Sam Casey 0:04

Hello and welcome to Behind the Headlines, brought to you by Insurance Insider. I'm your host, Sam Casey, and I would urge you to subscribe to the show. We hear a lot about how artificial intelligence is sent to transform insurance and indeed the whole economy. In today's interview, I'm speaking with a company which takes this very seriously and has already incorporated AI into its underrising workflow. My guest is Ben Hubbard, CEO of Cargo Specialist Parcel. Ben told me the industry is on the brink of a structural shift in how technology is deployed.

SPEAKER_02 0:35

We look for ways to use technology, increasingly AI, to automate away, you know, a lot of the work in insurance. We look for ways to move our team members really up the org chart in terms of what they're doing so they can be more strategic and useful. And I think the industry right now is on the cusp of a pretty profound structural shift. It's going to happen, I think, a lot faster than people are willing to admit.

Sam Casey 1:25

Olivia, thank you for coming on the show.

SPEAKER_01 1:28

Thank you for having me.

Sam Casey 1:29

We've both been at the Plus conference here in New York City. DNO people from all over the world uh gathering to discuss the market. What were the main takeaways you got? What were people speaking about most of the conference?

SPEAKER_01 1:41

Well, I think the main thing was the risk landscape. I mean, the rate environment is pretty stable right now. There's not a ton happening on that front. So people were really honing in on what is changing in the risk landscape and also more specifically the speed of changes in the risk landscape as they're happening right now. Under the Trump administration, there's regulatory changes happening very quickly, being enforced very quickly. They're kind of completely backwards from what we had seen in previous administrations. So DEI considerations where companies were just a couple of years ago putting in massive amounts of money to fund DEI initiatives. Now they have to pull back money in under fear of like maybe Trump is gonna, you know, go after them.

Sam Casey 2:30

Yeah, there was one panelist who was saying a similar thing about ESG. I think, you know, it was a huge uh focus under previous administrations. It's been rolled right back. But then I think he also pointed out these things can snap back again very quickly as things change. So it having to think about all of that for directors and officers creates risk. And if they get it wrong, that's when insurance kicks in. And I think there was quite a lot of discussion about the risk of AI as well. A lot of it to do not necessarily with how people are using it, but just how much companies are spending.

SPEAKER_01 3:05

Yes, definitely on the investments front, people are concerned. Is all of this money that people are throwing into AI going to pan out and how is it gonna impact the financial markets and then, you know, directors and officers? There's also the concern about how it's being used in management decisions and how these high-level executives are giving oversight to what AI is giving them in terms of like the data they input and basically just how how much reliance they're having on AI in the C-suite is a pretty big concern. And it's not one that anyone really knows much about at this point.

Sam Casey 3:41

Well, it's just like you were saying earlier, AI is changing so fast, it creates so many uncertainties and it's so new that people don't necessarily know how to deal with it.

SPEAKER_01 3:50

Yeah. So I think that seems to be like one of the main things that insurers are asking more pointed questions about, or they're being advised to ask more pointed questions about.

Sam Casey 3:59

And what did it feel like the outlook was for the rest of the year? As you said, the market feels kind of stable. We've seen some tiny rate increases, which is a big change from the last few years.

SPEAKER_01 4:11

Yeah, the outlook was strangely positive. I mean, the market is stable and there's been so much volatility in the past 10 years. The hard market, extreme hard market softening for the past few years. So I think the stable rate environment is being welcomed. But there's also the concern about profitability, which was brought up at a panel, and you know, all the panelists agreed that public DNO at least is likely moderately unprofitable, which is interesting.

Sam Casey 4:39

As you say, it was a strange optimism given that overhanging fact.

SPEAKER_01 4:43

Yes. No one seemed to think that there was an imminent hardening on the horizon, at least for 2026.

Sam Casey 4:51

Yes, no, it looks like stability and very modest price increases is the most that can be hoped for.

SPEAKER_01 4:58

Yes.

Sam Casey 4:59

Well, Olivia, it's been great speaking to you today. Thanks for coming on the show.

SPEAKER_01 5:02

Thank you so much.

Sam Casey 5:06

Parcel was founded as a tech company, but has evolved into a cargo insurer with a presence in the Lloyd's market. Given its origins, the company has always paid to be at the forefront in technology and is already incorporating AI into its underwriting. To discuss this further, I am delighted to be joined by CEO Ben Hubbard now. Ben, thanks for coming on the show. Thanks for having me, Sam. It's great to be here. Parcel, it's not compared to a lot of companies we write about your typical insurance company. You started out much more as a tech firm and almost kind of reversed and ended up as an insurer. Can you tell me a bit about the history of the business and how it came to be where you are today?

