Transcription:
Patti Harman (00:07):
Hello and welcome to the DigIn Podcast. I'm Patti Harman, editor in chief of Digital Insurance, and thank you for joining us today. Climate change, increasingly severe storms, more wildfires and a host of other weather- related events are highlighting the importance of carriers and policyholders becoming more proactive and mitigating some of these risks before they occur. Not all of them can be completely avoided, but technology is providing important insights when it comes to identifying vulnerabilities in various properties. Joining me today to discuss the importance of technology in the climate space and how AI and analytics are helping carriers identify and manage risks is Valkyrie Homes, co-founder and CEO of Faura, an InsureTech that allows insurers to gain a better understanding of property resilience for their high risk properties. Valkyrie began her career as a data analyst and engineering intern at SpaceX and has been instrumental in launching assessments for wind, hail, and wildfires to provide information on climate resilience to the insurance market. Thank you so much for joining us today.
Valkyrie Holmes (01:24):
Thanks so much, Patti. So excited to be here.
Patti Harman (01:28):
So I've just kind of given our listeners a very brief overview of your career highlights, but would you just share a little bit more in depth about your background, how you ended up focusing on weather resilience, and tell us what led you to start Faura?
Valkyrie Holmes (01:44):
Yeah, definitely. So I mean, from my perspective, I grew up in Las Vegas. We're ranked 49th out of the 50 states for education, so I got very bored very quickly and it was very classic tinkering in your garage type engineering work that eventually led me to first intern for the NASA Sea Institute. So I was working on the satellite imaging department, a lot of work with board orbit satellites, mostly geospatial, and then moved into SpaceX after being recruited by the previous payloads director and was focused on commercial rideshare. So anything that involved sending companies into space aboard Falcon, that was what our team designed and managed. So if you can imagine tons of different companies for each mission very far in advance. I think I waited two and a half, almost three years before the first mission I ever helped out on was actually launched it just very, very complex and custom kind of design metrics for all of that.
(02:52):
So started off there and I had kind of thought more about natural disaster risk when I was back in high school. I did a bunch of hackathons that surrounded specifically wildfire risk and just global problems, moonshot problems. What's something that doesn't exist now but could in the next three to five years if you worked on it to solve a big problem like wildfire? This was now, I think, the first thing I ever did in wildfire was six years ago. It's one of those things where you start to think about, oh, okay, we have a federal funding dedicated to this and firefighters, and back then it wasn't in the news as frequently, so it's not on everyone's minds. And then you start to talk to people in the space and realize, okay, crazy population increases in these areas. And because of those high population increases we've had to build very fast, so cheap building materials for properties in these areas and combine that with the fact that we're not clearing brush as much as we need to and we have hotter, drier, longer seasons and all of a sudden it starts to become what is going on?
(04:01):
We need to do something here. That was the first thing that I really ever got obsessed with and I received a grant to work on climate research, which then Faura kind of spun out of. So everything with Faura surrounds this idea of property survivability. So if you're looking at a structure, you're typically using a traditional climate model to understand the risk from the underwriting perspective. And we don't don't want to get rid of climate models. We think they've been useful, extremely useful, but now we have to get more granular on the actual structure and the likelihood that it will still be standing there after a disaster occurs, which is exactly what we do. So as opposed to a traditional climate model that's telling you where disasters are likely to happen, we tell you about whether that property is likely to survive compared to the others in the area and what you can do to mitigate your risk. So a lot of that comes from the idea that we need to create this positive feedback loop for policyholders to not only interact with their insurance companies, but create more of this education around what the risk of their property even is. And insurance inherently is this financial incentive that allows people to benefit from that work, which is how I kind of fell into the insurance space more specifically.
Patti Harman (05:22):
Well, but it's such an important aspect of it, and as I've been covering the insurance industry for well over two decades now, what I'm seeing is that carriers are becoming much more proactive in terms of identifying and managing risks. And so this is just the perfect complement to those efforts and we've seen that climate resilience is becoming a major focus for the insurance industry. What role can technology play in educating property owners then on how they can proactively protect their properties?
