The myth of the mandate: why compulsion alone never changed the London market, with Mark Geoghegan

[MUSIC] If you build it and make it compulsory, the market will follow. London Market has been trying to modernize itself for decades, new systems, new platforms, new mandates, and yet the same conversation keeps coming back around. Why is that? Welcome to Insurance Technology Fact or Fiction with Artificial, hosted by me, Georgie Simister. This is the podcast that separates Fact from Fiction in the world of insurance, debunks industry myths and explores game-changing innovations shaping its future. Today's guests has had front row seats to all of it. Mark Gagan has been in and around the industry since 1992, as a broker, as a journalist at the insurance insider for over a decade, and for the past six and a half years, the host of the Voice of Insurance, the podcast where the market comes to talk. But today, the tables are turned because there's a myth at the heart of the London market that nobody really challenges. The idea that if you build something and make it compulsory, the market will follow. Flueprint 2 Connect, a long list of initiatives that were supposed to transform the way the market operates. Some landed, most didn't. So what really drives change? And as AI starts reshaping everything from how risks are traded to the risk being in short, is the market finally ready? Or are we about to repeat some of the same mistakes with shinier tools? Mark, welcome to the other side of the microphone. Oh, well, thank you. It's nice to be looked after, rather than having to do the looking after, and have to plug all the microphones in and do all that stuff. It's nice. It's nice. And when I do my podcast, this is an lovely studio. We'll have to carry anything. It was the first day of thinking, "I'm going to do a podcast recording today." Great, but I don't have to bring my big rucksack with all the heavy microphones on all the cables and the memory to charge the batteries and all the things that you have to do. So today, it's just pure luck. I just came and got made a coffee. Emma, that's very nice. Well, I've last seen no pressure for you, because the pressure is certainly on for me, interviewing someone like yourself. So this is your time to shine. You had started the insurance industry in 1992 and worked for the insurance insider for 11 years. You obviously host your fantastic podcast, The Voice of Insurance, for the last six and a half years. I bet you've heard some things, haven't you? Well, yes. I mean, but you can't. The best thing about being a journalist and the worst thing is knowing that you're only publishing the tip of the iceberg, the things that you can prove are absolutely true. And of course, you saw something, you've got two or three independent sources to tell you that this is definitely, definitely true, because it might be important. It could be liable, it could be all these other things. But you only get to publish this tiny tip of the iceberg. There's all this other stuff that stuff that you've never been able to prove that was true, although you have a very strong suspicion, if it was a civil case, you think, and it was just on the balance of probabilities rather than beyond or reasonable doubt, was the burden of proof. You think, yeah, yeah, we're able to publish that. And that's the great fun of being a journalist, of having a news desk and having all this stuff happening, people going off and coming back from meetings saying, "You'll never guess what I've just heard." And then sometimes something comes across the wires and having to react really quickly. So the stuff you've heard, yeah, I've heard a lot, but a lot of it is so it's not necessarily repeatable without then having to justify yourself a couple years later and they're very expensive for court of law. So nothing you can share right now. No, well, if you buy them a drink later. Yeah. If we look back on your 30 plus years of experience, what are the biggest trends that you've seen come and grow across the market? And is there one that's actually changed things? Oh, everything changes. But some of them are really interestingly cyclical. In the early 90s, particularly in the mid 90s and then by the late 90s, I was actually part of this and for everyone was part of it by then, was a broker-consolization, for example. There were some, I mean, there were hundreds of similar trends within the carriers. We'd had deregulation in the '80s, under the THATRA regime. The London market was sort of full. By that stage, the London market was full of all. So everybody had every European insurance company had a small independent London market operation because it had been liberalized. And they didn't need a huge amount of capital to do that. And then we had a load of really undercapitalized companies. And I, in 1992, was a person who was in their old shutting. There was shutting down because they were sub-scale. The downside was far too big. And the upside was margin or at best. So they were shutting down. Obviously, and Lloyds of London had had 300 syndicats at that point. And they were all too small. I mean, it's much better now to have 40, 50 managing agents about 70, 80 syndicats that were all substantial and many of them writing a couple of billion dollars. And suddenly being like insurance companies in their own right. There's a bit of it wasn't like that. But that major trend would have been the broker consolidation of the '90s. And the broker that I was part of, it was the biggest broker in Spain, privately owned, part of an international network. But it was taken over by A on. And that was my cue to go and become a journalist and say, do this other thing that I wanted to do. But around that time, I knew this guy called David Houten because he was our DNO broker. He was the wholesale DNO broker. We were the big retail broker for Spain. We had half of the I-Bex 35. Suddenly needed to buy DNO. He met this guy called David. And he's like, you know, he can do DNO. And we'd never done DNO because no one in Spain had ever bought DNO before. So you come to London. And then we found a nice independent wholesaler. And he was fantastic. Did a really good job. Everybody loved him. Great service. Never had to chase him up for anything. It was really, really good. But we got taken over by A on. Yeah. The parents sort of company that had been taken over by A on or March at that time, by 1999. It was sort of, you know, the top 20 names that all been taken over. And the top brokers in each country that all used to be independent and all corresponded sort of independently with each other within loose alliances. Suddenly became 100% owned either by A on or or March. And perhaps Willis. Willis was a bit late to that party. But it was that suddenly less than say, well, but that was just when David Houten decided to become independent. So it shows you that I thought he's crazy. Who's the sky? You know, he's mad, right? But the odds are stacked against him. It's all over. The game is