The Asia InsurTech Podcast very much enjoyed speaking with Alex Taylor, the Global Head of Emerging Technology, QBE Ventures at QBE Insurance. We had a great conversation about how the increasing power of compute, universal access to data, artificial intelligence, and machine learning lead to knowledge-based approaches to risk and increased product personalization.
Michael Waitze 0:04
Hi, this is Michael Waitze. And welcome back to the Asia InsurTech Podcast. Today we are joined by Alex Taylor, the Global Head of Emerging Technology QBE Ventures at QBE Insurance. Alex, it’s great to have you on the show. How are you doing today?
Alex Taylor 0:25
I’m fantastic. It’s, it’s great to be on. Thanks for having me.
Michael Waitze 0:28
It’s great to have you here. Before we get into the main part of this conversation, we generally like to ask our guests what they think the biggest trend is InsurTech and let’s go global with this.
Alex Taylor 0:42
You know, it’s interesting that the insurance industry has been effectively selling the same product for 400 years that the biggest change we’ve seen in the last 20 years. And even more, particularly in the last 10 is the advent of the use of data, and big computers, and the combination of those two things in the form of machine learning, that’s really starting to have a dramatic effect on pretty much any insurance product that you would choose to pick. And we’re certainly seeing this trend across many different lines of business now. And certainly we’re in the just at the very beginning of this, but we’re starting to see the effect of it right now.
Michael Waitze 1:19
There’s always been it’s a really good point, right? There’s always been this big, I think, external thought process around that insurance companies must have a ton of data, and keep it super well organized as well, is the advent of data. And the big compute actually is another thing that’s actually really important and machine learning. Are these presenting challenges for incumbent insurers? And are startups solving these problems for them in your mind?
Alex Taylor 1:46
You know, I’d love to say that, that every insurance company has their data well organized and tidied away. In my experience hasn’t always been the case, but we’re certainly doing our best to improve. The reality is that the value of data is often in partnerships to incumbents, the the willingness or the ability that we have, often with legacy technology that dates back decades by its nature, is that it doesn’t often lend itself towards activation or the using towards doing something real with that information. The value that we’re seeing in younger companies is that they have pizza size teams the ability to rapidly spin up an iterator capability. But the one thing that they need, of course, is data. And you know, the beautiful thing about incumbent insurers or any incumbent organization partnering with a younger one, is that revitalization doing something with something that you have, that somebody else can make use of better than you can,
Michael Waitze 2:43
I want to back up for a second because you said something in a very subtle way. And I want to make sure that I understand it properly. You said I’d love to be able to say that incumbent insurance companies have all of their data organized in a you know, in a super way. And then you use the word we and I forgot actually can you explain to me the relationship between the insurance company and the venture arm? Is it arm’s length? Is it internally? How does that work?
Alex Taylor 3:09
So, you know, I often say that corporate venture capital units and insurance are about being simultaneously the the hype person to say what we could be doing, but also the connection maker to demonstrate how we could do something. So no, more often than not, I find myself wheeling out a younger company and saying, hey, you know, here’s this amazing thing that the small companies doing they, they could use some help and execution, they could use some help and data. But you know, if only for not being held back ourselves, this is what we could be doing. So bringing capability in from the outside and partnering together for a better future. It is all about what CVC is. And you know, that’s certainly what I spend the majority of my day doing.
Michael Waitze 3:53
Interesting. I may get these dates wrong, because I did not write it down. But QBE was founded in 1880 something if I remember correctly, right, so a while ago, not 400 years ago, but you know, more than a hunch. Is there a mindset change that had to take place or is in a constant state of taking of changing so that the incumbents like you are but also others can see what’s happening and said, it’s that what we can do and to how we can do it. And if you’re spending a lot of your time saying see that thing over there? If we just work together with them, we can bring it in over here. Does it require a mindset change internally? And is that happening slowly, but surely you know what I mean?
