In this blog post, we sat down with Michael Gallagher [MG], Chairman of John Foord Analytics, to find out more about his background, why he was excited to join John Foord [JF], the opportunity for cloud-based analytics technology to address insurance industry challenges, how COVID has disrupted the insurance sector, and what he sees ahead for the John Foord Analytics business in the years to come.

[JF]: Can you share with our readers a bit of your background and why the opportunity to join John Foord Analytics as Chairman excited you?

[MG]: I spent nearly 50 years with what became Aon, of which roughly half that time was in Australia and the balance was in Asia where I was first appointed as the CEO of Aon Singapore. I then served at Aon Asia as CEO of Emerging Economies, Chief Commercial Officer, Chief Operating Officer, and finally Chairman. As such, I  have wide  experience in the insurance business and am a Qualified Practicing Insurance Broker.

My experience is across a broad range of insurance topics, financing, HR, consulting, and more. I joined John Foord because of the synergies I had seen over the last decade at Aon following significant investments in data and analytics. John Foord approached me regarding their plans to digitise their business, to better serve clients, and opportunities for the creative use of data and analytics

John Foord will be able to use the strength of the data they have collected over the past thirty years to create a swifter, more precise, and less expensive data-driven valuation platform for their clients. I can help them across all of these areas, while also leveraging my close connections in the insurance industry, which will be a key market for this product to enter.

I also have broader business connections throughout Asia and the world, and the solution John Foord is building is ultimately across a broad spectrum of participants in the insurance industry. Why now? I was excited by what Gregory [Dickerson, Valuation Director, John Foord] and Graham [Copland, Executive Director, John Foord] wanted to do with the analytics platform and thought I could add real value.

[JF]: What are the current pain points you see in the insurance industry?

[MG]: Data analytics is dramatically changing the insurance business and the business of its clients, in the perspectives they take in planning for insurance, risk tolerance levels, comparison to similar type industries, the way they approach the insurance market (i.e. applying analytical technology on their losses and growth), and more. All of this builds a better scenario for a buyer in today’s environment.

One of the challenges for asset owners is that average clauses in insurance policies say the insurer will grant buyers an alleviation of up to an agreed per cent. However, asset owners will likely face a reduced loss payment if the actual insurance replacement value is outside that percentage allowance.

What John Foord have done over time is delivered valuations to insurance buyers, sometimes through insurers but mainly for the benefit of the buyers, that give them a greater ability to insure for the correct amount.

For example, in broad terms if you have a loss of $50 million and you are underinsured by 20 per cent, then you could be exposed for up to $10 million on that loss.  Would you rather stand in front of the board asking for $10 million of uninsured costs when you could have spent a minimal amount to get a correct valuation’?

While brokers are not liable to provide valuations to clients, they do have to advise them to have valuations done and articulate the effects of policy clauses. This solution will also support the broker with  a professional platform to assist buyers who have been advised they need valuations done.

[JF]: How do you see cloud-based analytics technology impacting the insurance industry going forward?

[MG]: In the insurance industry there is lot of data around sums insured, but what is not there is what John Foord has – the data on how the sums insured were built, what the variables are that apply to it, and how those variables change in the course of any given period. I don’t see anyone at the same level as the John Foord Analytics solution at this point, but I’m sure a lot of tech companies seeing it come out will start to look at databases and how they can build competing platforms.

As a first mover, John Foord will have the benefit of initial kudos for this solution and more importantly the reputational element of decades of data. So, the factors in our favour are: insurers and brokers wanting to provide solutions under policy terms and buyers and owners benefiting from a solution that gives them correct sums insured as they go to market. Analytics is a solution that will dramatically improve the data on sums insured for all parties.

Analytics will also help in cases where there is reticence among owners to do valuations because of the time it has taken under the traditional approach. As such, analytics will open up more buyers and markets.

The result will be that no matter where buyers are in the world, they’ll be able to access the analytics system to do a data-driven valuation – augmented only when necessary by a site inspection recommendation at the end of the digital process.

[JF]: How has COVID disrupted the insurance sector?

[MG]: Many companies have stopped employees working from on premises, so working from home is the new norm to deliver service to clients. This has necessitated a greater reliance on communication. While John Foord had already started down the path of building their analytics platform, COVID has escalated the need for that to happen.

Clients are now seeing the value in it because they can’t allow people to visit their sites for physical inspections. Data and analytics, coupled with mobile technology, drones, and satellite imagery will become more and more the tools of the trade for ‘digital site visits’. In most cases, you can get to within a reasonable tolerance – using all the data and analytics that John Foord provides.

We’re on a longer path to providing a better client experience without necessarily replacing the need for physical site inspections and valuations in some scenarios. Over the next 5-10 years, the traditional John Foord valuation business will still enjoy steady growth. Adjunct to that, we will have a rapid-growth technology platform delivering analytical valuations and statistics to clients as the world becomes more digitised and data-driven.

More and more buyers will start to use data analytics for most cases compared to traditional ways of doing it. A data-driven result may point to the need for a site survey to a unique answer for a non-typical asset, meaning John Foord’s traditional business will still benefit. It will be key for John Foord Analytics to continually work with its valuers to ensure models are continually refined for accuracy, even as we apply machine learning and artificial intelligence.

In this way, the experience of valuers and John Foord’s data over the last 30 years will become the backbone of the new cloud-based Analytics platform.

[JF]: What’s next for John Foord and the Analytics business?

[MG]: We’re already looking ahead to new opportunities the Analytics platform will open up for us beyond the insurance industry. For example, major asset owners and managers of assets like hotel properties, condominiums, offices, and shopping malls will benefit from the solution. (Large property managers worldwide have thousands of these assets under management.)

Right now, these asset owners don’t have the time to do valuations on each and every property, but what they can do is have a low level or high-level data-driven valuation done almost instantaneously or on rotation once every few years. This will be a huge market opportunity for the John Foord Analytics business coming out of that demand in the years ahead.