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Mark Geoghegan has been watching the London market from every angle since 1992, first as a broker, then as a journalist at Insurance Insider, and for the past six and a half years as the host of the Voice of Insurance podcast. In this episode, host Georgie Simister turns the tables, pressing Mark on one of the market's most persistent myths: that if you build something and make it compulsory, adoption will follow. From Blueprint Two to the broker consolidation wave of the nineties, from insurtech hype cycles to the promise of agentic AI, Mark shares what he's learned about how change in this market actually happens, and why the game, as he puts it, is never really over.
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What is Insurance Technology: Fact or Fiction??
Host Georgie Simister speaks with key insurance industry figures to separate fact from fiction in a world of insurance, debunk industry myths and explore the game-changing innovations shaping its future.
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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?
Georgie:Welcome to 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 guest has had front row seats to all of it. Mark Geoghegan 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.
Georgie:The idea that if you build something and make it compulsory, the market will follow. Blueprint two: 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?
Georgie:And as AI starts reshaping everything from how risks are traded to the risk being insured. 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.
Mark:Oh, well, thank you. It's nice to be, you know, looked after rather than having to do the looking after and and, you know, not have to plug all the microphones in and do that stuff. It's nice. It's nice to and when I I do my podcast, this is in a lovely studio where so I don't have to carry anything. Was Mhmm.
Mark:First day, I was thinking, oh, I'm gonna do a podcast recording today. Great. But I don't have to bring my big rucksack with all the heavy microphones and all the cables and remember to charge the batteries and and all the things that you have to do. So today, it's just pure luxury. Just came and got made a coffee, and that was very nice.
Georgie:Well, I'm glad to see 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 eleven 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?
Mark:Well, yes. I mean but then you can't the best thing about being a journalist and the worst thing is knowing that you really you're only publishing the tip of the iceberg, the things that, you know, you can prove are absolutely true. And of course, you you saw something. You you you've got two or three independent sources to tell you that this is definitely, definitely true, because it be important. It could be libelous.
Mark: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 was true, although you have a very strong suspicion. You know, if it was a civil case, you think, and it was just on the balance of probabilities rather than beyond all reasonable doubt was the burden of proof. You think, yeah, yeah, we you know, we'll be able to publish that.
Mark: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 just or sometimes something coming 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 so it's not necessarily repeatable without then having to, you know, justify yourself a couple years later in a very expensive court of law.
Georgie:So nothing you can share right now?
Mark:No. Well, no. Well, I mean, know, if you buy me a drink later.
Georgie:Yeah. If we look back on your 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?
Mark:Oh, everything changes, but some of them are really interestingly cyclical. When in the early nineties, and particularly in the mid nineties, and then by the late nineties, I was actually part of this, and I think everyone was part of it by then, was broker consolidation, for example. Yeah. There was I mean, there are hundreds of similar trends within the carriers. We'd had deregulation in the eighties under the Thatcher regime.
Mark:The London market was sort of full by that stage, the London market was full of all 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, that was when they were all shutting. They were shutting down because they were subscale, the downside was far too big, and the upside was marginal at best. So they were shutting down, and obviously, Lloyds of London had had 300 syndicates at that point, and they were all too small. And it's much better now to have forty, fifty managing agents with about seventy, eighty syndicates that are all substantial, and some of, you know, many of them writing a couple of billion dollars, and suddenly, you know, being, like, insurance companies in their own right.
Mark:But it wasn't like that. But that major trend would've been the broker consolidation of the nineties, and the broker that I was part of it was biggest broker in Spain, privately owned, part of an international network, but it was taken over by Aon, and that was 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 Howden because he was our D and O broker. He was the wholesale D and O broker. We were the big retail broker for for Spain.
Mark:We had, you know, half of the IBEX 35. Suddenly, he needed to buy D and O. We met this guy called David, and and he's like, you know, he he can do D and O. We'd never done D and O because no one in Spain had ever bought D and O before. So you come to London, and then we found a nice independent wholesaler, and he was fantastic.
Mark:Did a really good job. Everybody loved him. Great service. Never had to chase him up for anything. You know, he was really, really good.
Mark:But we got taken over by Aon Yeah. The parent sort of company that had everyone was either being taken over by Aeon or Marsh at that time. By 1999, it was sort of you know, the top 20 names had all been taken over, and the top brokers in each country that all used to be independent and corresponded independently with each other within loose alliances suddenly became 100% owned either by Eon or or Marsh, and perhaps Willis. Willis was a bit late to that party. But it was that sudden lesson to say, well but that was just when David Howden decided to become independent.
Mark:So it shows you that I thought, he's crazy. Who's this guy? You know, he's mad. Right? But the odds are stacked against him.