SPEAKER_02 5:44

Sure, yeah. Our story is not a typical one. I guess starting with the basics. We are a supply chain insurer, distribute in the London market in the US, Canada, uh, Latin America. Tangibly, what we write is stock throughput insurance, so marine cargo stock throughput. We have been going as a full-fledged insurer for four years, and we've really gone from nothing to on a gross written basis, probably, you know, top core tile Lloyd's market, which we're really proud of as an outsider. Companies headquartered in Denver, Colorado. We now have a decent presence here in London now. But yeah, we were the outsider. I mean, I think the insure tech label, whether that's good or bad, certainly we are a combination of technology, MGA, and syndicate. We write 20% of our book. We lead 80% of the business that we write. So it's the growth has not come from just delegating. We have a really sticky business, underwrite exceptionally well, beating class averages. You know, our niche, most of our book is pharma, life science, food and beverage. So not the easiest part of cargo, but we we now write all commodities. Yeah, we started as a data analytics company. We were monitoring the cargo that we're now insuring using our own IoT sensors and analytics platform. And that was the springboard to what we are today. But it gave us a really, I think, powerful foundation to start an insurance company because we were data technology native. And I guess what got us here is along the way, we just saw more and more opportunities, I guess, to eat more of the value chain and thought, you know, maybe we could do this better. And let's give it a go ourselves. So, technology company to Lloyd's lab, first cohort in 2018, to a little single-parel MGA. COVID happened. We got springboarded into a syndicate in a box. And look where we are today. It's really been an exciting journey.

Sam Casey 7:36

And you you talk about your foundations as a tech company, even now, as as you are as an insurer, it's still something which is at the heart of how you go about doing business. And what we hear about so much, I think, in in the market today is obviously in society, not just the market, is our artificial intelligence and how it's going to change job markets and job practices. It's something which you guys are really looking to put into action quite a lot, I think.

SPEAKER_02 8:05

Yeah, I think we have both because of our origins and I think because of our intentionality, we have really sort of rewired the org chart and culture, I think, for an insurance company. So the result of that is that technology and insurance really have equal footing in the company. We look for ways to use technology, increasingly AI, to automate away, you know, a lot of the work in insurance. We look for ways to move our team members really up the org chart in terms of what they're doing so they can be more strategic and useful. And I think the industry right now is on the cusp of a pretty profound structural uh shift. It's gonna happen, I think, a lot faster than people are willing to admit. And I don't think perhaps this is self-serving as a company that's leading in this space, but I don't think the status quo is gonna survive or is going to be a winning strategy. And I think some of that is structural, whereby the impediments to getting into insurance and innovating in it, I'm very familiar with it because we've had to overcome them, but obviously all the regulation, you've got the capital intensity, you have the deeply entrenched relationships and intermediation that happens, obviously, like decades of proprietary data, even if it's underutilized and unstructured. I think the industry and incumbents have used this as a moat to blunt some of the digitization that swept other industries. And I think it's protected it for a while. I think it explains why the industry is behind. But I think it was a Faustian bargain because now we don't have the digital underpinnings as an industry to take advantage of the AI revolution. We still have work charts and cultures and talent that's built for a pre-digital era. And I think it's a huge vulnerability right now for the industry that they need to come to terms with. Because it turns out AI is really good at a lot of the functions, especially the back office functions, but even the underwriting functions of an insurance company. And so when you start to reimagine a future where you have technology and AI agents who are infinite in number and never sleep, it starts to look a lot different than what we're in right now.

Sam Casey 10:30

So, in terms of the day-to-day life of a parcel underwriter, what are the sort of real tech things which you're doing, which you think sets the company apart?

SPEAKER_02 10:38

Yeah, well, I'd say I can say it about underwriters, but I can really say it about anyone who works at Parcel. So for underwriters specifically, they no longer use spreadsheets. And I'm not just saying that. Like, ask any of them, they don't use spreadsheets. And we got rid of them a year ago. We ingest all of our submissions through we have an internal AI underwriting assistant named Chauncey, named by one of our US colleagues who was trying to think of the most English name she could come up with.

Sam Casey 11:03

And I was getting to all scenario, you chased the name.

