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[00:00:00.08] SPEAKER 1: The more the driver comes in and looks at their trips. the more that they reduce crash risk.

[00:00:05.82] SPEAKER 2: This is the Insurance Technology Podcast, where we bring interesting people from across the insurance ecosystem to discuss and debate technology's impact on the industry. Join us each episode for insights and best practices from industry stewards and tomorrow's innovators. Now, here's your host, Reid Holzworth.

[00:00:27.20] REID HOLZWORTH: Welcome to the Insurance Technology Podcast. I'm your host, Reid Holzworth. In this episode, I'm going to be interviewing Ryan McMahon. Ryan is the SVP of Strategy and Corporate Development at Cambridge Mobile Telematics.

[00:00:40.55] And I'm going to be honest with you guys. When this came to our attention, Chris and I talked about this. I said, "telematics," I remember selling progressive policies back in the day and trying to convince insureds to plug that thing called snapshot into their cars, doesn't seem that interesting.

[00:00:55.59] Well, when I met Ryan and talked to him, look, it is really interesting. It's come a long way. So stay tuned. In this episode, we're going to get to know Ryan-- Ryan as a kid. We're going to learn how he fell into insurance like many of us. Then, we're going to deep dive into telematics and road safety. Really good stuff. Stay tuned. Ryan, welcome.

[00:01:22.34] RYAN MCMAHON: Thanks for having me, Reid.

[00:01:23.72] REID HOLZWORTH: Cambridge Mobile Telematics, we're going to get into this. Sounds like something out of a Robocop movie, or something. I'm just kidding. Most people got to know what that is, but we're going to get deep into that-- shows my ignorance around some of this. But I'm really excited about having this conversation. We're going to get deep into some things.

[00:01:40.50] But before we do, we always like to learn about the person, about the human, about yourself, Ryan. So tell us a little about yourself. Where did grow up? What were you into? Played some sports? How was Ryan McMahon as a child? Who were you?

[00:01:56.27] RYAN MCMAHON: Yeah, I'm sure everyone you have on the podcast was reading actuarial review magazines. So from a young age, I always had a lot of passion for loss reserving and that. In my early days, I grew up in upstate New York, Central New York. And it was a really interesting place to grow up as a kid because-- not close to any major city.

[00:02:22.24] So it's not like when people say, oh, I was a Chiefs fan, or a Braves fan, or a Patriots fan-- the part of upstate New York that I grew up in, everyone was a Syracuse fan. So I grew up a fan of Syracuse sports, college sports, which was great.

[00:02:38.14] And then I ended up going to school at the State University of New York at Potsdam. And here's a funny story. I did a series of radio interviews last year. And I was talking about Potsdam, New York, with a radio station. I think it was in Virginia.

[00:02:55.14] And they said you probably shouldn't tell them too many people that you went to SUNY Potsdam. So I don't know if it has some sort of notorious reputation.

[00:03:02.91] But the same interview, the I mentioned that, it was on the Canadian border, which was awesome because at that time, it was pretty easy to get up to places like Ottawa and Montreal. And totally, it's amazing. You just cross the border, and it feels totally different.

[00:03:18.66] This radio interviewer, the host said New York borders Canada, and it does indeed border Canada. I can confirm this. So grew up there, and I wanted to actually go into law enforcement at that time of my life. I was working part time for the New York State Park Police. And--

[00:03:38.67] REID HOLZWORTH: Oh, really?

[00:03:39.36] RYAN MCMAHON: --I was just waiting. Yeah, I was a park Ranger, which was a super cool job. I think the best job I had.

[00:03:44.76] REID HOLZWORTH: That's my dream job. I wanted to be-- that's what I wanted to be when I grew up, a park Ranger. It's awesome.

[00:03:49.44] RYAN MCMAHON: There's still time. There is still time. I did that. It was cool. And I was doing it over the summers. And one of the things that happened in that time, though, was I was always a little bit squeamish around blood, and trauma, and that kind of thing.

[00:04:06.64] And I was, if I'm going to do this, I need to jump in with two feet. So I actually became a New York State EMT at that time, and I volunteered with the Potsdam Volunteer Rescue Squad, which was-- I think we had 100 squared miles of territory in way upstate New York with not a lot of care close by. So we had a lot of helicopters that came in.

[00:04:25.98] And the first call that I ever went to was a fatal crash. And it was a sister that fortunately killed her sister because she was intoxicated, and the other was unbelted.

[00:04:38.58] So it's one of those things that road safety is stuck in my head for a long time. And when I graduated, I was just waiting for the test because the civil service tests come every few years. But I had student loans at that time, so I needed to get a job. And I applied to 63 or 64 places I have a spreadsheet, still have the spreadsheet.

[00:05:02.13] I got calls back from two. One of those was AAA. And they offered me a position to answer the phone to help people when they needed help on the side of the road. The other was from Hanover Insurance, offering an opportunity in a claims rotation program.

[00:05:17.16] So that moment-- so I was not a first-round draft pick by any means, started as a claims adjuster. But the rotation program was awesome because it gave me so much experience in a super short period of time.

[00:05:30.36] REID HOLZWORTH: Wow, that's awesome. A lot of people that I've interviewed on this podcast, they talk about the programs that these carriers had to get people in and get people in insurance. And it's pretty amazing how some of these carriers just brought people in, and then, boom. Now, you're stuck, dude. So did you play sports or anything as a kid?

[00:05:51.61] RYAN MCMAHON: I did. I played lacrosse. And my lacrosse career ended when I realized that the talent level that was around me was like 20x better than me. And I still remember this. We went to a lacrosse tournament one summer, and we were playing against teams from around upstate New York. And lacrosse is a Native American sport. That's really where--

[00:06:17.88] REID HOLZWORTH: Oh, really?

[00:06:18.21] RYAN MCMAHON: --the true sport began. Oh, yeah. And we played against a team from one of the tribes. And I remember just getting knocked over all day for the entire day.

[00:06:28.69] And it's funny the team that I played on, where I went to school, the kids that were on that team ended up going and playing for a national championship teams at multiple levels at Le Moyne, at SUNY Cortland, and at Onondaga Community College.

[00:06:48.31] But an interesting fact about me-- and I don't know if this is super well known-- but I actually dropped out of high school in my junior year. So I didn't have a senior year. And I spent my senior year washing cars at Bill Rapp Pontiac at the time. So I was a lot boy.

[00:07:07.03] I still remember this. My dad said to me, well, you don't have to go to school. You have to get a job. And at that time, I was selling TVs at Sears. And he said-- which was super awesome by the way, because they paid on commission, and I didn't even know this at the time. I had no idea, I was just, whatever.

[00:07:21.64] They probably could have paid me a lot less. I said, I have a job because I'm working part time. But my dad said, you need to get need to get a full-time job if you're not going to go to school, thinking that it would be a short temporary thing.

[00:07:32.61] And I went to the car dealership, and I said, hey, I want to sell cars. I was 16. And they're, you can't sell cars, but you can be a lot boy. And I didn't even care what the job was. I just wanted to check that box.

[00:07:44.93] So I did that. And that gave me-- I spent my senior year working. And it gave me the jolt that I needed because it showed me the path that I was going to go on, if I didn't take school more seriously, and if I didn't dedicate my time-- and I was not a good student. I was a C student, D student in high school.

[00:08:09.41] And I just never really-- I had friends that had dropped out at that time. And I was just-- I just didn't conform-- I guess it was the easiest way to say it. But then, when I got to college-- and I was super lucky. I was super lucky that I was able to get into SUNY Potsdam at that point because I just was already ready.

[00:08:30.80] I saw the other side. I'm like, this is not a path that I want to be on. I do not want to be working in the middle of the Syracuse winters brushing snow off a car and whatever other things that entail. For me, I needed that course correction super early on. And I still remember the first semester that I was-- the US politics class, actually.

[00:08:53.85] And I got the syllabus. And I thought that the syllabus was the homework for the next class. That's how not with it I was at that point. But I was, I need to do really well. So I read two books before the next class.

[00:09:06.74] REID HOLZWORTH: Whoa.

[00:09:07.20] RYAN MCMAHON: And I took college super seriously. I graduated with, I think, it was like a 3.97. I was number two in the program, and I studied psychology at that time. And I took it like super seriously from that point forward.

[00:09:21.57] But it was a really important time in my life. And I was very thankful that my parents, as crazy as I'm sure it would be, I was the end of a line of a lot of kids, a big family.

[00:09:35.54] And I'm sure that it was not a good mindset from their perspective, but they knew that this was the right thing for me. They gave me the freedom to fail, I guess, to a certain degree. And I was able to take that. And then that just motivated me. And I've been thankful ever since.

[00:09:54.47] REID HOLZWORTH: That's awesome, man. Your story is very similar to mine. In school, I got straight F's. No joke. Terrible. I was the worst student on Earth. I didn't skip school. A lot of people skip school. They were kids I hung out with. I was always there because all the kids were there. All the girls were there. I would show up, but I just didn't do anything, but same thing.

[00:10:18.26] After school, after that, of same situation-- I'm like, what am I doing with my life? This is not going to end well, and went to college-- same situation-- 4.0 GPA, the whole nine-- I ended up quitting college, starting a business. I didn't really finish, which I wish I would have, but it's interesting.

