Flying Solo: Modernizing Insurance with AI and More!

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[00:00:04.58] CHRISTEN KELLEY: Welcome to the Insurance Technology Podcast. I'm here with your host, Reid Holzworth. How are you doing, Reid?

[00:00:10.74] [LAUGHTER]

[00:00:13.01] REID HOLZWORTH: You did a great job. That was really good. Oh, cheers.

[00:00:18.68] CHRISTEN KELLEY: Yeah, cheers. I'm sitting here freezing in Massachusetts with inches and inches of ice. And I'm assuming you don't have any snow where you are.

[00:00:29.22] REID HOLZWORTH: I do not have any snow where I am. It's actually really nice here. A nice lunch. Met one of my friends. One of my good buddies, Jason Boggs, is here.

[00:00:37.43] CHRISTEN KELLEY: Oh, nice.

[00:00:38.16] REID HOLZWORTH: Yep. As you know. And a lot of people know Mr. Boggs. But he's here, he's in town. So it's been fun. I've been hanging out. Yeah, I had a nice lunch. It's like 80 degrees today. It's wild. It's so crazy the difference in temperature between here and like, the rest of the world.

[00:00:54.15] Like, up in Milwaukee, it's like negative 16 or something. It's like stupid. It's crazy.

[00:00:58.95] CHRISTEN KELLEY: Yeah, it's the ice. We went from snow to ice. And then they couldn't get the plows through because of the ice. So it's not fun right now. There's no salt to be had. So glad I work remote.

[00:01:12.76] REID HOLZWORTH: I think this is the first time that I've ever actually drank a beer on the podcast. I don't think I've ever really drank on this before, right? I don't think so.

[00:01:22.18] CHRISTEN KELLEY: When you had someone over, I think you did. Maybe--

[00:01:25.05] REID HOLZWORTH: Oh, Chip? Yeah, at my house?

[00:01:27.75] CHRISTEN KELLEY: I think it was you and Chip.

[00:01:28.14] REID HOLZWORTH: It was a Chip. I could see that. Yeah, yeah. Yeah. Yeah. Anyways.

[00:01:33.13] CHRISTEN KELLEY: All right, so in this episode, we're going to talk-- we've been-- so let's see. We're about six weeks into the year. I feel like every time I open up a newsletter website publication, it's trends for 2025, right? Everybody comes out with their trends for the year.

[00:01:53.40] REID HOLZWORTH: Let me guess, AI. AI is a trend.

[00:01:56.07] CHRISTEN KELLEY: It is actually. So I actually was pulling-- so our friends over at Datos Insights, one of the analyst firms that we work with. But they had actually published the top trends of '25. And so I thought we would go through them and see if there's ones you agree with, ones that you don't.

[00:02:12.78] I think we even had a couple on here that we were talking about that we don't even know what they are. So I'm just going to get your insights, see what--

[00:02:21.43] REID HOLZWORTH: I'm really glad I prepped for this.

[00:02:23.08] CHRISTEN KELLEY: Yeah. Well, I mean, you always prep for these things, right? OK. So number one, it actually has the word AI in it. But number one, insurers relaxing their concerns around GenAI. Or are they? So challenges around data privacy, algorithmic transparency, legacy system integrations. Is that a trend that we're going to see carriers getting a little bit about more--

[00:02:52.75] REID HOLZWORTH: I mean, I could see them getting more comfortable with it in ways. But relaxing, I don't know what that really means. They're pretty hardcore about that stuff, generally speaking. It's a privacy-- the contracts and stuff that we have with our customers-- is on the carrier side, you said?

[00:03:09.26] CHRISTEN KELLEY: Yeah. Yeah.

[00:03:10.03] REID HOLZWORTH: Yeah, I don't know. It depends on the player. And they're kind of different all across. But you know, especially the big ones, the tier ones, no way. I don't see that. I don't see them like relaxing on that kind of stuff. But I can see them getting comfortable with it. Like, OK, we can try these models. We can do some stuff. Like, I'm not fearing it, like they were. They're not fearing it like they were. They're getting comfortable. But I don't know about relaxing on that. You know what I'm saying?

[00:03:37.31] CHRISTEN KELLEY: Do you think it's more about trying-- like before, it was because of my concerns around data privacy, I am not even going to look at AI. Whereas now, it's like, we need to do it, so we need to figure out how to do it.

[00:03:53.05] REID HOLZWORTH: I could see that. Yeah. I can totally see that. But they're just following the trend though in a way. But there's so much value to it that it's going to-- yeah, so like, there really is. People are like, OK, this thing is real. It's not going away. How can we use it? Blah, blah, blah, blah, blah. Let's be smart about it.

[00:04:11.31] But a lot of that hype is kind of over, I feel like. I know that-- I feel like you're going to ask me more things, and they're all going to have to do with AI, because that's like what everyone's talking about. But there's been a lot, a lot of hype around it. I think now things are starting to happen. And people are seeing like tools in market.

[00:04:26.37] You know what's crazy too, I swear, everywhere I go, there's signs and billboards in Chicago and San Francisco and like, all these places, it's like Barracuda AI, bro. Whatever the hell it is. There are so many of these out there now. I'm like, what-- like revolutionize your business with .ai, .ai, .comai, or whatever. Like, what is happening?

[00:04:52.10] CHRISTEN KELLEY: Well, it's almost, I feel AI now, it's like you have to have it in your name somewhere. Whereas maybe I'll go a decade or two ago where you had to have cloud in your name, right?