Mark:It's all over. The game is over. Eeyon and Maj have taken over everything. Of course, Eeyon and Maj are still the top two brokers in the world, soon be slugging it out, probably. But now there's Alden is kind of you know, it's up there with them slugging it out, you know, and and so who's to say so there was a I actually had this on it was on the last podcast, but one, as Dan Topping of BP Marsh, which is a small private equity business that backs entrepreneurial Mhmm.
Mark: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 Houghton, Hyperion, as it was called then. Houghton Pangbourne, at that time, sort of mid nineties, and then when they finally sold out sort of fifteen, sixteen years later, they'd I should I have to check the dates, but it was May 15, twenty years later. You know, they made, I don't know, a 100 bagger at the very least. But the point is that you can have this consolidation. So, well, oh, consolidation.
Mark:Yeah. You know, small brokers are dead. Everything's big broker now. The game is over. And no.
Mark:Because it's on back to the point with Dan Topping, who's the CEO of BPMarche's, I used the title for that, was it it was a phrase that he'd got from Colin Bird at Beso, another independent broker, now now long since consolidated, was that big begets small, and small begets big. And what that means is obviously of course, the minute that the broker I was working for was taken over by Aon, 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 really wanna go? No, I don't.
Mark:A load of people in Spain had that same moment, and that they knew this guy called David. He is independent. We like working with him. And then suddenly, from that, Dual Iberia was born. So the very first MGA was, we've got this great product, DNO.
Mark:We're riding this. At the moment, it's just the IBEX 35, your FTSE 100 equivalent companies are buying DNO, and suddenly but we've got this thing we can really latch onto. Mhmm. Everyone's gonna be buying DNO by the end of it. Every SME in Spain's gonna buy it.
Mark:How are gonna distribute that? Well, it's gonna have to be by an MGA or something. And look at that. So then it becomes an opportunity for a whole lot of people saying, you know, I don't really fancy this Aon business, but we can ride this growth. Mhmm.
Mark:And so DNO, then cyber, whatever. And and look at all the things that you new business that could happen. Mhmm. The lesson is it's never over. So those those really big trends, it doesn't matter.
Mark:You can be consolidated. You think everything's consolidated down to, you know, 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.
Mark:And, yeah, David hadn't trust the market. He trusted his own distribution expertise, he learned that lesson. It was difficult when his I had a podcast with him, we were wandering around his different offices, and I knew that we were standing at that first office and said, you know, I learned a big lesson when that big Spanish broker that I was working for was producing a lot of his business was taken up by air, and suddenly that was that was a crisis moment for him. It's like, goodness me, one of my biggest suppliers now belongs to somebody else, and presumably they don't wanna work with me anymore. That's a crisis.
Mark:That's an existential crisis.
Georgie:Do you think there's still the same opportunity for young, hungry brokers nowadays to build
Mark:the right of an ecosystem, because it's not just BP Marsh there. I mean, obviously, the ticket price goes up,
Georgie:but
Mark:you've got an ecosystem around you saying, well, can I can be I'll give you an appointed representative? Yeah. And and then I'm almost you have companies that are even set up to be a kind of renter and appointed representative. Mhmm. Your business can be put into a cell.
Mark:You don't need a huge amount of capital. Mhmm. And they can look after all that boring stuff for you. And the same on the underwriting side. You can say, well, I haven't got enough capital to start my own syndicate or my insurance company.
Mark:I don't need to because I've got an MGA. I've got really good technology. I've I've got someone 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 someone 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.
Mark:You can structure it. Anything you can think of, it can be done. And I mean, look at and look at in short tech, look at all these 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.
Mark:It's just, you know, in tech. Oh, yeah. Well, Microsoft own everything. Yeah. I was like, no.
Mark:But then Google comes along, you know, and say, oh, what's this Internet thing? Oh, now search is gonna be oh, right. Okay. And now AI. You know?
Mark:So the people will tell you, oh, well, AI is just gonna mean there's gonna be three different AIs or two. Just in the way that web services, you know, cloud, there's only about four three or four cloud providers, and that's a worry, isn't it? It's a worry that is it some kind of oligopoly? Is there too much power concentrated into a small amount of hands? Then don't worry about it too much, because you'd be surprised.
Mark:Every time everything comes together, there's always a little bit that fragments, and then that's the one that has the opportunity to do a load of growth, because it can weave in and out of these huge giants. So again, so, yeah, broking, underwriting, tech, anything, it always seems to work the same. I've seen enough of it Yeah. To think that the game's over, and the game's never over.
Georgie:That's good to know. If we're zooming in right now then, what market shifts are you closely watching? We're at 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
Mark:we've seen? Yeah. There's nothing different about it Mhmm. Other than the technology itself. But people have got incredibly short memories.
Mark:Insurtech is 10 years old, or maybe it's 11 years old. Don't we don't know. I was there when it started, but we sort of there was a moment when it was obviously happening, and was a moment before that when it obviously wasn't happening. So it was around 10/1135, 2016, suddenly it became a thing, the sort of thing that suddenly the insurance society would do. I think, we better do a conference about this because people are talking we see that there's an opportunity to cover this thing that wasn't there before, so we better do one.