Alex Taylor 4:32
So look, the short answer is yes. But the longer answer is to start by saying that until I joined the insurance industry, I’d never seen a mainframe. And frankly, I never wanted to. The challenge that we have is not just mindset but by the fact that we were first movers as well. Having a mainframe and 70s 80s was incredible and it allowed us to do incredible things. The challenge that we have now is that the pace of change is so much faster and the willingness of the general public to do something. And our ability to execute on that is simultaneously challenged. Our collective goal is to connect with where people are with where capabilities are now, and to create products that resonate with the public. The challenge is that once upon a time, we might have had 20 years to respond to that. And now the landscape changes every 18 months,
Michael Waitze 5:24
I want to make a point to right because we are talking about insurance and InsurTech. But I come out of a trading but also an investment banking background, like my first job was at Morgan Stanley. And to be fair, our first male sat on mainframe, we actually called it mainframe male. And Morgan Stanley, just like QBE was very progressive back in the day, they were like, We’re gonna invest a billion dollars a year in technology. But that tech over time, like you said, it gets, I don’t want to use the word embedded, but it gets embedded into the company, right? And then it becomes legacy, even if you didn’t intend it to become legacy so that as things start to change, and you know, that the pace of technological change in the last five years was faster than it was in the previous five, which was faster than it was in the previous five, right. So as things accelerate, it just gets harder to keep up. Even if you have a pizza size team. It’s still hard. No?
Alex Taylor 6:14
That’s absolutely true. But the point that I’ll underline is that the systems that were acquired in the 70s and 80s were fit for purpose for the type of products that were being sold. And this is the fundamental paradigm shift that we’re seeing is that insurance products 30 to 40 years ago, were built on rating tables, they weren’t personalized, they were based on your driving profile of a make model and year of a vehicle of the age of a driver and the gender of a driver, or from our commercial policy that the nature of the business that you were undertaking versus the revenue that you had. The change that we’re seeing now is particularly because of the prevalence of big data, is that where we’re being asked to price on things that are 1000 of a million times the granularity of what we once had, and to create bespoke products for the individual or for the business. That’s a very different business to the one we found ourselves in, in the 80s.
Michael Waitze 7:09
Yeah, this idea. So how do you get from a mainframe computer that can crunch rating tables? You know, again, I don’t know how old you are. But you may remember Cray supercomputers, it seemed like they were amazing. My iPhone has more power in it than that than the last cray. But how do you get from rating tables and the calculations that go on there to not just big data, but real time Big Data, calculating policies on a granular basis that are personalized in real time? I mean, we haven’t mentioned the word parametric right. But that’s essentially what that is. Yeah.
Alex Taylor 7:42
That’s effectively Yes. And you’ve just reminded me of a comment. I saw the other day that your car key has more computing power than the Apollo spacecraft that landed on the moon, which is actually true. But, you know, I think, I think that the utilization of cloud computing is the thing that brought us to the fore. And, you know, towards the start of my career, I remember that if you wanted to have a cloud based computing facility, you went and bought a server and you paid to hosted in a data center. Now, particularly younger companies, and incumbent organizations like QBE are almost on a level playing field. If you want compute capability, either at the small scale or the very large scale, it’s equally accessible. And this democratization of access to compute has been the prevalent theme of computing for the last 15 years. The next step is the democratization of access to data. And we’re starting to see this at the regulatory level now, but also in terms of cloud computing organizations that are starting to do this. I mean, a great example of that is things like Google climate engine and Earth Engine products, where for the first time, we’re seeing younger companies that can use planet scale data sets, to create models that allow the predictability of wildfires or floods or cyclones, or whatever it happens to be, in some cases, much more effectively than incumbent organizations can.
Michael Waitze 9:06
Yeah, but I mean, this is the idea, right? Again, when I was at Goldman Sachs, when we were switching buildings, it was like 120 something million dollar move, and frankly, we were literally just moving up the hill. Okay. But the biggest part of that move was moving the datacenter because it was physical inside the office. And if that data center didn’t work, we left the other one line for like a month or two afterwards, just in case. Right? But now we wouldn’t we just plug a whole bunch of stuff in somewhere and get to work right away, it wouldn’t be the same level of trauma or concern. But how does this change the overall tenor of the insurance industry? I didn’t think about talking about this today with you, but how does it change it if a team of five people can have the same access to climate data, Earth Engine, all of this stuff that a company has been around for 300 or 400 years can
Alex Taylor 9:58
the thing that I’m always fond of saying Is that younger companies have nothing to lose, you can go from having no idea to having an idea to executing on the idea to exiting the idea in the space of a month. An incumbent organization can’t do that it has responsibilities to shareholders, it has responsibility to policyholders in the case of insurance. The thing that we’re seeing is creativity applied to the insurance sector. And the beautiful thing about insurance is that you can validate your idea very rapidly, particularly because you’re essentially predicting an event that will or won’t happen in the following policy year. So you know, your your predictability of a cyclone event or where wildfires are going to be as some emerging companies are starting to do, you have to wait a maximum of 12 months to determine if your model actually works. And if it doesn’t, you can actually improve that to a feedback cycle. The ability to do something like that, rather than relying on 50 years of historic data, which incumbent insurer has always relied on as being its principal asset. And the thing that you never give away the keys to the kingdom to suddenly we’re seeing a lot of that thrown out the window, because it has limited value.