[00:10:38.72] For me, there was that inflection point of, what am I doing here? Like you said, I don't want to be sweeping snow off of cars for the rest of my life. Let's do this. So then, so what did you do right after? Did you go right into the park ranger job? Or how did you get after school?

[00:10:56.39] RYAN MCMAHON: No. So I was working while I was going to school the whole time. So I knew that I wanted to be in law enforcement at that point. So I think I worked-- it was actually the first job I ever got fired at. I was a security guard for-- I think it was like JB Hunt, or a trucking company.

[00:11:15.20] And I fell asleep. I was on the overnight shift. And I fell asleep for a truck that was coming in. And I think I got fired the next day. So I was working-- after I was working at the car dealership, I had basically two jobs at a time for a while. And then when I went to school, I continued to work over the summers.

[00:11:32.34] So I knew law enforcement was super interesting to me because I was always interested in-- I didn't realize at the time, but I was always interested in traffic-related things and always interested in road safety because it was around the same time of Fast and the Furious, and that era.

[00:11:55.84] REID HOLZWORTH: Wait, hold on. So you watch Fast and Furious, and you're like, road safety. Yes, no more street racing.

[00:12:01.56] RYAN MCMAHON: No. I watched the Fast and the Furious and crashed my car. And after that point, I was like, man, this is not going well. I have already now dropped out of high school, and I totaled a 1992 Pontiac Bonneville, which is, I flipped it, actually. And I'm so lucky I was the only person in the car.

[00:12:23.38] And it was a very challenging maneuver. That was in a parking of a mall at that time. And one of those things at an early point in my life that, like I realized that I was being influenced by everything else around me, that I wasn't being-- I wasn't the person that says, this is what I want to do and going to do it.

[00:12:41.80] So I'm seeing these movies. I'm like, this is crazy. And then, I started to-- after that experience specifically, I was like, the law enforcement-- the experience I had at that point was scary. And I wasn't hurt, but I was transported. I went to the ER. And it was super scary. And it was an opportunity for me to then come back and reflect on it.

[00:13:00.61] And I'm like, you know what? I think that there's the other side of this is super interesting, and those cop cars are pretty cool. So I wanted to get more involved in that side of things. And I had friends that were older, that were in that area. And I had an opportunity to see the picture from a different vantage point.

[00:13:22.57] And because this whole incident, by the way, happened on private property, there wasn't a law enforcement component to it. So I didn't have a ticket or anything of that nature. It'd be like crashing a car on a race course.

[00:13:37.78] But at that time, it was a big deal for me. And my sister had known the captain of the police at that time. And I remember I went to the police station a few weeks later, talked. And they said, I think that this is an opportunity for me to learn something completely different.

[00:13:57.38] So I was, this opportunity was when I was, I want to say, 17, 18 years old. And then I had refocused myself and said, OK, I want to be in New York State trooper. That was the specific goal. But the New York State trooper, the test was only, maybe, every two or three years, depending on how many people retire and what the needs are at that time.

[00:14:21.59] So that was always my goal. But you had to have a certain number of college credits first. So I think it was 60 credits at that time. But I said, look, I'm going to finish school because I'd already had-- I was so embarrassed by the fact that I dropped out of school, Reid, super embarrassed for years.

[00:14:37.60] Probably not until, maybe, the last 10 years that I feel comfortable having this conversation in the way that we're having it now because I felt like I was a failure. And if you think about of the milestones you have in life up until specific stages, graduating in high school is a milestone that everyone looks to as an obvious achievement point.

[00:14:57.56] So if you don't have those achievement points-- so that's why I was, I'm going to finish school. I'm going to do as good of a job as possible. And then when the opportunity came around to take the test, I was already promoted twice in the insurance ecosystem, and I wasn't even living in New York anymore. I was living in New Jersey.

[00:15:16.60] So it was like a good motivational goal to have at that time of my life, but it was quickly surpassed by the glitz and glamour of the insurance industry.

[00:15:31.14] REID HOLZWORTH: I love it. I love it. So all right. So you're at Hanover. You got promoted twice. So then what? What happened after Hanover? Or--

[00:15:38.82] RYAN MCMAHON: It was a rotation.

[00:15:39.83] REID HOLZWORTH: Yeah, what happened after that, I guess you would say?

[00:15:41.74] RYAN MCMAHON: Well, it was a rotation program. So just like you said-- and by the way, I'm a huge fan of these things. I don't know if anyone actually knows exactly what they want to do when they graduate school. That's not a specialist that didn't like specialize into computer engineering or something super, super discrete.

[00:15:59.67] So these rotation programs were awesome. So I was with a cohort of people that had joined at the same time. So they're all around the same age, 22 years old. We were all in field offices for Hanover. I was in Syracuse.

[00:16:11.52] And then every, I don't know, six weeks or two months, we would go back to Worcester, Massachusetts, where the headquarters was, and we would learn the policy. We'd read the policy. We would get education. And then, we'd go back and do our jobs, which was real-world practice.

[00:16:27.13] And then when another opportunity opened up to move from PD at that time, Property Damage, to Liability Claims-- the office was in Central New Jersey-- so I moved from Syracuse to Central New Jersey and got a $2,000 raise and became super poor because the cost of living in upstate New York is minuscule, or at least at that time it was minuscule, compared to New Jersey.

[00:16:51.37] And I was there I remember having every-- I think every night for dinner was cereal, but not even the cereal. You would get at eye level-- the cereal, you get at ankle level.

[00:17:00.97] REID HOLZWORTH: It's the cop-- brand cereal.

[00:17:01.15] RYAN MCMAHON: You know what I mean? In a bag. Oh, totally. Absolutely, absolutely. But I did save a couple of bucks so I could spend the $13.95 to take New Jersey Transit from Central New Jersey to Manhattan every other weekend, or so, and explored. And it was awesome.

[00:17:19.67] And then, this is crazy from a technology standpoint. So Hanover was going through a transition at that period of time. And I forget if it was a guidewire system or something, but it was a new claim system. And they needed someone to basically be the guinea pig for the IT team back in Worcester and to work in the field to work in both systems at the same time.

[00:17:40.01] And I was just saying literally yes to everything. So I was, yeah, I'm happy to do that. So then I'm now doing two jobs, because I'm doing my normal claims job, but then I'm also sorting out how to make this new claim system work from a user perspective.

[00:17:53.30] And I got really good feedback and remarks from the technical team in Worcester and the HQ. And they said, hey, I think that you would be a great fit for this other business analyst rotation program, which moved away from claims into the core functionality of product, and pricing, and underwriting.

[00:18:14.96] So I went and moved from New Jersey to Worcester. And that was great because that got me into the headquarters. That got me ingrained with the core business functions. I learned so much in that period of time. I never had used Excel, and I became like an Excel master under these two gurus that new everything.

[00:18:33.32] And talk about the importance of being in office, at that time, for me, I got so much feedback and so much learning exposure in that period of time, probably the biggest learning time in my life was then. And one of the people I worked with had left Hanover to go work at Acadia Insurance and Commercial Lines.

[00:18:53.36] And I went there after working at Hanover for a long period of time, doing a ton of jobs. And the last job I did there at Hanover was with agents. So I handled-- I manage the Connecticut territory-- one of I think three or four territory sales managers for Hanover at that time. And it was awesome.

[00:19:11.93] Being out in the field was a great job, almost on par of the park ranger job. I was with agents, and they taught me so much about the actual functionality of how a small business grows and engages with the community, and how they compete, and the challenges that happen there.

[00:19:29.54] And I was able to bring my claims expertise forward. So I learned the job from the crash level up, which is super useful, because ultimately, that's what we're selling in insurance. We're selling a promise that we're going to put you whole if something adverse happens.

[00:19:47.15] And a lot of people don't have the opportunity of actually interacting with the methodology of how that happens with dealing with someone with a first notice of loss, with dealing with the issues that occur relative to appraisal inspection--

[00:19:59.57] REID HOLZWORTH: Yeah, totally.

[00:20:00.00] RYAN MCMAHON: --coverage, liability, rental cars, replacement parts if they're not manufactured by the original manufacturer or not. It's a crazy world on the claims side. But that was a great learning springboard to everything else.

[00:20:16.72] REID HOLZWORTH: That's awesome. So then what?

[00:20:19.66] RYAN MCMAHON: I went to Acadia Insurance. So Acadia is owned by WR Berkley. And a really important person to me, Len Ryer, was my boss at Hanover. And he had gotten to take over a branch there in New Hampshire.

[00:20:33.37] Len is one of these guys that just absolute master of the business, incredibly important person because he not only was a boss to me but a very personal mentor and helped me in so many ways in that period of time in my life.

[00:20:50.83] And what was cool is I established such a huge friend base from Hanover because there's so many younger people that were there in these rotation programs. But at that period of time, a lot of people went through the rotation program and then left to other companies.

[00:21:09.73] So one of the negative sides that-- if you're an insurance company, you're going to put together a rotation program, thinking past year, two or three, is super important because you end up with these super smart, motivated, alpha motivated people that now want to move up as fast as possible. And sometimes, there's not roles.