over. A on and March have taken over everything. Of course, A on and March is still the top two brokers in the world. Soon be slugging it out probably. But now there's Houten is kind of, you know, it's up there with them slugging it out. And so who's to say, so there was a, I actually had this on the last podcast, but one is a down topping of BP Marsh, which is a small private equity business that backs entrepreneurial intermediary businesses in the London market and very famously. And sort of one of the greatest investments of all time. So better than anything Warren Buffett's ever done. It was investing in David Houten. I was like, I was cool. Then Houten, Pangbourne at that time. It's mid-90s. And then when they finally saw that, sort of 15, 16 years later, they'd, well, I have to check the dates, but it was maybe 15, 20 years later. You know, they made, I don't know, 100-bagger at the very least. But the point is that you can have this consolation. So well, oh, consolation. Yeah, you know, small brokers are dead. Everything's big-broker now. The game is over. And no, because it's not, back to the point with down topping, who's the CEO of BP Marsh is, I use the title for that was, it was a phrase that he'd got from Colin Bird, that Besso, another independent broker. Now, long since consolidated, was the big, big gets small, and small gets bigger. Well, that means, obviously, of course, the minute that the broker I was working for, was taking for a while. That was the moment for me to stop being a broker and go and become a journalist. It was a crystallization point. It's like, "Do I want to go?" No, I don't. The load of people in Spain have that same moment. But they knew this guy called David. He was independent. We like working with him. And then suddenly, from that, dual-ibere was born. So the very first MGA was, "We've got this great product, D&O. We're riding this." At the moment, it's just the IBEX 35, your FTSE 100 equivalent companies are buying D&O. But we've got this thing we can really latch onto. Everyone's going to be buying D&O by the end of it. Every SME in Spain is going to buy it. How are we going to distribute that? What's going to have to be buying MGA or something? And look at that. It becomes an opportunity for a whole lot of people saying, "I don't really fancy this A on business, but we can ride this growth." And so, D&O, then, Cyber, whatever. And look at all the things that you knew business that could happen. The lesson is it's never over. So those really big trends, you can be consolidated. You think everything's consolidated down to death. It's something that's like the Rockefeller standard oil. But even then, standard oil got broken up by the regulator, because it was too big. You know, it had a monopolistic power. So, basically, the market, you have to trust the market. And David hadn't trust the market. Trust is his own distribution expert. He's learned that lesson. It was difficult when he had a podcast with him where we were wandering around just different offices. And I knew that we were standing at that first office and saying, "I learned a big lesson." You know, when that big Spanish broker that I was working for was producing a lot of his business was taking over by him. Suddenly, that was a crisis moment. Things like, "Couldn't this be one of my biggest suppliers now?" Blungs, somebody else. And, presumably, they don't want to work with me anymore. That's a crisis. That's an existential crisis. Do you think there's still the same opportunity for Young Hungu Boca brokers nowadays? There's still the same opportunity. There's more of an ecosystem. Because it's not just BP Marsh there. I mean, obviously, the ticket price goes up. But, you've got an ecosystem around you saying, "Well, I can be, I'll give you an appointed representative." And I'm almost, you've have companies that have even set up to be a kind of renter and appointed representative. Your business can be put into a sale. You don't need a huge amount of capital. And they can look after all that boring stuff for you. And the same on the underwriting side, you can say well I'm not off capital stop man sin to cut my insurance company. I don't need to because I've got an MGA, I've got really good technology, I've got some I can plug into, again that could be, I could do that myself or I can, there are a whole load of people and there's all the venture capital around that as well. I've got some I can incubate with who's got lots of, you've got the kind of Uber MGA and then they're, I'm becoming almost an appointed representative of that MGA and I've got my own cell within that MGA. You can structure it, anything you think of, it can be done and look at, and look at, in short, it could be other things. Things that didn't exist, these were the sort of domain of, a lot of these things are being democratized at the same time as they're being almost monopolized. So, you know, whenever you think, oh, it's game over, it's just, you know, in tech, oh yeah, well Microsoft own everything. Yeah. Because I know, but then Google comes along, you know, and so, oh, what's this internet thing? Oh, now search is going to be, oh, okay. And now AI, you know, so the people say, oh, well, AI is just going to be, there's going to be three different AI's or two. Just in the way that web services, you know, cloud, there's only about four, three or four cloud providers. And you know, that's a worry, isn't it? It's a worry that it, is it some kind of oligopoly? Is there too much power concentrated into small amount of hands? Then don't worry about it too much because you'd be surprised. Every time everything comes together, there's always a little bit of fragments and then that's the one that has the opportunity to do load a growth because it can weave in and out of these huge giants. So again, so, yeah, broken, underwriting tech, anything, it always seems to work the same. So I've seen enough of it to think that the game's over and the game is never over. That's good to know. If we're zooming in right now, then what market shifts are you closely watching? Where a moment where AI is entering insurance from almost every angle, is there anything that about the AI that is kind of generally different from previous waves of transformation or is it similar to everything we see in the first? There's nothing different about it other than the technology itself. But we've got incredibly short memories in short take as 10 years old, or maybe it's 11 years old. I don't know. I was there when it started, but there was a moment when it was obviously happening. And that moment, before that, when it obviously wasn't happening. So it was around at a 10, 11, 20, 15, 20, 16, suddenly it became a thing. And sort of the sort of thing that suddenly at the insurance side of it, we would do, I think we better do a conference about this because people talk, we see that there's an opportunity to cover this thing that wasn't there before, so we better do one. Was it the same fear when short takes