[00:05:07.39] REID HOLZWORTH: Oh. Yeah, totally. Yeah.

[00:05:09.60] CHRISTEN KELLEY: But now it's just assumed that things are going to be hosted in the cloud. So I think that there's always going to be AI, but I think potentially the AI naming will go away eventually.

[00:05:20.98] REID HOLZWORTH: Yeah.

[00:05:21.51] CHRISTEN KELLEY: Just a part of the technology.

[00:05:24.66] REID HOLZWORTH: I'm going to start a company that is a cloud-based AI platform that is SaaS that uses blockchain. I feel like somebody would give me money. [LAUGHS]

[00:05:43.35] CHRISTEN KELLEY: I was just going to say blockchain and then, yeah, cryptocurrency?

[00:05:46.68] REID HOLZWORTH: [INAUDIBLE] we're not talking about that now. That's not a thing.

[00:05:49.40] [LAUGHTER]

[00:05:52.62] Remember when that was a thing? Like, what?

[00:05:56.17] [INTERPOSING VOICES]

[00:05:56.82] CHRISTEN KELLEY: Certificates of insurance were going to go away, right? Yeah.

[00:05:59.43] REID HOLZWORTH: Yeah. I know. Yeah, totally. That was the whole thing, right? I never saw that. That one I never jumped on. I never saw the value. It was a solution looking for a problem in our industry. I could see it in some ways, like certain things I could see, but it just-- nah. If it's not broke, don't fix it kind of thing.

[00:06:20.43] CHRISTEN KELLEY: Agreed. All right. We got one down.

[00:06:23.36] [LAUGHTER]

[00:06:25.74] Number two, I'm going to do this in two pieces. So around modernization of systems. So for small insurers, small carriers, they are looking to modernize their core systems. This is going to be a trend for this year. Whereas larger carriers are going to be pursuing underwriting and finance transformation.

[00:06:47.34] REID HOLZWORTH: I could see that. I could see that. I would ask though, and I don't really know this maybe as well as I should, but I feel like the smaller carrier solutions, like tier fives, tier fours, the solutions are out there.

[00:07:02.66] I'm not even going to name names, because I don't want to like, whatever, but I feel like they're fairly modern solutions, generally speaking. You know what I mean? These are not systems that were built 50 years ago. And not even-- some of them not even 10 years ago.

[00:07:21.50] Now, there is some legacy stuff in there, but there are some good modern solutions that I know. and I know their people really well, and we work with them all the time at Ivans. And they're pretty good. I don't know.

[00:07:35.15] So it's kind of funny when people are like, they're going to transform and modernize, blah, blah, blah. And it's like, from what to what? Maybe they don't have something, they're going to something. I don't know. Is that just another analyst thing, like bro, transformation, or this kind of thing. I don't know.

[00:07:51.74] CHRISTEN KELLEY: Or maybe it's because you have less to move. So like a core system for you to say, I'm moving to the cloud, if you're a smaller carrier. It's an easier lift than it is if you're a large national who has multiple--

[00:08:05.72] REID HOLZWORTH: I don't know about that. I would say the complexity would come in on just the number of lines of business you have. And so it's not even necessarily-- because I could even argue like, even if it's 100 policyholders, it depends on the line of business and what you're moving and what it is as opposed to thousands. But if you have all these different lines of business, that's a lift.

[00:08:28.14] But if you're just a single line, monoline or a couple line situation, I could see that being smaller. And yeah, most of the big nationals are more than just that. And I think that's the timeline there, is moving everything.

[00:08:45.34] Even on the personal line side, you think about like boat, motorcycle, RV, flood, home, auto, like the bigs, like a progressive commercial auto, all that. And it's a lot, a lot of stuff. Travelers, Hartford, all these guys. Liberty. There's monsters because there's just so many different lines and different units and things.

[00:09:08.35] And a lot of it, too, has come in through acquisition over so many years, too. And that's the other problem with the big guys, is like,

[00:09:14.35] CHRISTEN KELLEY: Create a Frankenstein.

[00:09:15.43] REID HOLZWORTH: Yeah, exactly. And they have all these legacy systems that they're still using from the acquired companies. It's like I'm not saying this is a thing anymore, but it's like Ace and Chubb and that whole situation.

[00:09:28.23] But anyways, yeah. So I see that. But the small ones, I don't know, that's kind of a funny thing. I'm wondering why they're saying that. It's like, that's where they're going to go dig for gold or something? I don't know. I feel like the systems that are available for the tier fives are fairly modern in their own way.

[00:09:45.58] But maybe it's just a big transformation for them, like you said, to go from some on-prem thing to in the cloud. But I don't know. I find it-- I kind of--

[00:09:53.05] CHRISTEN KELLEY: Or maybe it's just adoption, right? Maybe there's just like, there's a lot of them that have not gone to a course-- a stronger core system, like you were saying. And maybe we'll just see more people going on to more modern.

[00:10:05.59] All right, number three. I feel like-- oh, AI is back.

[00:10:10.44] REID HOLZWORTH: All right.

[00:10:11.49] CHRISTEN KELLEY: All right. It's all about efficiency. Driving internal efficiencies in underwriting and claims through next generation AI.

[00:10:21.51] REID HOLZWORTH: Oh. Actually, we didn't get to the second part of that last one, which was about,

[00:10:25.83] CHRISTEN KELLEY: The underwriting and then large. Yes.

