You know, I can see the Hartford's building. I can see travelers over this window right here. Eight years we've run combined ratio. I've never really gone after those guys to do any business, despite the fact I work for 10 years over at the Hartford. Those big giant companies, they're not necessarily looking for us and we're not looking for them. Uh, I'd hope, I'd love to do it. I'd love for them to come around.

Speaker A: I will say this. I know those guys, they're. They're, uh, all those guys, they're good people, man. Like, they're not opposed to working with anybody, like, for real. And so I don't, I don't think it's that. And I don't think that those relationships, like I say there's big relationships and whatnot. It would it just take a bit to disrupt that, um, for that to kind of fizzle out to where the value is so much more swayed toward, toward the side of, hey, now I own this, this data model, this software, this platform, whatever it may be, this is ours that we're wrenching on and working with all these individual partners out there within the ecosystem to make it into our own solution. Um, but it's going to just take

Speaker B: time, you know, it's going to take time, Reed. And I'll just tell you, like, if I were to. And m. I don't know. Can I name names here? Can I, Can I. I don't know, dude.

Speaker A: Like, let's do it.

Speaker B: So when I, when I look out on the industry, right, I will tell you right now, like, I don't, like, we don't necessarily. We don't have ambitions to supplant the big software guys, the guide wires, Majescos Establish Creek. Like, like those, those folks are big. And, and I appreciate the value. Like whatever Duck Creek's doing, you know, for some like, like that, that's not a fit for us. Those guys will Be there. But I was talking to an analyst a couple weeks ago and they were talking about their like, you know, analyst write up of, of uh, policy administration vendors. 45 companies have policy administration solutions. Now here's just what I'll say. How many of those companies have more than three customers? And how many of them are dependent upon venture capital to survive? Here's what I'll say. What I want, I want to wash out a lot of that. I want that business. I want the guys that you know in Standa and SOCOTRA are going out for. You have to talk to us as part of your buying decision before you spend that money. And then you could spend it where you want. But we are a very interesting different decision. I want to go after all that. The big stuff is going to stick around. There'll always be a place.

Speaker A: Oh yeah, yeah, yeah, yeah. That'll be, it'll stick around for a bit. But you know, it's funny, it's a, it's a, it's like a provocative conversation, right? Because um, you know, it's like what would the industry look like if there was a standard solution like this for everything? Not even just policy administration.

Speaker B: Oh, don't get so, so read and like this is a conversation. We, you know, uh, I'll talk to you for hours about it offline. I'm sure if a groundswell. Groundswell of people took the policy for free. Why don't I just. Why don't we. And I'd love to work with people. If anyone's interested, give me a shout out. Why isn't there also an open source agency management solution? And then all of a sudden if the, if the technology driving the distribution chain was open source, maybe there's a not for profit in the industry or something that is managing it. We'd love to do it. Then how do things really change? It goes back to accord. If I was a cord, I would have open source agency management solution. I'd have an open source carrier solution. I'd have everybody to sort of take it and then what I would charge for a very reasonable transaction fee to move data between all those systems. That's we would be, everybody would be better. And then you what we'd all be talking about. And I know it's what most people are talking about now, but we'd all be seeing real interesting uh, strategic visionary technology plays like, like you know what AI we would be seeing a lot more like interesting things as opposed to just you know, call center replacement or ingestion. Like we need to free people's budgets, time and effort up from core commodity software and let them focus on the cool stuff. That's how the industry gets better.

Speaker A: Yeah. I will say, though, something you said earlier about how these carriers just become, like, vendor babysitters and whatnot. I don't. That's not really that true either. Like, this is true. There's a big part of them that do do that. But I do know some of these carriers that do wrench on some really cool.

Speaker B: And I will tell you. So that's interesting. Let's talk about that. So you are right. And you know where you see most of this cool stuff that they're doing? You see them in these innovation departments, right? You see them in innovation departments. You see, you know, they're bringing in real talent, they're developing real talent, and they're trying to do cool things. I will just tell you, those groups are the first groups that start getting cut when things get, like, a little bit hard. Like, like. And how many times, like, for those on the software side trying to sell cool, innovative solutions, how many times do you get that proof of concept with an innovation group where they have the greatest proof of concept, and then it goes nowhere. Then it doesn't change the world at all. And it's because here's my, uh, opinion, those guys doing cool stuff, they hit their head against big enterprise I t When it's time to, like, really get out there and make something happen. And it's the same story. We'd love to get to that. I think we've got spot in our roadmap in 20 months because we're in the middle of a Majesco implementation.

Speaker A: So freaking true. That's so true. So true. It is true. It's true. It's true across all of it. All of it. All of it at enterprise level.

Speaker B: And that's. And my point. And again, my point is not that my enterprise is better than everybody else's enterprise. What I'm saying is that. And you know what? Like, this is something that I say often, and I agree, like, I want to be the Honda Civic of policy systems.

Speaker A: You are on Civic.

Speaker B: Yeah. Like, not everybody needs, you know, uh, a luxury car. Right. Sometimes you just got to get a car that gets you from point A to point B in a reasonable way. That's what I want. A car that anybody could have fades into the background and does 95% of what, you know, $110,000 luxury car do. That's sort of what we want to be. And I think that if that was an option out there that more people took, they'd be amazed at the other things they could do that are cool and innovative.

Speaker A: Yeah, no, no, I, Dude, I, I totally agree with you. I believe it. They don't have to sit around and wrench on the really complicated back end hardcore stuff, you know, they can, um, but if you provide that and the connectivity for everything and then you give them a platform to start to build stuff on top of, everybody will start building all this innovative stuff, just like you said. I mean, all this AI stuff, it's all smart document ingestion and all this and call center stuff. Like you're saying it's true. What else could you do if you had all the data already stood up and you were already, already talking to everybody and already connected to everybody. Right. It's a completely different animal.