Michael Waitze 11:10
There’s a line that’s blurring between physical assets and digital assets. Yeah. And, to a certain extent, physical assets are finite, right? There’s only so much stuff we can put on the planet. Sure, we can fill in harbors and stuff and build buildings there, I get that. But from a digital asset perspective, and I’m not talking about Bitcoin and stuff like that, I’m just talking about lines, cables, the digital information that’s going back and forth, all of the storage stuff that we have stored digitally, and all of this sort of connectivity that we have, right? Like if this call goes down, this podcast is over. Right? And it’s not just this podcast, there are 7 million podcasts in the world that are probably recording right now. And all of them are done if the internet goes down. How do we then start moving away from these ratings tables with very little data history, right? And doing this predictability, this predicting that you’re talking about with so little data to start off with so that then we can ensure these digital risks, right? I mean, this is a challenge? No?
Alex Taylor 12:06
No, absolutely. And this is where the way that we partner with our customers is starting to become a lot more relevant. And if you look at a lot of nascent cyber insurance, particularly if that utilization of data to have interactions with your policyholder, during the term of the policy. There’s some very interesting companies in market like this at the moment Coalition, the cyber insurer is a classic example of this, where you have the ability to utilize the real time data relating to the risk of the insured, and in some cases, prevent an event a claim from ever occurring, you can reach out to your policyholder and say you know you’re exposed because you only have one primary Internet connection to your offices, or you haven’t patched this software. And if you don’t, you’re likely to have it as a zero day caused a significant event to your company. The biggest trend we’re seeing in resilience here is insurance, being able to prevent things from happening in the first place because of what they know.
Michael Waitze 13:06
Yeah, and I think most people think about this in the context of health, right? It’s like put down that cigarette or don’t have that beer or don’t drive drunk or all of these things that you can see and feel. But this idea that it can then be attached to the digital world as well, like you said, like you haven’t patched that thing. You know, like Zoom has flaws in it or fix that kind of stuff, then brings this idea of resilience in the digital side, which is super cool. And since you brought it up nicely. Do you want to talk at all about this resilience challenge that QBE is having? And talk about it? Like it’s scale? Like, what does it mean? Why do we do this? What was the origin of it? And what are we expecting the outputs to be?
Alex Taylor 13:46
Yeah, and look, I mean, resilience is an interesting topic, because it covers every product line that a modern insurer has, and it covers, you know, climate risk and emerging discussions around where people in businesses can and can’t be based. The way that you can operate your business and certain things that you can do. You know, our partnership with safety culture that QBE has, which is called Mitti Insurance is an interesting example of this. So, you know, sitting down prior to taking on a particular policyholder, and saying, you know, here’s an analysis of your business, and we’re going to have an open and honest discussion about the things that you’re doing that might cause an impact to your business, and the ways that you can fix those and still be insured, but prevent business interruption or a particular type of liability. This is a space that’s only going to become stronger and stronger, and it creates competition in the insurance market. But it’s a balance because the more you know about an insured, the more you can interact with them, the more opportunity you have to change the nature of risk, not just observers, but at the same time it’s a it’s an honest and informed discussion with an insured. I’m a fan of saying that what you have to fundamentally do is to exercise that the principle of least surprise, that is, Would an insured be surprised to know that I’m using this particular attribute to underwrite their policy. Now and if they are? Or can we open this up in a way, so that we can say, even though I know this, and I can’t unknow this, we can partner together to make a better product as a result.