came about as there is now for AI? Oh, yeah, absolutely. It was much more aggressive then. So some of the start-ups were real upstart and they were a bit punky and sort of we're coming to kill all of you. That was very that aggressive Silicon Valley thing. The great sort of cliche about the Silicon Valley pitch is, I want $100 million and it's like, yeah, I'll give you $100 million, but tell me what you're going to kill. It's like, oh, we're going to kill emails. Whatever it is, email's still alive and kicking and annoying all of us, but still you can't live without it. There was much more aggressive then. It was, hey, remember, Airbnb, you've got hotels, but look, now you don't need hotels. And Airbnb doesn't even own any hotels. So the biggest hotel company in the world doesn't own any hotels. Uber, the biggest taxi company in the world doesn't own any taxis. So they say, well, logically, the biggest insurance company in the world, well, I don't know what it doesn't do in insurance, I don't know in any, but I don't need capital. It could be that way, but there was the time there was a couple of start-ups where people were very worried, but it didn't matter. First, it was, oh, we got to do it by our own MGA. Or then it was, no, you need your own full stack because the insurance company is just so slow and boring that they will kill you, you know, that you'll get a proof of concept and you'll never get to the point of actually selling an insurance because they'll just be so monolithic and so dull that they'll, you'll run out of cash before they ever let you actually do any insurance. So we all come into a proof of concept, you know, and then there was that. And it was like, oh, you need a full stack. You need your own insurance company. Then it was, what about parametric? Oh, yeah. Oh, yeah, blockchain. Yeah. So what about blockchain? Oh, distributed ledger, you know, let's call it, you know. But when we're talking about every two years, it's been a fashion, we've already, and we've forgotten about all this stuff, I mean, parametric still with us. And then embedded. Yeah. And embedded is nothing new about embedded at all, for example. So, but somebody who doesn't know much about insurance can get excited about it enough to, you know, sign a check for a couple of hundred million dollars on the back of it and say, well, you really want an hundred of these to work. And now obviously, actually, there's a really good report out right now from Gallaghery who've been done a great job of measuring and following the insure tech booth every quarter. They've got a really good report out code of adding up, tossing up how much new investment's been into put into insure tech. And then what's it going into looking at trends? The latest one unsurprisingly, 95.6 or something like that, but a ridiculous, almost 100% basically, AI. Yes. So you can't be an insure tech today without having dot AI in your name. I mean, I'm a present company accepted. I think you have you got a dot AI? I can't remember. Yes. We're dot IO. You got IO. What's that sample? I'm not sure. I'm not sure. I open one for the notes. We are, we're the original artificial, but I went to a Gallaghery breakfast and it was funny. They were talking about investment and everyone needing to have AI. And it was companies that previously had their same business proposition, no AI, and now they're rebranding it to involve. I mean, I keep things suddenly come out to be a little bit, low code, no code. You know, what's that? We're talking about that anymore. I don't know. Is it relevant now that you can vibe code to your own insurance company, you know, in five minutes, just lying in the bath? We do we do love a hype cycle. Looking at the technologies, what have you successfully seen adopted in the London market? And is there anything that you think has particularly led to that success? It's because it's needed and people want it and people use it because it's really useful. So we always beat ourselves off about technology, but I remember walking into that office in 1992, and it's the first time I'd ever seen a modem. And so I'm sorry, you have to explain what a modem is. Oh, it's a way of connecting to the internet. So it's a way of there wasn't the internet, but there was how do you get a computer to talk to another computer down a telephone? Right. It was only 13 K, 14.4 K. I think you get a kilobits per second. Yeah, 14.4 kilobits per second. You know, if you go to fast.com on your computer, it's only doing 14.4 kilobits per second. You say, oh, my goodness, me on a phone BT and give them a piece of my mind. But back in those experiences, that was what you got. That's what ran fax machines. Yeah. And that's also what ran this modem. And the original modem was actually had the telephone receiver actually kind of in the thing, like the old school 1970s telephone sort of in the thing that we could make these boingy-boingy noises. And it's yeah, it was really interesting. Yeah. It's fun. Anyone who, yeah, you have to be over 40 to know what that noise means. There's a noise that the fax machine used to make or that the internet connecting made when it was 14.4 kilobits per second. It was going to be reliable at that speed, to be honest, it was either 14.4 or nothing. So I saw that and I said, what's that? And so our claims broker had Limnet. So we're a lot of really advanced technology. In the end, Limnet was a wave notifying all the markets on syndicated policy of a claim. And it was a company market policy thing. But it was a glorified text message, but it was pretty useful because you're talking about idea to walk through the rate with this huge file to get 20 people to do this. But most of the time, they responded to acknowledge and that's great because it's important that they acknowledge that there is a claim. They can't then say we didn't tell me about it. Yeah. So it's really important. And notification of claim and you know, an electronic record of that, indelible. For you know, all agree that was already working in 1992. I remember the claims broker got in trouble because he left it on because it was about two pounds a minute or something. It was a special sort of, you know, you know, a special premium rate number you had to dial through this modem. So it was, you know, so you know, we beat ourselves up about technology. But when it works, when it works, when people want it, obviously those claims brokers loved it. Yeah. Because they can notify claims. At least the first notification, the message is you can back say bring the file in. But at least we knew that that first worry was what if I didn't get around the market and then they reject the claim because it was notified too late or there was, you know, basically when you're doing re-insurance, a facultative re-insurance and you've got claims, cooperation clauses, claims control clauses, stuff that's really important. Like within 72 hours you're supposed to tell me about claim. Like, well, hey, I can just log on here and I can do it on this