Speaker B: I'll give you an example. Like, like, you know, if you were, like, if someone out there interested in buying a policy administration solution, let's say you buy one, it's going to cost you half a million dollars a year, and then you bring on someone to do an implementation. Let's say it's reasonable. Let's say it's 2 million bucks.

Speaker A: Yeah.

Speaker B: You'll be amazed about how much of that money, time and effort is going to. For example, let's say commercial auto. Figure out the user experience between states that are uninsured, underinsured as a single limit, and states where it's sort of split out into two limits. That kind of stuff is important. It's insurance, it's how the policies get done. But that type of thing has nothing to do with what you want to do to get out there and differentiate yourself. Right. There's no, I think that's going to be like, like, that is just commodity nonsense. Let's get it done, let's get it out there and let's move on.

Speaker A: Yeah, that's a good point. It's a good point.

Speaker B: And, and again, and maybe this conversation is getting long and boring and, and I get more excited the more boring these conversations get. It's very dangerous for podcast hosts. Reed. Uh, but like I will just say, the opportunity for the industry to, to come around on something, I think makes a lot of sense, right? Like, like, let's just say. And like take combined ratio out of it. Let's say everybody gets together in a room and they don't invite me. Every big insurer and they're like, you know what, let's all use the software, let's all try to make it better. Let's all decide what we should work on and contribute back to the open source project and get it there if there was a lingua franca for processing software. And let's take the data models aside, let's take the like, you know, the Accord stuff, like what fields for what products. Let's just say it's just this is the platform, everyone wrench on it to your, use your words and then let's just all just agree we want to stop paying stupid money for this and we'll come together on that. I, I don't understand who's hurt by that decision. It feels like such a win, win, win to me. Like I, I don't know. I mean I know who's hurt. I guess software companies are going to

Speaker A: be hurt by that decision.

Speaker B: Uh, my dream read and this is the most arrogant dream in the world and maybe it'll never happen. Here's my dream in for these, for these big software companies with core products, I want in their year end financial statements them to have to put a couple sentences in addressing the proliferation of open source tools in their core space. Like I don't need any like, like I want that. Like it should be, this should be threatening to people and uh, I think it is going to be threatening to people. But as long as everybody is saying nah, it's not the way we do it or we've done it this way or everyone else is buying xyz, let's do that. I think that there won't be any

Speaker A: change but dude, I think all this is going to go this way. And what you're saying, it's too easy to build technology these days, man. It really is. It's not that complicated, you know, I mean it's like you get some really smart people that know what the they're doing, um, you can turn out some really badass in a short amount of time. For real? Yeah, people coming together and like, like Accord used to do and like having meetings about standardization of certain stuff that's not even that huge of a deal. Like you know, there's platforms designed and built for that type of community that you can build. It's so different now than it used to be. So I think, yeah, I think, I think it will go to that eventually. That's the biggest risk. You know when, when we're looking at acquisitions and stuff like that. The big risk is, is not like who else is going to do this? It's, it's, it's wow, how can the customer do this themselves? In the future. You know what I'm saying?

Speaker B: Yeah.

Speaker A: And. And like, and it's trying to get in front of that and build Badass in front of it. Um, you know, so. Because that's, that's what they. They want, that's what they need. And if they don't have to build it, that's great. They can buy it, you know, but there's going to be a bunch of them that are going to start building their own stuff or they're going to build stuff on a platform that's nimble enough to do. So, I mean, it happened many, many years ago. Salesforce was the promise of it. Salesforce didn't do it. Sorry, Salesforce. You still haven't done it. Um, in the, in this industry, you know, they got. It's same thing, dude. They got. They got all. A bunch of people got in a room together and we're going to like, change the industry and Salesforce is going to be the platform for that. You know, it's just. It's not. I mean, but it will. I think it will.

Speaker B: I think it will too. And our thought. Yeah, our thought is that it's going to happen at a grassroots level. Because you're right. Like, these big giant companies are like, we're coming into insurance. And I will just tell you, like, as an insurance person, right, we all look at that with a little bit of skepticism. M. You know, and like, I think that if you don't grow up in insurance or spend like a reasonable amount of time, it is difficult to understand the complexities of insurance from a technology perspective. I think that our thought is, by

Speaker A: the way, I will say to that point that the software companies will always be around because of their expertise in that way. Um, but I think that they're going to change their, their role will change as time goes on.

Speaker B: I agree with you. But you look at the software companies today, particularly in the policy space, a lot of those companies, very light on real industry insurance expertise. Right? A lot of entrants coming from outside looking for an easy buck.

Speaker A: Yeah, yeah.

Speaker B: But no, I, I think that it's a grassroots thing. I think that I, I agree. Like, like, there needs to be some level of. I hate the word disruption, but, but, but disruption. And you know, for my entire career in this industry, right. 25 years, I don't think we've ever really seen it. We've seen big players supplanted by other big players. But like, policy, uh, administration's been great to me because, like, I had to learn it really, really well, once, and nothing's really changed except for the logos and some of the names. But I think we're coming to a place where, where this needs to change. It needs to be better. And I'll, I'll go one step further. I think that there's an industry's trend that I think that people are starting to talk about, which it's particularly on the commercial side, which is about underwriting is going to start moving up the distribution channel. Right. I think that we see it way, we're seeing a lot of it now with a lot of these MGA's that are, you know, backed by fronting companies. You know, a lot of sort of program business that's coming through like, like good groups of underwriters have value and can make their own stop in the distribution channel. Yeah, these are the folks that are going to need, you know, core systems and they don't, those guys don't care. They don't have, you know, a, uh, uh, $55 million IT budget behind them to do things. I think that if we really did a great job at combined ratio supporting these real underwriting based organizations with core back office software that get them done, I think that there'll be less and less of that necessary, uh, on sort of, you know, the capacity side of this. I, I think that we're going to see this need move upstream.

Speaker A: No, absolutely. That's awesome, man. That's awesome. Wow. That's it, uh, pretty provocative conversation we're having here, I'd say.