[00:10:27.82] REID HOLZWORTH: The underwriting-- yeah. Mm-hmm. So underwriting, using tools to make underwriting much more efficient at the carrier level, large carrier level. This is hey, are they going to use AI for-- is this a trend for underwriting?

[00:10:44.26] And I 1,000% agree with that. I think that there is a huge use case. Probably the largest use case that I've seen around AI is what you can do with underwriting, and how you can help underwriting. Whether it's on the submission, in taking those documents and consuming them, structuring them, taking all that data, bringing that into your own system in that way.

[00:11:10.03] Whether it's being really smart about the risk that has come to you. Is this really a restaurant? Do they really not have a deep fryer? Are they open till 2:00, or are they open till 10:00 PM like they said here.

[00:11:26.26] Does this thing turn into a nightclub at night? What am I looking at here? So I think AI around all of that is very, very useful. So yeah, I think that that is something that we're going to see the industry change on leveraging artificial intelligence, 100%.

[00:11:45.58] CHRISTEN KELLEY: So one of the stats they have here is, so next generation efficiency plays with AI can lead to a 70% reduction in routing time--

[00:12:00.47] REID HOLZWORTH: There you go.

[00:12:02.03] CHRISTEN KELLEY: --when you're using automated triage systems.

[00:12:05.21] REID HOLZWORTH: Damn. Think about that. 70%. That's wild.

[00:12:09.18] CHRISTEN KELLEY: Yeah.

[00:12:11.61] REID HOLZWORTH: That changes things for that carrier, leveraging that solution.

[00:12:17.31] CHRISTEN KELLEY: Well, and they're saying claims too. So not the underwriting part, like you were saying, but then for claims, like getting it to the right person or making sure that--

[00:12:24.60] REID HOLZWORTH: Oh, yeah.

[00:12:24.83] CHRISTEN KELLEY: Yeah.

[00:12:26.12] REID HOLZWORTH: That one blew my mind. I didn't know a lot of that. I've worked with a bunch of people that are in kind of that claims world. It's amazing that the claim systems and whatnot don't actually know because they're not interconnected with the policy admin systems in a lot of cases, to where they truly know, is this covered? Do they have this? What's actually happening here?

[00:12:46.98] It's like, you just kind of like-- for me as an outsider coming into this world, I would have thought that it's like one system. And it's just like, I'm in this one system, and like, here's the client. Here's all the stuff around them. But it's not. It's really difficult for them to get that real enforced data in real time, a lot of them.

[00:13:08.07] And so anyways, that's-- so it's interesting. I could totally see that. That's a claim. But on the underwriting side, getting to the stuff that you want much more efficiently, and then getting rid of the stuff that you don't want as quickly as possible is good for everybody.

[00:13:23.26] It's good for the agent, it's good for the insurer, it's good for the carrier. Those are win-win, win-win everywhere. And so yeah.

[00:13:32.10] CHRISTEN KELLEY: And straight-through processing is great. But then there are ones that need to be actually looked at by an underwriter. So the whole point of having it dispersed to the right person versus going through to people throwing it to the wrong person and having to who's going to catch it.

[00:13:49.03] REID HOLZWORTH: Mm-hmm.

[00:13:50.37] CHRISTEN KELLEY: The claims piece is interesting too, because there's so many the whole push to automate things. But then I think of our friend Joe Stevenson around the fraud stuff. And it's like, if you don't have people looking at it, how much stuff is just sliding under the radar too? So.

[00:14:08.70] REID HOLZWORTH: Right?

[00:14:09.64] CHRISTEN KELLEY: All right. Next one is AI as well. So number four, intelligent document processing becomes a game changer. So AI-powered document processing.

[00:14:20.65] REID HOLZWORTH: Oh, that is. Again, that goes back to my use case in underwriting in that way. 1,000%. I really believe that. It's such a good use case for that tool. If I'm looking at it, new construction, if you will, I would 100% implement all that stuff at the front end. Why would you not?

[00:14:40.09] CHRISTEN KELLEY: They have some stats here.

[00:14:41.61] REID HOLZWORTH: Oh, good.

[00:14:42.87] CHRISTEN KELLEY: 1,000-plus pages can be processed per minute with 90% accuracy and 80% reduction in processing time.

[00:14:52.50] REID HOLZWORTH: That's just--

[00:14:54.10] CHRISTEN KELLEY: Crazy.

[00:14:54.95] REID HOLZWORTH: It's crazy. It's crazy in a good way. Is this like the bots are going to take over and everybody's going to lose their jobs and all this? No, actually not.

[00:15:06.20] CHRISTEN KELLEY: This'll be under a Skynet shirt.

[00:15:07.90] REID HOLZWORTH: Hell yeah. Totally. I forgot about that. That was funny. But yeah. No like, is that really? No, this is real stuff that impacts everybody in the flow in the business. It's not eliminating humans, it's just making them become so much more efficient to get to the stuff that they need to get to, which is awesome. It's really good. Just speeds up the flow for them.

[00:15:31.72] Yeah, that is something that's not going to go away. OCR and all that's been around forever. They've had humans that are doing that and then taking it and looking at it. Look how many companies-- I'm not going to name names-- are out there that-- human beings are processing documents in this industry.

[00:15:51.05] Thousands and thousands and thousands, thousands, thousands, thousands of people every day are reading documents. there's real-- there's real power in that. And yeah, so I think that's great. 100%.