green screen thing and we laugh about it now. But it was way before, you know, we didn't have mobile phones or they, if they did, they didn't do text messages. Yeah. It was a glorified text message. But before text messages even existed. So that works. Right. And there are lots of things in the market where those things worked. But the problem has always been, then next would be EPS. That was a electronic placing support. Yeah. That was something it was voluntary. It didn't root, but nobody really wanted it because it was rubbish. Basically, what's the point in having technology? Technology is supposed to make your life easier and not harder. And I go back to journalism. I remember something that if you don't do content and well, on your everybody's website has, but you're probably not responsible for looking after your own website. But if you are, there's something called a CMS and it means it's a content management system. So how do I know? How do I change the text for what's on the front page and what's on this page and what's on that page and how do I put up a new bit of news or something on the page? And it's just a little box is there's one that's the headline one that's the actual body and there's one place for a photo to go or whatever. And there haven't none of them ever change and they're all rubbish because the formatting is always impossible to understand. If you paste something in from word, it doesn't work because the bowl doesn't get recognized and then sometimes you get this weird asking code numbers and if you had an acute accent on it, 'cause it was a French word or Spanish word for me, you know, all the squiggly end that you have in Spain, you know, all this stuff, it doesn't work. - Yeah. - But whenever we've had a new CMS sort of being organized for us, if they're ever a consultant with a journalist, they'll always say, but you know, you're just gonna write all your stories in the CMS on you. But no one ever does that. No one writes stories in a CMS, in the box with the thing open, it's really ugly and horrible. They just write it in word. And then they send it somebody else and that goes somewhere else. And finally, someone learns how to paste this thing in such a way that the formatting isn't horrible. You still have to, but then you have to look at it and reformat it and realize that everything's always wrong, you know, you hit return and then it comes out as quadruple return and you don't know why the bold doesn't come out right or the font changes and everything. But the point of that is that there's always this assumption that from the technologists is that this is a better way of doing it and therefore everyone will do it that way rather than going to the people, there is an eternal conflict between that. There's this, there's the kind of Henry Ford's quote about, if I asked my customers what they wanted, they just said, fast to horses was costing you what they really wanted to, was the Model T Ford and it's just great. And suddenly, if we want something that is completely different from ours, but it does the same job as a horse that it just does it way better. There's that conflict. So often the technologists do know they know that if we digitize the market in the right way, we can actually work in a different way. But of course the people doing the insurance don't know that and so I wouldn't do it that way. It was a we don't work that way. So sometimes it actually, faster horses are better. So sometimes I think there's a big difference between, for example, the popularity of PPL versus white space and maybe when we were kind of getting into trouble, but the most obvious difference is the user experience, white space, white space even had the, I remember going to early demo and it had the little, when someone put their line down, it had the little Lloyd's anchor, you know, the stamp went down and it had the reference up. It looked like the old, it was something that was familiar and it was a little, you could say, oh, that's just a soft tool, these sentimental people. But actually, I mean, there's probably, that I would say is that that's the thing that made people want to use that one more than the other one. There needs to be, there, you need to have that compromise between working in the new way. And of course, so the insurance industry embrace Limnet before anyone even heard of text messages. And I'm sure the insurance industry embraced the telephone, embraced the telex machine. And it certainly embraced the factory machine, we fell in love with the factory machine and then we fell in love with email and PDFs and spreadsheet. We love us, spreadsheet. Yeah, but what's wrong with that? It's way better than what came before it. So give me the benefit and then everyone wants to use it. And it's really obvious if the broker next to use getting a double-year bones because they keep producing 10 times more business than you do. And they seem to be going home early. You go, what are they doing? I'm not doing. I was up because they use this new thing. So, but show me how to use it. Give me one. I want what had the same machine he's got. But on that point of new systems and say if there is a new system that is driving huge benefits, why can't we just mandate those systems then? Because I guess it gets you into a bit of trouble. But there is a belief that if something is compulsory, the adoption will follow. But it's wrong, isn't it? That's wrong. You can only mandate it when it's 90% or 80%. Whatever, a large, 80%, 20% that will probably do when it's really obvious. So there was interesting. There was that. And obviously there's the politics of this. It's very difficult to be the person doing the mandating. Because you look a bit like King Canut, half the time. Sort of turning the tide to go out when you're getting your feet wet. But there was a type where Connect had been a failure. This was an early placing system. I mean, it was now the second attempt at electronic placing system for Lloyds. It hadn't worked. And it'd been an expensive failure and a bit of embarrassment. So that was left. Let's just do peer to peer or whatever. And so it was a really good way of kicking it into long grass and saying, we're not done mandate anything. We're not going to have a centralized system for this. And all very well. But at the same time, that same executive did mandate the use of the electronic claims file. Because there was absolutely no reason in 2007 or whatever it was. There was no reason on the earth why a van had to go down to Chatham with a slip just to so it could get signed so that the premium could be paid. Therefore, it became a valid policy. Therefore, the claims could be paid and that the money could flow. And it was a-- there was no reason on earth why you had to have some vang going every 45 minutes and coming back to a fleet of vans. You could mandate that you basically send what is a glorified PDF. And at that point, if you didn't know how to use a PDF, then shame on you at that point. I said, guys, you