Speaker B: I hope so. I never know Reid. Or like, it's always one of two things. It's either, oh, like, like I'm being unpleasant and people listening to this are like, we're done with him or I'm being boring. I always hope to find a middle ground, but I have no, uh, gauge on this. And then this will all be done and, and you'll send me a link to sort of like, listen to this and I'll be like, I better find out how this goes. And I will hear myself talk for six seconds and I'm like, I don't care what it sounds like. Just go like, I can't. Listen to me, dude.

Speaker A: I don't, I don't, I, I'm not joking. I, I, I think I've listened to like a few of these episodes. I don't ever listen to my own. It's like I just can't do it. I feel weird. It makes me feel, I don't know, I'm just not into it. Not my jam. Um, um, what do you think is going to be the next big move in the industry? Like, what do you think? Like, will there be change in the industry? Like, we talked a lot about this. I could see that happening. It's going to take quite some time. Yep. But I could see the industry moving to exactly what you're talking about. If the industry comes together around it 100%, like some sort of. Because people are going to have to contribute. They're going to have to, like, you know, there's some geeky industry stuff that you need to. People come together on. Uh, not to say that you and your company can't do that.

Speaker B: No, no, no. It's. It's 100. You're 100% right now. Now, here's my two cents about like, technology change in the industry is that I do not believe this industry is going to have big technological change that's not driven by business factors. Right. Here's what I will say. I don't think that a whole bunch of companies are going to come together and say, boy, that Luke knows what he's talking about. Let's change everything that we're doing. What I think is going to happen is that, um, you know, it's going to be. We'll need to see, you know, some real pressure on, like, like I said, I think if underwriting in commercial and excess and bliss, if underwriting moves up and, and it becomes more centralized with MGA's, wholesalers, program administrators, I think that with that means the capacity providers are going to have to drop expenses because there's additional fees that, that those guys get to charge for that. And I think that expense pressure is something that would, would make some of this happen. I think the other thing is new players that want to come in. Right. So, you know, uh, I don't want to speak about insurance capacity. I'm not the right person to do it. But there's a lot of interesting capacity floating around for MGAs and MGUs. Right. There's Lloyd's fronting companies, there's reinsurance fronting companies. There's a lot of this where you've got big established players willing to give capacity to new entrants. But those new entrants need to check some boxes from a technology perspective to prove that this is bulletproof enough to transact business. Yes, we offer solutions to do that very, very quickly and, you know, you own everything and then very inexpensive. If we implement it. I think that, like, if that starts happening more, more people will be interested in us and be there here's the change? I think, I think that the industry is going to stop biting off $30 million IT initiatives with dubious CBAs. Like, if I had to say one thing, it's going to be to your point about people wrenching on cool stuff. I think we're going to see more people taking innovative small incubated projects and really funding them to get bigger as opposed to, uh, CEOs who are interested in, in giving the green light to a $50 million core system replacement. So, so that'll be the change. And I think that with that means everyone out there doing cool stuff and I'm jealous of all of you. I think that you guys are going to start getting sort of more and more traction. I think that, you know, lots of these AI startups look like very, very interesting to me. There's a lot of cooler stuff happening in distribution. I think that's all going to go, go, go. But on the boring, uh, administrative back office side, I think that budgets are going to be very, very difficult to do stuff. And you know, that's sort of what we're banking on. We become very attractive in that light.

Speaker A: This is awesome. I love this conversation. Yeah, no, it's um, crazy times, man. I think it all for me, like when I think about all this stuff, like I said, I think it's just, it's easy to build technology and like when you're talking about incubating stuff internally and building cool and kind of bringing that to market within your four walls. It's also very easy to build enterprise grade, um, technology these days within your four walls.

Speaker B: Oh, I think so.

Speaker A: So people get mad at me when I say easy. Nothing's freaking easy. Let's be real here. Like, like, you know what I'm saying?

Speaker B: It's feasible. It is very feasible. I think that you're right.

Speaker A: Yes.

Speaker B: But I'll tell you what. None of those people are going to be building thing boring stuff. Right? Like, like, uh, so. And if I were to say it like what combined, Rachel, what we want to do is I want to corner the market on boring things and I want to do boring things in such a way that nobody has to think about it, that it is a reasonable price and it moves at a reasonable speed and it good quality and we never have to talk about it again because everyone out there is building enterprise stuff that is cool. That's what we're hoping for. And the fact that it's an open platform means that, you know, there's no ecosystems to navigate. Like, like we don't have to worry, like build the integrations. We got a whole integration layer there. If it doesn't do something, it's open source. Right. Do it yourself. Like we want to enable all that cool stuff. We'll just take care of the boring nonsense.

Speaker A: The Honda Civic.

Speaker B: Honda Civic. Sometimes like the joke that I make, particularly when we're depending on like who we're selling to. Like if like at a high level, I'm like, listen, you know, your kids might want a Porsche 911, but you're looking for a used Subaru for those kids. Right? Like, like, like go ahead with Guidewire. Beautiful, awesome, powerful.

Speaker A: Yeah.

Speaker B: But maybe for your, for, for your 18 year old, you just want to give them a Civic to get back and forth to work. That's what we're offering.

Speaker A: Yeah. Yeah. Hey, what do you think Salesforce's role is going to be in insurance moving forward? Like you run into a bunch of Salesforce stuff, uh, so up like every couple years they're doing this big thing in insurance, blah, blah, blah, blah, blah. Now they're, yeah. Agentic stuff. That's the agents and all this. And like that's their big thing. I don't, I don't know if you like get into any of this.

Speaker B: Well, no, so I'll tell you. So, so, yeah, I mean, so we, we, we uh, we invested a bunch of money that didn't work out because we decided years, uh, ago that Salesforce and Microsoft Dynamics, just as CRMs were too expensive and crazy for insurance companies, we built and launched an insurance specific CRM. It's floating around a little bit. It didn't light the world on fire. It's now going to be part of our premium hosting with OS policy. I like it very much. But what we realized is that.

