Electronic Chat with Paul VanderMarck
Laura Mazzuca Toops | June 08, 2020
Electronic Chat with Paul VanderMarck, Chief Innovation & Technology Officer, SageSure
Paul VanderMarck has been involved in insurance data and analytics for more than 25 years, most of it in a variety of roles at Risk Management Solutions Inc. (RMS), a pioneer in catastrophe risk modeling for insurers, reinsurers, and financial services firms.
In his current position as Chief Innovation & Technology Officer, he leads the technology teams at SageSure, the largest independent homeowners managing general underwriter (MGU) in the U.S. SageSure serves more than 300,000 policyholders and manages more than $500 million of insurance premiums, primarily in catastrophe-prone markets. The business operates on a proprietary technology platform that enables insurance agents to quote, bind, and service business.
You were onboard at RMS when data-driven risk analytics was new technology. What technologies were you using back then and how do they compare with what’s available today?
Technology was a very real constraint in the early days of RMS. I still have vivid memories of us rushing out to buy new computers every time Intel released a new 486 or Pentium chip, and of hoping we wouldn’t get a fire inspector visit while we had bundles of cables running down the hallways in early attempts to network those computers. We were constantly pushing the limits of what was possible. If we couldn’t get the run-time for our catastrophe models down from weeks to days, they weren’t commercially viable.
Today is almost unrecognizable by comparison. We now live in a world of abundant compute and storage capabilities that can be cost-effectively provisioned on demand and fed with near real-time imagery and other forms of streaming data from around the world. And fortunately, also one in which insurers have moved on from fax machines to email!
With all that change, the one challenge that has remained constant is for insurance leaders to grasp the potential applications of emerging technology-driven solutions and to implement them in a reasonable timeframe. Established insurers have historically achieved their success by getting very good at institutionalizing systematic ways of doing things. Changing those processes is hard, especially when they’re implemented on inflexible underlying technology. And the industry is now experiencing a faster rate of change than ever in its history.
In your previous life, you helped insurtechs raise capital. How do you anticipate the COVID-19 crisis will impact insurtech startup growth?
As with other sectors, the near-term impact will be highly varied depending on class of business and sector exposure. Established start-ups with encouraging traction who haven’t been materially affected by the current conditions will continue to raise growth rounds successfully and may even see increased investor interest among a narrowing of compelling options. There have been several recent examples of this. Earlier stage companies where investors are most fundamentally betting on the founders will have a harder time due to challenges spending quality time with investors, especially those not located near investor concentrations.
Beyond the immediate COVID-19 disruptions, this crisis has accelerated recognition among both insurance industry professionals and insurance buyers of the value of technology solutions that don’t require a live human presence. Think of companies that enable carriers and agents to conduct inspections and settle claims when in-person visits aren’t possible, to communicate efficiently with policyholders through multiple channels when traditional offices are closed, and to pay claims digitally without printing and mailing paper checks. Businesses such as these are not only seeing a near-term boost as insurers scramble to maintain operations, but will also see sustained benefits as none of these areas will ever return completely to pre-pandemic ways.
What sets SageSure apart from its competitors in the field?
We pride ourselves on our culture. We believe that talented people working shoulder-to-shoulder with a shared mission and common values are incredibly hard to beat.
As an MGU, we have always believed in building high-quality insurance products that provide policyholders and their trusted agents with differentiated, reliable coverage for their most precious assets, while also providing our carrier partners with equally reliable returns on the capacity they entrust to us.
And since day one—when SageSure was among the first in the industry to allow agents to quote and bind homeowners insurance through a browser—we have continued to invest in our proprietary technology platform and to maintain absolute control over every aspect of the quoting, binding and servicing experience for our products.
Insurtech is now about 10 years old. How do you see it evolving over the next 10 years?
I expect the technology vendor side of the insurance landscape will continue to be a vibrant area for innovation and a key external catalyst for industry change. While some of today’s emerging success stories will be swallowed up by traditional industry vendors, there will be a more diverse landscape of independent, insurance-focused technology providers than ever before.
Among insurers, there won’t be a clear distinction any longer between digital and “traditional” distribution models. All viable carriers will have an ability to transact business via an API and will have a direct-to-consumer chapter in their distribution playbook, just as we’ve seen develop in retail and other industries.
And agents and brokers will retain a higher share of business than many pundits predict, leveraging the value of their experience-driven heuristics to optimally match risk with capacity while innovating on digital customer acquisition and servicing.
What emerging tech tools do you predict will have the biggest impact on insurance?
My top two picks are AI and sensors.
AI is steadily replacing not just rote work but also increasingly higher skill work across all industries. Data entry, customer inquiry handling, image interpretation, contract language review, and numerous other activities will be handled in the future by bots and deep learning algorithms. Early adopters will gain advantages in all functional areas from underwriting to claims, improving profitability and the customer experience.
The proliferation of low-cost sensors coupled with continuously increasing connectivity is creating opportunities to introduce more tailored and dynamic insurance products, something that will challenge both insurers and regulators to adapt. Insureds will also benefit from new sensor-enabled capabilities to avoid loss and disruption, creating more value overall while narrowing the role of traditional insurance coverage.
How do you envision the business world looking after the COVID crisis has passed?
The level of public discourse during this pandemic on the challenges of decision making under uncertainty has been remarkable. The whole world has been through a crash course on simulation model sensitivities, input data uncertainties, ensembles of potential outcomes and counterfactual analysis.
The insurance industry is more experienced than any other at managing risk, and many of the advances in the industry in recent decades are rooted in the adoption of more sophisticated approaches to assessing and making decisions about risk.
An inevitable, and enormously positive, outcome of the COVID crisis will be an elevation in the quality of risk-based decision across both the public and private sectors, something which all of us in the insurance industry should make a particular effort to support and encourage.
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The Email Chat is a regular feature of the ITA Pro magazine and website. We send a series of questions to an insurance IT leader in search of thought-provoking responses on important issues facing the insurance industry.
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