Michael Waitze 15:18
If you’re partnering with people to get better results, and if that data, particularly from an analysis and underwriting and an actuarial standpoint, has value, if that data is shared, can some of that value accrue back to the people that are sharing it in in some form in some way, shape or form? It doesn’t only have to be like in lower premiums, although that would be nice. But what other ways can that data value then be shared with the people with whom you’re partnering? If that makes sense?
Alex Taylor 15:47
Yeah, absolutely. You look at a classic example, as a product that I built with a team when I was at IAG called Safer Journeys. Safer Journeys was a motoring product. And it was absolutely not an insurance product. So in fact, it was explicit in its terms of service that said, we aren’t going to price your insurance policy, based on what we can see here was a telematics data product for drivers, you know, both in commercial and personal lines. And fundamentally, it identified people were driving in a way that was dangerous or wasteful, no, and it could say, anything from your, you’re accelerating too heavily, and that’s costing fuel and damaging the environment, to you’re potentially going to have a motor vehicle fatality as a result of the actions you’re taking. And here’s some ways that you can not drive in that way. So that, you know, you might be alive tomorrow when you might otherwise not be. And, you know, it’s this kind of opportunity that the insurance industry has to create things that do have a positive outcome for the insurer, and certainly avoiding fatalities does that but also for the insured as well.
Michael Waitze 16:50
Can we talk about the difference between you just said like, it wasn’t an insurance product, it was a telematics product. What’s the line that differentiates between what is insurance and what isn’t, even if an insurance company is still offering it as a product?
Alex Taylor 17:06
Look, it’s a it’s an interesting question. And fundamentally, as much as we’ve had sort of blinders on for a long time, and thinking that Risk Services fundamentally means your pricing off that there’s a lot of things that you can do with risk style information. And it goes back to that point, around resilience, particularly in the end, just because you know, something about someone or about a particular business doesn’t necessarily mean that the only product that you can create there is one that that insulates them against that particular risk. And it could well be preventing the risk from occurring in the first place, like we discussed before, it could well be creating some alternative product that that’s a hybrid between an insurance products and a Risk Services product. But if you look at a lot of the innovation that’s taking place in the insurance industry, at the moment, it’s going beyond pure play insurance and more to knowledge based approaches to risk. I mean, a classic example of that is what we’re seeing in some property services. Now, in many people will remember that the Grenville tower tragedy in London, caused by a flammable aluminium cladding on the outside of a building, being able to identify that through physically visiting sites is infeasible for humans. It’s just a two to larger scale. But we’re living in a world now where a company like an insurer can go and look at every property that’s out there automatically. And you use visual recognition systems to identify this type of risk, and potentially to partner with the construction industry and governments to remove this kind of material. It’s an amazing future.
Michael Waitze 18:42
So again, another great topic, right. But there are companies today that are developing technology for servicing buildings, whether it’s the air conditioning in those buildings, the piping in those conditions, and then employing IoT sensors, to feed data back to them so that then they can be better on the maintenance and maintaining of the building side. But that’s just more real time parametric data that can then get fed into and partner with insurance companies that can create, like you said, whether it’s an insurance policy, per se, or some sort of protection policy, which is slightly different and regulated in a different way as well. But you’re gathering all this data. So instead of just being able to call somebody up and say the boiler is about to explode, or your air conditioning is gonna go down to your elevators gonna break, you can also feed that data back to the insurer and then work in tandem with them. Right, so it’s just not on the IoT company, just not on the building management or as you said, on the construction company, but there’s this three way partnership going on that says, Let’s just make all of this safer kind of thing. No?
Alex Taylor 19:41
It’s fascinating when you start to look at the macro effect of the type of risk that we’re underwriting today and looking at, at portfolio level views of energy consumption or the reduction in use of power fundamentally speaks to the climate risks that every insurer faces. If you’re if you’re a bank today and you’re looking at the LEND ability of a particular piece of coastal land, you have to have certainty that that coastal land will still be there in 30 years at the end of the loan term. Or that it’s not exposed to unpredictable wildfire risk, or cyclonic effects, whatever it happens to be. But if you look at regulatory changes in the market now, Canada just announced this in the last few days that banks and insurers have to report on the ESG risks of their portfolios. And we’re going to see more and more of this. But to an insurer today, understanding the energy consumption or the types of energy consumption of our portfolio is very, very opaque. Not only is understanding those things better for the insurer. You know reducing energy consumption is great for for business volatility. But looking at this at the macro effect of doing good for the world that we collectively have to live in, and the risks that causes can only be a good thing.