Speaker A: Oh, there it is. Okay. Premium model. That's what I just heard. Okay, whatever.

Speaker B: What we learned so, so what we learned, uh, was that, listen, Salesforce as a just like, just let's just take CRM. Like what it actually does. Salesforce is too much for insurance companies. But they're going to continue to bring it on. I don't know why.

Speaker A: Like it's too expensive.

Speaker B: I think that it's too complicated. I don't think that the. I would have thought. See, we thought the cost would be a concern. 170 bucks a seat, whatever the heck it is. It's expensive at an enterprise level.

Speaker A: Yeah.

Speaker B: I think it's not cost. I think that it is too complicated to do integrations to make changes. And typically today it's so focused in the marketing, uh, side of it, like that. That sort of agency selling type of side, that those people don't necessarily get budgets for real software work. But, like, what you're really talking about is, well, on that Force.com platform, are they going to be able. So, like, we see. You see so many things. Right. Sort of built on Salesforce, all of this. It sure feels like if they were going to do it, they already would have done it. Right. Like, I feel like we've been hearing things for ages. There have been great, great solutions built on Salesforce. Right. And I don't just say that because I'm talking to you. Right. There are others for the industry, but, uh, it boggles my mind a little bit that it doesn't happen. But I think if it was going to happen, it would have happened. And maybe this isn't. You know, I don't know what the going rate for a force.com developer is right now, but I think that that's a competitive market for people. So I think there's a talent thing. I don't know. My vote is they'll continue to do CRM. Um, but I don't see them. I'd be surprised if they had a really compelling offer that in insurance that did a whole bunch more than that.

Speaker A: Yeah, I think it's. I think it's tough, man. You know, I mean, the Salesforce product, the Salesforce platform product, really. Platform is pretty amazing. You can do a lot with it if you know what you're doing.

Speaker B: Yeah.

Speaker A: And when people say, like, whenever I hear somebody say, like, oh, it's too complicated, like I did. We did that for years, man.

Speaker B: And you.

Speaker A: You can, you can, you can. It's complicated to build on. It's complicated to understand. Kind of similar to insurance in a way. Um, but you can really simplify it if you know what you're doing.

Speaker B: That last part's the magic part there, though, Reed. Right. You got to know what you're doing. You have to be able to dedicate the time. I don't think that's why people. I don't think people go into the Salesforce buying process. That's the truth. Big enterprises do. But if, you know, if you're looking for a CRM to track how many times your agents, your. Your salespeople talk to your insurance agents, I don't think they go in thinking, I got to get smart about how to make all these changes and do it.

Speaker A: Yeah, it's. It's complicated. It's big. There's a Lot to do there. And I think where Salesforce has struggled on this for many years is they leveraged the partner ecosystem, which totally makes sense. And the partners went out and they. And they were on top. And they were oem, um, or just straight up isv. And they crushed it in that way, um, for a bit. But then Salesforce is like, hey, let's, let's, let's do this. And so they went. They bought Velocity. Velocity. Velocity. I always get a mix of. Velocity, Velocity. I get them mixed up. Velocity, um, which is run by David Schmeier. They were like the first, like, real vertical, uh, bet that Salesforce made, um, and insurance is one of their verticals run by really smart dudes. Um, Mike, Raja, all those guys, everybody over there, real smart crew that David Schmeier put together. Um, and they went after it. But it's interesting, they went. Velocity was building a policy administration system native to Salesforce. That was their big bet. And they. They got in the hands of a couple of carriers. I'm not going to name names, but I know. I know one of them, like one of the last ones that. That's. That's, um, on it. And they're moving away from it. So. So the, The. The promise of the Force.com platform was like, you could have the agency management system on there, you can have the policy administration system on there. Back in the day, like, like. And that's what we did, you know, at Tech Canary, obviously, on the agency side. But what's really interesting, Luke, is like, when we would sell these p. These customers in the insurance industry, we didn't sell just agencies, but carriers as well, for all kinds of different things. Because of our data model that we built on Salesforce, we'd always be like, sky's the limit. You can build whatever you want to build. You can do whatever you want to do, blah, blah, blah, blah, blah. It's so easy. Look, it's. It's declarative. You drag and drop fields and, you know, change your page layout and do whatever hell you want to do. And, um. And dude, 98 of the people wouldn't do anything. They just wanted to use it as is.

Speaker B: Read. I'm. I'm just like you when I'm up there.

Speaker A: Buyers too. Like, not like, you know, you're like, I know.

Speaker B: I'm with you. I love a cool tool, right? And I love something that lets you do things that you would have had to ask other people to do. And so, like, listen, we went through ages, you know, with this company Where I did the same thing, I would go in, talk to clients, you know, prospective clients, and I'd be like, well, this is what we do. But, like, we could do all this other stuff, like, let's use our imagination here, blah, blah, blah. Can I just say, my experience is, you know, especially in insurance, and it's not for everybody, but for most people, uh, fancy technology ain't helping you make that much more money. We are checking boxes to keep up with competitors or to make sure processing works. They just want something that does what they want it to do, and they want it to be done the easiest way possible. And so, again, I think that there's room for that innovative side, but I think that you need to start those conversations. Like, then you got to be coming to people who want to talk to you about innovation, trying to talk to people about just like core software, and then like, get them excited about the innovation. I think, I think it's tough. And you know what? I've come around that it's appropriate. Right. Sometimes you're just looking to put fingers in a dike and keep the river from, from killing you. And sometimes you're looking to, to really get out there and build ships, to sail. I'm happy to be on the, the dike filling, just keeping things going and making it happen there. But, uh, I do agree with you. Like, um, I don't know, it's. It's difficult to get people sort of excited about possibilities when I think that they're buried in 700 requests from the business that are six months old that are getting yelled at every day that aren't fixed.