Valkyrie Holmes (06:00):
Yeah, it's super fascinating. When I first got into this space, I remember reading this roadmap to resilience report from the National Institute of Building Sciences, and they had this graphic in there that I referenced pretty consistently where it's like a bubble in the middle and then all of these bubbles branching outside of it. And the outside bubbles are insurance, government, real estate tenants, landlords, all these different kind of stakeholders. And in the center, they all connect back to the property owner and in most cases we're talking about the policy holder, the homeowner for insurance. So it was so interesting to me because I feel like we originally approached this problem from an underwriting lens of, okay, how do we make it easier for us to pinpoint better risks? But when you think about the best risks that everyone's competing for, it's either a race to the bottom on price for the lowest risks or it's a pull out of the market entirely because you can't find the lowest risks anymore.
(07:02):
So we saw that and we said, okay, there's two things at play here. The first thing is we need to rethink the way that we think about these medium and high risk areas. And the way that we do that with Faura is focusing on the quantifying resilience of those properties, which we called the survivability index of a property. So that's one way to kind of open up a piece of the market and get people more excited about writing in areas that they again would've completely overlooked if they were just relying on typical climate models. And then the other part is going back to that graphic is everything goes back to the policyholder. The homeowner is the one that is hurt the most when a disaster happens, they lose their most valuable asset in many cases, it takes years and years to recover, and their insurance policy is supposed to be there for them in the event of that.
(07:53):
And if we empower people to not only reduce their risk and take those next steps to make themselves a more profitable consumer, that's creating more of this partnership between your insurance company like it was originally meant to be. So those are the two things that we think a lot about. And again, insurance is in this really unique area where we get to really influence how policy holders think about their property at a bunch of different stages. And this happens every year. So we have a lot of opportunities throughout the year. It could be weather alerts, it could just be upon renewal or just new business, whatever it might be to make people more aware of the fact that, hey, you could do these three things and it makes it better for us. It makes it better for you, and this is something we want to provide you because we value your business. We value the fact that you are a policyholder with us as opposed to anywhere else.
Patti Harman (08:50):
Right. Yes, that's so true. And just the education piece I think is so important. People don't realize when they buy a house, there are certain things that they're looking for and they don't always think about, oh, am I in a flood zone or am I someplace that's going to be vulnerable in some way because of weather or other issues? And I'm wondering, how are insurers using this technology then to better identify and price risks, because that's a huge part of what they do. So I would think that this would be valuable information for them.
Valkyrie Holmes (09:24):
Yeah, absolutely. So from our perspective, again, we don't want to claim that we can do things better than the traditional climate models that are out there because it's a very different thing what we've built. So with Faura, we built what we call our survivability index, and that's telling you on a very specific structure and parcel level what the likelihood of damage or total loss of that property is if it is coming in contact with some kind of disaster. So we do that for five different perils: wildfire, hurricane, hail, flood, and earthquake. So in all of these areas, for a lot of companies, they typically layer it on top of a traditional climate model. So we can kind of envision it like a heat map where on one end you have the first layer of is this a high-risk area or not? And then on the next layer you're saying, okay, this is a high risk area.
(10:20):
I have some capacity to write in these areas depending on reinsurance factors in what I really want pricing wise. But that allows you to pinpoint a little bit more specifically which properties, which areas and communities are best fit to either be that more profitable risk or here are properties that if you put in a little bit of work on the policyholder side can be a profitable risk for you. So that's just a score all insurers have to do is ping us with an address and we give them the survivability index score and then a breakdown of all the different components. So this is roof siding, foundation, vegetation, all of that. And then on the homeowner side, we're also giving them a tool that helps them walk through their property. So if you're a policyholder, let's say you're working with insurance company A, we would say give, let's say insurance company A wants to send you this personalized assessment of your property to get a little bit more information if you're in a higher risk area.
(11:21):
So they ping our system, we give you a text that says, Hey, this is insurance company A, we need to know a little bit more about your property. And from there you get a link, it opens up on your devices, so no downloads necessary, and you walk through taking pictures, videos, and answering questions about your most potent risk factors. So if people listening to this are familiar with the traditional digital inspection layout, it's pretty similar. And we designed it to be as easy as possible to not only educate people about their risk, but also at the end give them action items that directly relate and are personalized to their property. So now you can say, oh, we noticed that there's vegetation that's blocking parts of your gutters, or you have logs that are leaning against your house. You should probably think about removing those if you want to improve your score. And we do that, again, customized to all of those perils. So those are the typical sides of what companies use us for today.