Georgie:Was it the same fear when insurtechs came about as there is now for AI?
Mark:Oh, yeah, absolutely. It was and it was much more aggressive then as well. And also, some of these startups were real upstarts, and they were a bit punky and sort of, we're coming to kill all of you. You know? That was very that aggressive sort of Silicon Valley thing, you know.
Mark:The the great the sort of cliche about the Silicon Valley pitch is, you know, I want a $100,000,000, and it's like, yeah, I'll give you a $100,000,000, but tell me what you're gonna kill. Mhmm. It's like, are we gonna kill emails? Whatever it is. Right?
Mark:And email's still alive, you know, alive and kicking and annoying all of us, but still, you can't live without it. But yeah. So it was much more aggressive then. It was it was, hey. Remember, Airbnb, you know, you've got hotels, but look.
Mark: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. And so they would say, well, logically, the biggest insurance company in the world, well, I don't know what it doesn't do any insure doesn't own any doesn't need capital. It could be that way, but there was a time there was a couple of startups where people were very worried, but it didn't matter.
Mark:First, was, oh, we're do it via an MGA, or then it was, no, you need your own full stack because you can't the insurance companies are so slow and boring that they will kill 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. We go, oh, come and do a proof of concept, you know? Was like and then there was that, and it was like, oh, you need a full stack, I. E. You need your own insurance company.
Mark:Then it was what about Parametric?
Georgie:Oh, yes.
Mark:Oh, oh, yeah. Blockchain. Yeah. So what about Blockchain? Oh, distributed ledger, you know, let's call it, you know.
Mark:But I'm talking about every two years, there's been a fashion. We've already and we've forgotten about all this stuff. I mean, Parametric's still with us. And then embedded. Yeah.
Mark:Embedded, there's 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 $100,000,000 on the back of it, and say, well, you really need one in a 100 of these to work. And now, obviously actually, there's a really good report out right now from Gallegari, who've done a great job of measuring and following the insurtech Every quarter, they've got a really good report out, adding up, tossing up how much new investment's been put into insurtech, and then what's it going into, looking at the trends. The latest one, unsurprisingly, 95.6 or something like that, but a ridiculous almost a 100%, basically, AI.
Georgie:Yes.
Mark:So you can't be an insurtech today without having dot ai in your name. I mean, Present company accepted. I think you have you got dot ai? I can't remember. Yes.
Georgie:We're dot I o.
Mark:You've got io? Yeah. What does that sound for?
Georgie:I'm not sure. Artificial. Io.
Mark:One for the notes.
Georgie:We are we're the original artificial. But I went to a Gallegree 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 AI.
Mark:I mean, I've missed I keep so things suddenly come up. But wait a minute. Low code, no code. You know? What's that?
Georgie:Are we
Mark:are we talking about that anymore? I don't know. Is it relevant now now that you can vibe code your own insurance company, you know, in five minutes just lying in the bath?
Georgie: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?
Mark: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
Georgie:I'm sorry.
Mark:You have
Georgie:to explain what a
Mark:modem is. Oh, it's a way of connecting to the Internet. It's way of there wasn't the Internet, but there was how do you get a computer to talk to another computer down a telephone?
Georgie:Right.
Mark:It was only 13 k well, 14.4 k, I think, get kilobits per second. Yeah. 14.4 kilobits per second. You know, if you you go to fast.com on your computer, it's only doing 14.4 kilobits per second, you say, oh my goodness me. I'm gonna phone BT and give them a piece of my mind.
Mark:But back in those days, that was that's what you got. That's what ran fax machines. Yeah. And that's also what ran this modem. And the original modems almost actually had the telephone receiver actually kind of in the thing, like the old school nineteen seventies telephone sort of in the thing, it would make these boingy boingy noises, and and it's yeah.
Mark:Was it was really interesting. Yeah. It's fun. Anyone who yeah. You have to be over 40 to know what that noise means.
Mark:There's a noise that the fax machine used to make, or that the Internet connecting Mhmm. Made when it was 14.4 kilobits per second. It was incredibly reliable at that speed, to be honest. It was either 14.4 or nothing. So I saw that, and I said, what's that?
Mark:And so our claims broker had LimNet. And so we had a lot of really advanced technology. In the end, LimNet was a way of notifying all the markets on a syndicated policy of a claim, and it was a company markets policy thing. But it was a glorified text message, but it was pretty useful, because you're talking about either had to walk through the rain with this huge file to get 20 people to do this, but most of the time, they responded and said, Acknowledge. And that's great, because it's important that they acknowledge that there is a claim.