[00:16:08.99] CHRISTEN KELLEY: All right. Specialty and ENS lines drive innovation.

[00:16:17.48] REID HOLZWORTH: That's interesting. I could see that. Super hot. That's where everybody's going. I could see it. Yeah, I could see it starting to drive product innovation on the insurance product side. I could totally see that.

[00:16:31.77] CHRISTEN KELLEY: Yeah. It's saying 50% of insurers have implemented at least some automation for specialty lines underwriting and claims.

[00:16:40.01] REID HOLZWORTH: Interesting.

[00:16:41.45] CHRISTEN KELLEY: So you know what I wonder, is that if-- because most specialty and ENS is going through an intermediary, right, like the MGA or a wholesaler. If it'll push those organizations to look at more automation across even the traditional business. That they're almost-- if they're modernizing just in these little pockets and seeing success.

[00:17:09.07] Because right now I feel like that's one of those places where like, carrier to agency is a fairly automated workflow. But when you start adding in the intermediaries is where we start seeing more bespoke or manual connections.

[00:17:25.36] REID HOLZWORTH: Yeah. Yeah. Yeah. You know what's interesting though, you have a lot of brokers that are starting their own in that way. Big brokers that are doing a lot of that stuff. But you're right, the connectivity is a little bit lagging behind like the pure carrier side of the market.

[00:17:45.16] But I don't know, we've been wrenching on that stuff with those guys for a lot of years. It's not like new. We've been selling to them for a lot of years at Ivans. That stuff's-- I mean, it's moving, but it is behind. I can see that, for sure. But, I don't know. I don't know. What do you think?

[00:18:06.06] CHRISTEN KELLEY: I don't know. I think that there is such a growth in the ENS market that agencies are looking for, where it was maybe a smaller percentage of their overall book that was going to ENS, it didn't bother them as much that they had some more manual or things that fit-- that were outside of their common workflows with their carriers.

[00:18:29.95] And now when we're talking about growing, I think we said like 30% or something like that, it's more of a pain in the ass, if you have large volumes of it going into the ENS market.

[00:18:45.88] REID HOLZWORTH: Yeah.

[00:18:48.13] CHRISTEN KELLEY: So if they're only modernizing 50% at this point, hopefully we'll see that grow.

[00:18:53.33] REID HOLZWORTH: Mm-hmm.

[00:18:54.31] CHRISTEN KELLEY: All right. Next one, rapid product innovation becomes an imperative. With emerging risks, economic pressures, and slow regulatory approval, it's pushing PNC insurers toward rapid product innovation.

[00:19:13.04] REID HOLZWORTH: Yeah. I mean, if the regulators and everybody's going to allow them to, yeah, sure. Who the hell wouldn't want that. Right? Come on. But there is so much red tape around that. I go back to what Casey Kempton said a long time ago. She's like, if I was to fix anything, that's what I would fix.

[00:19:31.88] All of a sudden, I was like, I never thought about it until that moment. And she's 1,000% right. That's a mess. It's a real mess. And so to really do that, of course, I think everybody would. Think about, I don't know. I hate to use names around this stuff, but when people talk about this kind of stuff, they talk about Progressive, and how Progressive moves and how smart they are around this stuff. They're moving and doing stuff before anybody.

[00:20:00.95] And it's not easy. It is not easy to do that in that way. And so, I don't know, I just think there's just a gigantic amount of red tape around it. So I don't know.

[00:20:14.49] CHRISTEN KELLEY: So it's that rapid piece. But so even if you had the best AI-powered technology hosted in in the cloud [LAUGHS] at your organization, had the smartest people in your product team to be able to rapidly augment or change or create net new products, you're going to get bottlenecked in terms of getting through all the regulatory.

[00:20:42.31] REID HOLZWORTH: All the bullshit. Yeah, 100%. So if you could speed up that process, then I think you could make that true. But it's hard. I think every carrier out there would jump all over that If they could do that. But it's not--

[00:20:55.86] CHRISTEN KELLEY: By the time you get something approved, then the thing that you're trying to fix or alleviate or have a new product for could be over.

[00:21:03.93] REID HOLZWORTH: And it's just, it's all the systems too. But again, through all the transformation stuff and whatnot, I don't know, it's not crazy anymore. But there's a lot. There's a lot to it. Just to build and launch a new product, yeah, I don't know. We should get somebody on the podcast that's like-- to talk about that actually.

[00:21:29.57] CHRISTEN KELLEY: Creating a product from scratch, an insurance product?

[00:21:32.59] REID HOLZWORTH: Yeah. And what all that-- what goes into all of that, and how quick it could be. And what are the inefficiencies of it? Where we could go and as an industry, kind of solve some of this, right?

[00:21:44.38] CHRISTEN KELLEY: I love it.

[00:21:45.46] REID HOLZWORTH: Yeah, we should totally bring somebody on to talk about that. Because I bet, collectively, there's stuff that we could do together as an industry to fix some of this. I don't know. But some may argue they don't want it fixed. They don't want to. I don't know.

[00:22:00.96] CHRISTEN KELLEY: Well, if you're listening out there and you have experience creating an insurance product, we'd love to hear from you.

[00:22:07.18] REID HOLZWORTH: Yeah.

[00:22:08.46] CHRISTEN KELLEY: OK. So this is the one that I feel like I'm just, it's over my head. And even the word quantum is over my head. Quantum threats creep up on insurers. So a fault tolerant quantum system will revolutionize fields from drug discovery to climate modeling and financial analysis.