must be wedded to the wrong. So you can definitely mandate it when it's plainly obvious that you're living in the wrong century if you're not doing this. But I'd say that's not the adoption piece. That you can't mandate adoption. There needs to be adoption. And then it's use this thing to mandate. Yeah, absolutely. Yeah, I'd say once it's 80% used by everybody, and it's wholly proven. And there are even two or three different vendors out there with sighted different versions of them. Maybe they'll go one that you like better, because it's just as pleased as you more aesthetically more. We've got that with the placing systems. There are rival places and systems out there. They do the same thing. Some people like one over the other. Maybe it's easier to integrate this one into my system than that one. But that's good, isn't it? And the imperative is ultimately, you need to do the job. Or now everybody's connecting to each other through APIs anyway. So again, you don't need to mandate that. And I think I do agree with, I've had obviously recently had very senior figures from the market. And they're, yeah, I think they're right. You don't need to mandate that. And also, it's nice to have a bit of competition. It is. Yeah, because that means that the systems will then keep updating to make sure that they have the competitive edge. Yeah, ultimately, no one in their right mind would ever say, oh, you know what, we don't use Excel. We've got this guy in the corner who's coded this new version of a spreadsheet that is just a bit better than the average spreadsheet. You'd say, no, don't be crazy. Just pay your license or pay your license to Microsoft every year. And you get Microsoft Office for all the employees. Because it's just no brainer. Why would you, you know, you don't get some broker and say, you know, we've got our own water. It's so good. I mean, we bring it in from the special lake in Scotland. And can you not taste how different that is? It's just our employees are 20% more productive because they just drink this water. This is like proprietary water. And no one else is allowed to use it. So it's like our water. And it would just sound ridiculous, wouldn't it? So the idea that some, oh, our technology, proprietary technology is just so good. You need some of it to be proprietary, but you need to know what that entails. Because a lot of people think, oh, I spent five million on this thing. Great. And they forget that means that's a one million every year updating costs. And then in year five, you need to spend another five million, because it's completely obsolete. Yeah. And then you need to do another thing. So why wouldn't you get another, you know, let Microsoft do that for you? Yeah. Not, you know, not Mike, but let that third party vendor do that because it's their prerogative. That's their business. That's what you pay them for. And they have to keep updating and make sure, oh, now except video. Now it's like, oh, I didn't realize people want to start sending video claims files. Actually, they probably will, weren't they? Because why wouldn't they? If you're down there, get your phone out, but only your justice there. Unwook my clunky old system, of course, it can't take. Yeah. And pegs, can it? And that's one of the issues that we're seeing now is that there's lots of legacy tech that people are now needing to update and move on from, because it solved problem back then, but so far advanced from that now. I'm going to open a kind of worms now. FluPrint 2 was intended to be mandated. Why do you think that went wrong? It was an interesting idea. It was a smog as bored and this kind of pallet of all the things you could do. But it wasn't necessarily prioritized about what actually needed to be fixed. Certainly, I had to pat your tin on the show very recently. And I pressed them and it's awesome. Are you comfortable? Obviously, is there's a really important operational risk here that what happens if the whole of the London market's back office falls down and people can't pay claims and people don't have a policy number for a thing now they can't pay the premium and then therefore they can't get a claim paid. And suddenly it becomes national news and people are asking questions about the parliament and the thing shut down. There's something like, you know, when a bank comes to that situation, you know, where the ATM machines aren't working cash, it's stopped coming out or that, you know, you go to pay and your thing doesn't go beep and it doesn't pay. Like we had in Spain when they had the shut down. So the cash started, it was the only thing that works. It was like everyone wished they had more cash in their back pocket because thinking, well, at least we can go down the bar. Yeah. Even though the fridge is switched off the bar, but for the next five hours, the fridge is still on. We keep the door shut. We used to be going to have a beer while we'll wait this thing out. It was like, no, we can't pay for the beer. So I think they went back to barters. Like, I'll pay you back when we get, you know, I'll do an eye, there were people writing eye-o-year thinking the bars, you know, waiting for the lights to come back on. But they said, we don't want to go to that. But as long as battery was very comfortable, the core systems are fine. So the rest we can develop, I think we can work it out for themselves. And particularly also because it's hard to know what people are going to want in five is someone who thinks they're changing so fast. I had a really interesting podcast with Anthony Stiggas, who's head of digital firm for Marshall and London market. And that's fascinating. And that was funny enough. I knew him because he worked at the entrance inside of very briefly. Yes, I heard that. I'm not a guest. Yeah, he's a really interesting character. But yes, I think we may be going a lot further, a lot quicker with the coalition of the willing, you know, with everybody connecting to each other anyway, you know, doing, you know, APIs and all that kind of stuff. Well, I'd love your opinion on that because you give the floor to so many others. But your view on digital trading, what do you actually think it means for the market and do you lean towards any kind of advantages or drawbacks to it? And if you were back in your broken role, how would you be looking at this? I would be using everything. I've just been a podcast with Flood Plus and Flood Plus is only 10 years old. So it's almost like an insure tech that's his got writing flood all across the US, you know, right at the consumer level, how individual households, something you wouldn't expect a Lloyd Syndicate to be able to do, but they're doing it with four people or five, four and a actually because they're able to ingest all the information that isn't insure tech. So I mean, I'm, you know, everyone just have line slips. We had a line slip for fireworks, manufacturers and displays because it's funny that we had about a hundred at the peak of that because it turns out fireworks manufacturers