Mark:They can't then say, You didn't tell me about it. Yeah. So it's really important, a notification of claim, and an electronic record of that, indelible, for you know, all agreed that was already working in 1992. I remember the claims broker got in trouble because he left it on, because it was about £2 a minute or something. Was a special sort of you know, special premium rate number you had to dial through this modem.
Mark: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, claims brokers loved it
Georgie:Yeah.
Mark:Because they can notify claims. At least the first notification the message usually came back and said, 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 those you know, particularly when you're doing reinsurance facultative reinsurance, and you've got claims cooperation clauses, claims control clauses, stuff that's really important. It's like within seventy two hours, you're supposed to tell me about a claim.
Georgie:Mhmm.
Mark:I go, well, hey, I can just log on here, and I can do it on this green screen thing. Mhmm. And we laugh about it now, but it was way before you know, we didn't have mobile phones then. They if they did, they didn't do text messages. Yeah.
Mark:It was a glorified text message, but before text messages even existed, so that worked. Mhmm. Right? And there were lots of things in the market where those things worked. But the problem has always been then then next would be EPS.
Mark:That was electronic placing support. Yeah. That was something it was voluntary, didn't but nobody really wanted it because it was rubbish. Mhmm. Basically, what's the point in having technology?
Mark:Technology is supposed to make your life easier, not harder. And I go back to journalism. I remember something that if you don't do content well, on your own 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 that it's a content management system. Sort of 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?
Mark:And it's just a load of boxes. There's one that's the headline, one that's the the actual body, and there's one way place for a photo to go or whatever. They haven't And none of them have ever changed, 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 bold doesn't get recognized, and then sometimes you get those weird ASCII code numbers, and and if you had an acute accent on it because it was a French word or Spanish word for me, you know, or the squiggly n that you have in Espana, you know, all this stuff, it doesn't work. Yeah.
Mark:But whenever we've had a new CMS sort of being organized for us, if they ever consulted with a journalist, they'd always say, but, you know, you're just gonna write all your stories in the CMS, aren't
Georgie:you? Mhmm.
Mark:You see? But no one ever does that. No one don't no one writes stories in a CMS Mhmm. In the box with the thing open. It's really ugly and horrible.
Mark:They just write it in Word. Yeah. And then they send it to somebody else, and that gets to somewhere else. And then 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, yep, everything's always wrong.
Mark: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 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 is the kind of Henry Ford's quote about, If I ask my customers what they wanted, they just said faster horses. Of course, what they really wanted was the Model T Ford, and it's just great, and suddenly realized, if we want something that is completely different from a horse, but it does the same job as a horse, but 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.
Mark:Mhmm. But of course, the people doing the insurance don't know that, and so we I wouldn't do it that way. It was a we don't work that way. Mhmm. So sometimes, actually, faster horses are better.
Mark:So sometimes I I think there's a big difference between, for example, the popularity of PPL versus white space, and maybe when we were kind of, you know, getting into trouble, but the most obvious difference is the user experience. Yeah. White space. Whitespace even had I remember going to an 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 looked like the old it was something that was familiar, and it was a little you could say, oh, that's just a sop to all these sentimental people.
Georgie:Mhmm.
Mark:But actually, I mean, there's probably I would say is that that's the thing that made people wanna use that one more than the other one. There needs to be you need to have that compromise between working in a new way. And of course, so the insurance industry embraced LimNet before anyone even heard of text messages. And I'm sure the insurance embraced the telephone, embraced the telex machine, and it certainly embraced the fax machine, because it fell in love with the fax machine, and then it fell in love with email and PDFs and spreadsheet.
Georgie:We love a spreadsheet.
Mark:Yeah. But what's wrong with that? It's way better than what what came before it. So give me the benefit, and then everyone wants to use it. And it's really obvious.
Mark:If the broker next to you is getting a double your bones because they keep producing 10 times more business than you do, and they seem to be, you know, going home early, you go, what what what are they doing that I'm not doing? I was like, because they use this new thing. I said, well, show me how to use it. You know, give me one. I want one of the same machine he's got.
Georgie:But on that point of new systems, and say if there is a 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?
Mark:That's wrong. You can only mandate it when it's 90% or 80%, whatever, a large eightytwenty, that'll probably do, when it's really obvious. Mhmm. So it was interesting. There was that and obviously, there's the politics of this.
Mark:It's very difficult to be the person doing the mandating, because you look a bit like King Knut half the time, sort of turning the tide to go out when, you know, you're getting your feet wet. But there was a time Connect had been a failure. This was an early placing system.
Georgie:Mhmm.
Mark:I mean, it was now the second attempt at electronic placing system for Lloyd's. It hadn't worked, and it had been an expensive failure and a bit of an 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 the long grass and saying, well, we're not gonna mandate anything. We're not gonna have a centralized system for this, and all very well.
Mark:But at the same time, that same executive did mandate the use of electronic claims file, because there was absolutely no reason in 2007 or whenever it was. There was no reason on earth why a van had to go down to Chatham with a slip just 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 you know, was no reason on Earth why you had to have some van going every forty five 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. Was like, 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.
