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The World of InsurTech with Jeff Radke of Accelerant

This episode explores the exciting and fast paced world of insurtech. Jeff Radke, CEO of Accelerant joins us to speak to the process of leveraging quality data to disrupt legacy systems in the insurance industry. The Accelerant platform connects specialty underwriters with investors to empower growth and enhance the overall customer experience.

Payments & Fintech Insights In This Episode

  • How the expertise of a team creates efficiency and quality on a industry disrupting platform.
  • How leveraging new technology allows data to be transported in a way that allows smaller underwriters to play toe-to-toe with the larger entities.
  • The role of regulation and compliance in the insurance and reinsurance industry.
  • The importance of a data centric strategy and aggressive transparency when building and growing an insurance business.
  • And so much more!

Featured on the Show

Episode Transcript

Heather: Hi, everyone, and welcome to another episode of PayPod. I’m your host, Heather Bodie. And today we’re going to be discussing the often daunting world of insurance. Joining me to help explore this topic is Jeff Radke, co-founder and CEO of Accelerant. Jeff, welcome to the show.

Jeff: Thanks very much. What do you mean daunting? You mean exciting and fast-paced?

Heather: Yes. That’s what I mean. Exciting and fast-paced world of insurance.

Jeff: Sorry. I was so anxious to get that out. I don’t think I thanked you properly. Thanks for having me. I’m delighted to be here.

Heather: So, to get us started, tell me a little bit about yourself. How did you find your way into insurtech, specifically on the side of things that you’re in now?

Jeff: I think I found my way into insurtech by being in insurance and reinsurance for decades and decades. And that sort of means I was in insurance-not-tech for all that time. And I know how painful that is and how expensive. And I mean expensive in every sort of dimension. Monetary, emotionally, service-wise, to try and do this business with the old technology tools that were available. And then to try and run this business with an old stack, with legacy technology, it felt like Monday to Thursday was spent trying to fight data gremlins, and you got to work and try and serve your customers on Friday. So, when we founded Accelerant in 2018, the group of us were almost sort of pugnacious about it. There was [inaudible 00:01:51]. We are going to have access to all the data, all the time, in order to make the best decisions to help our partners. So, that’s from living without it for a long, long time,

Heather: I started my career in the insurance industry as well. So, I’m always absolute geek when we talk about that legacy technology. And I think that’s why I said daunting at the top of our call because I remember trying to feel my way through ways to aggregate information to properly serve my clients. So, to take it back and apologize for that. This is new and exciting, and I’m very glad to be able to have this conversation with you.

Jeff: Isn’t it interesting? I’d never ask you how long ago that was, but let’s assume it was some time ago.

Heather: It was about 15 years ago. Yeah.

Jeff: And it still stuck with you?

Heather: Oh, absolutely.

Jeff: And I think sometimes the folks that are outside of the industry don’t really appreciate how bad the status quo is. And maybe PTSD that’s lasted 15 years, kind of sums it up rather well. I think that’s a useful thing for non-industry people to have in their mind.

Heather: Absolutely. So, let’s shift and start talking about Accelerant specifically. I’m under the impression that it’s a property and casualty focus, correct?

Jeff: That’s right. PNC insurance in the U.S., the UK, the EEA, European Economic Area, and a subject to regulatory approval, which we hope to get by the end of the year in Canada.

Heather: Great. So, can you expand for us on how your platform works and why it’s so important?

Jeff: Well, the first thing I’d say is you did a lot of my job there when you said your platform. We’re an insurance enterprise. We’re a platform that connects specialty underwriters. Most of the time, they work inside MGAs or MGUs, which are acronyms that stand for underwriters without a balance sheet, right? So, they have distribution relationships, and they have excellent risk selection capabilities and experience. So, what we do is we connect those people, those specialty underwriters with investors that want to provide capital against the risks associated with the portfolio of insurance policies. Now, Heather, you worked in the industry, so you can imagine the spaghetti in-between those two people, from a regulatory technology, to… I mean…

Heather: Where’s compliance in all of this? Yeah.

Jeff: Yeah, yeah. And compliance technology, regulatory statutory rules. So, obviously, we do everything appropriately, but being able to master that, is one of the real key competencies of Accelerant. When I want my board to feel sorry for me, which, by the way, doesn’t work. But when I want them to feel sorry for me, I point out that we answer to 65 different regulators.

Heather: Oh, my gosh.

Jeff: Yeah. That’s more than one a week if you think about it that way. Yeah.

Heather: I don’t even know how you would keep ’em all happy or straight. I mean, I don’t know who you’re talking to that week.

