INSURANCE AND INSURETECH
Navigating the Changing Tides
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[Bruce Silverman] Hey, everybody, welcome into another edition of "Managing Risk for Tomorrow, Today," this day with Jeff Kleid. He is the founder of Victoria Insurance and Elite Risk. Jeffrey, how are you?
[Jeff Kleid] I'm good. How you doing?
[Bruce Silverman] That's all you have to say. "I'm good..."
[Jeff Kleid] Yeah. How you doing? How you doing? How YOU doin'? It's all I got...
[Bruce Silverman] All right, that's fair enough. Fair enough, you can get in touch with Jeff at 818-968-1353. Website is eliterisk.com. And he is the founder. Insurance -- before we even get into the topic right now, insurance in the middle of 2023 is really a day by day situation, isn't it?
[Jeff Kleid] It's crazy. I mean, it's, it's crazy. It's what we call a hard market. Very rarely do we see hard markets and, and there was a really long time between a soft market and hard market. But within the hard market, it's getting really hard. And it's really going to be difficult. And it's, it's going to affect like everybody as opposed to just like business owners or as opposed to just maybe house. I mean, it's it's across the board. Now. It's different.
[Bruce Silverman] I have spent a lot of time in my conversations with you, with Adam, with Henry, talking about creativity in insurance. And most people would think and I made this statement to all three of you, most people would think that creativity in insurance is not needed. But right now, creativity is key.
[Jeff Kleid] Yeah, it's fun. You know, it's funny. It's always been needed. But not everybody needed it. So now it's - more people need it that are just regular people. Just simple "how do I get homeowners insurance as a consumer," how you know, who's gonna, you know, "who's going to take me with my auto insurance." I had a friend actually, that just literally was at when we were out of town a couple of weeks ago. And they found out that they had been cancelled months earlier. They did not know this. And it was frustrating for them. Because a there was a) there's a whole bunch of different things in the way they should should should happen. Right? The carrier should send you letters, the broker should be involved. They had no clarity, because they believed that they were covered. Because if they had a credit card, because now you know, a lot of policies, you can put your credit card in and it happens. When they went to go fix the problem, everyone said you can't get coverage. And it wasn't for anything they had as far as what was wrong with them. What it turns out, they kept being told is that because and again, it could be an excuse, it could be whatever, I believe it. But if you recall, when COVID started, insurance companies rolled back the premiums by giving credits for your auto and saying "you're not driving now, right?" because your premium is based on driving. Well, now, they can't just go back and recharge or re surcharge or change it. So they don't want to go through the process of finding out all the answers. So it's almost easier to cancel people. If there's a, you know, a fault, you know, it's like it's a quicker system. You know, and by the way, it's the same thing for consumer goods. Same thing for if you miss a payment on something, it's the same. So it's not just insurance, but in insurance. it's crazy.
[Bruce Silverman] Never a dull moment.
[Jeff Kleid] Yeah, no, it's actually cool. I mean, it's it's not cool that it's happening. It's cool to be someone who spent my whole 25 years, almost 30 years in business, like seeing these anomalies when maybe not everyone else saw it, and dealing with those little anomalies and, and you know, some people kind of snickering going, "Hey, how's that little thing you're dealing with? Or how's that" but like now, it's like being able to go, you know, and have a conversation. I mean, I had a conversation with some swim meet the other day, Robbie is swimming. And as basically, you know, "Jeff, what's going on in Florida with the homes being home insurance being canceled?" I go, "it's not just Florida. It's California." Like and California is wild for fire Florida's hurricane you and I have talked about this, but it's happening, you know, more so and, and it's really simple math. If you're a consumer, if you're a business person, it's simple math. If you collect this much money, and it costs this much money, you lose money. If you collect this money, much money and you know, put my hand over here, so you can see, but if you collect this much money, and you don't know how to predict it or project it, the best way for you to do it is say "I'm out. I'm not going to do that anymore."