are all kind of artisans that they don't realize that they make their own fireworks because they want to have make unique fireworks for the special displays and fireworks are really big deal in Spain, you know, every fiesta can have really good fireworks display. So they had their own manufacturing facilities, which is basically a load of sheds in a field somewhere because you don't want to blow up anything. It has to be a long way away from population. But then we have this package, a sort of liability package for employees of liability obviously because it could blow up your staff with their not paying attention. And then obviously you can set fire to people if you fire the fire in the wrong way or it's, you know, it didn't, it went off wrong. But that was a pain in the ass, you know, the admin for that now, we could literally plug that in and that could become the local broker down in Seville could just press a button because we weren't doing anything. We weren't really underwriting those. We could maybe set the terms or we could codify that to the point where I wouldn't have to, why would I have to run around with a new piece of paper with a new declaration saying pyrotechnic pyrotechnia, they were in Spain, you know, these pyrotechnic companies, why would I have to say, you know, it's pyrotechnica, Sanchez this week and then it's pyrotechnica low pairs next week. And they're all, are we really underwriting them? Again, we're commoditising something that's quite difficult. We have those kind of, any of those packages, you could just codify them really quickly. If you were a smart go-ahead broker, you would say, we got this done. We did the added value part, which is actually ensuring fireworks manufacturers because it's a big exclusion of explosives are excluded from most people's treaties, of course, for a really good reason. Yeah. Because they explode or, you know, railways or whatever it is. All the stuff that we live on in the London market, which, you know, core things, there's a treaty exclusions for everybody else. And that's why we're here. But if you can commoditise that, take the cost out of it, it wouldn't need to have 32 and a half percent commission on it, you know. But the thing that strikes me when we're saying that you can't mandate stuff unless you're, I think you said, like 98% of the way there. But brokers are already mandating the trade of business, you know, the same. Yeah, we're giving them another way, yeah. Yeah, how are brokers successfully doing it? But somebody like the Lord's cart. And, and, and own is it, is not the right word of the customer's always free to go somewhere else. But if you have you originate a customer, a real human being, these are relationships with people. This is person to person relationships. Someone plays golf with someone. They've been playing golf with them in rebel. They go to the same church and whatever it is. And they understand and trust that person to place their insurance for them. And then they could be, they could be at the beginning of a very long chain. But they're going to place insurance with that person first and foremost. And then that that person will get a very good deal. If they can be a terrible deal, then they might go somewhere else. But it's about having who got that customer in the first place and explain to them that their firework company could be insured. And it's quite complicated. But it's going to give you all the cover that you need. Here's what you need for these difficult to ensure risks, you know, you've got all the standard stuff. And then you've got, you know, you have a client who owns a whole shopping, a strip of shops. And then they're doing so well. And they say, hey, I've just bought myself helicopter. And you go, you ensure that as well, aren't you? You go, I don't know, but then you phone someone in Madrid and then someone should phone someone in London. And then before you know, yeah, you've got to quote your saying, what do you use a helicopter for? You know, and then how many hours of experience? What kind of make a model is it? And you know, how many, what have all this stuff? And suddenly you go, that person knows more about helicopters than these two. So you're saying that you can ensure anything. If there was a benefit to digitally trading and focus on the business, then it makes sense for the camera. And then you see, you know, you're like, I'm going to use it. I'll tell you what, you know, you've got to use it. And then you're going to use it. Right. Right. always, you know, anytime phone, two o'clock on a Sunday afternoon that adds the phone straight away what is it? Come and help you. Oh, there's been a fire, you know, bang, you know, we're down there. They fix it. So those people own, it's wronged. It's a nasty way to distribute. I don't even mean it's the distribution. They own the distribution. So if they want to play a business anyway, they want to do it, that's their choice. But then some of the things that you've said could be the same for law, it's you know, it's a trusted place. They placed the weird and wonderful. So the brokers do need them as well. It depends on, well, it depends on where the demand and supply balance is. Obviously, Lloyd's often has been in position and the London market has been in position where this is the only possible place you could get this done. That's not a very good word of selling yourself, but it is still the only possible place where you can get this thing done. Yeah. Sometimes it's, you know, I've got an armoured car business. They deliver cash and they just had a $50 million claim last year and the local market thinks they nicked it themselves. Well, nobody wants to be touching this with a barge pole. So let's send it to London. We know it's going to cost more than it did last year. But hey, at least London, they'll probably look at it and go off we go. You know, we'll start somewhere with this, you know, because it's been a loss and there may be three years later, it's going to run to clean for three years and then it gets spirited back to that local market. But the point is, when it's the market of last resort, there is nowhere else to go. So then the insurers in that market of last resort can say, if you want to do it this way, it costs this much and you have to do this boring, terrible, clunky way that we still are wedded to. But so, but you have to deal with us, rather than us having to adapt to you. Well, of course, if you want to write really good business, one third of the London market's business or a bit more than the third is delegated authority business because everybody in stance, yeah, if you want to send, you wouldn't send slightly more vanilla, more stable business to London. If it was a pin in the back side to do it and it was expensive. And yet, there's a minimum, it's below whatever the minimum premium is. Well, there are other structures to deal with that. So why can't we do more of that? The we can do more of that. We're already backing, we've been backing MGA's