[00:22:29.71] So I looked up the fault tolerant piece. It basically is creating computing that can continue to work and process accurately, even if there is inaccurate data or something that has--

[00:22:48.29] REID HOLZWORTH: I don't understand what it's saying. These are too many big words for me.

[00:22:52.72] CHRISTEN KELLEY: And then so you go to the definition, and then the definition is above my head too. It is basically saying that it is computing that can continue to perform calculations accurately, even when errors have occurred.

[00:23:11.41] This is possible through the use of logical quantum bits. And I am just so out of my element with this. [LAUGHS] It's the only one that I'm like, I don't know how this works.

[00:23:22.90] REID HOLZWORTH: OK, so what's the trend, or what's the trend? What is it saying again?

[00:23:25.72] CHRISTEN KELLEY: They're basically saying because of this new fault tolerant quantum systems, that they're going to be used for things like drug discovery and climate modeling and financial analysis. So those types of things, it says is going to creep up on carriers.

[00:23:44.21] So I would think if that stuff actually--

[00:23:47.84] REID HOLZWORTH: Creep up on carries because carriers-- wouldn't carriers want to be doing this stuff?

[00:23:51.21] CHRISTEN KELLEY: I was going to say, yeah. I would think it would--

[00:23:52.55] REID HOLZWORTH: Yeah, start to model these things to understand. And again, it goes to that rapid product deployment and whatnot around all of it. I was talking to a friend of mine, we had lunch. And he's involved in a bunch of startups and shit.

[00:24:09.15] And he's working with some startup. I forget where they are, in Chicago or something. But they're doing these sensors that are detecting early warning for like earthquakes. I forgot what he told me. It was like something like-- and I'm probably totally wrong, whoever hears this. Like, you're an idiot. It's supposed to do that. But like, whatever.

[00:24:27.84] I think it was something like, it was like seven days prior to something happening, right? So almost early like detect-- and it's real. they have real data, the shit's like badass. It's a real thing. But I'd be interested like, how could you react in our industry with that? Like yeah, sorry, no more binding coverage. Or like-- you know I'm saying?

[00:24:49.15] This is where the red tape and all that comes in. Like, what could you, I don't know. Yeah, you could like tell people to screw their pictures on the wall or something. Like, hey, just so you know, earthquake's coming. Stuff's going to fall off. It sounds so simple, but--

[00:25:07.99] CHRISTEN KELLEY: Or you could be a complete asshole and be like, yeah, I know it's coming. I'm canceling the home policy. [LAUGHS]

[00:25:13.96] REID HOLZWORTH: Yeah. Like, sorry. Yeah. I don't know. But it's kind of funny. There's all this tech out there. And there's all these things that are able to detect this stuff that may occur. Now, I think it helps with modeling the policy and the rates and everything over a term and whatnot. Like, what can we expect, and what do we know, and like blah, blah blah, blah, blah, like that. But I think being able to react in real time I think is kind of hard based on those.

[00:25:41.98] So yeah, I don't know. I just don't know that world enough. But that seems like the logical answer. It's like, cool, but how are we going to put that to use? You know what I'm saying?

[00:25:54.46] CHRISTEN KELLEY: Maybe that's why I mean it's creeping. It's like all this stuff is coming, how are you going to use it?

[00:25:58.90] REID HOLZWORTH: Right. Exactly. But I could see it. Of course, if I'm in a carrier, I would want to know this type of stuff and be able to understand these things. I can't put two and two together on how you're going to actually put it to work for you. You know what I mean? And I'm not saying you can't, I just don't know. That's where my head goes on that stuff.

[00:26:23.50] CHRISTEN KELLEY: OK. Number eight. Property disruption continues amid shifting risk, landscapes, and coverage models. So traditional risk models are failing as historically safe areas are experiencing devastating losses.

[00:26:43.39] REID HOLZWORTH: Yeah. Yeah. I mean, that's gnarly. Like, what was it like, Carolinas and all that shit? Like, what the heck? Who knew, ever? That's tough.

[00:26:56.30] CHRISTEN KELLEY: Well, and then it goes back into, like we were talking about ENS before. So it's saying that there was 41% growth in ENS premiums in 2023 to over 27 billion. Well, and I guess that also ties back into the product innovation too. Because if models aren't working anymore, then you probably have to go, not back to the drawing board, so to speak, but. [LAUGHS]

[00:27:22.03] REID HOLZWORTH: Yeah. I was talking to someone other day, and they were talking about something like 100 carriers have gone out of business in the last year. Mostly small guys, but it's because-- California carriers and smaller ones and whatnot.

[00:27:39.00] But it's because of the reinsurance cost is so high now. The reinsurers are just getting hammered. And to your point, it's like, when you think about spreading risk across the world or across the country, it's like, oh, these houses in Carolina, making good money on that stuff. But it's just like, boom!

[00:28:00.03] And it's climate change stuff. I don't care what your political affiliation or whatever, I really believe that shit's real. 100%. You see it. You can tell. The winters are different in Wisconsin than they have been. The summers here in Key West are different. They just are.

[00:28:17.42] And so, I don't know, that's what I see. So that shit's really happening. Wild stuff is happening all over the place. It's going to be tough. And how do you-- again, how do you model that? Like, oh, wait, we see a big storm is coming. Shit's about to hit the fan. OK, what are you going to do? You can't cancel all the policies. It's not a thing. So you're already screwed at that point. I don't know.