[00:21:25.88] So I, at that period of time, had friends everywhere at all the carriers because everyone spread out. And Len was my boss at that point, and went over to Acadia Insurance, which was commercial insurance, still is commercial insurance owned by WR Berkley. And I went and learned commercial. It was the first time that I learned commercial.

[00:21:44.95] I was in charge of growing the branch for Acadia, and also ran the Affinity programs for them, so got really involved with associations, with different types of businesses, the wider side of the business.

[00:22:03.34] What was fascinating was Acadia was a super, super big boss control organization, meaning they had engineers. They had safety professionals that went out to businesses, loggers, sawmills, super crazy stuff, to work with them to reduce risk.

[00:22:20.75] And I was in the position that I could learn from them. And it was brought back to my roots in the time when I was in Potsdam and saw the from the insurance industry to the safety side.

[00:22:38.03] And it was that period that started the little spark of, hey, maybe there's more to the insurance business than just underwriting and selecting risks, but maybe we can actually change risk at the same time. And that's exactly what Acadia did.

[00:22:54.21] And at that period in, my opinion, they were among the best because they had a huge investment in super professional talent that were focused on understanding what it takes to get people home every day, from workers' comp, from a liability perspective, what it takes to get people home.

[00:23:12.86] And I was at Acadia for a while then had left. And he took a job, I think, at Providence Mutual at that point. And I had an opportunity to go to work at Plymouth Rock, which, if folks aren't familiar with-- Plymouth Rock is a privately owned company that had, I want to say, $1 billion of premium at the time. It's probably significantly larger now.

[00:23:37.31] Really interesting company that focused in the Northeast and had every distribution system. They have independent agents. They have captive agents. They have a direct business.

[00:23:47.52] And the opportunity was to basically find new ways to grow the operation, find a new path forward for the independent agency business for other use cases and we did probably the coolest stuff in insurance that maybe has ever been done in the insurance industry. We put baseball benefits on an auto insurance policy, football benefits on a homeowner insurance policy.

[00:24:12.87] We created the co-branded credit card methodology of auto insurance. And I don't think it's been duplicated to this point, which is shocking to me, because all of that work was super interesting. How do you differentiate the offering on a pretty commoditized industry?

[00:24:33.56] And I'm not saying the product itself is commoditized. It's not. But the industry, a lot of the approach that the industry takes are similar across brands and businesses. So for Plymouth Rock to step out at that time-- and had an amazing management and leadership team.

[00:24:49.52] Chris Olie was the president of the independent agency business at that time. Keith Jensen was the chief marketing officer. And I worked closely with both of them. And what happened during that period of time was, really, I think, thinking significantly outside of the box of how do you grow a business.

[00:25:08.66] REID HOLZWORTH: What year around was that? When was that roughly?

[00:25:12.44] RYAN MCMAHON: 2013, I think, is when I was thee.

[00:25:15.74] REID HOLZWORTH: That makes sense, yeah. Yeah. Yeah. It's awesome. Maybe that was I remember. Plymouth Rock was doing all kinds of stuff back then. And they did a ton of stuff within the Salesforce world. That's how I got to know them. I spent a ton of time with those guys back in the day and creative teams--

[00:25:32.39] RYAN MCMAHON: There was a lot of companies--

[00:25:33.71] REID HOLZWORTH: --that spun out of. A lot of-- people that were there kind of spun out and did startups. And it really really did a lot within our industry. It's cool.

[00:25:45.38] RYAN MCMAHON: Well, I'm in that story. So I didn't start CMT by any means. But I joined when the company had 42 people, and before the company had significant outside funding. And I remember how nerve-wracking it was to leave.

[00:26:02.48] Because the thing that I think is challenging is, when you get into a, quote unquote, "career path"-- I think it's a misnomer. I don't think there are career paths. I think there are achievements, and there are things that lead to each other. But there's no path. You have a path as much as you have a chainsaw, and you cut your way through a forest to figure it out.

[00:26:28.06] And what was interesting was, I really, really wrestled with the decision to leave Plymouth Rock and join a startup at that time, which absolutely was a startup. But they had been around for a long time, but they the telematics world was not what it is today.

[00:26:47.64] Because at Plymouth Rock we were doing so many cool things. We were doing so many amazing innovative things in the insurance industry. For a small company with a small group of people, that it was very challenging to leave. But the opportunity at CMT was so significant.

[00:27:05.82] And I started to see the actual product that CMT was making create a huge competitive advantage because I was part of the team that built something called Road Rewards, which is Plymouth Rock's telematics program that is based rewarding drivers for being safe, so it's not a premium discount program.

[00:27:23.41] It's an app on the phone that if you do things that are safe, it gives you discounts on gas. It gives you free Starbucks, free movie tickets, Amazon gift cards, all that stuff. And when I was at Plymouth Rock, I had negotiated all those deals with outside entities.

[00:27:40.20] I had studied other programs backed this model very heavily on a program called Vitality Drive from Discovery Insure, a South African company. And I remember I was pleading with my peers at Plymouth Rock. And listen to this. It'll be funny. But I was, I need to go to South Africa.

[00:27:56.55] And imagine working for a Northeast regional insurance company in trying to lobby to go to South Africa. They're like, no. No, you're not going to South Africa. But I did eventually get to South Africa, by the way, with CMT. But I was learning. I was taking all this information in.

[00:28:12.36] And this is the time period in insurance and insurance tech, where insurance tech wasn't a thing. I went to the first on-ramp conference, which I think was-- on-ramp was to me, at least, the first insurance technology conference that existed. I remember Sheffy and Avi were the emcees for the event. It was in Chicago.

[00:28:32.22] So it was either the first. Maybe it was the second. But it was big. There were 300 people there in that room. I bet if you go back to that attendee list, I bet all those people are doing super cool stuff because it was the first movement of people realizing that the technology is so incredibly overinvested in 1988 technology that there's a huge opportunity to do something new.

[00:28:57.42] And it was before the mega conferences. This was a small focus thing, one day in and out. And it was a super, I would say, very intense period in time in the industry because it was before all the venture funding. It was before all of the attention. I don't think anybody was really paying attention to what was happening.

[00:29:19.41] Fin-tech was starting to bubble up a little bit, but not much. And at that period of time, what we were doing with RoboRewards was pretty revolutionary. We had to get insurance filings. We had to get regulators to say it was OK to give something to our clients, which could be construed as rebating underneath some of the language.

[00:29:39.07] So we had to go out and convince the Massachusetts DOI, and Connecticut, and, I think, Pennsylvania at the time, and New York in our backyard. And that work was really, I'd say, fascinating because it wasn't just the partnerships that we negotiated. It wasn't just the business model that we had to create internally to figure out what we're going to set the reward amounts at and how we're going to distribute. It wasn't just the technology.

[00:30:05.80] It was also coordinating in all the regulatory pieces, too. So that period of time was also one of those elements where it's hard to replicate because there was no road at that point. It wasn't like we could just reference something that already existed.

[00:30:22.09] And most of the stuff was done inside of Plymouth Rock at that point, but we did have amazing support from the technology side from CMT, and I started to work with them. So I started to become really, really familiar with the people there. And I want to say the company was 30 or 40 people at that point. I think that I was number 42 when I joined.

[00:30:42.88] So I brought my immediate prior experience of doing something that was totally outside of the normal approach in the insurance industry over to CMT. But at that time, when I joined CMT, I had claims experience. I had distribution experience with agency partners.

[00:31:00.16] I had experience on the regulatory side of getting crazy stuff approved and building the business case internally, and getting financing, and putting it all together, and then getting it out in the market. And I think it was the perfect combination of things at that time.

[00:31:18.22] But if you ever told me that I would work for a tech company, I would have told you you're crazy, because I still remember sitting outside of Liverpool, New York, the claims office for Hanover in Syracuse, on my lunch break listening to This Week in Tech, which is a podcast that was by Leo Laporte, used to be the tech guy on Tech TV. I was always into technology.

[00:31:45.40] And he was broadcasting from CES, or he was recording from CES. And I'm like, this sounds like the coolest thing ever. And I was like, man, how cool would it be to get a job in tech and be able to do that? And I think I've been to every CES since 2019 at this point and beyond.

[00:32:05.77] And if you ever told me before then, I would have no even thought that it would be possible. But all that experience that I was accumulating then turned out to be super useful because CMT doesn't just build programs that measure driver behavior. We're also detecting crashes. We're sending emergency support to the scene. We're reconstructing crashes.

[00:32:28.55] And the claims side of the business is as big as anything else. So it is fascinating to me-- because in that period of time, I felt I was totally-- I would get 10 claims a day, work through those. I think I had two weeks of vacation time. And I remember thinking to myself, I'm like, man, this is it?

[00:32:48.35] We work all this time in college, and in high school, and all the work you do to get to a job. And your job is literally like this in and out processing thing? And you get so little vacation time. So this is where I'm spending my life. And I think I was low-key depressed at that point.

[00:33:07.22] And man, I'll tell you what. Now, I talk to people that are in super advanced positions in some of these different verticals that don't really have the hands-on experience of doing the thing that their tech actually is doing.