[Bruce Silverman] Yeah, last night flash flooding in Fort Lauderdale. Couldn't even get close to a movie theater. I had to turn around, even though - perfect example of what you just described - credit card, put down , paid for the tickets couldn't get anywhere near the movie theater without a U boat.
[Jeff Kleid] Right, right. And believe it or not, though, somebody has come up with a solution for something like that there's insurance products out there with insurtech that actually would insure that as long as, as long as the flash flood had so much water, or it happened in so much time, or it was in a certain area, there's actually that's what's cool about insurtech is they're creating simple kinds of silly fixes for stuff like that, because there's real value, right? You spent 80 bucks to go to a movie for four people. And you don't get it back. Because done, you know, they're not going to return it just because you didn't make it. So how do you do that? So...
[Bruce Silverman] Well, and that is a perfect segue into what's happening right now in insurer tech and how people can grab control.
[Jeff Kleid] Yes. So, I mean, ours is more "how to insure tech companies grab control, rather than the consumer," right? I mean, this is this is more for us to kind of, you know, put a spotlight on what is evolving what, you know, what are the band aids? What are the fixes and stuff? So it's different for us, because that's how we're thinking about it.
[Bruce Silverman] So how can businesses take control?
[Jeff Kleid] Well, so I mean, again, I would take it from, I take a step backwards, because a business is really looking for someone to have a solution. So what I'm really focused on is helping other... someone who has a solution, or thinks they have a solution, kind of figure out how they can make that solution more scalable, so they can help more people like you. Right? So they can help a consumer. So from where I sit, I mean, yes, I can go sit with a business and say, "you know, you should have a generator, if you live in a place where power goes out all the time," you know, you I could do all those risk management things. But that's not what I do. That's not what my company does. You know, we're an insurer, you know, we're an MGA. So we would basically work with brokers on behalf of their clients, right? So we don't even work with the client directly. But the client comes out and says, "How do I take control of my risk?" So on this, we're, we're talking about InsurTech, we hope to help insure tech companies with the insurance company paper that they need behind them. So, we have the ability to basically ensure or reinsure the creative widget or process that they're trying to, you know, offer to a third party as a solution.
So for the for the insurer tech company, that's trying to solve for your problem of "what happens if I bought tickets, and now there's a cancellation." The insurer tech company is trying to use insurance and technology to make that a very painless thing for you do it at a cost that's minimal and affordable for you. And at the same time, there's an ease of transaction with using insurance and the technology behind it to make that process go. So you know, at at the time of purchase of tickets, for example, you have a, you know, a embedded insurance product, or you have something that says "Click here if you'd like cancellation insurance", right? Now, here's where the hard part comes in for an insurtech or for what's going on. Using the same examples of the housing market or the building market or flood, hurricane wildfire in California, flood hurricane in Florida, that insurtech company has a problem because they need to be able to have insurance company backing or reinsurance for that thing to help you. And that's where the problem is coming into play. That's, I mean, that's the biggest, like, that's the spotlight. Right? It's like, "okay, we've agree, you have a need, we agree we can solve the problem". But now the people behind us that are ensuring our program as an insurtech company, don't have it. So that's where we come in, and we go, "Okay, let's see how we can help you."
The hard part that's existed up until now is insurtech, as a concept and a term back in 2013 14 and 15 - if you talk to a traditional insurance broker about it, or you talk to an end user consumer, like you know, "what is this insurtech you speak of?" Right, like that's how they would think it. And so these guys have to climb up hill and usually most of those companies are founded by technology people who truthfully, and some could argue with me, had and have a disdain for the insurance process.
So that, you know, look, we all form companies out of frustration, right? We all form, here's why we're going to do this, here's what we, here's why I'm gonna open up the best coffee place, here's why I'm gonna do it better than someone you know, Tom Cruise, you know, in Jerry Maguire, you know, here's his mission statement. And really, it's Leigh Steinberg, who happens to be right down the street, who I've been impressed with since day one, because it was really Leigh Steinberg, right, I'm gonna, I'm gonna change, I'm gonna, I'm gonna raise the expectations.