Michael Waitze 20:58
Is there an overall ESG angle to the stuff that you’re doing.
Alex Taylor 21:04
You know, it’s interesting, when you look at the statements that many insurers including QBE has made over the last several months, it’s the entire industry is starting to look very carefully at energy production shift, particularly carbon output. Even more particularly looking at the mix of energy generating assets in the market. There’s one comment that I’ll make very, particularly in that ensuring renewable energy assets has always been particularly challenging for the insurance industry. And that’s largely that it’s new, and then to a certain extent, or less predictable. But what you’re going to be seeing over the next several years, is the willingness for insurance companies to take on risks, though, that they wouldn’t have otherwise. Because they reduce carbon output to the atmosphere because they participate in methane capture, or whatever it happens to be. And this is fantastic to see, but extraordinarily challenging. Again, back to understanding risk.
Michael Waitze 22:03
Yeah. And back to understanding that data. And it’s interesting to me, because the second part of that question, which I don’t have to ask anymore, is, is the world simply moving in that direction? And it really is, right? In other words, if ESG, at some level is in part of your investment thesis, you don’t have an investment thesis. No?
Alex Taylor 22:18
Absolutely, and ESG and climate change and the broader space that they touch is going to impact every area that the finance industry is involved in, and the effect of that over the next 20 years will only be dramatically amplified. It’s it’s quite remarkable the opportunities that we have in this space that are untapped at the moment. Yeah, there’s some really fascinating companies doing incredible things in this space. But they do, again, depend on data input. There’s, there’s a company I saw that’s based out of the US the other day, called Geo Financial. And they’re looking at methane emissions from industrial sites as a proxy for operational risk management for businesses. But getting a global view of methodology was very hard. 10 years ago, yeah. Whereas now you can go to Google climate engine and spin up a risk model that looks at that in half an hour.
Michael Waitze 23:15
It’s so interesting, right? Ray Dalio is doing this right at Bridgewater Associates 50 years ago, or 40 years ago, when he was saying, I don’t know what, you know, pig futures, like a hog futures are going to do, but I know that it’s not raining enough in the Midwest, or all these other data inputs that he put in. And that means that they’re gonna get more expensive. And this is exactly what you’re talking about just in different markets, but also with way more data, way more access to that data, and way more real time access to that data, which makes your ability to price these things better or worse. I’m not sure yet, right? Because all this stuff is kind of new, but at least possible.
Alex Taylor 23:54
Absolutely. There was an organization I saw a while ago called Stable Price, that’s fascinating. And it, it speaks really strongly to what people are experiencing at the moment, because they provide, essentially exposure to the futures market to small and medium enterprises for resources they acquired to run their business. So you can lock in a wheat price, for example. You know, it’s not an insurance product, but it has an insurance style effect. Because if you can’t buy wheat, and you’re, you know, you’re making bread, then you’ve got a business interruption claim. But if you lock that price in, and then suddenly you keep operating where your competitors might not. This is the type of way that data is being used to create resilience focused products that operate in very similar ways to insurance, but but are not fundamentally insurance products or traditional ones.
Michael Waitze 24:41
So there is a world in which individuals on a personalized basis can take fractional ownership using tokenization. I feel like I feel like we’re playing bingo. But there is a world in which this can take place right where you and I can own pieces of food production where we can own hotels we can own, we can collateralize all these things, tokenize them, split them up into pieces, and we can own little bits and pieces of them. So that via the the ability to inflate the prices or even fluctuate the prices around those things becomes irrelevant to us because we own a piece of it and part of our ownership allows us to use that. Does that make sense?
Alex Taylor 25:19
Yeah, absolutely. And you know, this is where it gets really interesting in here in nascent technology, particularly decentralized finance is starting to make the opportunity to participate in markets that wouldn’t have traditionally been accessible to individuals, as suddenly front and center. No, and it follows that general theme of democratization of access. If there’s one thing that computers have done, particularly in the last 50 years, and decentralized finance in the last 10 years, have particularly done, it’s created opportunities for participation. And we’re seeing this across the board. You know, it’s interesting, we’re starting to see the ability to create insurance opportunities to participate in the insurance market, to individuals, even outside non traditional institutions. When Nexus mutual as an example of this decentralized insurance company without the overhead of 1000s of people that are employed or risk professionals to understand risk individually. But a person can put up digital currency like Etherium, to act as a reinsurer for organizations like that.