[00:33:21.11] And they're making huge decisions on behalf of the organization, and they have to talk to up and down to get a perspective. And I was fortunate enough to have that. But I was not happy by any means with that opportunity at that time.

[00:33:36.50] REID HOLZWORTH: Wow. Wow. So talk to us about Cambridge, CMT, as you say. Talk to us about that. So telematics, first, I know-- just going off of memory, and you're probably going to choke me out here. But telematics became a thing, to me, as an agent with Snapshot-- Progressive. Was Allstate first? If I recall, was Allstate--

[00:34:04.58] RYAN MCMAHON: No.

[00:34:04.91] REID HOLZWORTH: OK.

[00:34:05.39] RYAN MCMAHON: No. I think this is documented. So Progressive had something called Autograph before that. And I think it was in the '90s. So Progressive-- yeah, so it was a project at that time in the company that they said, we don't care what it costs. We're going to get data from a car. And I think it was in the '90s.

[00:34:27.17] REID HOLZWORTH: Oh, yeah.

[00:34:28.98] RYAN MCMAHON: And I'm pretty sure I know the people that were involved in it, but I don't want to get it wrong, so I won't like I won't step on myself here. But Progressive is one of those companies, similar to Plymouth Rock-- obviously, significantly different scale-- but Progressive was a company that, and still is, a company that invests a lot in things that are way outside the box. And Autograph was the start.

[00:34:55.36] So their whole idea was, we think that if we get information from the car in some way, shape, or form, that we will be able to better predict crash risk. Can we predict crash risk in this way because there are other variables?

[00:35:08.23] And if you look at what the insurance ecosystem has at its disposal in order to set rates, almost none of it is based on the actual activity itself. It's all proxies, so the financial responsibilities of proxy credit score.

[00:35:25.38] Where somebody lives is a proxy for congestion, or where they're driving, so their zip code. Their motor vehicle record is a proxy for how they drive, but that's not necessarily how they drive right now. That's how they drove while a cop was around and decided to write a ticket, and then their ability to effectively plead it down below the level that it shows on an NVR or not.

[00:35:48.33] So you actually look at this, and you think about it. It's actually crazy. It's crazy that you have all this premium that's based on elements that are proxy variables, but you have to. What else are you going to do?

[00:36:03.19] All the way back from whenever the first insurance policy was written on auto-- maybe it was travelers. I don't know exactly. But that first auto insurance policy that's written-- maybe State Farm, actually. But anyway, the first policy that's written, and you don't have-- how do you know? So then you continue to scale, continue to scale. So Progressive at that time had launched the program.

[00:36:23.42] So the first incarnations were the cost to get the data was probably $2,000 per car, so obviously not a scalable solution. But then, what happened-- and this is a seminal moment. So the California Air Resources Board mandated that the OBD2 port on a car becomes standardized for smog inspections. Talk about things that are totally unrelated.

[00:36:45.16] So CARB mandates that the OBD2 port is a standardized-- it has a standardized output. So now, all the cars sold in California have an OBD2 port, which also means that all cars sold everywhere else because you have-- 42 million people live in California. It's own little country, so they have the ability through their regulations to seriously steer a lot of activity.

[00:37:04.88] So the insurance industry at that point has already been toying around with this. And I'm pretty sure-- I don't know 100% know this, but I'm pretty sure the Progressive was first to market with an OBD2 product.

[00:37:15.02] So at that time, they would mail out the OBD2. You would have to plug it into your car. It would keep it in there for some period of time, unplug it, put it back in an envelope, and mail it back. And then some person, the company, gets these every day, figures out the policy number, pulls the data off, and presses plus or minus in the premium system.

[00:37:37.81] And then OBD2 got a little bit more sophisticated. Some of them got connected to the cell network, so they didn't have to start to send those out. And what I got involved in telematics that's exactly what it was. That is exactly what it was. And I hated it, literally hated it.

[00:37:55.27] I was responsible at Plymouth Rock during the period of time of getting agents to get involved in usage-based insurance. And I was probably very cantankerous about this entire idea. We were, I think, at one point giving agents $50 to plug it into their own car.

[00:38:14.62] And I think that we had made some error somehow. And we had killed a whole bunch of batteries when I was at Plymouth Rock, because there was like a pin setting or something that was incorrect. I think that we--

[00:38:25.92] REID HOLZWORTH: OBD2-- what you put in wasn't right, shorted out--

[00:38:28.96] RYAN MCMAHON: It wasn't right.

[00:38:29.47] REID HOLZWORTH: --battery.

[00:38:29.89] RYAN MCMAHON: It wasn't right. Yeah. And to make it even better, imagine doing that, Reid, to your best agents, the ones who you have relationships with to ask them to do things.

[00:38:37.21] REID HOLZWORTH: Oh, Jesus.

[00:38:38.01] RYAN MCMAHON: And I think that actually happened to our chief marketing officers, too. So I think that it happened-- when he was at the-- I think he flew somewhere, and his car was at the airport, and it was sitting there-- came back. The car was dead.

[00:38:49.09] REID HOLZWORTH: Oh, no.

[00:38:49.75] RYAN MCMAHON: So I hated telematics. I thought it was the stupidest thing ever. And I still think that error there was full of issues. By the way, some parts of the world are still super overindexed on OBD2 and hardware, but we can talk about that later. CMT is a global company. So I get to see all sorts of parts of the world.

[00:39:06.35] So anyway, that period of time was expensive for carriers. So the business models were super tight. They didn't have a lot of benefit to consumers to opt in because they weren't really-- it wasn't a scalable solution when you need to involve this level of, not only the hardware itself, but the support level for it, too.

[00:39:29.74] REID HOLZWORTH: Yeah.

[00:39:30.13] RYAN MCMAHON: In fact, if you go to-- some carriers still use it. You can go and find a website where you can find a very in-depth instruction manual on how to find where your OBD2 port is. And if you drive a Tesla, or Rivian, or a Ford F-150 Lightning, it doesn't exist because, again, that port is only there because of CARB. That's why that port is there. Still, to this day, that's why that port exists.

[00:39:51.73] REID HOLZWORTH: Wow.

[00:39:52.15] RYAN MCMAHON: And Teslas are not obviously part of the smog check. So anyway, that technology is a period piece at this point. If there's a telematics museum, it will be there at some point. But during that period of time, it was huge. It was huge.

[00:40:06.65] So what happened was CMT-- and this is way before me. I think it wasn't quite-- it was after the car crashing and dropping out of high school period of my life, so maybe in the early insurance days.

[00:40:19.02] In that period of time, I've looked back at what CMT was doing. And it was started by two professors at MIT, Hari Balakrishnan and Sam Madden. They're still professors there. In fact, Hari just won the Marconi prize which is like the Nobel Prize of the internet, so to speak.

[00:40:38.13] When he was awarded this prize, the guy, Vint Cerf, that literally invented the internet, was also awarded a Lifetime Achievement. So the Marconi prize for those in the technology, ethernet, sensing world, all the stuff that we need to do this podcast, the foundational stuff of the internet.

[00:40:59.48] So Hari was working on that for a long time, and Sam was as well. Sam was in the early days of AI and database structure. And they both teach at MIT. And they're amazing teachers, incredible teachers.

[00:41:13.73] So they were working on this technology that their first use case was detecting potholes. So people were driving around. They were hitting potholes around the city of Boston. The sensors at that point-- it was before smartphones, but they were using phones that had accelerometers in them.

[00:41:31.11] So think about the Snickers phone or the Razr, that period of time-- Nokia phones. They started to put accelerometers in them for games or other things. So they realized that they could take that data and make sense of it.

[00:41:47.01] And what they were doing got the attention of the insurance industry because they said, well, if you can detect potholes, maybe you can detect the same thing that we're doing in this super expensive hardware-driven environment.

[00:41:58.98] And they connected with Bill Powers, who already had been very successful in the traffic industry and had done a number of startups, and sold businesses, and eventually brought businesses public. And they originally thought that the business was going to be around traffic.

[00:42:14.37] So the first name for the company was going to be Traffic RNA-- turns out to be RNA became very popular a few years ago. That name got shelved, and it became Cambridge Mobile Telematics. And then the insurance industry started to realize that the same stuff that they were doing on the hardware side could be done on software. The first company that figured that out was State Farm.

[00:42:35.10] So State Farm was really one of the first that started to dabble in mobile telematics, which today is-- it really was like a catalyst event because it created a very low-cost way to gather individual driver behavior.

[00:42:51.27] And then it created all these business models that forked off from it that go down to reward programs, driver improvement, core usage-based insurance, tons of different things, crash detection.

[00:43:01.89] None of that would be possible if the technology was taking up all this cost because the technology then-- that cost then shrinks down significantly. And now there's all these new business models that you can create. So the tech was the catalyst to really a whole industry taking off.

[00:43:19.41] REID HOLZWORTH: But I feel-- so back in the day, when we'd sell the Snapshot, or whatever. You don't really sell it. You promote it to customers because it was good for retention purposes if they did the whole thing.

[00:43:30.66] But plugging it in-- if I remember correctly-- this is years and years and years ago. But a lot of what they watched was braking-- how much people brake and how hard they brake, I guess, to show congestion, where they're at, and just speed up, slow down. But it wasn't necessarily watching speed and whatnot.

