Harnessing AI and Tech-Driven Underwriting – Parsyl’s Growth in Lloyd’s

In 2016, the insurtech scene wase exploding into life. Entrepreneurs seized on break-through technologies to trailblaze with new products and services, shaking up the insurance landscape dominated by incumbent insurance giants.

During this time of excitement and opportunity, Ben Hubbard co-founded Parsyl and the firm made it into the first cohort of the Lloyd’s Lab. It’s never looked back.

Today it underwrites profitability on supply chain risks – such as food, life science, pharmaceuticals and packaged good – using latest technologies and innovations.

For example, Parsyl runs 100% of its submissions through artificial intelligence. It constantly revamps its products over rolling two-week cycles and updates its models from experience and new third-party data every four months.

Lloyd’s muscle  

It’s growing muscle in Lloyd’s is evident by its leadership of the Essential Consortium, coverholder status and operation of syndicate 1796.

Explaining Parsyl’s recent developments, Hubbard told Voice of Insurance host Mark Geoghegan: “We launched a consortium at Lloyd’s 18 months ago, and we’ve put 60 million of premium through that since its debut. It’s impressive. Really proud of that.”

The 40-staffed business is light on overheads, meaning it is less people-heavy than other syndicates, instead reliant on technology to carry out much of its work.

“That is one of the most exciting ways to build a profitable insurance business,” Hubbard explained.

Parsyl builds its own technology, this means the data scientist and data engineers have the same standing as the underwriters.

“It’s that kind of equality that creates creative friction, that creates better outcomes,” he said.

‘Constantly changing’

Geopolitics, climate, the new political leadership in the United States and environmental, social, governance (ESG) were all highlighted in the discussion as risks facing shippers.

Hubbard said: “It is constantly changing and moving. And the exposures, even if they’re static, are changing, you know, by the hour. So, it makes it interesting.”

Using technology to unlock new classes of business, and some of the ‘grey’ area in between classes, is one of Parsyl’s aims.

Underpinning these ambitious plans will be the capital from its successful series C fundraising.  

The funding, Hubbard explained, will go towards growing the underwriting operation, research, and development, along with investing in data technologies and capabilities.

“What we need humans to do is develop the business. It’s the network, it’s the judgement,” said Hubbard.

“As a US company with a Lloyd’s presence, we actually have very light underwriting footprint in the US.

“Most of our footprint in the US is product, engineering and operations, so we want to grow our US presence.”

Another important part of the growth story is generative AI. Hubbard enthused: “Gen AI has been a big investment for us. I think we’re an early mover on it.

“We’re seeing huge rewards. We want to keep that up. It’s one of the things I find myself surprisingly excited about.”

Avoiding the ‘stupid stuff’

When it comes to underwriting appetite, Hubbard believed Parsyl is niche, focusing on perishables and pharmaceuticals.

Even though market rates have softened, Hubbard is confident his business can continue on its profitable course.

“We won’t compete with stupid and there’s some stupid stuff out there. But actually, I’d say that niche of the market, it’s underserved still, and so we find that there’s limited options for clients.”

Exit strategy

Pressed by Geoghegan on an exit strategy for divesting the business, Hubbard was forthcoming.

“I think we have a plan, and we’re loving what we’re doing, and I don’t really want to be doing anything else, and hope this ride never ends. And I think actually everyone feels that way. So, we have a business plan at some point,” he explained.

“Your trade sale, recap with a private equity company, IPO. Those are all options that exist. So, we’re focused on hitting our plan, and I do believe the rest kind of takes care of itself.”