Unique Contributions

Data, trust and rising premiums: Insights from LexisNexis Risk Solutions

• RELX • Season 4 • Episode 5

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In this episode, YS Chi speaks with Bill Madison, CEO of our insurance business at LexisNexis Risk Solutions to explore the dynamics within the insurance industry and why premiums keep rising across the board. To understand the challenges consumers and insurance carriers are facing today, Bill takes us back to 2020, right at the beginning of the pandemic. 

This episode is also available on YouTube at https://youtu.be/PGgi39UtbBE

YS Chi:

The Unique Contributions podcast is brought to you by RELX. Find out more about us by visiting relx.com.

Bill Madison:

How do we help you evaluate columns of knowledge about the risk itself and make an informed decision associated with it? We've been very focused on delivering decisions.

YS Chi:

Hello and welcome to our podcast. Today, we dive into the world of insurance, an industry that touches every aspect of our lives and protects what we value most. Since the pandemic, most of us have seen our insurance premiums increase pretty much across the board. Some American states have seen property insurers exit from the market altogether. I'd like to understand why this is happening. Is this an industry in crisis? What will the solutions look like? My guest today is Bill Madison, CEO of our insurance business, LexisNexis Risk Solutions. Our business headquartered in Alpharetta, Georgia, provides analytics and decisions tools for insurance companies. Bill, welcome.

Bill Madison:

Hey YS, thanks for having me.

YS Chi:

Thank you so much for making the time for this. Bill, we know, you've been at this company for 36 years, but before we talk about that, how about a small introduction from you about yourself.

Bill Madison:

Well, to your point, over 36 years has been quite a journey on many fronts. In the early days, was part of a startup. We're based in Charlotte, North Carolina, really defining a problem within the insurance industry itself. We created a solution to address the problem. The problem was hidden drivers and helping the industry to identify hidden risk within their portfolio, we got extremely focused on that. Went through the market, really helping the industry implement that solution across the market. We got acquired, and then, really advanced through that solution to the position where I am today. After we got acquired, I went into sales and then eventually became the CEO of the insurance division within RELX. So, it's been quite a journey. Today, I'm married, live in Alpharetta, Georgia. Have two sons, two young men. It's hard to believe how quickly they've grown both personally and professionally. They're doing well. It's been quite a journey within itself, very exciting.

YS Chi:

Yeah, very exciting and I'm going to eventually get to this, but to say that you were actually defining of a problem to solve, and it was about hidden drivers and hidden risk from them, right?

Bill Madison:

Yeah, that's it.

YS Chi:

All of that was well before the days when we talk about AI, let alone data analytics or even big data. How did you think about that?

Bill Madison:

Yes, it's funny when you really step back and look at most startups, the initial offering was a failure, to be brutally honest with you. We really focused on the basic components of capturing mileage intelligence and doing the simple math between the point A and point B, and in determining how many miles you drove as a consumer over the course of the year. Sounds very simple, which it was. Sounds very exciting, which it was. The problem is the early days of computing, when the inspection locations would load this software on their recently acquired PC, back in the day, they didn't consistently put the data incorrectly within the software package. We had to step back and we started to really engage with the market, asking questions. Basically came up with this concept, once we did some research with available information. Data assets by state, could we acquire the driver's license file within a state? That's what we did. Where was available, we went and acquired all the licensed driver information within a given state. We developed a programme that could actually take an insurance carrier's book of business within that state. Compare it, match it to our database, and let's say there's a policy out there that has three cars, vehicles associated with the policy, and two drivers. We would match on the address. We would identify those two drivers being located at that address, and if mom and dad forget to put licensed kids on the policy. We would identify those individuals that were in the household at that location were reported back to the insurance carrier. Then the insurance carrier would reach out to the policy owner and say,"Hey, I see you have, looks like two kids, two of your kids that are licensed within a household, do they belong on, associated with one of the policies? Are one of the vehicles on the policy?" That's what we did. Again, a very simple concept of acquiring information, matching it, reporting back to the carriers, and then allowing the carriers to actually get the premiums associated with the risk. That's what we did, and it's still all these years later, is still a very viable solution that the insurance industry uses today.

YS Chi:

So from that little thing, that little curiosity and piecing together the puzzles to your current nickname, billion dollar Bill.

Bill Madison:

That's too funny.

YS Chi:

Oh, wow. Don't think it's funny at all. It's very respectful Bill. That you build this business into a billion dollar business. Tell us a little more secrets.

Bill Madison:

Well, the secrets are really all about the people.

YS Chi:

You always say that.