[00:28:41.56] That's tough. insurance is getting hammered. People think that-- I talk to so many people that don't know this industry all the time. Like, oh, fucking insurance companies. Everybody's just making all this money. And it's like, we don't make a lot of money in this business at carrier level. There's not a lot of profit there. And these kinds of things really sting. And so it's a tight business overall.

[00:29:05.47] Sure, there's a lot of money flowing around, but at the end of the day, at the bottom line, it's not a ton, ton, for what it is. And those kind of things, like damn. I mean, look California, that was just nuts. Nuts. But I'll tell you, I grew up in Southern California. Everybody knows this. Half of my town burned down when I was a kid. Literally.

[00:29:30.33] I saw the fire coming over the hill and burned the whole schools down. Literally. And so that stuff happens out there. But with all the precautions, all the things and blah blah, blah, blah, blah, you think that this wouldn't. But it's just--

[00:29:44.58] CHRISTEN KELLEY: Well, and you had said too when that happened, then the mudslides happened. And that's exactly what's happening now, right?

[00:29:50.23] REID HOLZWORTH: Oh, 100%. Yeah, first comes the fires, then-- because there is always the Santa Ana winds in California, then it comes rainy season, and then what is that? Mudslides. And then now you get mudslides that fly down those big old hills into the houses below that didn't burn. Because at the bottom, fire goes up. And so water comes down. It's like, it's bad. Not good. Not good.

[00:30:14.10] But it's like, how do you predict that, to this point? And then how do you stay profitable as a carrier when this stuff happens? And then these little guys, it's like, how do you literally buy reinsurance? They can't afford it. It's just-- yeah, we just can't.

[00:30:34.39] CHRISTEN KELLEY: Well. And I feel like Florida has kind of been in that for a while, right? Even with companies that we've seen that have worked with Ivans, and then they're just gone, right? Agencies will come to us and say, we're not seeing them anymore. Well, it's not that we're not delivering the download, it's that they're just, they're gone.

[00:30:52.31] OK. Two more. Number nine. Totally, one of our other-- we should have had bingo cards, insurance topics. SaaS.

[00:31:02.56] REID HOLZWORTH: Oh, all right.

[00:31:03.62] CHRISTEN KELLEY: All right. SaaS feeds continue their seemingly inexorbitable rise.

[00:31:10.63] REID HOLZWORTH: Inexorbitable rise. Yeah. Just like consulting fees. [LAUGHS] Just like analyst fees. [LAUGHS]

[00:31:22.30] CHRISTEN KELLEY: There's four times-- so it's saying SaaS inflation is running at four times the consumer price index, creating new challenges for CIOs that are managing spending targets.

[00:31:36.80] REID HOLZWORTH: Yeah. No, I get it. I don't know, hard for me to say. It's like, what we do?

[00:31:42.04] [LAUGHTER]

[00:31:43.28] CHRISTEN KELLEY: We're one of those SaaS fees.

[00:31:45.08] REID HOLZWORTH: We're kind of one of those line items.

[00:31:46.87] [LAUGHTER]

[00:31:48.58] I don't know what to say about this one. That sucks, I guess. I don't know.

[00:31:55.35] CHRISTEN KELLEY: But why-- I guess why would it increase by that?

[00:31:59.87] REID HOLZWORTH: I don't think it's like the fees, the costs themselves are going up just because for nothing. I think that companies are leveraging much more SaaS-based products than they ever have before. I don't know, but that's why I was joking about, yeah, just like analyst fees, whoever wrote this shit.

[00:32:18.94] It's like, their fees are-- I mean, come on.

[00:32:22.50] CHRISTEN KELLEY: However, you would think, though too that maybe it's balancing out. Because you're spending more on tech, maybe you're saving money somewhere else. Because we keep saying all this automation is helping you be more efficient.

[00:32:34.69] REID HOLZWORTH: It's like saying that people are-- that the cost of gasoline and the amount of gasoline consumption is insane when cars became a thing. It's like, yeah, da! because I don't want to ride a horse anymore, you know?

[00:32:53.04] CHRISTEN KELLEY: Yeah.

[00:32:55.71] REID HOLZWORTH: I don't know. I mean, I'm probably totally reading this wrong. and they're probably like, oh, this is like blah, blah, blah, like, da, da, da, all this stuff. But yeah, I don't know. I would assume that's not just like, oh, yeah, hey, we're going to charge you 40% more for the same thing that we're giving you today. it's hey, we got this other product that does badass shit. Do you want to use this thing? Yes. Well, your cost to me just went up.

[00:33:20.31] And it's SaaS. Why is it SaaS? Because it's how you do this stuff. How else would you price it in that way? We go like the old technology way like way back in the day. Like, I'll sell you a piece of software and then you have to maintain it. But then I'll charge you to maintenance it and do all this stuff.

[00:33:41.86] By the way, we still have crap like that here at Ivans. Like, no joke. There are still stuff from way in the bellows of our basement that people still use and pay us for in that way. But it's just not-- it's not how it's done anymore. So the costs are going up. And that sucks. People are leveraging technology more and more.

[00:34:00.25] You know what's really expensive? Really, really, really, really expensive? I'm going to use it. AI is fucking expensive.

[00:34:08.53] CHRISTEN KELLEY: Yeah.