Jeff: You sure as heck tell the truth, right? Because it’s the only thing that you can remember to have the same consistent story. So, yeah, it’s a complicated thing. And as I say, the Accelerant team, about 200 people now. But the real hallmark of the team is we hire experts in their areas. We expect them to take accountability and responsibility and just decide and get on with it. And a big part of that means that we have people making decisions that know the ranks, right? That know what the rules are and know how to interact with regulators because they’ve been doing it for decades.

Heather: So, dive a little further into why your platform is so important on both sides. From the individuals who are…you refer to as members and the other side of it.

Jeff: Yeah. I’ll sort of take a step back and talk about, to me, the exciting stuff, right?

Heather: Okay, great.

Jeff: And the exciting idea behind Accelerant, because, really, the only ideas, really, in the end, are the exciting thing. But the exciting idea behind Accelerant is that individuals or very small organizations, where the people working in them have equity ownership, right? Are owners. We believed that the world had changed, and you see it in every other industry. We believed that the world had changed, and technology has allowed data to be transported efficiently and with high enough quality, that those individual practitioners, linked up in the value chain, could beat the pants off of the big monolithic companies in whatever industry they’re in, especially insurance. So, we built Accelerant to do the following. We built Accelerant to be the necessary conduit to make those specialty underwriters, to make their success be bigger, faster, and more enjoyable. All we have to do is make our members successful, and we’ll do fine.

And I think whenever a company has a mission where it’s really a service mission, I find I get more motivated by it. I think my colleagues get more motivated by it. It’s much easier to rally the troops to go help a group of people than to try and make another shackle for the organization. So, that’s what we set out to do. We said, “There’s gotta be a better solution to solve the problem for these specialty underwriters.” Again, we call them members, other people might call them managing general agents, MGAs, managing general underwriters, MGUs. They’re all alphabet suit, but we’re talking about the same individuals.

And then on the other side, you look at insurance or reinsurance companies, and in a lot of ways, because I’ve worked there and because I’ve tried to solve some of the same problems, I understand their frustrations, their sort of problem statement, which is, “We talked about the legacy technology. I can’t get good at a really data-centric strategy. Many of these companies, in an honest moment, I think sort of say that.

So, what they need is they need the platform to spoonfeed the capability for them so that we deliver up the data and the analytics on top of it to the entire value chain. So, we’re about sort of aggressive transparency. So, I bet if you think about what you read and what you listen to in terms of podcasts, I bet you hear hundreds and hundreds of times that “We have better data. We’ve got an information edge so we can do blank better.” Well, there was actually a Nobel prize in economics given out for this. But we believe that aggressive transparency where you don’t try and get an information edge, rather, everyone gets the same thing at the same time with the same analytics. They can do additional analytics if they want. I’m not saying that they shouldn’t have a point of view. Of course, they do. But I think you can say this in a podcast. There’s an old adage that said, “If you sit down at a poker game, and within two hands you don’t know who the sucker is at the table…

Heather: It’s you.

Jeff: …it’s you.” Right. Yeah. And I think that’s the way the insurance market works. Because we’re quite sure that we don’t know the whole picture, and so, we’re just trying to figure out, are we taking advantage of other people? Do we have superior information or do we have inferior information? And I think it’s one of the big things that slows everything down because everyone’s checking and rechecking and asking and rechecking and Ugh. Right? Whereas once our partners across the value chain start to have real, real confidence through repetition that the transparency is there, the speed of the transactions really, really picks up, and the friction in the system goes way, way down. And that’s what the platform does.

Heather: I spent some time on your website, and it’s very clear that the insight that you derive from working with those members, the MGAs, the MGUs, is crucial to the way that you build and advance your platform. How do you go about gathering that insight from them? What does that communication chain or communication process look like with your members?

Jeff: That’s a really good question. I think the communication process starts with something that we call member managers. And member managers are in charge of the relationship with a particular member, obviously. They become the CEO of the company just this way. And what I mean by that is, they’re in charge of marshaling all the skills and resources of the Accelerant team to deliver to the member what that member needs. The reason I start there is the relationships that we have with our members. If I’m up to date, there are 76 of them now. The relationship that we have with the members is very unusually close. We’re starting to travel again, we’re in their office every month, certainly on the phone every week, probably more frequently than that. We are really, really in lockstep about what they want to do and what they’re doing now. We’re always talking about how we grow profitability.