Bill Madison:

Well, I know, but it's a truth. It really is a truth. I look at myself as a spoke in a massive wheel, and the wheel actually turns because of all the spokes working together. All the people, the knowledge that we've created. We're very focused on the culture of the business itself being decisive, owning outcomes and acting as one team, and that's what we do. The other side of it is we have an incredible market that we're working with today. The insurance industry, just absolutely incredible. You identified it in your opening when you said, what the insurance industry does, it keeps us safe. And when you start to look at the fundamentals of insurance carriers and what they do and some of the challenges they have, they work with us to make us better and to create new solutions that are prominent throughout the industry today. We spent a lot of time on that.

YS Chi:

Yeah, let's start talking about that at current time, okay. Insurance rates have gone up. I think we've all felt that in the US, especially. Whether it's car insurance or boat or home or any property insurance has gone up. What would you say are the fundamental reasons behind this happening?

Bill Madison:

Let's go back four or five years, right to the beginning of the pandemic and what happened during 2020. That was really the cornerstone of some of the challenges that we're dealing with today, across the market. If you think about it, when March of 2020, hit, consumers stopped driving.

YS Chi:

That's right.

Bill Madison:

The vehicles stayed parked in their garage or their driveways, because people just weren't moving around. They weren't connecting, they weren't going into the office, they weren't really exposing themselves as a risk to the insurance industry. As a result of that, there were a lot of consumer groups that were starting to question as to, why are we paying for our auto insurance premiums, when we're not driving the car? For the average person, it's a fair question to ask, but it is complicated in a lot of ways. What happened as a result of that event, and people are not driving. Guess what's happening? They're not following claims either, because they're not having accidents. The industry is starting to make pretty significant profits over the course of the year. As a result of that, the departments of insurance were getting involved. Some of the consumer groups were getting involved, and they're saying, "okay, so shouldn't you be doing something here?" That's exactly what the insurance industry did. Started giving rebates, started dropping rates, just to kind of stay in front of the event itself, but also because they were making a lot of money. So, 21 hits, what did people, the average consumer started doing?

YS Chi:

Coming back out with vengeance.

Bill Madison:

Amen. So, they start driving. When people are driving, what are they having? They're having accidents. Now the carriers are saying, "oh, man, this came on a lot faster than we anticipated." With the increase in driving activity, the carriers say, I'm starting to be more challenged and starting to lose money. Now we got to fall for right rate increases. So, working with the departments of insurance across United States. Basically they were trying to get rate to cover the risk, and they just they couldn't get enough rate to cover the, some of the challenges that they were dealing with. That process really continued over the course of 21, 22 and a big part of 23 as well. As rates were going up, there's a state out there on the west coast that over a tier period, 23 and 24 the average rates within the state went up 41%.

YS Chi:

Oh my goodness.

Bill Madison:

Yeah, incredible.

YS Chi:

During that time Bill, did the insurance companies regain the profitability? Are they making too much money right now, or are they covering cost of repairs and all the other stuff that has also gone up?

Bill Madison:

Yeah, well, they're just starting to get to a point of profitability after all this time.

YS Chi:

My goodness.

Bill Madison:

It's been quite a challenge for them. You look at labour costs, you look at parts costs associated with it, and the challenges that they had over this period of time. They've been trying to get back to a point of profitability. Some people are saying, is the market at a challenging point. I wouldn't really identify as a, really a challenging point. They're at a point of transition right now. You have some carriers that are just getting back to a point of profitability, where they're starting to get focused on growth again, which is interesting. They have other carriers that are still challenged and still trying to get rate increases approved through the departments of insurance. You have a lot of transition activities that are not consistent across the market.

YS Chi:

It seems like the insurance business has that delay because of the regulators that have to approve the rates each time.

Bill Madison:

Yes and that's a big impact on it. One, they've got to prove it right. They really need the rates, and then the regulators are there to protect consumers,

YS Chi:

Yes.

Bill Madison:

Right, making sure the consumers aren't overly penalised based on any activity across the markets that are in play here.

YS Chi:

Yeah, yet as consumers, it hurts every $50 more that you have to pay hurts.

Bill Madison:

Well, and I use the reference, every consumer is the CEO of their household. You think about it from that perspective, and to your point YS, they're trying to control how they're operating, their funding, and what they can afford and not afford. You have this thing that's mandatory called insurance. If you have a mortgage on your home, you have to have insurance. If you own a car, you have to have insurance. So you sign anything you can run away from. When the cost of this continues to go up, something else has to give.

YS Chi:

Yeah, exactly. But I think that people, just general consumers, understanding this big picture is not an easy thing. Even someone like me, who's been insuring cars for a long time, does not understand the entire dynamics that you just explained. So, very helpful.

Bill Madison:

Yeah, and just to add to that real quick. It really goes back to the education side. One of the things that during this whole process just described, you have more and more states, as we went into 21 that was questioning the use of data, data for good, associated with it. And over the course of 21 we decided that we really needed to get proactive and create an education team. That's what we did. Our team internally, what they do is they work with regulators, they work with the insurance carriers. They work with insurance trades, really to help everybody collectively understand how data is being utilised. Now, it's a benefit for consumers. Now the next part of this journey is, can we get more proactive in working with consumer groups? That's what we're designing as we speak, to take a position of education. As an example, that story I just walked through, what happened during the pandemic and why insurance carriers are having to raise rates. To your point a second ago, because the average consumer doesn't understand that. Can we actually help the industry in telling that story?