[00:43:49.94] RYAN MCMAHON: No, it wasn't.

[00:43:50.38] REID HOLZWORTH: And so I wonder now so if I'm plugging in to the OBD2, I'm seeing the throttle and all of it and whatnot. But I would assume on the mobile device, you can see speed and maybe you can see braking in that way. But I would almost assume that it'd be better to be plugged in. No?

[00:44:13.59] RYAN MCMAHON: Maybe. I think that what happened, though, was the programs that were plugged in were only measuring limited variables, but more important for a limited period of time.

[00:44:24.18] REID HOLZWORTH: Oh, yeah, because you'd send it in two months later.

[00:44:26.58] RYAN MCMAHON: Two months later. They experimented--

[00:44:27.84] REID HOLZWORTH: I would tell customers, just drive real good for the next couple of months, this kind of thing, seriously.

[00:44:32.73] RYAN MCMAHON: Yeah. By the way, there were still companies that were doing that. So if you were an agent in March 2020, and you sold that with those short-term monitoring programs, those people in some cases have lifetime discounts, depending on the way that the carrier was set up.

[00:44:46.44] So there are some people sitting on the 2% mortgage interest rate equivalent of a UBI score from March 2020, April, may, that kind of thing. But what happened is the industry started to realize this technology is substantially cheaper, and we can monitor continuously.

[00:45:05.37] So early days, an individual's driving behavior-- the thought was that people don't change. So if you can look at them for a period of time, you got it. That's how they are. That is totally not the case. That is 100% absolutely not the case.

[00:45:20.83] In fact, if you signed up to be a gig driver right now, what we have measured is your time that you're spending on the app could actually change your risk profile immediately because the nature of their task, the context, where you drive, why you drive there, the road around you, the conditions of other drivers, all of that stuff factors into your own individual driving risk.

[00:45:44.35] So there are really no safe and unsafe drivers. Even though that the nomenclature and a lot of the work that goes into it is, oh, this is a good or bad risk, that's like for the moment. But like I was a terrible student in high school, but turned it around in college, people can have bad moments of time that don't exhibit the way that they drive continuously.

[00:46:05.40] And if you give feedback to drivers-- and here's the big thing-- that none of that stuff did. It didn't tell you how you were doing on the whole. You didn't really know how you're doing. It's just this thing that's out there.

[00:46:16.21] REID HOLZWORTH: Yeah, totally.

[00:46:16.59] RYAN MCMAHON: And it's like stepping on a scale that doesn't have a number to it. So you just keep stepping on it, and, yeah, I' doing the thing. Great. And you're like, why does my pants fit anymore?

[00:46:26.49] So if you have the ability to create this closed ecosystem where you're measuring the behavior, you know that behavior is predictive, you continue to expand the universe of elements that are predictive to that, you provide feedback to drivers to that and to that approach, and incentives and structure that, then allow that person to maximize their own personal financial condition, so now you're tying driving to their finances.

[00:46:50.94] Now, you're tying driving to some positive element, not just not getting caught. So it has changed the dynamic considerably. And what really the tech has done has given the insurer the ability to not only predict price and crash risk, but actually change it and reduce crash risk. It actually fundamentally make roads safer.

[00:47:12.90] So now where we're at is-- the foundation of the company, by the way, the mission of the company, CMT, is to make the world's roads and drivers safer. And you can do that if you give feedback. You can do that if there's incentives. You can do that if you're actually accurately measuring risk. You can't do that in this headless environment.

[00:47:30.61] So yeah, there may be tons and tons and tons of factors that the more data that's out there, the more you understand what leads to a crash prior to a crash. What I can tell you is we have found is that, yes, heartbreaking is if you are a constant regular hard braker, that is indicative of future crash risk because what you're doing is you're not allowing yourself enough time to adapt to things that happen around you.

[00:47:58.30] And that is a huge issue. If you don't have enough time-- it's like if you're playing baseball and you're not looking at the pitch and you're just waiting for the sound of the bat, it's already over. The ball has already passed you. And some people don't know that they are not as good at that. They just don't know.

[00:48:16.51] And it's funny, because if you ask drivers, if you go out and survey drivers-- and this happens over and over and over again-- it's official stuff-- 90% of drivers say they're better than average. How do people get feedback? They either get stopped.

[00:48:27.90] They have someone in their car that gives them feedback. And by the way, nobody takes that well-- backseat driver. No one's, oh, thank you so much. You know what? You're so right. Or another driver decides to give your hand signal to inform you of your quality of your driving. And that's it.

[00:48:44.43] If you don't get feedback, you don't know. And the driving learning process ends at 16, and then you're thrown to the wolves. So over a long period of time, you don't think that even Max Verstappen is studying every single one of his movements.

[00:49:00.12] And when it comes to us, it is the number one killer of people from young age to mid- to late-30s before other diseases catch up. It is literally the number one killer, just getting into a car.

[00:49:12.27] So it's just like this totally divorced component that is a problem. And the more that we can do to connect these financial incentives and feedback, then you can change it. So that's what changed in the last, I would say, four to five years.

[00:49:27.03] REID HOLZWORTH: So you're really-- so in the apps-- and I haven't used one of these newer apps, probably a good thing in my case. But--

[00:49:33.48] RYAN MCMAHON: You're paying too much for insurance if you're not. I can guarantee you.

[00:49:38.55] REID HOLZWORTH: But in the app, is it really saying, hey, this is-- is there like a meter there, if you will-- this is where you're at? And if you were over here, if you made these changes, hey, let's watch a little YouTube video on how to not use your brakes as much, kind of thing? Is that what we're talking about here?

[00:49:57.83] RYAN MCMAHON: Oh absolutely. And there's a wide variety. We have 120 programs across the globe right now. They might be more than that. We bought two other telematics companies in the last three years. One was TrueMotion, another Boston-based company, and another is Moto, which is based in Croatia.

[00:50:16.89] And in all of these programs around the world, there's lots of different variety in the ways that this goes through. But we were just at the Transportation Research Board, was the Super Bowl for transportation geeks. And we had a paper that was published in a presentation there about driver feedback.

[00:50:37.06] And it is definitive-- the more the driver comes in and looks at their trips, the more that they reduce crash risk. And we have one of our customers that's reduced frequency 25%. And they're experts at it, global experts at it. So it's not-- there's not--

[00:50:51.46] REID HOLZWORTH: 25%. That's--

[00:50:52.33] RYAN MCMAHON: 25%, for sure, for sure. This is Discovery Insure, the company that I mentioned that RoadRewards was inspired by. Discovery Insure's whole ethos is shared value-- what can we do as an insurance company to put ourselves in the same position as our customer to reduce crash risk, or to reduce risk overall, whatever that risk is? They have lots of different business units.

[00:51:11.92] And what's happened is there's now behavioral scientists that are working on this. It's not just actuaries. We have actuaries. We have data scientists. We have behavioral scientists. The insurance companies have these things now, too. Insurance companies are now connecting more with the road safety community.

[00:51:30.07] Progressive sponsored a study that happened at the Children's Hospital of Philadelphia. There's really cool stuff about researching what type of feedback, how often, what type of information. We have a thing in market called hard braking alerts that gives feedback the drivers audibly that tells drivers that we detected a hard brake.

[00:51:50.11] And that helps people understand not just the in-app feedback, but real-time that there's some information we have other stuff that's like that, too. So really, it's a transition away from it. It didn't start like this. It started as a pricing tool to do better than all the proxy stuff that exists out there.

[00:52:08.36] And what happened was over time, people realized that not only can we predict crash risk, but we can actually change it. And man, if you can change it-- this is a Wall Street report a few years ago from Mike Zarembski, who was at Credit Suisse at the time. He's now at Bank of Montreal.

[00:52:23.20] He said that if Progressive reduced frequency by 1%, 1% reduction in frequency, they increase earnings per share by 9%. And this is when price was under 100 bucks.

[00:52:32.95] So from the investment standpoint, when you realize this, the real challenge is, how do you get more drivers to engage in these programs? How do you get more drivers engage this program? And that is still not a solved issue. It's still not a solved issue, especially an agents.

[00:52:48.12] REID HOLZWORTH: Yeah, no kidding, because you still have to convince the insured to get the app, and do the app, and follow along with it, right?

[00:52:55.14] RYAN MCMAHON: Here's the thing that is universal truth. For whatever reason, the bulk of the independent agents are not as, I don't know, if it's confident or crisp in explaining how this works to a consumer as that conversation goes with a direct conversation or captive agent.

[00:53:20.26] And I think, maybe, because there's, maybe, too many options, and there's a lot of detail-- and as someone that came from the IEA world and spent a long time in it, I have a tremendous amount of respect with tons of friends that are still independent agents.

[00:53:33.46] And what I would say is that it's just the data-- if you look at our people favorable to this approach. Do you want control of your insurance price? Do you want more capability to determine what you pay? Do you want feedback on the things that filter into this? Are you open to this technology?