Speaker A: Yeah. And I think that just, you know, in our industry, there's just the day to day and it's tough, man. People are busy, you know, they're just overloaded with stuff. And I think that's where you get a lot of friction because it's like, what then? Now. Now what? Like, oh, come on, man. Like, you know what I mean? It's just, I think there, I think there's a lot of that. People are just busy and just. And then the change management around all of it is just gnarly. And so, like, the innovation side, it's like they're open to it and they want to talk about it. And people used to buy our solution back in the day because they love that idea of, of doing that. And, um, but our solution was so highly customizable and it was kind of built in that way that's that people would, would struggle with it sometimes because it's like wait, what like I gotta like no, you're like this is your thing that you got to go and build. And I think I'm kind of going back to this like free platform, free software, all these people, all this stuff. You'll always need the experts within the industry I think generally, um, that are going to help you build those workflows that have done it before.

Speaker B: And that's what we have. And so I don't know if that was on purpose or that just worked, but this is a, you know, I think you're coming around for me here. Look, combined ratio solutions, right? We've been around for eight years with let's say a little bit over 200 people. We only really do property casualty insurance and we're all insurance people. Like, like, like this is what we do. We are experts in the field. Like the value of us is we'll come like uh, you know, we'll go to a meeting and you just got to tell us what the, what's business side, what's going on, we can go out and run, we don't need hand holding, you don't need to teach us insurance. We wanted to create a situation where we could put that, we could make that more valuable to people. And so to your point, we got this open source platform, it's very configurable, you could, boy howdy, like from an insurance perspective you could do anything with it. But like, I don't know, I hope that some people take it, use it, love doing it at themselves. What I really think that that's going to do though is it's going to let people like us move very quick to take their expertise and instill that into an implementation for a specific customer and do it faster and easier and better. And it's going to make it more affordable to deal with experts on this sort of platform than to go for some of these big guys where, or uh, these big consultancies where you sure met the insurance a team, uh, when you bought, when you signed the contracts. But then you know, you're now dealing with people who have never seen insurance in the world. We want it to be easier to deal with experts. And I'll just go back, that's why I think everybody who's an expert in this space, who, who's sort of like a business architect or someone who really knows this space and is consulting or whatever in insurance, why not take the open source, there's all documented, you know, bring the product up, offer your expertise in a product and save your customers from going down that terrible buying process.

Speaker A: Yeah. So what if one of the software company. Could one of the big, big companies just do this? What if they got like. I'll just, I don't know, maybe it's not fair to say got their together, you know, in a way. What, what would their together look like? I guess that's a question. Like, could they, you know, get in front of this and they, like, listen to this podcast and they're like, oh, what do we do here? Like what? I mean, what do they do?

Speaker B: Yeah. Oh, I'll tell you what. They could get in front of it. They could get in front of it by dramatically dropping their prices, by offering a better solution for customers to, like, own the technology assets that they're paying to implement, and by having SI partners that are dependable, fast and inexpensive that make it easier. I think that, quite honestly, I think that if, if somebody could do those three things, I think that our message would be a lot less impressive. But I will tell you, they will never do those things because the economics that they've built those companies.

Speaker A: That's what I was going to say. Like, uh, okay, how do you do that? Still make money?

Speaker B: And I'll go back, I'll go back to something else, right? So Combined Ratio Solutions, we are privately held. I own half of it. I got a partner over here that owns half of it. We have no investors, we have no private equity, and we're not looking for an exit anytime soon. That is why we can do this. And we're making a gamble. Like, no lie, right? Here's, here's the gamble. This sort of, kind of makes sense, right? But the gamble is if we do something and we say, you know, what, what's best for the industry, let's do what's best for the industry and try to monetize around that and see what happens. That's the gamble that we're making. No company, uh, with bankers and masters and, uh, you know, would ever be allowed to make that game gamble. That's why no one's going to be able to get ahead of it. I don't, I don't know. Like what, here's what. Here's my. Here's how someone smart is going to get ahead of me and I'm going to support them every step of the way. Let's say a big giant consultancy like Deloitte Accenture, they're going to check out this software on GitHub, um, they're going to pay us a hundred hours of some expert to talk them through how this product works. They're going to build a practice around OS policy and then that's finally going to let them move down market and have something inexpensive. And they'll, they'll snatch up every bit of that and they'll never deal with me. They'll have their own hosting. They'll do everything that we're doing and they'll take all of it and run with it. You know what I say? And they should do that. The fact that no one's talking to me yet boggles my mind. I think it's lazy, but, uh, and I think it's hubris.

Speaker A: But I don't know. Well. Well, I don't know. I haven't seen the software, maybe.

Speaker B: Oh, it's pretty good. It's pretty good. And it's in production, running. It's all. People are happy with it. But here's what I'll say if that happened. I say, let's go. I would support that. Like a rising tide floats all boats. And I will just tell you, combined ratio solutions does not need to take over this industry. Right? Like, we don't. What, what I'm looking for is to change the narrative and to be positioned well in that. And I got my own ego, right. I like the thought that we would sort of help usher that in. But, uh, but I would support anybody that wanted to get on board with this, even. Or I'll give you another one. What if somebody else, like, somebody else, they should get ahead of this by putting donating some of their intellectual property to the industry themselves, right? Agency management solution. Give a little bit of it out. Sell the premium service, you know, the premium on it, right. So sell the hosting. Right? Do some of that. That's another thing where, you know, we'd be the first ones to help, you know, make the integrations get out there and talk about it. Like those are things people should be doing to get ahead of this. But what it really is is it's, it's joining a movement as opposed to shutting us down.

Speaker A: Wow.

Speaker B: We'll see.

Speaker A: Uh, hey, Luke, you said, you said don't have an exit anytime soon planned. What's the plan for that?

