FreightCasts Episode Summary: "Running on Ice EP118 Mitigating Insurance Risk with Parsyl"

Release Date: February 14, 2025

Introduction

In the latest episode of FreightCasts' "Running on Ice," host Marielle O'Connell delves deep into the intricacies of cargo insurance with her guest, Michael Niederhauser, Vice President of Strategic Partnerships at Parcel. The episode, released on February 14, 2025, provides listeners with a comprehensive understanding of how Parcel leverages data to mitigate insurance risks within the freight industry.

Guest Background

Marielle O'Connell welcomes Michael Niederhauser to the show, prompting listeners to learn about his journey and current role.

• Michael shares his diverse background:
  “I actually started out as a programmer with Accenture... I joined the Peace Corps... taught mathematics for two years in Sub Saharan Africa... then focused my career around supply chain and healthcare...”
  (01:38)

• Transition to Startups:
  Michael recounts his shift towards the startup ecosystem, highlighting experiences with acquisitions and the pivotal moment that led him to Parcel through a connection with CEO Ben Hubbard.
  (01:38)

• Current Role at Parcel:
  Initially part of the monitoring team focusing on customer retention and growth, Michael has since transitioned to strategic partnerships, bridging the technical team and underwriters.
  (04:13)

Understanding Parcel's Cargo Insurance

Marielle seeks clarity on what Parcel offers, aiming to provide context for new listeners.

• Michael explains Parcel's mission:
  “We are a data-powered cargo insurance versus complex supply chain company... we acquire and use data from many different sources to better understand price and mitigate risk.”
  (06:13)

• Insurance in Supply Chain:
  Using the analogy of shipping strawberries, Michael illustrates how Parcel protects against both catastrophic events (like wildfires and floods) and non-catastrophic risks (such as human error or equipment malfunctions).
  (06:13, 08:45)

• Role of Brokers:
  Emphasizing the importance of broker relationships, Michael notes that brokers consolidate various types of insurance, making Parcel’s cargo insurance a vital component of a broader insurance strategy.
  (08:50)

The Role of Data in Risk Mitigation

A significant portion of the discussion centers on how Parcel utilizes data to enhance insurance offerings.

• Data-Driven Policies:
  Michael highlights the use of diverse data sources to create customized insurance policies, ensuring that clients pay accurately based on their unique risk profiles.
  “Using data to customize policies... understanding specific commodity risks helps insureds potentially overpaying or underinsured.”
  (19:01)

• AI and Automation:
  Addressing inefficiencies in traditional insurance processes, Michael mentions Parcel’s investment in AI to reduce manual data entry for underwriters, freeing them to focus on risk assessment.
  “Most underwriters spend two hours a day on manual data entry... we’re investing in technology to maximize their time.”
  (11:20)

• Global Risk Assessment:
  Michael discusses how Parcel’s data-driven approach allows for comprehensive global risk assessments, enabling clients to make informed decisions about their supply chain operations.
  (10:07)

Innovations and Recent Announcements

The conversation shifts to Parcel’s recent achievements and future plans.

• CDC Funding Success:
  Marielle brings up Parcel’s significant funding raise from the CDC, prompting Michael to outline the strategic areas of investment.
  (10:55)

• Key Investment Areas:
  Michael identifies three primary focus areas:

  1. People: Hiring talented underwriters and expanding teams in North America and London.
     “People number one...”
     (11:20)
  2. Technology and Data: Developing in-house tools and acquiring unconventional data sources to enhance risk assessment.
     “Building some in-house tools as well as purchasing some in-house tools...”
     (11:20)
  3. Mission Investment: Committing to impactful initiatives that leverage insurance to bring about positive changes, such as the adoption of safety measures like sprinklers in warehouses.
     “Our mission is... insurance can actually change the world.”
     (11:20)

• Profit Milestone:
  Michael reveals that Parcel aims to reach profitability in 2025, marking a significant milestone for the startup.
  (23:14)

Future Trends in Cargo Insurance

Looking ahead, Michael shares insights into the evolving landscape of cargo insurance.

• Customization and Flexibility:
  The future of cargo insurance lies in adaptable, customizable policies that cater to the intricate and interdependent nature of modern supply chains.
  “Supply chains are becoming more complex and interdependent... cargo offerings have to adapt accordingly.”
  (16:21)

• Emerging Markets:
  Parcel plans to expand into emerging markets like Brazil, navigating complex insurance landscapes and addressing challenges such as ethical sourcing and regulatory compliance.
  “Emerging markets are a huge additional phase... Brazil is a very complex insurance market to get into.”
  (23:14)

• Comprehensive Insurance Products:
  Expanding beyond traditional cargo insurance, Parcel aims to offer a variety of products, including stock throughput policies, warehouse liability, and logistics liability, to provide comprehensive coverage.
  (19:01)

Humorous Segment: Is Cereal a Soup?

To lighten the discussion, Marielle introduces a classic debate question.

• Debate on Cereal as Soup:
  Marielle asks Michael if he considers cereal a soup, leading to a playful exchange about definitions and personal preferences.
  Marielle: “Is cereal considered a soup?”
  Michael: “The short answer is no or yes. It must be because of gazpacho.”
  (25:29 - 26:34)

• Host’s Opinion:
  Marielle sides with "no," citing the separation of cereal and soup in grocery aisles and her dislike for soggy cereal textures.
  (26:34 - 27:09)

Conclusion

As the episode wraps up, Michael provides listeners with ways to connect and continue the conversation.

• Contact Information:
  Michael encourages listeners to visit Parcel’s website or reach out to him directly on LinkedIn for further inquiries or support.
  (27:27)

• Final Remarks:
  Marielle thanks Michael for his insights, and listeners are reminded to subscribe to "Running on Ice" across various platforms for more updates and discussions on the freight industry.
  (27:45)

Notable Quotes

• Michael Niederhauser on the Importance of 'Why':
  “Understanding the why is often missed. It's probably the not so secret sauce to any business functioning effectively.”
  (04:30)

• Marielle O'Connell on Data Mitigation:
  “By doing these tiny little things, we can mitigate some of this loss and drop that 30% down.”
  (14:17)

• Michael Niederhauser on Insurance Changing the World:
  “There is this kind of interesting impact that insurance could have... we're really looking to invest in areas that can change the world for the better.”
  (13:00)

Key Takeaways

• Data-Driven Insurance: Parcel utilizes extensive data and AI to offer customized cargo insurance policies, enhancing risk assessment and pricing accuracy.

• Investment in People and Technology: Significant investments in talent and technological advancements aim to streamline operations and improve service delivery.

• Expansion and Innovation: Parcel is focused on expanding into emerging markets and diversifying its insurance product offerings to meet the evolving needs of complex supply chains.

• Mutual Benefits: The relationship between insurers and insureds is mutually beneficial, with Parcel aiming to help clients reduce losses while protecting their own business interests.

For more insights and episodes, subscribe to FreightCasts' "Running on Ice" on FreightWaves TV, YouTube, Apple Podcasts, Spotify, or visit FreightWaves.com.