forever by any authorities. So why wouldn't we do it that way? Why won't we do more of that? If the focus saying, you know what, I wanted to actually wouldn't mind doing more with you because I'm your security is fantastic. You know, double A minus these days and you've got licenses. We know you're, we like your claims, paying ability and your claims, paying attitude that you want to play. You're generally looking for ways to pay the claim, your commercial. You're really good. You're good to deal with. We like working with you, but we just hate all this clunkiness. And so sign up for this technology we've invested in. Just and then we can, you know, we'll weave in an API, but that's a different proposition. That's going to be higher volume, lower margin, but lower volatility business that's very nice business to everybody wants to write. Then why wouldn't you say yes? So they're the demand, the supply is saying, hey, I want that business. And the buyer is saying, well, if you want that business, you need to do it my way, rather than me adapt to you. But I do understand here, when it's the thing where I know there's nowhere else to go, I kind of have to begrudgingly do it your boring way. And I guess the benefit to digital trading as well, there is a lot of unprofitable business that you can't touch because it costs too much to actually bring it into the market. And if you can digitalize it, you'll cost a lower. So we are getting more distribution coming to the market. Yes, absolutely. And that's what's really exciting is if you can write a ton of business that runs at 99 and a half forever in a really predictable way, in a really bad year, it runs at 100 and point one and a good year runs at 98.7. But it's incredibly predictable because it's really, there's a lot of big numbers. There are big numbers, but small individual premiums and small individual risks. None of them blow you up. You know, you've got insurance to take care of the cat risk. That's fantastic. Why wouldn't you do that? If you're almost guaranteeing that you will make money by writing it on this term. I'd love to get your opinion on Agente.KI, the latest hot topic. Does it excite you or does it worry you that we could soon, I say soon, I guess could we have Agente agents that are running the end-to-end, broken and undriving workflow? No, definitely. I think you could. It wouldn't worry me too much because you can only do it with the things. If it could be automated, you should automate it, but that's not to think that everything can be automated. It can't. We are trying all the time to automate things to find more simple structures for doing this more efficient. Everyone's got an imperative to make more efficient ways of doing things. Broke is a much better run than they used to be. They didn't use to know really how they made money. They were run. I've had it was on Dan Topping's podcast. It was really, he's, who knows more about broken than Dan Topping because of invested in every broker that's grown over the last 30 years, or they've been shown every investment opportunity in the London market in the broken space for the last 30 years. So those brokers that nearly double their margins in that period by being better run. So the best brokers always got the imperative of, couldn't we do this in a more efficient way? That's a permanent cultural question that's happening. Here's everything we've done today. Could we have done that better in a more efficient way? Could we do it in a more efficient way, which would increase our margins? There's always, there are lots of people sitting those broken working that stuff out all the time and constantly re-appraising how they do stuff. Of course, if you could do that way, it will be done that way. If it goes wrong, the regulator is going to jump all over you. Are you still responsible for it? Just because you can't say all it wasn't me, it was the AI. Sorry, the AI is not an approved person. The approved people are still going to have their chain pulled quite hard. If it starts treating, it has to treat your customers fairly. It can't enable money laundering. It can't do all these things. It must know who that customer is. It must do all this stuff. If it doesn't do that, it's going to be in deep trouble. If someone's trying to cut corners, they're going to be found out so quickly because it's regulated initially for a really good reason. Back in the old days, you sold a piece of paper and returned for the promise to pay lots of money if something goes wrong. Now it's not even a piece of paper. If you're a fraudster, it's a very attractive business model, isn't it? It's literally the ultimate Ponzi scheme. I don't even have to do anything. I just sell you a piece of paper. Then, of course, it's brilliant because it's only like a one in 10,000 chance if you're actually having a fire. It's great. I should just go around to have sell fake insurance to people and it'll never happen. Actually, if they're small fires, if I get an income, I'll be able to quietly pay them anyway. It will only be when there's a really big conflagation or something like that. There's a hurricane that I'll be in trouble. That's why you have regulation because it's so easy to defraud people via the vehicle of insurance because it's perfectly designed for fraud. AI is not going to change that much. It's just going to make things more efficient. Much more efficient and spot new business opportunities. Of course. It's allowed. It will improve some risks of Patrick Tindan on, I asked him about. He said, "Well, look at some of the pharmaceutical industry, those kind of biosciences. We'll accelerate the testing to say, 'Will we know that will it check what sort of side effects you'll get from this drug by analysing what all the other drugs that are similar structures have done and what side effects they've produced?' Again, you can actually make some of the risks better. Again, it's all about ingesting load of information, structuring unstructured data, looking at patterns. It's not rocket science necessarily. Again, it's not a brain. It's just a load of probabilities of saying, 'I think the next word in the sentence is going to be this. That's a 93% probability.' So that's what it says when it's talking to you. It's not necessarily thinking. But I can't believe we're almost at time. I've got one final question for you. You've spent over three decades watching the insurance market from every angle from being a journalist and a server and now somebody that everyone comes to talk to. If you had a bet on the London market, what the London market looks like in the next 10 years, what's it kept, what's it let go of, and what is genuinely going to lead the world? Well, I'm really optimistic, I think, because of these technological advances, most important thing, people always forget and it takes you while to learn it. It was funny being a broker, I had my head in the weeds, just doing stuff. Suddenly, you become the editor of a magazine and then you have to look from 