SPEAKER_02 11:05

I have yet to meet anyone named Chauncey, uh, which actually is great when you're naming your AI. You don't want it to be someone's name. So sorry for any of the Chaunceys out there. But this is a tool that's nearly three years old. So we've we've created this agent early on. And uh it's evolved and matured a lot along with the technology, but it ingests email submissions, it does everything, you know, reads emails, the attachments, the tabs, it structures the transit information, it goes through the SOV, it pushes it into our exposure management system, it gets RMS loss costs and risk scores, it does the folder structure, it does the sanctions check in the KYC. There's 82 different human tasks that they or an underwriting assistant would have been doing that are no longer performed. And now it quotes it. So they actually log in. It takes about eight minutes for it to process. And so they look at actually a fully structured, fully quoted policy that's hit our pricing algorithms and our proprietary data. They're fine-tuning it based on whatever the considerations are with that particular deal. So, what that means is, yeah, they're spending a lot more time being strategic. We really see our underwriters becoming, or really already are, portfolio managers, and they love that. Uh, and it's really hard for them to imagine kind of going back to what they were doing before in terms of the manual nature of that job.

Sam Casey 12:22

A lot of those tasks are very laborious and time consuming, but it's not necessary where the value add is created, is it?

SPEAKER_02 12:29

Precisely. And I think we still believe, just to be clear, we believe in humans. We're very humanistic organization, and we believe in our underwriters. We just believe that they should be doing very strategic things with their time. And I think obviously focusing on the relationships, it gives them more time to do that, on the distribution, on new product development is one thing we get more time to do and think about. And it's true across the board. So we're putting an equal investment in claims right now. And um I think this is an area that the London market, the insurance industry tends to overlook. It feels like the stepchild, oftentimes, of uh IT budgets and figuring out ways, again, our claims team isn't spending their day in an inbox trying to understand an email thread that's you know nine months old and re-reviewing attachments. Like those are all things that an AI agent can do for them and now is doing.

Sam Casey 13:23

And how quickly does it feel like all of this technology is changing and developing? You know, if you think about to a year ago, the things you could do then compared to now, is it switching up?

SPEAKER_02 13:34

It's so fast, Sam, and it's frighteningly fast. And I say that as a leader of a company that like is on the edge of this. It's hard to keep up. It's hard for our CTO to keep up. And that's both very exciting, but um it definitely keeps you on the edge of your seat. I think, particularly in the last two months, we use Anthropic's Claude. Their release of Opus 4.5 and Sonnet 4.5 and Claude Code a couple months ago really changed the game just in terms of its applications for agents, for its ability to do high-quality software development. So this is no longer a technology that you just talk to and you have write B-level research papers and kind of mediocre memos. It's a doer. It can act for you. And increasingly, it's it's around uh empowering everyone in the organization to be able to use those tools, not just the people with an engineer in their title or product manager in their title.

Sam Casey 14:35

It must be um slightly daunting, I always think, as a CEO of a business trying to make decisions about where to prioritize decision making and time on this, when, as we said, it's moving so fast that by the time you've got your head around one aspect of technology, there's a new one doing something different and better.

SPEAKER_02 14:54

Aaron Powell Well, I think the answer to it is is is a very unsexy one. Because where we see the source of our edge when it comes to using these tools and technologies is in the culture that you create around it. So, you know, I've seen some CEOs in the industry referring to the AI underwriting arms race recently. You know, an arms race implies you're doing something to differentiate yourself, not just buying the same thing as everybody else. And so it feels a little bit like the bolt-on strategy of old. And it can feel good to allocate more money to your budget for AI, everyone's saying they're doing it. But it's one thing to buy new software with AI in it versus leveraging AI internally. And the latter is a lot harder because then you're getting into change management and changing behaviors and you know, decades old practices. And so we know what works in that. And there's been a lot of research on it that we follow. So, is there an AI strategy in place? Do team members have access to the latest tools, which is really important. They need to be using the latest models. The biggest one is manager expectations. Is the manager explicitly setting an expectation and giving employees time to go muck around and try this stuff out? Because that is how you learn it. You got to just use it and try it out. And so it's leadership expectations is really the biggest catalyst there. It's not doing the flashy pilot or buying the latest software. And so, what I am so excited about is I see I see members of our team who are not software engineers building software now. It just happened last night. Someone was really frustrated that a feature that they really needed. So one of our ops professionals was at the end of the queue in terms of our product roadmap. And there's a lot of trade-offs in terms of determining that. And so she used Cloud Co-work and developed an automation and a whole website in 90 minutes, showed it to the product team. They're like, this is incredible. We can fold it into the workbench and policy admin system in the next 10 days. She just solved her own problem. And she has no software coding background. It looks beautiful. I would never know that it wasn't done by one of our engineers. And so you think about that is domain experts being able to break down their domain, their challenges into solvable software problems and then going and doing it themselves, it's it's hugely empowering, but it really changes people's jobs.