Michael Waitze 26:27
Exactly. And, again, I don’t want to attribute the founding of insurance or the home of insurance or the history of insurance to any particular entity or person or place. But you can go back to the tea shop, where people used to gather in London, and where mariners would come in and say, Oh, my God, I’m going to India in a couple of weeks, how can I pay for all this stuff kind of thing, and see a through line two individuals investing in insurance style products. It then became institutionalized, because the the access to capital made it easier to accumulate capital and then insurance those things and lay off those risks in syndicates over time. But now we’re coming full circle, because technology allows us like you said, through tokenization, and through decentralization, which is almost like the de institutionalization of the insurance market, allows us to come back at least some way to this ability where individuals can now participate in the insurance market. No?
Alex Taylor 27:24
Absolutely. And look, insurance has always been about the transfer of risk. And it just so happened, that the risks that we now insure are so large, and the scale of the individuals involved are so large that we’ve tended to centralize on on very large institutions, but fundamentally look at the perfect world would be one where we can avoid those risks occurring entirely. Of course, that’s not feasible. You know, we can’t predict force majeure events, it’s, it’s not the nature of the beast, as much as I wish that we could. But the thing that we’re blessed and cursed with now is the advent of additional knowledge about what contributes to those risks, the responsibility we have is to keep it to the human scale. It’s not about keeping your cards close to your chest and saying, I know all of these things about you as power imbalance. And I’m going to penalize you as a result of what I know, it’s about putting the cards on the table, regardless of the risk. And the even large challenge that insurance institutions have now is things like the consumer data, right, that we’re seeing in a in several different jurisdictions, which is how do we then transfer something that we know or that we’ve discovered to another insurer that that that person might want to engage with? And you know, what, what does that look like in terms of the value that we uniquely have? What that means, particularly is that we can’t rely on the fact that we know a particular thing to to allow us to have a competitive advantage over another organization.
Michael Waitze 28:54
And this gets back to the conversation we were having earlier, when you were saying that insurance companies used to protect their actuarial tables and our ratings tables, like they were, you know, a gift from some higher entity. And today, we’re moving towards open banking, open insurance, open everything and if your access to data is not your is not the moat around your business than what is right. And that’s a really interesting question.
Alex Taylor 29:18
And that moves every year. Yeah, it fundamentally, we’re now seeing people training models in compute platforms like GCP, Azur and Amazon, that are generations ahead of what a traditional insurance company had a few years ago. Sure. And, you know, I would be the first to say that company particularly working in Property Services, understanding the the nature of residential and commercial properties that’s trained on Google Streetview and, and modern machine learning platforms. In fact, like one of our portfolio companies Tensorflight has done they can much more cheaply discover the features of a property the risks that property exposes compared to traditional rating table model or are visiting the property itself, which costs untold 1000s of dollars. This is the world we have to keep up with now. And younger companies particularly a better place to create that future, because they’re not beheld by the past.
Michael Waitze 30:17
Yeah, exactly. And they have no legacy internal, not just systems, but they have no internal legacy, anything that they have to deal with. It’s pretty interesting how fast that legacy gets built. That’s a conversation for another time. Do you feel like you’re living on like a massive inflection point? Do you know what I mean? Where, and let me just be clear about this where you can go back, I feel like because things moved a lot more slowly, 100, even 50 years ago, where you could look and say, okay, 18, something was the beginning of the Industrial Revolution, because this thing happened. But now I just feel like, it’s just warp speed all the time.