Georgie:But I'd say that's not the adoption piece. Like, you can't mandate adoption. There needs to be adoption, and then it's usage Yeah. That you can
Mark:Yeah. Absolutely. Yeah. I'd say once it's 80% used by everybody, and it's wholly proven, and that there are, you know, there are even two or three different vendors out there with slightly different versions of them. Maybe they're one they've got one that you like better because it just as pleases you aesthetically more.
Mark:And we've got that with the placing systems. Yeah. There are rival placing systems out there. They do the same thing. Some people like one over the other.
Mark: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 it needs 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 do agree with I've had, obviously, recently had very senior figures from the market in there.
Mark:Yeah, think they're right. You don't need to mandate that. And also, it's nice to have a bit of competition.
Georgie:It is. Yeah. Because that means that the systems will then keep updating to make sure that they have the competitive edge.
Mark: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.
Mark:Just pay your license, or, you know, pay your license to Microsoft every year, and, you know, you get get Microsoft Office for all your employees, because it's just a no brainer.
Georgie:Why
Mark:would you you know, you don't get to some broker and say, you know, we've got our own water. It's so good. I mean, we bring it in from a 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 proprietary water, and no one else is allowed to use it.
Georgie:You know?
Mark: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 5,000,000 on this thing.
Mark:Great. And they forget that means that's a 1,000,000 every year updating cost. And then in year five, you need to spend another 5,000,000 because it's completely obsolete now, and now you need to do another thing. So why wouldn't you get another you know, let Microsoft do that for You know, but let that third party vendor do that because it's their prerogative. That's their business.
Mark:That's what you pay them for, and they have to keep updating and make sure, oh, now it accepts video. Now it's like it's like, oh, I didn't realize people were gonna start sending video claims files. Mhmm. Well, actually, they probably will, won't they? Because why wouldn't they?
Mark:Mhmm. If you're down there, you get your phone out, boom, the adjuster's there. Unbook my clunky old system. Of course, it can't take
Georgie:No.
Mark:MPEGs, can it?
Georgie: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 a problem back then, but we're so far advanced from that now. I'm gonna open a can of worms now. Blueprint two was intended to be mandated. Why do you think that went wrong?
Mark:It was an interesting idea. It was a smorgasbord and this kind of palette of all the things you could do, but it wasn't necessarily prioritized about what actually needed to be fixed. Certainly, I had Patrick Tyn on the show very recently, and I pressed him and asked him, are you comfortable? Obviously, 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 at the Houses of Parliament, and the thing's shut down. It's almost like when a bank comes to that situation, where the ATM machines aren't working, cash has stopped coming out, or that you go to pay, and your thing doesn't go beep, and it doesn't pay.
Mark:Like we had in Spain when they had the they had the shutdown, so the cash started. It was the only thing that worked. It was like everyone wished they had more cash in their back pocket because they're thinking, well, at least we can go down the bar Yeah. Even though the fridge is switched off the bar. You know, for the next five hours, the the fridge is still on.
Mark:We keep the door shut. Please swing and have a beer while we'll wait this thing out. I was like, no, we can't pay for the beer. So and then he went back to barters, like, I'll I'll pay you back when we get I'll I'll do an there were people writing IOUs, I think, in the bars, you know, waiting for the lights to come back on. But they so we don't wanna go to that.
Mark:Yeah. But as long as Patrick was very comfortable that the core systems are fine. Mhmm. So the rest we can develop. I think people can work it out for themselves.
Mark:Mhmm. And particularly also because it's hard to know what people are gonna want in five is when things are changing so fast. I had a really interesting podcast with Anthony Stiggers, who's head of digital for for for Martial London Market. And that's fascinating. That was funny enough.
Mark:I knew him because he worked at the insurance insider very briefly.
Georgie:Yes. I heard that on the podcast.
Mark: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 in doing, you know, APIs and and and all that kind of stuff.
Georgie: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 or drawbacks to it? And if you were back in your broking role, how would you be looking at this
Mark:digital trading I've just done a podcast with Flood Plus, and Flood Plus is only ten years old. So it's it's almost like an insurtech. That's Hiscox writing Flood all across The US, right at the consumer level, individual householders, something you wouldn't expect a Lloyd's syndicate to be able to do. But they're doing it with four people, or four in an actuary, because they're able to ingest all the information. It's an insurtech.
Mark:So, I mean, I remember, you know, everyone used to have line slips. We had a line slip for fireworks manufacturers and displays. Because funny we had about a 100 at the peak of that, because it turns out fireworks manufacturers are all kind of artisans. So they I didn't realize that they they make their own fireworks, cause they wanna make unique fireworks for these special displays, and fireworks are a really big deal in Spain, you know, for every fiesta, you
Georgie:can have
Mark:a really good firework display. So they had their own manufacturing facilities, which is basically a load of sheds in a field somewhere, because you don't wanna blow up anything. It has to be a long way away from population. But then we had this package, this sort of liability package, for employer's liability, obviously, because it could blow up your staff if they're not paying attention, and then obviously you can set fire to people if you fire the firework in the wrong way, or it went off wrong. But that was a pain in the ass.