Sam Casey 17:31

Going back to what you were talking about earlier, the history and of the company and its journey throughout that, you've been involved with in the Lloyd's market a lot over the years. And from, as you said, being in the lab and then having a syndicus in the box, how crucial has it that all been to the growth of the business and what what's the value that you see it brings today?

SPEAKER_02 17:51

Aaron Powell Well, Lloyd's for us, if that's the question, is really uh is is is huge. And I think Lloyd's being the great platform in the history that it has, of course, but I say particularly in marine cargo, it's the OG insurance line for Lloyd. So there's a great tradition we're building on, but it's actually just really important in terms of being a credible lead market. And that's what we set out to do, is to be a tech player, but like a credible lead market. And I think it's the thing I'm one of the things I'm most proud of is that no one would have expected us to kind of storm the doors and become a top quartile cargo market in four years if you were talking to us four years ago. So I think we've established that credibility. I think Lloyd's is a huge, hugely contributor to that. Lloyd's lab, like, you know, I still think it's such a great feature of the market. It did a lot for us. The syndicate in a box has also been very important. They can all be improved. And you know, I've shared feedback with Lloyd's, but the intention is absolutely there. I actually think really doubling down on some of those programs would be the smartest thing that they could do.

Sam Casey 18:56

And how's that shift been for you from, as you said, when you began underwriting, being very focused on a part of the cargo market to now being involved in it much more broadly across commodities?

SPEAKER_02 19:08

Well, we've had to mature, went from being uh, you know, a passionate group of evangelists uh for using data and technology and cargo, you know, to hiring, you know, experienced cargo leaders and professionals. And so I think the market sees you one way when you start. You're almost like this cute little thing, and they want to pat you on the head. And isn't that adorable? And so we've kind of moved beyond that as like we're we're grown up now. And even when we came into the syndicate in a box, which was, I would say, a bit premature, but it was COVID and we were doing lots of vaccine work. I like to say we were given a suit, like an adult suit when we were a child. And it's so it's it didn't fit. Uh and I feel like we've we've now kind of grown into an it, it's starting to fit. And we might even need a bigger size here soon. Um so yeah, you you mature in that way. We've always prided ourselves on not being a technology company that comes in and says we're gonna disrupt you. Um, that was never our style. It was like being very humble and collaborative and saying, I think we have something we can add to this. I think people have appreciated that. And in the beginning, it led to a lot of people and companies giving us a ton of help that frankly, you know, we we probably should have paid more for. But I think that's the great thing about this industry. There's a lot of people really willing to lend a hand when they see that your intentions are pretty pure, which ours were and still are.

Sam Casey 20:31

And thinking about uh your strategy for this year or maybe the coming years, what are the key things which are which are on your mind, which parcels looking looking to achieve?

SPEAKER_02 20:40

I think we've built some incredible foundations, and that includes the insurance infrastructure and the distribution, and then includes the technology. And so for us, it's really around how can we utilize those two assets more frequently. And so the focus for us now is evolving parcel to being what I see as the really truly first AI technology native specialty insurer. We have all the foundations in place for doing that. So we're now looking for new supply chain adjacent lines of business that we can hire or acquire into. And, you know, I take as inspiration, you know, companies like CFC Underwriting that started monoline, you know, used a syndicate to write part of their own book, you know, diversified and grew over a healthy period of time.

Sam Casey 21:29

Does any say much you can you can grow if you're one line?

SPEAKER_02 21:32

I think it's being monoline is a real advantage when you're starting, when you're innovating, and you want to be focused. And I wouldn't want to discourage anyone from that path. I wouldn't do it any differently. I do think you get to a scale that we're now at where it's just natural to diversify. There's a number of benefits financially and operationally to doing it. And luckily, I think we're at that point now. We've demonstrated to Lloyd's that we have the capability to manage a syndicate. We've been huge. Hugely assisted by Asta as a managing agent. And yeah, we're ready to take that next step. And I think for us, when we show underwriting teams our software capabilities, they want to use it. And I do think the best underwriting teams in the future are going to want to go to the best software capabilities where they can set up shops. So that's what we're going to be focused on.

Sam Casey 22:23

Well, it sounds like there's lots on the agenda, Ben. Great speaking to you today. I appreciate you coming on the show. Thanks for having me. Finally, here are some of the other main stories from the last two weeks in insurance. The eruption of conflict in the Middle East has had far-reaching consequences for especially underrisers, with marine, aviation, and political violence markets all setting their exposures. And in MA, Zurich confirmed the terms for its acquisition of Beasley, and CEO Mario Greco said the combined business would create an unprecedented capability in cyber. Thanks for tuning in for this episode, and we will be back again in two weeks' time.