Patti Harman (12:22):
It's just such a practical approach to all of this. So if I moved recently and I remember my insurance agent saying, oh, do you need flood insurance? I said, I am at the very top of a hill. I said, if I need flood insurance, the rest of you're going to need an ark! It's going to be pretty bad, but it's still good to know what your vulnerabilities are. Simple changes can make just the biggest difference and really be the difference between getting your property back in operating order in maybe a few days as opposed to weeks, months, or years, whatever. So we have both been at a number of conferences this year, and we spoke at the ClimateTech Connect conference and there were a number of climate focused InsurTechs there. And not to get you to name names or anything, but did you see any ideas or technologies that excited you or you thought, wow, this is really cool, and just seeing where the industry is going and all of the attention that's being put into this area. So given your background, I was just wondering if you saw anything that was pretty interesting? I saw some things. I was like, oh, okay, that's cool.
Valkyrie Holmes (13:40):
Yeah, no, I mean SAC Connect was great. I'd be like a good portion of the attendees were kind of coming together from all different areas, and then I looked around and I was like, oh, most of these people are my friends already. It was a good indicator for me that I am in the right place. But yeah, I mean lots of really interesting tech out there. When I first got into this space, I was roped into a couple different parametric companies, this company called Ric, who I know Nikita very well, but micro flood products for people that may think that there's an issue here, maybe just want to play it safe, especially in areas where you maybe just need that pick me up after a flood happens where, okay, let's immediately push this payout as fast as we possibly can. I think a lot of the private flood market is opening up.
(14:35):
There's been a lot of headlines on that recently. So I think parametric products in general are really useful. And there's another company, Adaptive, that's doing something similar in the parametric space, but for the grid. So their approach is, let's say you're a business operating in an area and a natural disaster happens that takes out the power of your business and you lose money because obviously the power, let's say you're a restaurant and all the food goes bad or whatever it might be. So it's a parametric policy that can measure along the grid if it's out for a certain amount of time, you get that immediate payout. So I think they're doing some really awesome stuff, and I think there's just some really interesting infrastructure surrounding the intersection of insurance and climate right now. I know I've been a part of the insurer folks, their organization for a while, they do a lot of grants and competitions around new climate tech and getting people into the space where they can launch new products onto the insurance market. So I always have to spell it out, I-N-N-S-U-R-E, but Charlie Sidoti and the people there have been really instrumental in just us learning about the industry, and it's been really cool to see them grow.
Patti Harman (15:56):
That's why I love covering this aspect of it. And people think, oh, insurance is so dull and boring. It's like, where have you been and what are you watching? Because especially in this particular area, the technology is just evolving so quickly, but even across the entire insurance ecosystem, there's just a lot going on. So we're going to take a short break now. We'll be back in just a few minutes.
Welcome back to the DIG podcast. We're chatting with Valkyrie Holmes, CEO and co-founder of Faura. So as we'd said earlier, you've had a rather nontraditional career path. What opportunities do you see in STEM-related careers, particularly for women now?
Valkyrie Holmes (16:43):
Yeah, I love questions like this because I get asked about, as a young woman in a field that's technically the majority is women, but it's still male-dominated in terms of executive and leadership positions. And I think a lot of that is changing and it has continued to change. But in STEM particularly, I think the one thing that I consistently see is women starting to put themselves out there in positions that make us inherently uncomfortable. I just had a conversation, it's so topical. I just had a conversation with my sister about this, where she's going into the Air Force, she has a lot, she's going to be an officer and has all of these different things going on. And I think I have to remind myself that when it seems like the world isn't really, it seems things aren't really working out, we have to all remember that life is not out to get us.
(17:49):
I've worked very hard to get into the positions that I've been in, and I know I've faced a lot of blockers because I'm young in a legacy industry or I'm a woman in an industry that's more male dominated. But I think a lot of it is just remembering that luck is something that can also be generated, and a lot of the opportunities are in surrounding yourself with the right people, as well as taking those chances to be more uncomfortable no matter where you are, whether you're young, older, have been in the industry for 30 years or two years. I see so many people taking a shift in their career that ends up really, really powerful. So that's a lot of more general kind of things, but I think it's all stuff that I have been thinking about that always is kind of interesting for me to hear.