Mark:The admin for that now, we could literally plug that in, and that could become the local broker down in Seville Mhmm. Could just press a button, because we weren't doing anything. We weren't really underwriting those. Those. We We can 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, as they were in in Spain, you know, these pyrotechnic companies, one would have to say, it's pyrotechnica Sanchez this week, and then it's pyrotechnica Lopez next week.
Mark:And they're all are we really underwriting them? Again, we're commoditizing something that's quite difficult. We have those kind of any of those packages, you could just codify them really quickly.
Georgie:If
Mark:you're a smart go ahead broker, you would say, we got this done. We did the added value part, which was 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.
Georgie:Yeah.
Mark:Because they explode. Or railways or whatever it is. All the stuff that we live on in the London market, are core things, there's a treaty exclusions for everybody else, and that's why we're here. But if you can commoditize that, take the cost out of it, you wouldn't need to have 32 and a half percent commission on it. You know?
Georgie:But the thing that strikes me when we you know, 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.
Mark:You Yeah, know, they're they're mandate it the other way, yeah.
Georgie:Yeah. How are brokers successfully doing it?
Mark:Somebody's they like, own the law business. Can't And own is not the right word. Obviously, the customer's always free to go somewhere else. But if you originate a customer, a real human being, these are relationships with people. This is person to person relationships.
Mark:Someone plays golf with someone, they've been playing golf with them forever, they go to the same church, whatever it is, and they understand and trust that person to place their insurance for them. And then they could be at the beginning of a very long chain, but they're gonna place insurance with that person first and foremost, and then that person will get them a really good deal. If they give them 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 that it's quite complicated, but it's gonna give you all the cover that you need. Here's what you need for these difficult to insure risks.
Mark:You've got all the standard stuff, and then you've got you have a client who owns a whole strip of shops, and then they're doing so well, and they say, hey, I've to bought myself a helicopter. And you go you insure that as well, don't you? You go, well, I don't know, but then you phone someone in Madrid, then someone in Madrid phone someone in London, and then before you know it, yeah, you've got a quote for your saying, what do you use a helicopter for? You know? And then how many hours of experience, or what kind of make and model is it, and, you know, how many whatever.
Mark:All this stuff. And then suddenly you go, that person knows more about helicopters than they used to, or
Georgie:So you're saying
Mark:that You know, so you you can insure anything.
Georgie:If there's a benefit to digital trading and brokers own the business, then it makes sense for the carrier.
Mark:So whose customer is it? Right. Ultimately, still, just because you're the world's most expert in helicopters, you can't steal that customer away from that person because they trust that person, and they're their point of contact. And they, well, they speak the same language, live in the same town. They do all this stuff, and they ensure they're stripped more, and they do the employee benefits and all the boring stuff, and the pension scheme and the other things, probably, for their company.
Mark:I've known them for years, and they've always come through for them, done a really good job, given them great service, always, you know, anytime, phone 02:00 on a Sunday afternoon, answer the phone straight away, what is it? Can I help you? Oh, there's been a fire. You know, bang. You know, we're they're down there.
Mark:They fix it. So those people own it's wronged. It's a it's a nasty word. Know what mean.
Georgie:It's the distribution.
Mark:They own the distribution. So if they wanna place the business any way they wanna do it, that it's their choice.
Georgie:But then some of the things that you've said could be the same for Lloyd's. You know? It's a trusted place. They've they've placed the the weird and wonderful. So the brokers do need them as well.
Mark:But why? Well, it depends where the demand and supply balance is. Obviously, Lloyd's often has been in a position, and the London market
Georgie:has been
Mark:in position, where this is the only possible place you could get this done. That's not a very good way of selling yourself, but it is still the only possible place where you can get this thing done.
Georgie:Yeah.
Mark:Sometimes, it's you know, I've got an armored car business. They deliver cash, and they just had a $50,000,000 claim last year, and the local market thinks they nicked it themselves, or nobody wants to be touching this with a barge pole. Mhmm. So let's send it to London. We know it's gonna cost more than it did last year.
Mark:But, hey, at least London, they'll probably look at it and go Yeah. Off we go. You know, we'll somewhere with this, you know, because it's been a loss. And then maybe three years later, it runs 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.
Mark:So then the insurers in that market of last resort can say, if you wanna do it this way, it costs this much, and you have to do it this boring, terrible, clunky way that we still are wedded to. But so but you have to deal with us Mhmm. Rather than us having to adapt to you. Well, of course, if you wanna write really good business, one third of the London market's business, or a bit more than a third, is delegated authority business. Because everyone understands yeah.