YS Chi:

It does appear that a shock in the system like the pandemic has kind of made this not ordinary. Now Bill, is this going to last, or is this just a hiccup?

Bill Madison:

Well, sitting back in 2020 I don't think anybody would have anticipated or guess that we would still be dealing with this challenge in 2025. But here we are.

YS Chi:

Yeah.

Bill Madison:

I think we still have a period of transition, I'll use that word again, and what the industry is going through because of the lack of consistency in terms of where carriers are from a growth perspective, from a rate perspective, and how they're going to advance in the markets that they're going in. And then on top of it all, you have things like the California fires that come into play. Does that create a new challenge for many carriers across the market? It does. You have the hurricane activity across the southeast and especially in the state of Florida, does that impact things? It does. To the extent we really don't know. No one has a crystal ball in terms of the long term impact, because, in a weird way, there's always a challenge to deal with. Then the question becomes the severity of the challenge itself.

YS Chi:

So, it seems like you have been helping these insurance companies provide the best, most accurate pricing by giving them the drivers data so that there's no froth on top of the premium, or they lose their shirt by underestimating the risk. What kind of data do you give them to be able to help them make better decision?

Bill Madison:

Yeah, so it's multiple data sets, that goes

YS Chi:

So if I could take a little risk here and ask you a into the evaluation of a risk. You mentioned AI earlier in the conversation. We have really focused in the market on delivering decisions. Think about that. Over my career, we question in, say, comparison to food. Giving data, raw data is always had the ability to deliver content and say, "All right, here's a view on YS. You know, grab it, incorporate it into your system, and good luck." Okay, we took a more proactive position of saying,"Okay, how can we help you, as an insurance carrier, ingest the intelligence that we have like providing just raw grocery. If you give them well structured associated with it? How do we help you evaluate columns of knowledge about the risk itself and make an informed decision associated with it?" We've been very focused on delivering decisions. Think about that. The difference between delivering and organised, it's like giving things by selling in a content and delivering decisions. That's what we've been focused on. Now, that decision on the risk is looked at by every carrier in a different way. Based on their profiles and the type of risk that they want to do, and go supermarket, pre packaged and nicely, cleaned up and all that after the actuarial side associated with that organisation and their activities really match to the strategy of that company itself. No two companies are exactly alike. To the foundation of your question YS, it's claim history. stuff. But you're talking about actually giving them the recipe The claim activity I've had in the market is my coverage. Have I had consistent coverage in the market over a period of time. My financial records. What does that say in terms of how I performed financially in the market? Is that predictive? The and running that stuff, so that it is actually mixed well driver intelligence. It goes on and on, columns of data being evaluated to have a decision reported back to the carrier. Again, as stated, so they can actually make an informed decision on how they want to move forward with me as a risk. together, and some decision can come out. It goes well beyond

Bill Madison:

Yeah, I think it's well put. It's very easy as an raw data, structure data to decidable data. Have I used the right analogy? organisation to, and I use the phrase tossing data over the wall, and say, good luck. But it really comes down to working with the industry, working with their analytics organisations on what they're trying to achieve and helping them design the combined recipe based on what they know, how they want to move forward in combination with what we have. There's a lot of time and energy associated with that. We don't have a separate consulting practice, but we do consult in a way to really on the market conditions, where the market is, and how they can best utilise our data assess to stay in a very solid position within the market that they're serving.

YS Chi:

Yeah, I don't think that you need a separate consulting service because everything you do in analysing the data with your customer is, in itself, consulting, right?

Bill Madison:

That's fair, that's a proper way to look at it. You're exactly right.

YS Chi:

I think it's incredible that you have built that kind of stuff, and that means, should I say you are trusted by the insurance companies that you serve?

Bill Madison:

Yeah and I tell you, that is such an important identification there. What you just went through, is trust. I think the success of any organisation starts with that. A lot of what we do for the industry is through what we call contributory data assets. Where the industry I use to claim history as a great example. Where we have a high, high, high percentage of the market giving us daily, in some cases weekly, updates on their claim history. That we consolidate as an offering that's used as a consumer shops the marketplace, to understand their claim history over x period of time. But you think about the trust that we've had to create over the years for the carrier to, carriers, to contribute that information to us. Without that level of trust, we really wouldn't have a business.

YS Chi:

Now is there the same trust from the consumers to the insurance businesses?