Fast forward to where we are now, you know, 2016, 17, 18,19 and 20, There's all these insurers are and investors that started putting money into insurtechs because they start to believe that these data scientists and all these people that build technology, were going to create these great products. And there's some great products out there. The problem is getting into more recent years, you had to partner with an insurance person to really understand the lay of, why people are going to buy it, how do you get them to buy it? What's the marketing, good old fashioned old school thought process, right? How do we get from A to B? You know, some things are simple, and they're incidental. You know, you go on Airbnb, you go on Hopper, you go on something like that, there's a "click here to get insurance in case you cancel your room," "click here in case you cancel whatever." But to get to that point, it's not that simple. So a lot of these insurtechs, you know, over the last, you know, 2020, 2021 into 2022, start pounding their chests going "Insurers, you need to come to us and you're going to be giving us everything." And it worked for a good couple of years.
And, interestingly, I would go to insurtech conferences, and there's actually one coming up in October that I'm going to again this year, and it's an awesome conference, when I first started going there, I think they had 400 or 800 people. Last year, I think they had 10,000 11,000 people, because you know, and it turned into like, I think they even had I don't remember who the concert was, but it's like, you know, English Beat or some crazy like, well known old school, whatever, you know, showing up at a concert, I didn't stay. But you know what I mean? Like they they have this this great stuff. I know, I know, you would stay. I like to get home. I'm a family guy. I like my family. You - not so much...
[Bruce Silverman] I go to concerts WITH my family...
[Jeff Kleid] No, no, no, don't don't try to don't try to get in there. You know, don't try to make up for your family, you know, minimization there. But I want to get home. But point is the insurers have taken a real step back and said, "What are you going to do for us? We understand your concept, we get it? How are you going to sell it to critical mass? How are we not going to lose our shirt on and how's it going to be profitable for us?" And now they're looking at the things you should look at that but the market is so much in trouble right now, because of all the all these other things. That's where we're at is that and by the way, there's a couple of other things that have happened in the last two weeks that that are even going to make it even harder.
But that initial like product liability, weather related risks, you know, wildfires, auto insurance, all that stuff is coming to a head, and well heeled old school insurers who have a lot of money in the bank, and well heeled investors who have a lot of money in the bank, they're starting to look at it and go, "You know what, we're willing to give you a little to test your model. But we don't want you to waste it on insurance. We want you to go out and figure that out on your own. We want to we want to get into the technology of it." But they're seeing that there's not as much excitement for the technology in the data, even though there is. AI is here and everything is here. They're seeing okay, just because you can, why do you do it? And so they're kind of pulling back. And they're even interestingly enough with these insurtech startups. They have no investors and insurers who have said, "we're not going to go into risk, but we're going to invest in someone that doesn't share tech so we can kind of blend it into our world." They are slowing back on they're getting people to what they call series A so you go you know, your friends and family and then you go seed and then you go series A. After series A used to be "oh yeah, we need to be able to get B, we need to be able to get to C," and I'm not a money guy. I'm just telling you how I kind of in my world. Well now if you're not profitable after Series A, you're not getting a series B at this moment. That's the dramatic change. And so when you know when you start dealing with the actual insurance side of that, and the reinsurance side of it, you know, reinsurance like what is it that's keeping these guys from getting to the next level And then it's like is their model you know, gonna make us money or lose us money as an underwriter? So, that's where we're at.
[Bruce Silverman] Sounds like fun. I know you're having a good time.
[Jeff Kleid] I mean, look, I mean, we we turned down 98, 99% of the business that comes to us. Not because we want to not believe me, I just because we know it doesn't fit what we're doing.
[Bruce Silverman] And everybody needs to stay in their lane. And that's the most important thing and Elite Risk has figured that out. He's Jeff Kleid. He is the founder of Elite risk and Victoria insurance, you can reach him at 818-968-1353 and the website is eliterisk.com
If you want to talk insurtech with Jeff, that is the way to reach him. We'll see you next time on "Managing Risk for Tomorrow, Today."
[Jeff Kleid] Thanks Bruce.
[Bruce Silverman] Thank you!