Mark:If you wanna send you wouldn't send slightly more vanilla, more stable business to London if it was a pain in the backside to do it, and it's expensive. And, yeah, and there's a it's 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? We can do more of that.
Mark:We're already backing we've been backing MGAs forever, binding authorities. So why wouldn't we do it that way? Why don't we do more of that? If the broker's saying, you know what? I actually wouldn't mind doing more with you, because your security's fantastic.
Mark:You know, you're AA-'s 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. You're commercial. You're really good.
Mark: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 gonna be higher volume, lower margin, but lower volatility business that's very nice business that everybody wants to write, then why wouldn't you say yes? So there, the demand, the supply is saying, hey, I want that business, and the buyer is saying, well, you want that business, you need to do it my way rather than me adapt to you.
Mark:But I do understand. When it's the thing where I know there's nowhere else to go, I kind of I have to begrudgingly do it your boring way.
Georgie: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 London market. And if you can digitalize it, your costs are lowered. So we are getting more distribution coming to the to the market.
Mark: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, and in a really predictable way, in a really bad year, runs at a hundred and point one, and in a good year, it runs at 98.7. But it's incredibly predictable because it's really there's a lot of big numbers.
Georgie:Mhmm.
Mark:There are big numbers, but small individual premiums and small individual risks, none of them blow you up. You know, you've got reinsurance to take care of the the cat risk. Mhmm. 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?
Georgie:I'd love to get your opinion on AgenTek AI, 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 Agentic agents that are running the end to end broking and underwriting workflow?
Mark:Oh, definitely. I think you could. It wouldn't 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.
Mark: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. Brokers are much better run than they used to be. They didn't used to know really how they made money. They were run I bet it was on Dan Topping's podcast.
Mark:He's and obviously, knows more about broking than Dan Topping because they've invested in every broker, you know, that's grown over the last thirty years.
Georgie:Mhmm.
Mark:Or they've been shown every up investment opportunity in the London market in the broking space for the last thirty years. So those brokers that they've nearly doubled their margins in that period Mhmm. By being better run. So the best brokers always got the imperative of, couldn't we do this in a more efficient way? And that's permanent cultural question that's happening.
Mark:Here's everything we've done today. Could we have done that better in a more efficient way? Yeah. Could we tomorrow, could we do it in a more efficient way which would increase our margins?
Georgie:Mhmm.
Mark:I mean, there's always there are lots of people sitting in those breaks working that stuff out all the time and constantly reappraising how they do stuff. So, of course, if you could do it that way, it will be done that way. And will the you know, if it goes wrong, the regulator's gonna jump all over you. Are you still responsible for it? You know, just because it's you know, you can't say, oh, it wasn't me.
Mark:Was the AI. You know, it's like, sorry. You know, AI is not an approved person.
Georgie:Mhmm.
Mark:The approved people are still gonna have their chain pulled Mhmm. Quite hard if it does starts treating you know, it has to treat your customers fairly.
Georgie:Yes.
Mark:It can't enable money laundering. It can't do all these things. You know? So it must know who that customer is. It must do all this stuff.
Mark:And if it doesn't do that, it's gonna be in deep trouble. And if if someone's trying to cut corners, they're gonna be fanned out so quickly, because it's a regulated industry for a really good reason. Because Yeah. I mean, back in the old days, you sold a piece of paper in return for a promise to pay lots of money to someone if something goes wrong. Mhmm.
Mark:And now it's not even a piece of paper. But so it is. You know? If you're a fraudster, it's a very attractive business model, isn't it? It's like, literally, the ultimate Ponzi scheme is that I don't even have to do anything.
Mark:I just sell you a piece of paper. And then, of course and it's brilliant because there's only, like, a one in ten thousand chance of you actually having a fire. It's great. I should just go around and have sell fake insurance to people, and it'll never happen. And actually, if there's small fires, if they get enough income, I'll be able to quietly pay them anyway.
Mark:And it will only be when there's a really big conflagation or something or there's a hurricane that I'll be in trouble.
Georgie:Yeah.
Mark:So 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. So AI is not gonna change that much. It's just gonna make things more efficient. I mean, much more efficient, and spot new business opportunities. Yeah,
Georgie:course. Is it allowed to do
Mark:things that Yeah, and obviously, it will improve some risks. I've actually had Patrick Tin and I asked him about it, he said, Well, look at some of the pharmaceutical industry, those kind of biosciences. We'll accelerate the testing to say, We know that will it check what sort of side effects you'll get from this drug by analyzing what all the other drugs that are similar structures have done, and what side effects they've produced. So again, you can actually make some of the risks better. But, I mean, again, it's all about ingesting a load of information,
Georgie:structuring
Mark:unstructured data, looking at patterns. Yeah. It's not rocket science necessarily. Again, and it's not a brain. It's just a load of probabilities of saying, think I the next word in the sentence is gonna be this.