[00:34:09.30] REID HOLZWORTH: That shit is not cheap. No way Jose. It's not. That's another one too. People talk a big game about all that stuff. And it's like, Oh, I can do this, and I can do that, and blah, blah, blah, blah, blah, blah, blah, blah, blah, blah, blah.

[00:34:20.96] You're going to pay 25 bucks a ping for that every time you hit that button? 25 bones, 25 bones, 25 bones, 25-- it doesn't sound like a lot, but it's a lot. So there's a lot of costs around that stuff. And people aren't really-- they're talking about all the solutions and the things, but they're not talking about the cost around it.

[00:34:41.18] CHRISTEN KELLEY: Well, that could-- the whole point of it increasing. Maybe that's what it is too. Is that you're having to pass along costs. Like if everything, and almost everything that we talked about on this list is AI-powered, and if AI is costing the solution provider, vendor, what have you, money to even provide this to you, then your cost is going to go up too. But you're getting more efficient, modern, all those fun words that we've been using.

[00:35:11.26] REID HOLZWORTH: Yeah. Amazon, they're the ones getting it. AWS, GCP, Azure. Right?

[00:35:24.16] CHRISTEN KELLEY: Well, and they-- it's just like an add on to a lot-- I mean, it's not one of very many things that all of those companies are doing.

[00:35:32.42] REID HOLZWORTH: Yeah.

[00:35:34.40] CHRISTEN KELLEY: OK. Last one. I'm actually going to talk about people a little bit. It's very interesting. But AI again.

[00:35:42.98] REID HOLZWORTH: I've got to-- no, no. I'm not answering another one for AI. I'm not doing it. No. OK, fine.

[00:35:49.07] CHRISTEN KELLEY: Sorry. Looking for-- OK, so AI fills in amid the search for sustainable solutions to the tech talent crisis. As experienced professionals approach retirement, AI and automation will allow routine tasks to be systematized, while experienced staff focus on complex cases requiring human judgment.

[00:36:14.37] I feel like we've been talking about the insurance industry retiring since I started in insurance. [LAUGHS] And a lot of us are still here, though. [LAUGHS]

[00:36:23.13] REID HOLZWORTH: That's since I started insurance. It's always like, the average age of the agency owner is blah, blah blah, blah, blah. And they're all going to be retiring. And now this new workforce is coming in. That's always been a thing, right?

[00:36:35.14] I don't get it, though. I'm a little slow. So is it saying that there is a need-- a demand for AI engineers, and that's a gap that we have out there? Is that what it's saying?

[00:36:48.29] CHRISTEN KELLEY: It's saying that while the industry searches for tech talent, we're using AI to kind of fill in the gap. So you have-- as people retire, you're going to have less and less people that are going to be able to work on the more complex stuff.

[00:37:05.32] So if you can use AI to do more of the entry level stuff to get that stuff done, you can use your talented people to work on the stuff that requires a human.

[00:37:16.28] REID HOLZWORTH: OK. OK. That makes more sense. I got it. OK. Yeah, I could see that. All the redundant task stuff. It's like some of the stuff we were talking about. The streamlining of the workflow and underwriting and stuff like that.

[00:37:28.23] You can start to get what was not necessarily straight through processing type stuff kind of somewhat automated in ways, right? So that they can really focus on the real tricky stuff in that. Yeah, I could totally see that. I could totally see that.

[00:37:44.74] I'll say just through our lens, we're hiring a lot of AI engineers right now, especially after the Planck acquisition and just all the shit we're doing. And we're doing a ton of legit AI stuff at Ivans. And so we're hiring a lot of AI engineers.

[00:37:57.24] There's a bunch out there. The really, really good ones are hard to find. But I will say this. This is just my experience. But you don't need the super high-powered ones. You don't need a lot of those. Because a lot of this is just like heavy lifting stuff. It's just like, you need people that are smart, understand it, this kind of thing. But it's not like, you don't need the Elad Tsur type dudes.

[00:38:25.34] Elad's another animal, but-- you know what I'm saying? Maybe that was going too far. But just like really, really, really experienced AI engineers to build all that stuff. You need a couple of them. But you don't need a whole sea of them.

[00:38:42.10] And those guys, those guys are hard to find. And they're not cheap. But I think that when we're talking AI engineers, you just need a bunch of dudes that can do a lot of the heavy lifting. And that's because the models that exist today make it easier in that way.

[00:38:59.90] That's going to be a thing. It's like Salesforce developers, where a number of years ago, they were so sought after because everybody was moving to Salesforce and doing all this. I might be just saying that because that was my world, you know? But that's how I saw it.

[00:39:13.33] And now that like everybody certified, you can find Salesforce people everywhere now. There's tons of them. And so I think AI is going to become the same. Everybody's going to have that on their resume.

[00:39:26.33] But I guess my point is, once again, it's like, I think that it's fine-- you're fine with those, but you need a couple of the whizzes, if you will, to make sure you're making the right architectural decisions and things like that. Like you know actually what you're truly doing, but there's just a lot of heavy lift grunt work, if you will, around that stuff. And I'm saying that speaking from firsthand, because we're hiring a ton of these people right now. So anyways.

[00:39:54.38] But yeah. So I could see that. I could see that, to answer the question. The redundant kind of tasks and things being automated via AI in that way so that your people can focus on the things that are more complicated. I don't know.

[00:40:10.98] But that doesn't mean like-- I always think, I don't know why, just like-- it's like this nervous reaction I have around this stuff, where it's like, I always feel like I need to just tell people it doesn't mean that your job is going to go away. You know what I mean?