Patti Harman (18:47):
Well, and I think one of the reasons why I love the insurance industry is that it is so relationship based and those relationships transcend everything else that goes on. And really, it can make a huge difference in who, you know, meet somewhere. Just the importance of networking and just kind of staying in contact with people. And I think back over people that I have now known in this industry for 20 or 30 years, and as we're all lifting each other up, that makes a huge difference. So why should women pursue opportunities in these areas then?
Valkyrie Holmes (19:25):
Yeah, I mean, you kind of said it right there. There's a lot of just amazing women in these spaces. I think I have this conception, my partner, he works in the finance space and they have trouble hiring women, bringing women to their space. And we talk about this quite frequently. Why do you think that's the case? And I think on the men's part, we need to make it more inviting to women. But on the women's part, it's for something like insurance. For a lot of traditional STEM roles, there's a lot of really amazing women that will lift you up, and we talk about networking, but women in these spaces, there's a lot of conflict around once you get into these higher positions, there's talk of women try to compete over each other because there's less at the top. But I really do think that there's way more women that just want everyone else to succeed, because the more that we succeed, the more other people in our field succeed, the more that we continue to push the statistics there.
(20:35):
So I think that's a really great thing. I think another reason why women should start positioning themselves into these roles, like pursuing these opportunities is really just, again, when you're uncomfortable, that's where you have the most potential for growth. So I did a lot of these, what I call these 30-day challenges, where I would say, okay, I want to learn a skill for 30 minutes every day. I can definitely find 30 minutes in the day to do something. And it sucked. I'm not going to lie to you some of the time, but at the end of it, you look back on your career, you look back at those experiences and it teaches you so much about yourself, about other people, about the industry, and a lot of these opportunities are very fast, very strong learning curves. So I think a lot of that, especially early on, is really, really crucial.
Patti Harman (21:30):
And the reality is that nothing in life comes easily. It takes time and it takes putting yourself out there and working in places where you're a little bit uncomfortable. When I look back over my career and the opportunities that I've had, it's like if I hadn't pushed myself, if I hadn't done that, whatever it was, however intimidating it seemed, the payoff was always worth it. But you're right, it just takes a lot. So as an entrepreneur and a co-founder of your own firm, what advice do you have for women who are interested in launching their own companies or in InsurTech?
Valkyrie Holmes (22:10):
Yeah, I think two things come to mind here. The first one is don't try to do everything alone. As an entrepreneur, it's a pretty lonely job. And I have a co-founder, she's amazing, one of the coolest people I know. So smart, so capable. And yet it still feels like sometimes I am alone in a lot of it. So I can't even imagine with solo founders that have only themselves in a lot of these cases before they build out a team. But even if it's not like a co-founder in your company or whatever new venture you're starting, just having different groups to be a part of. I joined a ton of just women in leadership groups and I'm in pretty much every women in insurance WhatsApp group at this point, and it's amazing. If I have a question or I'm feeling down and I come to these women and I'm just like, this is who I am in this moment.
(23:07):
You'll receive me as I am in this moment. And it always is just such a powerful experience. So I think that's a big thing. And I think piggybacking off of that, I talk to so many people and one of my biggest pieces of advice is always talk to as many people as you can in the beginning to ask all of the dumb questions. I started if people that know me know this, but I am kind of going the LinkedIn influencer route with a lot of my content. I post every day and I just read and repurpose a lot of that I'm reading because I think it's interesting, but also because it continues to get me thinking about ways that we can tell more people about what we do. But because of that, I started just posting and then I would reach out to a couple hundred people every week on LinkedIn and just say, please, would you have a meeting with me?
(24:05):
And I realized among most people, especially in insurance, they want you to succeed. They want to help you out, especially if you're just starting out in a new space. I am truly a believer in the idea that everyone wants, or most people want other people to succeed and have the best intentions. So that's a big piece of advice is just talk to everyone that you can in the beginning, ask every single question that you can and get a ton of second, third, fourth opinions. And then you start to see patterns emerge that if you spend the time to talk to as many people, it will lessen the load of you learning these things on the job later. I'm very grateful for the people that gave me the time.