Alex Taylor 30:58
It’s incredible. And look, I mean, one of my favorite authors is William Gibson, who has a lot of early work focused on inflection points and the ramifications on society more broadly. The world is going to have to get used to the changing nature of work over risk, and many other fields. Self driving vehicles as a classic example of this. And there’s some great studies on this particular field. And, you know, look, the technology itself is fascinating, but let’s not drill into to that let’s assume it’s going to come about and it very much looks like it is. If you look at the raw numbers in this commercial driving truck drivers in the United States only represent I think, two or 3% of total employment in the US. But they represent somewhere in the region of 16 to 17%, of total GWP. It’s our GDP inputs. And that’s an effect of the income that they have and what they spend their income on and how that contributes to the broader economy. But you know, if they’re not employed anymore, suddenly, you’ve got this massive hit to GDP. And it’s not just one sector, it’s being automated as many others as well. And for all this, vehicular automation will change the nature of the insurance industry. Certainly, at the macro level, we’re not going to see individual drivers, and shortly we’re going to see OEMs vehicle manufacturers insuring their vehicles are straight with reinsurance and factors, as Mercedes did demonstrate two weeks ago. Now they’re insuring their level three self driving cars, and telling drivers that if it has an accident, while it’s in automated mode, it will be covered by Mercedes insurance, not by you. We’re going to see this effect across so many different sectors, that to your point, it will be hard to keep up with it. The real challenge that we have collectively is how it will change not just the financial services industry, but society as a whole.
Michael Waitze 32:51
Yeah, autonomous driving is something that I think about a lot because of the impact that it has on supplementary complimentary ancillary industries. I love this conversation, right. So I’m in a car, I’m not driving, whose responsibility is it? But then also think about even further? What does it do for the number of cell towers that need to be there the insurance around the cell tower? Because if I’m not driving, I’m watching a movie or I’m doing work, right. So so how do I then like what what is the usage happened to Wi Fi? Where does the value in the driving disappear? But the value in everything else that I’m doing when I’m driving increased? Like all these conversations are so interesting, what happens to land prices downtown, if I never have to park because I can just get out of my car and go shopping. So no, the shops now moved in town. And the big massive parking lots get built out in the suburbs? Because that’s where I’m gonna send my car at night for it to charge kind of thing like, I love this conversation. Yeah.
Alex Taylor 33:51
Or Or you might not send it to charge, you might send it out to make money, right? It’s, it’s fascinating and look, looking at the knock on effects of these things, as you say, is one of my favorite hobbies. So commercial car parks in the CBDs. What are we going to do with the use of that land, just in the same way that companies are starting to look at leasehold agreements that they had, and, you know, encouraging employees to come back to the office to to make that look like a less silly idea than it does at the moment. But you know, this, this goes back to the resilience of younger organizations. I’ve had nine startups in my career, only one of those startups have a physical office at all. And here we are in a world where companies are saying you have to come back to the office, because that’s where it’s always been done. And you know, the story of the great resignation, people are saying, No, it doesn’t have to be and I’ve moved to Tahiti, where I’m based from now, and I’m going to stay there and find an employer that wants to let me do that.
Michael Waitze 34:48
Right. And this also gets really interesting to me and I’ll let you go after this. Right because I feel like we could go on about this forever. But if there’s been an employment arbitrage, right, which means that I don’t have have to be in Seattle. And I’m generalizing right to work from Microsoft. So if I’m a Vietnamese programmer who went to Carnegie Mellon, and then moved to Seattle to make $250,000 a year, you’re not telling me that if I moved back to Ho Chi Minh, you’re going to pay me $35,000 a year. So that arb has to close at some point, right? And it has an impact on everything. I know, we’re talking about insurance and InsurTech, but that’s going to change the way that everything gets priced globally, I think no?
Alex Taylor 35:29
I absolutely. And, you know, it’s really been fascinating. As I’ve been doing some team builds during the pandemic, I’ve long expected you’re gonna see this some modulus is so I’ve employment where for some people will be paid less, some people will be paid dramatically more. What’s been fascinating is that I’m now in a world where I’m paying, you know, western country style contract a day rates in countries that traditionally you would have been paying 10 to 15% of that. Fundamentally, the message that I always send to everybody is that particularly in the technology sector, there is so much talent in these countries that you haven’t even thought of that you should be exploring. Because your products will be the better for it.
Michael Waitze 36:12
Yeah, like if you’re not hiring programmers in Pakistan, you’re making a mistake right now. Anyway. I could I could keep you forever. I really appreciate your time. Alex Taylor, the Global Head of Emerging Technology, QBE Ventures at QBE insurance. This was awesome. Thank you so much for coming today.
Alex Taylor 36:27
My pleasure. Great to be on.