And, you know, you can either sell more good stuff or sell less bad stuff to improve profitability. And that’s sort of a constant swirl, where we’re talking about our expertise, what we see and have seen. And we’re comparing that to their expertise because this is their niche. They really are the bee’s knees in that niche, and we are incredibly respectful of all that knowledge and experience. What we try and do is we try and look at the portfolio from a data-driven perspective and just watch how the portfolio is evolving and emerging. What I found over time, whether I was managing a portfolio or whether I was an underwriter inside a portfolio, when you’re an underwriter, you’re thinking about the world on a risk by risk, by risk basis. And it’s a very different skill set and very different technology tools that you need to monitor the portfolio and understand all these risks as a whole, what is the portfolio? What’s the profile of that portfolio? And that’s what we try to do both with our experience and with our data and analysis, that, again, going back to the earlier question that we share with everyone.

Heather: Well, let’s switch to the investor side of things. That’s definitely territory that I’m not familiar with. My understanding is that majority of the PNC that you’re underwriting is, we’re talking about, like, high volatility, very large limits. Am I on the right?

Jeff: You’re actually not.

Heather: Oh.

Jeff: We sort of pointedly…

Heather: Great. I wonder where I found that? Sorry about that.

Jeff: We’ll have to go back and look, right?

Heather: Yeah.

Jeff: We set out to build and are building every day, building a portfolio that tries to have great diversification, relatively small insureds, ultimately. Our commercial insureds are a small business, maybe medium-sized businesses that drives low limits. We avoid property catastrophe risk as much as possible. And what we’re trying to build is…if you think of the visual picture, we’re trying to build the smoothest portfolio we possibly can because that’s what’s really valuable to investors. They can get Florida hurricane a hundred different ways. They don’t need Accelerant to do that. If they want California earthquake, they’re submitting, ditto, right? All those big, volatile things, there’s always a demand for capital. But what I discovered, the biggest change over my career is, 35 years ago, a reinsurance portfolio was about half low-risk business and half high-risk business.

That low-risk business, I call ballast because it kind of keeps the lights on, keeps the ratios okay. You don’t make that much money, you don’t lose that much money. And it lets you go to the high test, high-risk stuff on the other half of your book. Well, that whole ballast premium, that highly diversified low volatility portfolio or a premium, the insurers just retain that now. So, that’s gone. So, one of the ways that I hope or we’re told our reinsurance risk capital providers appreciate is this is one of the few ways to access a portfolio that looks like that without the big gotchas, the volatility gotchas.

Heather: Thank you for clarifying that for me.

Jeff: Sure.

Heather: So, what’s next for Accelerant? [inaudible 00:14:10] any exciting news or partnerships or new developments that you can sort of give us the inside scoop on?

Jeff: I think geographic diversification is always…features large in the team’s mind because it’s hard. You’ve got your tune and you kind of got your act, but you have to change it. For every new territory or every new country, you have to change your act. So, Canada, we’re really looking forward to starting in Canada. From what we hear in the conversations that we’re allowed to have at this point, from a regulatory standpoint, it would appear, generally, that there are many, many MGAs in that market that feel like they don’t have a great alternative in terms of capacity providers and wish that they did. So, we’re excited to try and help that group of people. The U.S. business is only a couple of years old, maybe a year and a half. So, gosh, we have so far to run in such a big, big, big market.

Heather: Yeah. What have been your biggest learnings in this first year and a half?

Jeff: Again, just to be sure we keep it straight, a year and a half in the U.S?

Heather: In the U.S.

Jeff: And we started in ’18 for the overall business. The biggest learning goes back to that, do you have any challenges with integrations? Three months of legacy is still really hard, right? You gotta get it done quickly, or it tends not to get done at all from an integration standpoint. If you think about our business model and the way we create value, we don’t really have a choice. We need that data and we need that data in a way that we can use it. So, we are going back a lot to replace the first few, that’s just a week, just a month. That’s hard. That was definitely a learning.

The other thing that was really gratifying, and I think we’re all really grateful for this, is the way the members responded to the proposition. You always hope, you know, your belief in the individual and your belief in technology as an enabler of the individual, and your belief in the overused word, but democratizing the economics of the value chain, right? All those things should work and people should love it. But what if they don’t? And along with all of my colleagues, I’m sure we’re grateful and perhaps somewhat relieved that the business model seemed to hit the exact right chord at the exact right time in most of the markets that we participate in.

And then similarly, it’s been really gratifying to be able to build the team that we have. And not COVID. Of course, terrible disease, but rather the change in attitudes about working arrangements, couldn’t have happened at a better time for us. So, I’m gonna get this a little wrong. I think the furthest east employee is Hungary, and the furthest west is Seattle. You don’t get to do that any year before what? Two years ago. And Kristoff way out east, and Ryan way out west, you know, you think about what the company would be like without them. And we wouldn’t be as good as we are. However good that is, we’d be less good. And it’s really great to have built a team that are willing to take on what’s a much, much harder job, right? Everyone complains about not having authority, but when you give them authority, everyone realizes, including me, it’s a much harder job.