Patti Harman (24:56):
Yes, that's true. Well, but listening and taking all of that information in is a big part of it. You can have those conversations, but if you're not going to listen and kind of synthesize what people are telling you, you might still be destined to make a few mistakes along the way. So what excites you the most about how technology is changing the insurance industry and even the job opportunities going forward
Valkyrie Holmes (25:23):
In insurance? A lot of people talk about how slow the industry is, and I'm not going to say that it's not slow, but it's changing much faster than I think we've experienced it in prior years and in previous decades. And I think it's because it needs to, as our world gets more complex, the risks get way more complex. And we've gotten really good as an industry in being able to quantify different levels of exposure and manage that exposure. But we've gotten really good with much more limited variables on a regular basis. And I'm speaking from what I know about property and mostly personal and some commercial, but I think as a general rule with telematics starting to come on the scene where we now have all of these more advanced pricing algorithms that can rate your premium based off of how safe you drive. When I first learned about telematics, I tried to find the equivalent of that in property.
(26:24):
And you realize, oh, well properties don't really change that much year over year. But then you start to think more about it and you're like, okay, the properties aren't changing very much. It's the climate around us that is rapidly getting into this period of not really being as quantifiable by traditional models as it previously was. So I think just how fast the industry is moving is something that excites me in the scheme of all those trends. And I also think around the topic of things like AI and more advanced risk modeling, we are starting to see regulators and people in these executive positions of insurance companies really starting to embrace the ROI of a lot of AI capabilities with Faura. We don't use a ton of AI in our solution. We were actually warned against it when we initially started because of the apprehension, and I think there's still a long way to go in terms of mass adoption, but I was talking to a couple of folks the other day and they were just seeing, okay, the more case studies we get about the amount of time and money it saves a carrier, the more that we have people in higher positions playing around with something like a Chat GPT or a short wave or whatever it might be.
(27:46):
That's really where we get a lot more of the champions internally. We think about this a lot with just tech in general. How do we get more people talking about the value here and really describing what happens? So I think the fact that it is now everywhere and we're giving people more chances to play around with it and form their own opinions ultimately is a good thing. And I think we should continue to make sure that that is an effort along all those different sides.
Patti Harman (28:21):
I would agree, having covered the industry for quite some time, I think the evolution and the adoption of technology has really increased considerably, especially since the pandemic. I think at that point it was kind of a do or die time for them and just watching what they're doing. And then as I'm talking to different carriers and seeing how they're implementing and they're testing AI within their networks and that sort of thing, and they realize that if they don't adapt, they're going to be left behind by a lot of these new InsurTechs who are able to do things almost on a dime. Is there anything about the adoption of technology in the industry that concerns you at this point?
Valkyrie Holmes (29:06):
Yeah, I mean, I think a lot of it is insurance companies have had a lot of time to think about what profitability looks like and what they want to strive for when it comes to profitability and reducing risk. But with a ton of new technology all at once, I think it bogs a lot of us down. I think there's a lot of solutions out there that are specifically around more advanced climate modeling or less around the homeowner, but more homeowner facing tools. And there's just a lot of it out there. So I think one of the things more generally that concerns me is just insurers having to reallocate a lot of their priorities to one piece of technology when in reality there's a bunch of different things that they could be doing, and they've picked a technology that doesn't really move the needle as much, but it's just kind of a safer bet.
(30:13):
So I guess to kind of condense it down, I think the main thing that could concerns me is just companies looking at other InsurTechs and taking the safest bet as opposed to the thing that could potentially increase Lyft way more. And that potentially dampens a lot of the priorities and change that we can see moving forward. And I think besides that, innovation is a great thing. There's a reason why companies have created all these innovation departments to try to either scout for startups or try to make more of an effort in the startup sphere to engage with InsureTechs. And so I think ultimately it's a good thing that we're trying to get in front of a lot of new ideas that we could be using to move things forward.
Patti Harman (31:09):
Why do you think it's so important as we're trying to move into these new areas and focus on some of these new and emerging risks, why is it important for carriers to partner with InsureTechs then?