Speaker B: Oh, yeah, yeah. Listen, here's what I'll tell you. Uh, So I am 40, uh, five. Coming up. 45. My partner here, a couple of years older than me. And we talk about it and we've certainly flirted, um, with people sort of interested. Um, I don't know what then Reed. So like, so again, we've. Because we've never taken Investment. We've had to be profitable from day one. Like, the company's profitable, it's working. We don't have any masters. It's sort of a nice place to be. What if we exited? Like, then what? Like, like, this is what I do. I, I don't have, like, great hobbies. Like, I'm not gonna go to some other industry. Like, like, this is my hobby, this is what I like to do. And I'll just tell you, they'll come a point in time, right, where I'm sure I would enjoy retiring, but it's not right now. And so what I would say is, um, you know, and I'll say this to, like, other founders or other, you know, companies maybe a little earlier than us. I think we wasted a lot of time and just mental capacity thinking about an exit and then entertaining exits. And at the end of the day, we always pulled the plug on it. We were always like, no. And I will tell you, I think that that is a thief of your energy and time. I think that if you need to exit, then you should exit. Or if you got a plan, you should do that. But it was freeing for us when we said, no more. Like, we're going to spend three more years. We don't want to talk about it. We don't want to talk to people. We don't want to do math on it. Like, let's just go and, and focus on what we're focusing on, which is, you know, uh, the fundamentals of this organization. So, like, that's why I don't care about annual recurring revenue, right? Like, so, like, for those maybe who don't know, like a software company is valued on their annual recurring revenue. Sometimes you get 10 times, let's say on that, when you sell your company services work. When you sell your services, right? If you got a services company, you get two, two and a half, three times. So that's why all these companies don't want to do services work. They just want to sell licenses. They just want annual recurring revenue. That has driven the model that insurers now have to purchase into. That's bad for the industry. It was better when vendors did their own services work. They were close. They had to eat their own dog food. We can do that. Because now I don't care about those multiples. I, uh, care about, you know, we're profitable, care about the money coming in. But we, we can align ourselves better to what our customers want, which is that we are profitable. We will stay here, stick around forever, and, uh, you know, we're not going to do anything crazy that's going to change the business.

Speaker A: Yeah, dude. You know, I was, I was just um, I was watching this video yesterday, um, on um, sport fishing boats and it's the, of the, the boat manufacturer, Viking. Viking boats are so badass. They're such sick boats. Anyways, they're like, they, they're a boat manufacturer, they've been doing it for a long time, um, in, in New Jersey. And they're talking about how all these other boat manufacturers have gone out of business doing the same types of boats and how they kept moving along. And the reason why is because they're a family run business. They could, they could move, they could pivot. They like, they made a huge investment back in the day when everybody was building boats and hulls out of wood and whatnot and they switched to fiberglass. So like, I don't know, this fiberglass thing seems pretty good. And so like they went after that and like, you know, we make big investments where if it's, if it's a business that's run by yourself, you can say, hey, like you and your partner, dude, it's all good. Like I, I don't need to get any profit sharing this year. I don't need like that, I don't even need to get paid this m month. Like, whatever it is, like let's, let's do that and let's invest in the business because this is what's going to be best for it, uh, in, in the future. You know, now that Viking does like close to a billion dollars in revenue a year building, I mean, and I

Speaker B: would say, like, you know, if this is the last thing I say it to everybody, I'd be happy with it. I'm surprised that more that when you're buying software, when insurers are buying software, they're not spending more time looking at sort of the company fundamentals. Like if I were to buy like, like I get that some of These companies get 60 million, $70 million of investment, right? But if these companies are burning that investment down and they've got a three year ramp before they need to find another funding round, that would send shivers down my spine. I'm going to give you $7 million to get all this working and then you could run out of money if someone else doesn't come in and buy them. Like, I'm just, it feels to me again, for a very conservative industry that people should be looking more about what the exit strategy for the company is and read right, like, you know, you know these companies that sell, sometimes they sell and they win, but sometimes they just have to sell. And it's rarely good news for a customer when they have to sell. Right. The customers of that selling company. That is not a good story for those customers. And you know, I think that uh, working with us. And one more thing, now you got me talking mildly related. You're in with these companies that have different motivations uh, than you and you're locked in, right? Everybody is always locking you in to the companies you're dealing with. One of the huge advantages of having open source software is that you're not locked into anything. We tell everybody, you know, everyone that comes on now, we say we are going to start this project with you, right? We're going to do an amazing job and no one ever leaves us. Right? But you could wake up tomorrow, you could find some new people to do this, you could hire your own people and everything continues. It's just not us anymore, it's new people. You are locked into nothing with us because you own the intellectual property. You own what you have. I think that that's a, another important thing. But that was a good change that I went on.

Speaker A: I mean I don't know that would feel good to me knowing that I own it. Uh, you know, but I'm a technologist too. Like to some people that's scary. Like even like owning that, ah, maintaining that, being responsible for that. Like everything's on, on your, on this stack that, that you know you're using and building on. So some people that's, that's horrifying.

Speaker B: But you're right, but you gotta pay for, you gotta pay for the comfort. And that's why like a guide wire, we'll always need a guide wire giant publicly traded, like that's a stable, excellent sort of organization there. But they're there a lot of these other guys doing business right now feels very fly by night and, and you know you could say I feel good because they'll be here, but they're going to be here assuming they get their next round of capital in the next two years if things change in the private equity markets and who's interested?

Speaker A: So you're talking about, you're talking about like yeah, that the, yeah. All the, all the, the PE backed uh, policy administration systems not gonna name. Yeah.

Speaker B: Which is most of, which is most of them.

Speaker A: That's everybody dude. Like, but that's just the game. And I, I, I, I don't know that that game sucks dude.

Speaker B: That game sucks.