Mark:Mhmm. That's a 93% probability. So that's what it says when it's talking to you. Mhmm. It's not necessarily thinking.
Georgie:Yeah. Well, 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 observer 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 ten years, What's it kept?
Georgie:What's it let go of? And what is genuinely gonna lead the world?
Mark:Well, I'm really optimistic, I think, because of these technological advances. Most important thing, people always forget, and it takes you a while to learn it. And it was funny. Being a broker, I always had my head in the weeds, sort of, you know, just doing stuff. And then suddenly, you become the editor of a magazine, and then you have to look from sort of 10,000 feet above and and see, well, how does this thing work?
Mark:You talk to these people. You start talking to CEOs instead of underwriters. You're not just trying to renew some policy for next week. You're talking to CEOs about strategically about what they're talking about. But of course, fundamentally, insurance is a wholesale business that that sells money.
Mark:It rents money out to people in a slightly different way than banks do. But again, it just it makes something that was really unaffordable affordable. 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, one, you couldn't afford to buy the house as you borrowed money, and then you couldn't afford to die. And then all this other stuff.
Mark:This is how insurance works. I bought this building, now I can't afford for it to burn down. So I'll buy some insurance. And great thing is it's not very expensive, because it's really efficient, because everybody buys insurance, so it keeps the cost down. Not all the houses are are gonna burn down all on the same day.
Mark:You know, it's like one in one in 10,000 chance.
Georgie:But
Mark:the cost of capital will come down. So what's happening in the London market is really interesting. If we drive unnecessary costs out of the system, things get faster, those trades can happen without friction. Because before, every time you had a you'd have a trade, you had 10% cost or something like that, and then another quarter where the money's sitting around and it's sloshing around. If we solve a lot of these problems with them, the money gets split quickly and gets spent quickly.
Mark: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 just goes boom, in the way that it does in the stock market, the way that these trades. If we can trade quicker
Georgie:Okay.
Mark:And more efficiently, and then some of that money could just go to you know, we've got things like London Bridge too in the London market. For example, at the moment, as a retail investor, I can only get exposure to insurance by buying stock in Aviva, Hiscox, Beasley, things that listen on the London Stock Exchange, there aren't that many. I mean, are 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, say, I don't know, BlackRock Lloyd's fund?
Mark:BlackRock run hundreds of funds, thousands of funds that a retail investor can buy into with very low cost of 0.2% fee or 0.1% fee on a tracker fund, a money market fund that's investing in cash like securities. Why shouldn't there be a BlackRock fund that invests in Lloyd's that I could get exposed exposure to as a retail investor? Don't know. When I had one of the member's agents on ALF 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 last twenty years.
Mark:And also, you know, there's lots of tax advantages, loads of really good things. You can't, unless you've got £15,000,000 net worth. So it's like, well, when I get my first 15,000,000, 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 15,000,000. I would love to be able but why couldn't I buy BlackRock Mhmm.
Mark:Lloyd's and have it as part of my because I know, I I know I know that will be a good investment. Hopefully, that'll be making this that share of Patrick Tynes saying 12% returns across the cycle. If I had confidence, if I would allocate a small amount of my pension fund to that, I'd be very happy with that if I put four or 5% of my pension fund into that fund, and it was run at low cost. And then every syndicate at Lloyd's, they're making the most of my pension fund money. 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, they're allocating 2% directly to insurance so that every syndicate Lloyd's can go well, obviously, I go to the member's agents.
Mark:Oh, no. I go to BlackRock Lloyd's fund number one because it's now 20,000,000,000, or something like that. And but we're talking about a 400,000,000,000 market. But if you decrease the cost of capital because, again, back to the original point, it's it's money. Everything correlates to money.
Mark: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.
Mark:If we can get the cost of capital down, get the frictional cost out, there's no reason why we shouldn't have a 500,000,000,000 trillion dollar market, and so everyone's saying, you've cracked it. Why wouldn't we wanna work with you? Why wouldn't you be writing Chilean 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 just as well or more efficiently than anybody else.
Mark: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 everywhere else. So it means that fundamentally, the cost of your product can be lower. You can be more competitive.
Mark:You could do more business. So why wouldn't you wanna do more business and more of that much more of that traditional high volume, low value business that's much more stable? And then you do all the other stuff as well. Of course. Absolutely.
Mark:But the market could be way bigger and way more profitable. And, again, there's no reason why it wouldn't be a triple a market rather than double a minus.
Georgie:Oh, we'll have to watch this space, and we'll have to reassess in the next ten years.
Mark:Well, I mean, that's the dream. I think it's hard. You know, 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 capital, 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.
Mark:But if it's far more stable, they would. So there's an enormous opportunity.
Georgie: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.
Mark:Thanks very much.
Georgie:Thank you so much for listening to 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.