[00:53:50.59] The numbers are 80-plus, surveyed by us. JD Power, a number of different times, continue repeated. And that number keeps climbing, by the way, keeps climbing. Then, people that are asked, are you willing to opt in? That number-- so are you favorable, that's number one. The second thing is actually when you're asked, do you opt in, the take rate, so to speak, that number is like 70%, 75%.

[00:54:13.88] So the number one problem is that consumer awareness is high when people shop directly with the company or with captive agent. Consumer awareness is really low in independent agent. So I don't think that consumers are being asked. I don't think that they're being asked.

[00:54:29.60] And I think that's the number one issue that that conversation is not happening in IEA is because there is enough carrier mix that they can get to around the right price without taking every single step necessary to get someone the absolute bottom line best price. There's no knock on it. It's probably one of the advantages of the system that there is so much variability or inefficiency between companies.

[00:55:00.22] But what's happening, though, is the carriers that are invested in their telematics programs, they're growing incredibly fast, and they know so much more about risk. So go back to the first part of the conversation. Imagine you're looking at your company, and you're just basing your data off of proxy variables, then you have another company that's the first-party data. It's first-party data.

[00:55:21.55] So you know something the rest of the market does not know. And now, you have a direct relationship with that consumer and can actually change and shape that risk and reduce crash risk. Your prices over time, in that particular segment, are going to continue to get better, and better, and better.

[00:55:34.96] And the people that don't take advantage of that feedback, and they choose to drive dangerously-- and that's really what we're talking about. We're not talking about people that don't toe the line. We're talking about people that drive dangerously.

[00:55:46.09] And I can talk about this because, like we talked about before, I have been there. I drove dangerously. I flipped a car. I was brought in an ambulance to a hospital. And I saw people drive dangerously as an EMT.

[00:55:56.80] So this is not about people driving perfect. This is about people that drive dangerously. And if people choose to drive dangerously, then they might pay more for insurance. And they won't engage in the telematics program. They'll go to a carrier that doesn't have it. And over time, it's little by little, taking one grain of sand off the beach and just putting it onto a scale.

[00:56:18.25] And over time, that's just going to create a massive imbalance for independent agents and independent agent carriers. And I think it's a major issue. And it's not that consumers aren't interested in it. It's that agents haven't really embraced it as much as other distribution channels because companies like Nationwide have great programs. That program is fantastic-- 15% upfront discount as a consumer.

[00:56:41.04] That program is reducing distracted driving. And Nationwide is doing a ton of work. So it's not like these programs don't exist, or they're not well architected. They are. But generally speaking, across all of the-- if you just weigh the three channels, the independent agency distribution just is not as engaged in telematics as others.

[00:56:59.51] And I think partially, Reid, it's because of the first part of the conversation. The first tech that came out was not good. The first utility of the approach, I don't think-- my personal opinion is, I hated it. I personally did not like it.

[00:57:15.22] And I can't imagine if I was an agent trying to continue to try to find someone's OBD port and trying to put my head under in a car and tripping over McDonald's French fries while doing it, I'd just be done with it. And I think that today's telematics is so, so, so different than what was out a decade ago.

[00:57:31.72] REID HOLZWORTH: But let's get down to brass tacks here. How much could I save, really?

[00:57:36.76] RYAN MCMAHON: Some carriers are 40%. I mean, it depends.

[00:57:39.05] REID HOLZWORTH: 40%?

[00:57:40.30] RYAN MCMAHON: Four zero.

[00:57:40.90] REID HOLZWORTH: [INAUDIBLE] know that. The Snapshot stuff back in the day was-- I think it was, maybe, 15%, max.

[00:57:44.95] RYAN MCMAHON: The start is 15%. So the upfront discount-- your upfront, the minute you switch is 15%. And then, you see the meter. And it shows you how you're driving, and it shows you your areas to improve.

[00:57:58.01] I'm not speaking about Progressive specifically. I'm speaking overall. Nationwide program is 15%. State Farm's program is 10%. I think Travelers program is 10% or 15%. I can't remember. But it's to the point now, 23 of the top 25-- 24 of the top 25 carriers have programs like this. And the majority of those programs are continuous.

[00:58:18.26] And what's happened is gradually, the variables that are produced from an individual driving behavior are so clearly more predictive of crash risk than they just replace. They just like slowly replace.

[00:58:33.53] So what's happening is if you take $1 bill and you just like fold that up to the point of what part is coming from proxy and what comes from direct risk, the more that you can continue to make that dollar bill representative of direct risk, it's going to mean that carrier is going to be more profitable because the carrier is actually pricing relative to the environment around them and where they are.

[00:58:55.97] And every company that has had telematics programs has had the ability for that particular book of business to match rates of risk if they're continually updating this technology and continually updating the scoring data. If you only take it in at a small period of time, at a Snapshot period, then it's not going to update. You're not going to have that advantage. But oh, by the way, Snapshot doesn't work like that anymore. Snapshot's now continuous.

[00:59:18.29] So that's really what's changed is. It used to just be like this tiny little corner of the dollar bill. And it's not half, but it's working its way there because it has more representation of the actual risk that's observed, and it's over the life of the policy. So that's really what's changed.

[00:59:36.03] REID HOLZWORTH: Yeah, wow. That's fascinating, man. That's super cool. I had no idea about all of that. I knew, but not like that. It's pretty cool. So what's the future of it? What's next?

[00:59:51.71] RYAN MCMAHON: The biggest next step-- and part of it's already happened. So more and more of consumers are connected to crash detection in real time, which is awesome. Progressive talked about this on the earnings call last year, just about a year ago. I'm sorry, just about over a year ago.

[01:00:05.81] What they have done is they've made crash detection available to anybody in their app. You don't even have to be a part of Snapshot. So if you have the Progressive app, you can hop into this. And that benefit is significant because people pay money for crash detection services-- OnStar, for example. It's 30 bucks a month.

[01:00:23.39] If you get into a crash and you need emergency support, emergency help, if it's a observed crash, you can just call-- someone else can call 911 for you, or if you can reach your phone and call 911, but a lot of crashes aren't observed. And these crashes happen at night. They happen in rural areas. They happen during a snowstorm. Somebody goes off the road.

[01:00:42.50] Now, what's happening is the insurance companies actually acting as a guardian angel, which is super cool. That's a major evolution. So the insurance company is moving from this era of time of reactive to everything, reactive, reactive, reactive to proactive. And the more that shift happens, the more that the services that are provided to consumers are better.

[01:01:00.06] They're just providing better services, and they're actually serving a different purpose in life. And agents are, too. So agents that are helping people get to this point are now giving their customers this guardian angel service. It's amazing.

[01:01:15.29] What now also occurs, as a former claims guy, is now that crash data is available through digital technology. So when I get somebody that calls in, I now have all the information that I need to start that claim. And sometimes that's all you need to just get it started.

[01:01:30.74] So you need to get where it happened, when it happened, confirm coverage, help that facility up. Is it a total loss? Let's get it immediately over to a salvage yard, instead of having it accrue costs at a body shop.

[01:01:44.12] Let's not tow that thing three times. Let's get the whole claim handled so I can give the money back to the consumer faster if it's a total, or let me get this car back to the person because literally nobody wants their car in the shop-- no, no. Especially now, those rental cars are not-- they're 50,000 miles on them.

[01:02:01.17] So what's happened is it really is just facilitating-- the digital transformation is facilitating this move from reactive to proactive. And this change is permeating the risk side. It's permeating the crash side. And eventually, I think that we'll get to the point where drivers will have this other places outside of insurance.

[01:02:24.70] I think that at some point, your driver's license, when you're going through the permitting process, your test will be, or your record up to your test, will be digital. If anybody plays games like Gran Turismo or Forza, it's harder to get a license in those games. Those are racing games on Xbox and PlayStation 5.

[01:02:43.96] It's harder to get a license in those games than it is in real life because all of the data is there. So you have to continue to drive safely and number of times. So we're like analog--

[01:02:54.01] REID HOLZWORTH: Its incredibly freaking annoying, man.

[01:02:57.26] RYAN MCMAHON: Dude, trust me. I think just that one little last thing, and you just hit the curb.

[01:03:02.35] REID HOLZWORTH: It's hard. It really is hard. But no, it's so true. It's so true.

[01:03:06.02] RYAN MCMAHON: So I think what's going to happen is all of this approach of being able to connect to the thing that we're trying to achieve to data-- data is already part of our life in so many different areas.

[01:03:16.25] But giving it to the consumer, giving more tools to the consumer so that the consumer can help facilitate, that person can learn driving from an agnostic from a simple approach as opposed to learning it from, maybe, whoever has access to a car, or their mom or dad like.

[01:03:33.14] Over time what we're doing is just bringing more tools and technology to the approaches of things that have been a part of our life for a long time that have been analog. And it's really been missing from mobility. It's been missing from our car.

[01:03:46.16] I could talk to you for another hour about what's happening on road safety and how people that make policy decisions decide to invest dollars in that and the data that they have. The way that distracted driving is analyzed right now is by a survey on the side of the road. And that's because that was the best technology approach at the time, when someone said, how many people are distracted?

[01:04:08.96] So what's happened over time is, we've just evolved so many things to bring digital technology and data. And it just makes sense. And I think the most important thing, Reid, literally, the most important thing is giving consumer control. This should not be headless. The consumer should know because a lot of the stuff is controllable.