10,000 feet above and see, 'How does this thing work?' You talk to these people, you start talking CEOs and so on, you're not just trying to renew some policy for next week. You're talking to CEO about what they're talking about. Fundamentally insurance, it's a wholesale business that sells money. It rents money out to people in an insight of different way than banks do. Again, it just makes something that was really unaffordable. You buy a house, you have to borrow some money off the bank to buy the house and therefore you need life insurance because you can't afford to die because you can't afford to buy the house as you borrow money. Then you can afford to die and then all this other stuff, this is how insurance works. I've bought this building and I can't afford for it to burn down. So I'll buy some insurance. And great thing, it's not very expensive, it's really efficient because everybody buys insurance, it keeps the cost down. Some of the whole houses are going to burn down all the same day. It's like one in 10,000 charge. The cost of capital will come down. So what's happening in the market is really interesting. If we drive unnecessary costs out of the system, things get faster. Those trades can happen without friction. Before every time you had to have a trade, you had 10% cost or something like that. And then another quarter where the money is sitting around and it's sloshing around. If we solve a lot of these problems, the money gets split quickly and gets bent quickly. So that insurance goes straight to the reinsurance, which goes to the retro and everybody collects on the day that that premium goes straight, it goes, boom, in the way that doesn't stop market, the way that these trades. If we can trade quicker and more efficiently and then some of that money could just go to, you know, we've got things like London Bridge 2 and the London market. For example, at the moment, as a retail investor, I can only get exposure to insurance by buying stock in a Viva Hiscox beastly. Things that listen on the London Stock Exchange aren't that many. I mean, more and more in the US Stock Exchange, way more choice there. But ultimately, that's not the same as why can't I be an underwriter myself? Why couldn't I buy a fund that is, let's say, I don't know, BlackRock Lloyd's fund? And it's, you know, BlackRock run hundreds of funds, thousands of funds that a retail investor can buy into with very low cost at 0.2%, you know, feel 0.1% fee on these on a tracker fund, on a money market fund, you know, that's investing cash like securities. Why shouldn't there be a BlackRock fund that invests in Lloyd's? At the Ike get exposed to as a retail investor, I only when I had one of the members agents on Alph on the program last year, the problem with being, you know, I'd love to be a name, we'd all love to be a name actually because it's been such a good investment in the last 20 years and also, you know, there's lots of tax advantage. There's loads of really good things. You can't, unless you've got 15 million pounds net worth. So it's like, well, when I get my first 15 million, then maybe I'll become a name, but I wouldn't really, I sort of, it's a shame, you know, I've got some spare cash, but I don't have 15 million. I would love to be able to, but why couldn't I buy BlackRock Lloyd's and have it as part of my, because I know, I know, I know, I know that will be a good investment, hopefully that'll be making this, that share of, you know, Patrick Tern saying, you know, 12% returns across the cycle. If I had confidence, you know, if I would allocate a small amount of my pension fund to that, I'd be very happy with that, you know, if I put four or five percent of my pension fund into that fund and it was run at low cost. And then everything to get Lloyd's they're making most of my pension fund money, you know, my money or even my pension fund, even if I would do it through a self-invested personal pension, but if someone else is doing it through their pension fund, you know, they're allocating 2% directly to insurance. So that every single good Lloyd's can go, well, obviously I go to the Memes agent, so I go to BlackRock Lloyd's fund number one, because it's now 20 billion. Well, something like that. And we're talking about a 400 billion market, but if you decrease the cost of capital, because again, back to the original point, it's money. Everything correlates to money. We need capital to do insurance. The price of capital goes up and down and funny enough, the price of insurance fluctuates absolutely in correlation with the price of money. But how could it not? Because we're ultimately selling money. If we can get the cost of capital down, get the frictional cost out, there's no reason why we shouldn't have a 500 billion, trillion dollar market. And so everyone's saying, you've cracked it. Why wouldn't we want to work with you? Why wouldn't you be writing trillion homeowners from Lloyd's? You could. You certainly could, and there's no reason why you shouldn't do it. And you could be doing justice well or more efficiently than anybody else. And you've got great security, you've got access, and you've got everything around you, everything that you need, and the ecosystem around you. So basically, you have a comparative advantage because ultimately Lloyd's particularly is capital efficient. You don't need to have as much capital to underwrite at Lloyd's as you do over else. So it means that fundamentally the cost of your product can be lower. You can be more competitive. You could do more business. So why wouldn't you want to do more business and more of that? Much more of that traditional I volume low value business that's much more stable. And then you do all the other stuff as well, of course, absolutely. But the market could be way bigger and way more profitable. And again, here's no reason why wouldn't be a triple A market rather than double A minus. We'll have to watch this face and we'll have to reassess in the next 10 years. Well, that's the dream. I think it's hard. It's a competitive market, but it's very encouraging what we're seeing with a lot of the digital trading. As the fundamental thing, it must, if it decreases ultimately the cost of a couple, it makes Lloyd's and the London market more investable. And that therefore more capital comes, the more capital that comes, it'll have to be more competitive. It'll have to accept a slightly lower rate of return perhaps. But if it's far more stable, they would. So there's an enormous opportunity. Thank you Mark. That's all we've got time for. I can't believe how quick that's gone. Thank you very much for being on my podcast and obviously big fan of yours as well. Thanks very much. Thank you so much for listening to Insurance Technology Fact or Fiction. If you like what you hear then please subscribe to our channels. We'd also love to hear from you about future guests so please get in touch via the link in the show notes or reach out via LinkedIn. Thanks so much again and we'll see you next time.