Heather: That it’s a much harder job. Absolutely. Yes.

Jeff: And we’ve been really fortunate to build a team of people that love it. Maybe not every day. No one loves it every day. But when they love it, generally, they get so excited. And watch what they achieve in a given timeframe, and it’s sort of flabbergasting. I always act like I never doubted it, but the truth is I can’t believe it sometimes, what they pull off. And, again, I sound like a broken record, but it’s that doubling, tripling down on the individual, and saying, “You know what? Technology is gonna let all of us act like a Fortune 500 company. So, those have been a little bit of the learnings and a little bit of what am I most grateful for, sort of, combined all together there.

Heather: I love it. All right, we are down to the final, how we close out every show. I’m gonna give you five questions. Rapid fire. Are you ready?

Jeff: Yeah.

Heather: Okay, here we go.

Jeff: Okay.

Heather: Make a prediction about changes in the immediate future of insurtech. What do you think will happen in the next 12 to 24 months?

Jeff: Dramatic M&A

Heather: Wow. Concise. All right, in the next five years, most people are going to make a purchase either with Bitcoin or Apple Pay or some other thing, which one do you think it will be and why?

Jeff: It’ll be my daughter using Apple Pay. And it will be either junk food, makeup, or pizza. That’s my prediction. And I don’t need five years. It’s gonna be 20 minutes, I think, and that will come…

Heather: Yes. We’re already doing it. I was telling somebody recently I went into the Walgreens and realized I had forgotten my wallet and then realized I could use my phone. In line, I’m like, “It’s magic.” And everyone’s like, “Heather, this is not new technology.”

Jeff: I bought a truck with my phone. Yeah. Yeah.

Heather: Wow. Wow. Wow. Okay. What’s one piece of advice you have for someone considering insurtech or financial technology industry as a career?

Jeff: What I see too often, and the reason I say it too often, isn’t the old crabby man. Well, maybe it is. A little bit of the old crabby man, but more so it feels like people are missing half of the fun or half of the problem. I would say your technology that’s enhancing, usually, distribution, is absolutely awesome. Good for you. But make sure you learn the other parts, right? Make sure you learn the risk selection part, and especially the finance part. Because otherwise, you’re always gonna be operating sort of with one hand tied behind your back if you don’t understand those pieces.

Heather: All right. What is the best piece of business advice that you’ve ever received, and from whom? This one’s always a stamper.

Jeff: Yeah. It’s gonna sound ridiculous because it’s so obvious. But every parent must have this story. I was lucky enough to have my father, who’s still alive. But my father was lucky enough, as I went in to intern for Guy Carpenter for the first time in summer, he said, “Just remember, if you lie, ever, all these people are gonna know you’re a liar for your entire career.” He said, “So, just make sure that when you say you’re gonna do something, do it, and always, always tell the truth.” And he said, “Almost anything else is recoverable as long as you always tell the truth, and do what you say you’re gonna do.” So, that was, by far, the best.

Heather: That’s incredible advice. Well, that does it, Jeff. Thank you so much for joining us on our shows. If folks wanna get in touch with you or they wanna learn more about Accelerant, where can they find you?

Jeff: We’ve got the website which, you know, accelins.com. I do this quite often. It’s funny no one takes me up on it. But the easiest way is LinkedIn. You can find me. Or just call me, 210-452-0249.

Heather: Jeff, I love that. I’m gonna give you a call. Careful what you wish for.

Jeff: I’m standing by.

Heather: All right. Thanks again for chatting with us today.

Jeff: Absolutely. Thank you.

Heather: If you enjoyed this episode and wanna hear more, head on over to soarpay.com/podcast to subscribe on your podcast listening platform of choice. That’s soarpay.com/podcast.

Industry Spotlight

Accelerant

Accelerant is unlike other insurance program carriers. We are fueled by insurance technology and supported by our unique insurance platform. We work exclusively with MGAs and Program Administrators. We’re transparent, responsive and collaborative. We’ve walked in your shoes and understand your challenges. And we’re organized and committed to your success, because we’re successful when you are too.

Our technology fueled, data driven partnerships with specialty underwriters and risk capital partners propel new levels of profitability by:

· Providing the entire value chain access to data and analytics to better understand risk and benefit from these insights

· Offering long-term capacity commitments

· Prioritizing velocity and collaboration while eliminating bureaucracy

· Offering support to streamline operational and regulatory complexity

We’ve built a network of some of the best MGA and Program Administrators on the planet. We call them Members because it underscores our deep commitment to their, and your, success. And we are always looking for other top-class Members.