Speaker A: That game sucks. It's like, oh, wait, I have an idea. Oh, wait. Go find somebody to, you know, give me some money for my idea. Okay? Now I got this person that gave me money, okay? Now they want to return on their investment. That's where it starts, you know, so then it's like. Then it's like three years later. All right, what's the next thing we got to do this thing. You got to go sell to this. Now you're. Now you're in venture. Okay, great. Now you got venture capital back. Okay, cool. Now you got a new master now. Oh, wait. Venture wants to get a return on their. Now. Now you're in private equity. Then you go down the Alphabet, you know, series A, B, C, and like, you know, and it's just like more and more. More and more masters, more shareholders, more like, you know, and it's just. It's just a thing. And I think it can be good in, in a lot of ways. When you need capital, I, um, don't think you need it in the beginning like that. I mean, some people just don't have the money and can't afford it. And their idea is so expensive that they need humans to contribute to make that happen, to get, like a loan for it in that, in that way. I, I totally understand that, but I think they go too far. I mean, I've been involved in so much as M and A, and, and I know what those founders have. At the end of the day, it's not a lot.

Speaker B: It's.

Speaker A: The percentage of ownership is, is now, granted, it's huge numbers. They get paid huge money. Don't get me wrong here. But it's not like people think, you

Speaker B: know, I, I agree. And look like, you know, and again, so, like, like think about. So to your point, about not having enough just like, for us, right? We started this company, we wanted to be a software company. We were going to build this, uh, seating solution. I still think it's a. Something that we need in the industry. But things changed. We had no money. Like, we had to start services, right? Like, I went on the road and sold, uh, consulting services. I still continue to do that. But, like, you know, we didn't start off with a pile of money. We had to, uh, get out there and do something, be profitable, and then decide to invest those profits into sort of what we wanted to do. And, uh, I will tell you, I think it builds a little bit of. Certainly builds a little character, but I think it builds an organization that is more focused on keeping their customers happy than it is managing their capital partners. Right. If we were going through all that, how much of my time a day would have to be spent talking to bankers? Now? 0% of my time is talking to bankers, all talking to customers, I think so.

Speaker A: I will say this though. I don't think it's bad. Like I've been there, done all the things and like, and like if you have the right partners, financial partners, I think it could be really good. And it does work out really well. Sometimes you have really good investors and capital partners in that way, good bankers where it's not like a huge pain in the ass. And when you need capital, I think there is a need there. But to your point, the scrappier you can be in, in the younger years of your, of your business, um, one, you'll develop relationships differently with those customers because if you're honoring your word, doing what you say you're going to do, you'll start to develop a deeper relationship and connection with that customer in that way if you're doing like what you're talking about. So there's, there's good uh, on that but, but you're make, you're bringing money in to keep the business going while you're figuring it all out as opposed to having all of these cat, these partners that are then telling you how you should run the business and what is the best for the business in that way. And not to say they're always, I'm not saying they're wrong all the time, but it just like there's certain things that you want to pivot, you want to do and invest in, um, that sometimes you just can't. Yeah, you know.

Speaker B: Absolutely. And just like for the record, as I'm being, you know, very self, uh, satisfied, self righteous really. You know, I have years of jealousy about everybody that was taking all that private equity. Right. Like when we're scrapping through, we're not going to parties, nobody's flying us on airplanes. Right. We are like in the ditches digging with everybody else. I have like this whole chip on my shoulder and it is from jealousy about how cool that must have felt. And it's just only when we get to now where, you know, trajectories are different and we sort of look at what we're left with, you know, from an equity perspective, from a control perspective that, that I get like a little self righteous. But it all comes from insecurity and jealousy, uh, my opinions about it.

Speaker A: So thank you for sharing.

Speaker B: Yeah, most of my personality does read, so yeah, don't be Too offended by me.

Speaker A: Oh, man, that was, uh, that was awesome, man. All right, so I'm gonna ask you a couple more questions, then we're gonna wrap up. It's been, this has been good, man.

Speaker B: It's always a pleasure.

Speaker A: Oh, always is good. So, um, I don't know, man. What, so what do you think about this AI stuff right now? Like, like, I mean, my. I'll give you my opinion where, where I'm seeing the most value in AI in our industry is on all the ingestion, specifically around the underwriting side speaking, you know, mid market, large, small, middle, middle, all that kind of commercial side, um, generally speaking, but more swayed towards the mid large complex risk, um, helping streamline, um, the day, if you will, for the underwriter. Um, in that. What do you think about that? Yeah, I mean, I agree in general in our, in our industry. And like, what do you think is going to go.

Speaker B: That's a tough one. So let me start and just say that I agree with you. So here's how I think of AI today. If you had something that you have considered outsourcing to a BPO partner. Right. To bring in low cost people and other geographies to do, I think that AI is coming in and offers a different alternative. And sometimes it's f. It's often faster.

Speaker A: Not perfect. You know, let's be real, not perfect.

Speaker B: But if it was something that you've already thought about sending, uh, off to, you know, bpo, sending offshore, then I think that there's some real interesting, compelling solutions.

Speaker A: Yep.

Speaker B: I don't think that I'm seeing a whole ton interesting beyond that. So, like, here's what I will say for.

Speaker A: And by the way, you're like a science fiction nerd too. So, like, I am.

Speaker B: Oh boy, I am. But like, you have.

Speaker A: Like I did.

Speaker B: I really am. And maybe that's why I'm, I'll tell you right now, I, um, am. I have like this rap and I'll tell you I'm conflicted. I'm ambivalent about it. I am, um, a curmudgeon about AI. I look at it and I say, this is just a clever parrot. These large language models, we see the limitations every day. And I'm like, this is something that is coming to a thing. But then I'm often amazed by the stuff, the practical things that people are doing with it. Right. But so here's just what I'll say. I focus on underwriting LED organizations. So the other organizations, like if you're writing again, NCCI workers Comp. Like personal auto, home, high volume stuff. You have so much automation around your underwriting decisions, your pricing decisions. I don't know where AI fits into that. I think you've sort of got it covered right there. Right. Then for the really complicated stuff, I can't wait for someone to say, you know what? We're going to write crazy risks with an AI underwriter. Those companies will go out of business. Like. Like the whole point of that niche is that you need real underwriters. And here's what I will say. I think that. And I don't think that this is what underwriters would say. This is just my opinion. You know, maybe three quarters of, of being a great underwriter for complex risks is like an understanding of the industry. And having seen it, I think a quarter of it is like a gut feel. Right. I think that lots of these folks.