Bill Madison:

Unfortunately, not. I think it's a role that collectively, we all need to play. I just mentioned a second ago on the education side, what we're doing as an organisation, how we're leaning into that challenge. To really talk about the fundamentals of insurance. The fundamentals of data and why this is good for consumers in the market. But it goes right back to that education component. I don't think that there has been enough education. There have been pockets of it, but we want to play a critical role in helping everybody understand the fundamentals of the insurance process and the fundamentals of data. How data is being utilised across not only the insurance market, but many markets.

YS Chi:

And as a third party, perhaps we can be more objective and more comprehensive in the picture we draw for the consumers.

Bill Madison:

Yeah, and I think it's very important for us to stay in connection with our customer base, with the industry, on what we're doing and why we're doing it, and that's part of this journey that we're on together. It all comes down to one word. And that one word is transparency and for the consumers, for the industry, for regulators, for the trades. You think about our position right now, we really sit as the centerpiece between what we do with the insurance carriers, what we do with law enforcement, what we do with the vehicle manufacturers, associated with it. Can we actually collectively tell that story across these three markets, and really bring a consistent message of education to these markets. We're extremely excited about first of all, the role. We've worked for literally decades to get to the position where we are today. Now, how can we help everybody understand better?

YS Chi:

Yes, there's definitely a lot of education that's required, and transparency helps everybody trust each other. Can I bring back to the point you were making earlier about people? It has been so important in the years I've known you, that you care so deeply about the people that you work with. Tell me why it means so much to you. Did you always have this kind of philosophy, or is this something you've developed over the years, as you become so dependent on their great performances?

Bill Madison:

Well, you learn by doing. My mom and dad always

YS Chi:

Well, numbers are important because they measure looked at me and said, "you know Bill, you're one of these individuals that always has to learn the hard way." A lot of it goes back to the early days of being affiliated with organisations where culture wasn't the centerpiece, and you saw in some cases, where culture was created out of fear. Which you never want within an organisation, and where knowledge wasn't shared because individuals felt as if when they managed data, when they managed the intelligence affiliated with where they sat within the business and did not share knowledge. They felt as if they were in better control of their destiny. I'm thinking to myself, this goes back years ago. I that is so wrong. Everybody can learn from the knowledge that, that individual has, and if they're willing to share it, how we could all benefit from it. When I got to a position of really being a leader, where you could actually influence culture, it's one of the first things I did. And really started to design the organisation with the knowledge of the importance of shared knowledge. Eventually we migrated or evolved that shared knowledge culture to a purpose driven culture. I'm telling you, how that has served the organisation. I can't be more proud of that. Part of my, early part of my career, I was so focused on the numbers. You're always focused on the numbers for us, right? being a business leader. Then you start to realise, well, it's kind of about the people and the numbers. Now, I'm probably more so focused on the people, because you really start to really understand the impact the right people in the right roles, believing in a purpose driven organisation and acting as one team, what it really means to the success of the organisation

Bill Madison:

Yes.

YS Chi:

They measure for us and it gives us an assessment as to moving forward. how well we're doing, but that is not the purpose. When you do well, it can stay that way. One of the things that I really, really, deeply admire about you is just how you can do that continuously. You just don't stop innovating. You don't stop growing people, growing relationship with your customers. Tell me the secret, please.

Bill Madison:

Well, thanks for that. Just again, not being complacent, right? I just, I feel like me personally, I owe it to the organisation. I owe it to our employees. I owe it to the market, our customer base. First of all, to advance their personal strategies. Whether it's an employee, to continue to have the lens of advancement and being able to support them. All the way through our customers and their strategies, I just think is so critical. I do put a lot into my role, and I wouldn't do it if I didn't love it. I love our customers. I love the people that are affiliated with the business. I love what we're doing. I get asked a question all the time, why are you still here? It's because of that. It's because of the influence that we've had over this incredible market over the years, and how we have helped the industry advance and continue to improve. It's extremely exciting for me, and so that's, as a leader of this business and having the privilege of sitting in the seat doing that, I feel as if I owe it to all involved parties to do what I just described.

YS Chi:

Well, I could be on this with you for hours to get more wisdom squeezed out of you, but I have to say your obsession in terms of understanding customer. Using data, always using data, and with, all these technology that you've been unafraid to apply. Then doing that all under the culture of this sharing one team, I think you've done greatly well to be a billion dollar Bill.

Bill Madison:

Well, I've had a great support network and thanks. Thanks, all the thanks goes to you guys for leaning in and helping us get to where we are today.

YS Chi:

Well, thank you so much for joining us Bill, and giving us some of that insight. We look forward to you continuing to innovate and hearing about everything from more and sophisticated data, to educating and creating even better culture. Thank you so much today.

Bill Madison:

Thank you, YS.

YS Chi:

Thank you to our listeners for tuning in. Don't forget to hit subscribe on your podcast app to get new episodes as soon as they're released, and thank you for listening, please stay well.