[01:04:25.79] And if it's controllable, we can control this, then you can actually reduce risk, which is in the total best interest of the insurance carrier, and in the best interest of the person that's engaged, and of society, people you share the road with. So that's where we're headed.

[01:04:39.57] And I think it's got to be favorable to consumer. We have to create technology that's simple, that's clear, and that helps the consumer manage their risk, their economics, and make it approachable. And the less it looks like the OBD2 from that early day, which was great and super important to move the industry along, the more that, I think, people will be excited about the ability to actually understand it versus looking at it through a lens of a black box.

[01:05:11.87] REID HOLZWORTH: That's awesome, man. I've got a question for you. If you could change one thing in the insurance industry, what would you change?

[01:05:19.99] RYAN MCMAHON: I think more underwriting factors and variables that are first-party, that are directly related to the risk, and less third-party data. That's my personal view.

[01:05:30.73] REID HOLZWORTH: Why aren't they, though? If it's in the best interest of the carrier, going back to your dollar example-- and the progressive $1 equals $9 in shareholder value-- why wouldn't they? Or are they?

[01:05:45.10] RYAN MCMAHON: It's the data. It's not available. So all the telematics data, the majority, not all-- but the majority of the telematics data that's used is created by the consumer on an opt-in basis, which is good. I think it needs to be an opt-in basis. I think the consumer needs control over it. But the data's just not there.

[01:06:05.30] So there's no alternative. So third-party data becomes the only other solution because the data's not there. And you can't have a price for everybody that's homogeneous because then you're going to end up charging people crazy, crazy rates. It's been tried. That has been tried multiple times. And I don't think it's a good model at all.

[01:06:32.28] So you do need to have a basis to differentiate risk on. You absolutely do. You need to be able to look at elements that cause loss, change those. And if you don't have the data yourself, where in the world are you going to get it? So to me, it's a distribution problem.

[01:06:49.02] And I think at some point, it will be-- this period of time will be-- I think if we look back on, wow, I can't believe we used to price like this. There's so many different things that are so much more related to the actual risk. But I don't begrudge the carriers for doing this, or the people that are in this. They have no other option.

[01:07:08.69] And you can't just-- there's no utility in saying, OK, we're going to charge every single person the same because that even gets us further away from the issue of matching rates of risk. So we need to match rates of risk.

[01:07:19.71] But I think-- if you're asking me personally-- more first-party data and more consumer control. That will lower costs because any time that you as a consumer are not directly involved in the elements of what you pay and the components of what you pay for it, you're paying too much. You're just absolutely paying too much.

[01:07:37.91] That's probably the problem with health care, where you don't really negotiate. You don't really know. You can't really control your health care costs directly because there's a lot of things that happen in between. You can 100% control if you get into a crash or not, if you are responsible for that crash.

[01:07:53.39] Each crash occurs because some human error occurred. They don't just randomly happen. They don't just hop out of a cake. Literally, the system that works on the grid-- the traffic network works fantastic if everyone obeys the rules. People don't.

[01:08:08.27] So in that environment where individual decisions drive whether or not there is a crash or a loss, then we need more tools to actually manage that, to differentiate against that, to reduce it. And then eventually, I think the idea of pricing on things that aren't that is going to literally sound archaic.

[01:08:28.10] REID HOLZWORTH: That's awesome, man. I could totally see it. So good. This is all so fascinating. I'm going to transition on. I want to learn a little bit about you, a little bit more. Let's get into a little leadership stuff if that's OK.

[01:08:41.21] RYAN MCMAHON: For sure.

[01:08:41.75] REID HOLZWORTH: So tell me, what does the leader mean to you?

[01:08:45.84] RYAN MCMAHON: I think someone that helps you be your best-- your best, not their best, but your best, because every person has skills that they can contribute that are unique to them. And I think that the more that there are individuals that can help people become that for themselves, the better that will work.

[01:09:05.70] I think the challenge is that sometimes people don't even know what that is. So sometimes leadership is hard to-- you can't manufacture it. So every environment and scenario can't necessarily have leadership. And I think that's a bit of a misnomer that we're always going to have leadership. And leadership-- sometimes you have management. Management is just that controls of functions.

[01:09:26.91] Management isn't leadership. It's not the same thing. Leadership is about the subject, not the person that is doing the activity, I think.

[01:09:42.21] REID HOLZWORTH: Where in your career did you realize you were a leader? Or do you believe that you're leader?

[01:09:48.67] RYAN MCMAHON: Yeah, I don't know. It depends on the context. I would say that in some aspects-- I think what's actually the biggest change that I've seen in myself where I feel comfortable saying that I am a leader is when I've put forward ideas, or concepts, or approaches that have helped to resonate and move things forward, whether it's the idea or a person.

[01:10:20.30] And it's at that point that I look back, and I've exhibited leadership. But I don't think I personally am a leader. I think that you exhibit leadership in particular times. And then other times, you find yourself as a killer wing man, or woman.

[01:10:35.60] I think that if you always think that you are the leader, then you're going to quickly fall into a scenario where it's about your ideas, not about what's right. So I don't think that I'm a leader, so to speak. I do think that I have leadership on a lot of cool things. And I've been really fortunate to be with people that have allowed me to bring the best out of them, too. It's a two-way street.

[01:11:03.47] And I've worked with people at CMT, outside of CMT, that I've been super impressed with how they have brought their skills and to a point where they are contributing way more than I think they even thought when they started in whatever endeavor it is.

[01:11:24.86] But I don't feel comfortable with just saying that I'm a leader. But I do think that I've had opportunities to exhibit leadership in the verb active, as opposed to the noun definition.

[01:11:40.10] And when I don't have the ability to be the leader, I'm happy to be in the flock and help and execute other people's excellent visions. Sometimes I have them. Sometimes other people do.

[01:11:53.45] REID HOLZWORTH: That's great. That's great. How do you define success?

[01:11:58.07] RYAN MCMAHON: Oh, man. That's a tough one. I think it's super context-dependent. Sometimes success is based on getting policy change. When I first started, telematics was not able to be used in New York. Mobile telematics was not allowed by the New York State Department of Financial Services. It wasn't allowed in Massachusetts.

[01:12:19.19] And one of the things that I personally set out is I want to make it so consumers can choose to opt into these programs, and what do I need to do that. We did that. It's awesome. And those type of opportunities are obvious right because there's a clear goal, and it's a clear win.

[01:12:37.16] But sometimes success is-- five years ago, we didn't publish any research really at all on the analysis that we had. And I created the first distracted driving report that we built at CMT. And now, we're working on I think the fifth iteration at this point.

[01:12:56.69] That is now being used by advocates to get laws changed. It's being used by Department of Transportation to assess the success of their ability. That to me-- I'm using the definition in my answer. But some stuff is so long-tailed that it's very clear, that it's hard to lose a little bit of the initial piece, but success is contextual-- what are you trying to accomplish in a given time?

[01:13:25.70] And sometimes success means just an iterative tiny step on getting there. And some people get way too lost at the end goal. And it is very hard to get to the end goal. If you're trying to lose 20 pounds, 1 pound is fricking cause for celebration and success. You just have to start somewhere.

[01:13:46.74] And the biggest thing, the hardest thing to do, I think, in life is to start on big challenging things. But man, I hate working on small stuff. I just don't-- I only want to work on big things. And Bill Bowers is the CMT CEO and co-founder. He's like, don't play small so that others can play big.

[01:14:05.43] He's like, work on big things, impactful things. And he has done amazing work of getting a company from this research idea and awesome technology to the point now that he created an entire industry. That is success. For me, it's big stuff. And it doesn't mean big stuff just to swing for home runs.

[01:14:24.66] Sometimes big means just getting around the bases and scoring a run. And the process is just getting on base. So man, it's contextual,

[01:14:33.69] REID HOLZWORTH: That's awesome. What a great answer. How do you give back?

[01:14:38.78] RYAN MCMAHON: Well, one of the biggest things that I've focused on is one of the hardest things. I work a lot with advocates that have lost loved ones from road crashes. And I have spent a lot of time with individuals that are making a big impact in changing laws that are much bigger than the insurance industry.

[01:15:00.36] If they can actually make roads safer for every single person with the stroke of a pen, like what happened in Michigan last year, and in Ohio, and in Alabama, and Missouri--

[01:15:10.61] REID HOLZWORTH: What happened?

[01:15:11.51] RYAN MCMAHON: --these are huge issues. They passed Hands-Free laws. And we know that passing Hands-Free laws, while they're not the silver bullet--

[01:15:18.11] REID HOLZWORTH: What's the Hands-Free law? What does that mean?

[01:15:20.15] RYAN MCMAHON: You can't use your phone while you drive. So if you have a phone in your hand while you drive, depending on the state, it's a primary offense, like not wearing your seat belt or speeding, and they can pull you over for it.

[01:15:35.03] And you just need that law so then you can start communicating to the public and you can start talking to them. So these laws don't do anything from a business perspective. It's not a CMT-related component. But it means a tremendous amount to work with the people that are actually-- they've been unfortunately and irrevocably impacted by these scenarios.