Speaker A: There's some art there man. A little.

Speaker B: There's art to it and I don't think a machine could ever do it. So.

Speaker A: So Reb, totally agree with you on that.

Speaker B: 100 so I think that like, like I don't know, I think that underwriting is just gonna like, like it is always gonna be the discipline that makes money for insurance companies. And so like AI what do I think? I don't know. Like here's what I will say would you know, you see a lot of these quote bind issue portals on the commercial side, right? Make it easier to quote. Would it be better if it was just an AI agent asking questions and doing this a better way? Yeah, I mean I can see that. That makes sense. Someone will get there, it'll be great. They'll integrate with OS policy to do it. But uh. M. Here's what, uh, beyond that, I don't know. I don't know. I could be wrong this. But you know what, here's what I'll say. I've never like going big up against the frothiness in our industry hasn't hurt me yet. Right. I was the one saying I didn't understand how blockchain was going to make a difference and everyone told me how that.

Speaker A: Right.

Speaker B: Like M Web 3.0. Was that a thing? I don't remember. But. So I think that. I think we're going to see a lot of proofs of concept. I think it'll do some stuff. I think it's going to hurt the bad BPO providers and it is going to absolutely elevate the good ones. I think that we should see turnaround times on the underwriting side for you know, submission to quote. Yeah, speed up. I think that um, yeah, things that are pains in the asses, right? Pulling loss, uh, agents pulling loss runs like, like stupid manual stuff that I could ask my 11 year old son to do. That stuff should all get better, but it's not going to change the fundamentals about how we do business in insurance. My two cents.

Speaker A: I, a thousand percent agree, 100%. And yeah, it's, it's, it does feel a lot like blockchain, you know, it's like it's going to change everything. Uh, uh, like what are you talking about? Tell me how you know, right?

Speaker B: Walk me a day in the life, right?

Speaker A: Yeah, exactly.

Speaker B: I mean, I can't imagine what ITC is going to look like this year, right? It's going to be nine tenths of that is going to be talking about AI and it just, it feels so like, and again, I'm not doing it. And maybe, maybe this is going to bite me in the ass, right? I'll tell you what, if everything turns out to AI and we were a slow mover and I'm out of business looking for jobs, I'll come back on this, uh, podcast and I'll tell you all the ways that I went wrong. But we all got jobs to do. Like, that's all well and good out there, but people are still doing jobs. There's still things that we need. I'm going to focus on those things. Uh, and maybe if I were to say this in a better way, let's see a winner. Let's see somebody who moves up the insurance leaderboards because of like a real great use in AI, right? I'll pick on my favorite company. Lemonade. Boy, howdy. We have heard about their AI processes a whole bunch for the last five years. Nobody, uh, wants that combined ratio. So if somebody gets out there and they move so quickly, so nimbly, so inexpensively, and, and they're, they're, they got good fundamentals. Uh, let's follow them. Let's, let's figure out what we can steal and steal. Right? But I don't see anybody, and I don't see anybody doing anything where you'd say, oh, we gotta copy this.

Speaker A: Yeah. No man, that's, that's a, that's a unicorn. Capture it, study it, you know?

Speaker B: Yeah, yeah, I like that. Dissect. Yeah.

Speaker A: But no, I don't know. I, I kind of agree with you, man. Um, yeah, we'll see what happens. But, um, but yeah, you know, it's, it's, it's Interesting. You can see that happening in what you just said in some carrier, like, doing it and, like, really crushing it. The possibility is there, but, like, you know, I, I. Nobody's done it and not doing it, and so maybe we'll get there, but, um. Yeah. All right, man. Well, this was awesome, man. This is a good, good, uh, back and forth, no plan, just kind of riffing on stuff.

Speaker B: We'll see. It feels awesome to me. Reed, your poor folks that are going to go through and do the editing and producing, they're going to be like, I don't know what to do with this.

Speaker A: We can't air this one.

Speaker B: Thank you so much for. For having me back on. And if I. If I just, like, sum it up, I would say let's take all of my nonsense aside. Right. I was on here once, I don't know how long. A year, two years ago maybe. And. And, you know, we were thinking about doing something.

Speaker A: Yeah.

Speaker B: And then this year, we actually did it, and it really went from sort of like, just, uh, like a fun thing for me, for. For us to talk about to. No, no, no, this is happening. And did it. I will just say that that was a very rewarding thing. And having done some interviews and talked about it a little bit, and then to be able to say, hey, I said I was going to do that, and look at how we did it, uh, that was really rewarding. And it really taught me, you know, there's value in setting sort of big goals and then just sticking through it, whether it feels good or not. Just saying, I said, I'm going to do it. Let's do it. And, uh, it's been great, and I appreciated coming on here and being able to sort of, uh, you know, close the loop on that.

Speaker A: I think. I think that, um, as an entrepreneur, the number one thing you can do to be successful is to stay focused and actually, like, you grab onto an idea and you just go after it. You keep following it. Where. Where people get into trouble is, they go, oh, wait, I got this other idea and this other idea and this other thing. And this other thing. This other thing. And if you have something and you know, and you feel it's good and you really believe it and you know it and you see it, you visualize it, that will 100 come true. And I think that that's not just in work. I think that's in life.

Speaker B: Yeah.

Speaker A: And everything.

Speaker B: It's hard to stick to it. Right. It's hard to keep that clarity of vision. But I agree with you 100%.

Speaker A: Yeah. Yeah. Awesome, Luke. Thanks again, man. This has been good.

Speaker B: Thank you very much.

Speaker A: All right. Looking forward to the next one.

Speaker B: Yeah, let's do it. I hope it's a good one. Take it easy, Reed.

Speaker A: See you, man.

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