Valkyrie Holmes (31:21):
Yeah, I mean, we bring it back to innovation. There's a lot of things that InsurTechs can do much quicker than a traditional insurance company. And that way we're getting a lot of data back much more efficiently. And we think a lot about this at Faura. The idea that, is it if we were looking at 45 variables, is it the 46th variable that's going to move the needle or is it the aggregation of all of them and the efficiency of looking at all of them at once that's going to move the needle? So I think startups, because they are interfacing with a lot of different teams all at once, they're taking their learnings, they're condensing it, they're creating more of that value as opposed to insurers where you have to go through a ton of different iterations and you are typically, you and your data and you have to go through this big drawn out process without really any insight or less insight into what more of the industry is doing. So I would say that's probably the biggest thing is the speed and the learnings that that InsurTechs can bring to the industry in terms of just delivering the most potent value. That's something that the whole industry shares and benefits from.
Patti Harman (32:42):
Very true. I've noticed that carriers are much more willing to partner with InsurTechs. I think initially there was a little bit of hesitation there, but they're really beginning to see that there are definite benefits to doing that going forward. Where do you see the insurance industry and its use of technology in the next couple of years? I mean, it's changing so quickly, but is there anything that you expect to see with part of this adoption?
Valkyrie Holmes (33:13):
Yeah, I would say two things. I think we're definitely, and this is a very standard answer, but I think it's important to kind of keep hitting the nail on the head there. I think we're going to see just more adoption of whether it be AI or some kind of advanced processing, just like things that make our lives more efficient by condensing variables together. Because when I think about it in the context of our company, if you're looking at a property, you could look at all of the manual property characteristics one by one, and make a definitive decision about whether or not you think this property will survive. Or you could look at an index and say, okay, there's going to be a problem here on this property. The biggest problem I'm going to have is in the foundation in these three elements, and I should start building my case outward from there.
(34:05):
So I think we're going to start approaching, at least in property insurance, more of these opportunities as this is something I want to write unless these things happen and I'm looking for those problems as opposed to, okay, we have one filter that kind of shuts us off and there's no other opportunity from there. And then I think also just the engagement with the policy holder. It has to be the future. The future of insurance is transparency. And I think we forget a lot of the time that if a policy holder is canceled or non-renewed, the likelihood of them coming back to a carrier after that happens is virtually zero unless they're in an extremely, extremely restricted market. So when we think about the fact that more teams are building out their loss control elements, and we are starting to think more about business retention, I think that's exactly where we need to be because of the fact that the policy holder, at the end of the day, we're serving the policy holder, we're trying to provide products to our end customer, and if we can make that more efficient and make people feel like they're part of this partnership, again, that's where we're going to see a good amount of change, at least from what I've initially seen.
Patti Harman (35:19):
Yes. I would totally agree with that. Is there anything I haven't asked you about climate technology or even technology in general that you think our audience should know?
Valkyrie Holmes (35:29):
I mean, we've covered definitely a lot. I would say I just urge more people to look into, first off, just stay educated on a lot of the in InsurTech news that comes out. There's companies that are raising rounds that are, if you get on it quick, you have a competitive advantage in the market because you're adopting this technology that gives you a certain amount of lift before everyone else gets on it. And I always urge people to just stay on top of what's happening in tech, but especially when it comes to something like climate technology, it's easy to say stay on top of what's happening in the political world, but getting both sides of a lot of what's happening in politics when it comes to climate makes it a little bit easier to contextualize what we really have to worry about. There's a lot being thrown at us at every point from all sides all over the world.
(36:30):
And I know that a lot of my colleagues are stressed out about all the news happening, but also we're just trying to find something that's actionable. We're just trying to find something that we can clinging onto that says, okay, this is what's happening in the general direction of things. And I think in order to get to that middle ground, we have to embrace it from a ton of different sides. So that's always just my stance from the climate perspective. But yeah, I think this is great, and thank you again so much for having me on.
Patti Harman (37:05):
Well, thank you so much, Valkyrie for sharing your insights with our audience. Thank you for listening to the Dig in podcast. I produced this episode with audio production by Wen Wist Jean Mary. Special thanks this week to Valkyrie Holmes, CEO and co-founder of Faura for joining us. Please rate us, review us, and subscribe to our content at www.dig.com/subscribe From Digital Insurance, I'm Patti Harman, and thank you for listening.