[00:40:25.99] I don't even know why I say that. People know that these days. But I feel like-- I don't know. Maybe all the years selling into agencies and things and selling automation and like, I had CSRs literally not like the system or not like things because they feared job security, 100%. So that's probably where that comes from, I don't know.

[00:40:47.53] So sorry, I was going off on a tangent there, but like, I don't know.

[00:40:50.29] CHRISTEN KELLEY: I kind of came from the same thing. We were selling portals, right? And they're like, No. If you give them a self-service portal to get their certificate, then they have no reason to call me.

[00:40:58.24] REID HOLZWORTH: Right? Exactly. Yeah, same thing. You're like, no, no, but you can-- no, they don't understand it.

[00:41:03.33] CHRISTEN KELLEY: Yeah.

[00:41:03.64] REID HOLZWORTH: And so I think there's a lot of that noise still around AI and whatnot. But as we were talking about, as people have kind of have gone out there, they've tested it, they're getting more comfortable with it, all right, what's the use case here? Oh, hey, like streamline underwriting, that makes a ton of sense. We can help with claims. It makes a ton of sense. Some of this stuff.

[00:41:19.72] And then the end users, the humans, they're not bombarded with a bunch of redundant things day in and day out, day in and day out. Automation, leveraging AI will help with a lot of that. So yeah. Anyways.

[00:41:35.52] CHRISTEN KELLEY: All right. So we have gone through the Datos top 10 trends for '25. So we talked about AI and automation, around ENS and claims and underwriting and a bunch of other-- and SaaS. And I think there was a couple other bingo card terms on there.

[00:41:56.95] Is there anything-- you were talking about things that you've heard, things that you've had with conversations with your peers that you didn't hear kind of addressed there that you think is going to be stuff that is happening this year or, hell, even into the next year?

[00:42:13.48] REID HOLZWORTH: That would have been a good if I actually did do my homework. I'm just a bad student.

[00:42:18.85] [LAUGHTER]

[00:42:20.53] Ponder. I think we covered a lot of it. If somebody were to ask me that, what I'd say off the cuff is a lot of what we talked about here.

[00:42:30.29] CHRISTEN KELLEY: Yeah.

[00:42:30.58] REID HOLZWORTH: This year we're going to see AI truly impact our industry. I really believe that. We're already seeing it. There's already products out there. People are using it. They're going to start to really leverage this stuff.

[00:42:41.60] I see the most value around underwriting. That just through my lens. I mean, I'm sure there's tons of value in other way, all kinds of stuff. But I see it on that flow. It's a very cumbersome, not very efficient. There's a lot of room for improvement there. So I see that.

[00:42:59.74] Yeah, I don't know. We talked about, it's kind of funny, small carriers moving to a more modern stack and all of that. That would not be the first thing that I would ever say. But I could-- I maybe, sure. I don't know, I think we covered a lot around it.

[00:43:15.32] CHRISTEN KELLEY: Yeah.

[00:43:16.42] REID HOLZWORTH: Anything else that I see that wasn't mentioned? I'll say this. I said it before. Sure as hell aren't seeing a lot of startups out there. I haven't seen anything like new, cool, exciting, in a while. And I talk to friends. I got lunch with one of my buddies the other day who's like super in that world. And on all the boards and blah, blah, blah, blah. And not a lot of like really exciting stuff out there.

[00:43:48.00] It's really exciting. I don't know, I just haven't seen like-- it's a lot of the same things, once again. So sorry, I'm going off tangent there. To answer your question, not really. I think we covered a lot of it. It's a lot of this AI-ish stuff.

[00:44:02.64] It is, I hate saying it, like blah, blah blah, but it's kind of like what blockchain was a number of years ago, right? But it's real. It's not blockchain. There's real value here for us in this industry. Not to say that there's not value in blockchain, I get it. But no, not in our case.

[00:44:19.91] So yeah. I don't know. It's going to be a fun year though. I feel like the market's turning around. I feel like things are happening. People have been building a lot over the last few years. And we've gone through a lot with COVID and all this just chaos, right? The election. It's just like, what is happening? All these natural disasters. And just stuff's like weird, right? It has been.

[00:44:46.30] But I feel like we've come past that. And this is going to be a real big, I want to say build, but not necessarily build, because I feel like people have been building stuff. But we're going to see things come to life this year in ways. And so, yeah, I don't know. For me, that's in that. But what do you think? Was there anything we missed?

[00:45:13.95] CHRISTEN KELLEY: I don't think so. I think as I was going through the list, I think one of the reasons I picked it was because it did-- it was a lot of things that we had been hearing and talking about with customers internally.

[00:45:24.75] But I do think, yeah, AI has gone from-- I don't know where I got this from. So I apologize wherever I pulled this from. We've gone past the AI as like people researching it and wanting to be aware of it, and now it's operationalizing it, right?

[00:45:40.24] OK, I know what it is. Now it's like, how do I use it inside my organization? So to your point, I think we're going to start seeing a lot of things come to life. We keep talking about all of these use cases. Now it's like, let's see how it actually works.

[00:45:56.28] REID HOLZWORTH: That's the best way to put that. That's exactly. These things are going to start to come to life this year. I love it.

[00:46:04.23] CHRISTEN KELLEY: All right. Well, thanks for your time. And hopefully we will be getting some new guests on soon. And yeah, I think we're good.