[01:16:03.30] And from a personal perspective, I've seen it. I've seen it from a lot of different angles. And if I personally can make a difference on it, I absolutely, absolutely feel obligated to do it. So it's not even something that's I'm giving back. This is obvious. It's a compulsion that needs to happen. So that's, I would say, probably the biggest thing.

[01:16:28.17] REID HOLZWORTH: That's great. And that's big, man. That's really big. And that's impacting a lot, a lot of lives. That's really, really cool. It's really cool. So what do you do for fun, Ryan?

[01:16:37.69] RYAN MCMAHON: Well, I just turned 40. And my 40th birthday, I went back country snowboarding, and it was awesome. I was in British Columbia. And I've got a group of people around me that I've been able to do a lot of really cool stuff like that. And these are people that I've known from the insurance industry from forever.

[01:17:00.16] So the connection back to those early days of forming those friendships have stayed with me. So I had people that were in my and other rotation classes with me 18 years later, or whatever it is. So that's fun.

[01:17:18.99] And I love outside, man. I love getting outside as much as possible. And I realized that there was a period of my life that I was just-- this sounds-- if I heard this from someone else, I would cringe. But I was literally just working. I didn't play golf. I didn't do anything. I spent no time engaged in things that were for fun, that just purely for fun and just for me.

[01:17:44.07] And I've been able to do that a little bit more in the last few months. And it's hard because when you're at a super fast growing company, it is really hard to-- if you are a motivated person and you think about work in the shower, it's really hard to not just do that one extra thing and put that trip off because you might have a work thing that pops up.

[01:18:05.73] And that's been a big part of my life, and I'm really happy for that, but also realize that life is somewhat an hourglass, and at some point the sand just stops.

[01:18:18.90] And if you over-index on any one part of your life, it's going to make you feel with a whole bunch of regrets at some point. Maybe, you won't even be able to think about those regrets because you don't even have the opportunity to. So I think it's important.

[01:18:32.73] REID HOLZWORTH: Wow. That's great. That's great. If you had unlimited time, what would you do?

[01:18:40.91] RYAN MCMAHON: Do I also have unlimited money in that case?

[01:18:42.71] REID HOLZWORTH: Yeah, sure.

[01:18:45.37] RYAN MCMAHON: Truth, I don't know. I think I would--

[01:18:47.56] REID HOLZWORTH: I ask these questions. I don't even know the answer to that one.

[01:18:50.11] RYAN MCMAHON: Yeah, I don't know, man. I'd probably build something super cool. I'd build something. I'd probably become-- I'd probably just make music, I think. I would learn how to produce music, and I would just be a music producer, I think, because I love music. I think that's exactly what I would do.

[01:19:09.70] REID HOLZWORTH: That's very cool. Last question, what's your drink of choice?

[01:19:16.84] RYAN MCMAHON: Boy, tequila soda. I think tequila soda is-- it's my number one go-to standby. Yeah. Casamigos, Blanco, soda, ice, a little bit of lime.

[01:19:32.90] REID HOLZWORTH: Ooh, that sounds good. That sounds good right about now. Well, hey, man, this was great, fascinating stuff, Ryan-- really, really cool. I want to thank you so much for joining, Ryan. It was really, really good.

[01:19:44.03] RYAN MCMAHON: Thank you, Reid. I've done a fair number of podcasts. I don't think I've ever talked about this stuff. So I appreciate the opportunity to get a little bit into it. And really, let's solve the independent agency distribution thing. Can we do that at some point?

[01:19:59.96] Because that is to me-- there are a lot of good people out there that are in that space-- like yourself-- maybe, just not knowing about this stuff. So maybe that's a step, too, at some point.

[01:20:09.62] REID HOLZWORTH: Starts with education, man. And I think a lot of people are going to get a lot out of this. It was a big education for me, and it will be for many, many others. It's really cool.

[01:20:17.51] RYAN MCMAHON: Appreciate it.

[01:20:17.82] REID HOLZWORTH: Especially now, even for the consumers, when everybody's just bitching about premiums and whatnot, it's, here you go.

[01:20:27.75] RYAN MCMAHON: Listen, the consumer price index was at 3.1, I think, last month and right around the same thing. Half of a point from that was insurance price that went up 20% in the month of January and in December. So you could actually make the argument that if insurance prices weren't worth they were, if roads were safer, then mortgage rates would be cheaper.

[01:20:51.70] So we need to get on this because insurance is now affecting so many people. And it's going to take a minute for it to calm the waters. So the only thing that's available is you get control of your premium. That's it.

[01:21:06.01] REID HOLZWORTH: It's great, man. Thanks again, dude. It's good stuff.

[01:21:08.48] RYAN MCMAHON: Appreciate it.

[01:21:10.75] REID HOLZWORTH: All right. We're back. Ryan McMahon, what do you think, Kristen?

[01:21:15.16] SPEAKER 3: Well, I do have a soft spot for people that have ties to Massachusetts. But-- no, I loved his story. I loved that similar to Deb, he got into insurance by one of these programs that the carriers have out there, so kudos to Hanover for bringing somebody into the industry that has stayed and is still providing value to the industry.

[01:21:40.51] REID HOLZWORTH: Totally.

[01:21:42.28] SPEAKER 3: It changed my perception of what telematics was.

[01:21:46.08] REID HOLZWORTH: Yeah, I'd say so. I just thought it was that thing you just plug into the car. And like he said, it used to be just plug it in, and you hope that you're doing the right thing. He said like-- what did he say? He said something-- it's like stepping on the scale, and then the scale doesn't give you a number. So you just keep doing it to. Hopefully, it's doing something.

[01:22:09.18] SPEAKER 3: Hopefully, your pants will fit better.

[01:22:12.18] REID HOLZWORTH: And then, when I was an agent, I used to tell people, just drive really, really good. And I think I remember one of the hacks was a lot of it was due to braking, how much you were braking, and it wasn't as much acceleration, but hard braking, fast braking made you a riskier driver. So I used to just tell the insured, drive really nice, really safe for 30 days, send it back in, and you get a discount on your insurance.

[01:22:38.97] SPEAKER 3: That trusted advisor, Reid Holzworth, insurance agent.

[01:22:44.61] REID HOLZWORTH: It worked. It worked.

[01:22:48.08] SPEAKER 3: I just like the connection into road safety. So to the point of, let's take this information to help advise drivers on how to be better drivers-- I'm actually I talked to some of the people over at Cambridge Mobile who will be at Insuretech Boston. They have an annual road safety survey.

[01:23:11.59] So it'll be interesting to hear and see some of the things that they're learning from the telematics information that they're getting within their organization.

[01:23:22.48] REID HOLZWORTH: Yeah, totally. it's potentially a really big impact to safety on the roads for people, just like the alerting and letting you know. And what did he say? There's no good or bad drivers. What did he say, again? It's like, no good or bad drivers. It's the-- put it in a good way.

[01:23:42.33] SPEAKER 3: Good or bad risk. It's the risk that you're looking at.

[01:23:45.00] REID HOLZWORTH: Yeah, it's the risk itself. And yeah, and it's not like people are trying to do this kind of stuff. Things just happen. And ones that are making these mistakes more often than not are the riskier drivers. And so why not put technology around them to help them understand that? It's pretty game changing, I guess, in a way.

[01:24:10.17] The cost of insurance using this model, and people that are actually really good drivers-- it's like, why not? Why not give them a lower rate in a really crappy zip code?

[01:24:27.74] SPEAKER 3: Yeah, that's a whole other episode about where you live impacting what you pay for insurance.

[01:24:34.76] REID HOLZWORTH: Yeah. No, it's crazy. It's crazy, dramatically different between zip codes, depending on where you're at. Yeah, I really liked Ryan. I really had a lot-- he's got a lot of passion for this industry. This whole story, and him at Plymouth Rock, and all of it-- he's got a lot of passion for this industry and really for road safety.

[01:24:56.87] And like he said, that his Fast and the Furious experience, him causing chaos with his own vehicle, and then really digging in there and trying to impact the world in this way. Kudos to him. That's pretty cool.

[01:25:13.97] SPEAKER: To me, it gives him so much more credibility that, yeah, he's lived that. He was the person who was being a little crazy to the point of flipping a car, I think, is what he said. And then now looking at it for his job and just trying to make everybody better, but also make insurance a little less expensive because you're utilizing technology to help.

[01:25:41.82] REID HOLZWORTH: I think it's good timing, too. So many people are upset about the price of insurance right now because of the market. And especially on the personal line side, people are just over it. And these are tools and things they can use. And for the agents listening to that, promote this stuff, guys. It helps with retention. Put it out there.

[01:26:06.00] I think it's good. Look, if I go to quote my insurance a year from now, and I'm getting this great rate because I'm driving well, nobody's going to be able to compete with that. So why not? Why not promote it?

[01:26:19.02] And then if it's helping your insureds and helping people become safer drivers, that means it's safer for everybody else around them and around you as well. So I think it's a pretty good mission. It's pretty cool.

[01:26:32.28] SPEAKER 3: Agreed. Well, on to the next one.

[01:26:37.62] REID HOLZWORTH: On to the next one. Many more to come. Stay tuned.