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PODCAST OPENER
Welcome to the Inside Insight podcast presented by CR Solutions. At Consolidated Risk Solutions, we are taking our expert knowledge of the insurance world and using it to innovate the industry using technology, groundbreaking thinking and a personal touch. Join us as we talk to masterminds both inside and outside of CR Solutions about how the world of insurance is changing, and how we can be sure to grow along with it. If you have to manage insurance in your work, then you can benefit from the interviews, conversations and insights we’ll be exploring to elevate your business’s success.
INTRO (00:42 – 03:03)
Trevor Casey: All right, good morning, Beau.
Beau Lunceford: Good morning, Trevor. How are you?
Trevor Casey: I’m well. How are you?
Beau Lunceford: I’m good. I am really excited. We are in a new year, we are starting off really strong. I’m excited to be back with another episode of Inside Insight. I’m really hoping that everyone had a great holiday season and they are ready to jump back into the insurance world with us today, especially because of the person that we’re interviewing today.
Trevor Casey: I know and we’re starting off the New Year strong because this isn’t just like a normal insurance podcast, if you will. This one really dives into the data, the science, like we’re blast into your new year with all kinds of crazy information.
Beau Lunceford: With all these statistics like it’s such great stuff. Like Trevor said, today we are talking to Tom Kellogg, and Tom Kellogg is the founder and principal of a new company called Maple Insight. Then Maple Insight provides industry leading default risk assessment, loss estimation and monitoring and default insurance admin services in the construction industry. Tom tells us a lot in this conversation about where he’s come from, his history in insurance and construction, his past work as a veteran. He really covers the full spectrum in this conversation. Trevor, like you and I both got to sit in on this conversation. And I think people are really, really, I think any pen and paper out honestly, to take notes on this because there’s so much in depth information that comes out of this. Like you said, there’s science and statistics and studies, all this crazy stuff that gets to come out of this.
Trevor Casey: Absolutely. And this is a super exciting one. And it’s just cool to see where the insurance space is going as a whole. People are stepping outside of the, “Alright, here’s your limit on audit, here’s your limit on general liability, and they’re really diving into, what makes this tick”. Let’s use all the advanced computers and technology that we have statistics from other things and implement them into the insurance world and it’s just so mind boggling. So I’m super excited for everyone to listen to this conversation and hear more about what Tom has to say and the ingenious stuff that they’ve come up with.
Beau Lunceford: Well, let’s not waste any more time. Let’s dive into this conversation with Thomas Kellogg from Maple Insight.
Trevor Casey: Let’s get into it.
Interview (03:06 – 24:55)
Trevor Casey: All right, everybody. We are back with another episode of the Inside Insight podcast. We are joined today by Tom Kellogg, founder and principal of Maple Insight. How are you doing, Tom?
Thomas Kellogg: Very good. How are you guys?
Trevor Casey: I cannot complain. It is a beautiful sunshiny day. So thank you so much for taking the time to meet with us. We’ve heard a lot about Maple Insight lately, and some of the groundbreaking and innovative things that you guys are doing. And as our listeners know, it’s one of our favorite things to highlight on this podcast are new and innovative ideas, especially in the risk management and insurance space. So just kind of kick it over to you, Tom, if you want to give us an introduction and kind of go from there.
Thomas Kellogg: Sure. Thank you guys so much for having me on. This is really, really, really cool. Nice way to end the morning on it. It was a Tuesday, Wednesday, whatever day. Anyway, so I’m Tom Kellogg. I am the founder and principal of Maple Insight. I’ll give you a little history on me. I went to college at George Washington University, graduated with a degree in Political Science, so I can write a pretty mean email I think. After college, I got a job at Shawmut Designing and Construction and eventually became one of the purchasing managers over there for New York retail, high end retail and hospitality and then residential but slightly bigger geographic region. I spent a couple of years there as a purchasing manager and then moved on over to Urban Atelier group based in Union Square. They do predominantly 20-30 storey high rise residential market rate or condos, I was eventually the purchasing manager there as well. In the scope of my work as purchasing manager, we did a lot of risk assessment, risk tracking, ensuring that company wasn’t exposed to more risk than it wanted to tolerate. We use a lot of different products out there. We used and or tested a lot of different products out there. We came up with some great new ways to do things, but still kind of always thought I think there’s better ways to assess and to monitor risk. Long story short, I ended up departing UAG to really study those things, specifically in a lot of depth and in a lot of detail and it’s pretty awesome. You’d kind of blank canvas, paint my own painting with all the folks and the tools that I thought should really be there working on it. So we’re really, really excited.
Trevor Casey: That’s awesome.
Beau Lunceford: It sounds exciting. I mean, with the experience that you have, and kind of it seems like the vision that you have for what you want to see in the industry. I mean, this sounds like it’s going to be a game changer.
Trevor Casey: So one thing, Tom, that I saw when I was looking at your LinkedIn earlier, and you haven’t even highlighted yet is I saw that you were in the military for a number of years.
Thomas Kellogg: Yeah, that’s right. I was in the Army National Guard as a platoon leader building roads and airfields. We did a small mission in Kenya, which was absolutely incredible experience, incredible to work with the Kenyan defense forces. And then I end up finishing my career after a couple of years as an executive officer for an engineer company. I finished my career as the senior instructor for New York State’s Officer Candidate School. And I managed all the academic curriculum for officer candidates, folks who were hard chargers wanting to commission as army officers, which was amazing to be able to take all that experience, teach it big class, small class, it was really, really rewarding experience from start to finish, really all 11 years of that.
Trevor Casey: That’s incredible. It sounds like you really gained a lot of insight and knowledge for your career now from your years there. So thank you for your service. We really do appreciate that.
Thomas Kellogg: I appreciate that. It’s a lot of good lessons in planning and management. That’s for sure definitely has helped out here.
Beau Lunceford: Well, tell us a little bit more about what it is that makes Maple Insight different from the other things that are out there in the industry right now?
Thomas Kellogg: Sure. So Maple Insight is a service, it’s a risk assessment and monitoring service. Maple is really the culminating exercise of everything that I’ve wanted from a default risk assessment standpoint in my career in construction. What differentiates Maple and one of the number one pillars that we kind of built this Maple Insight house on top of was that the risk has to be quantified. In the construction industry, we estimate projects in square feet and dollars, we are scheduling them in months and years. But unfortunately, we’re looking at default risk in colors. Where it’s high, medium, low, green, yellow, red, a + b + d – c +, the question that we asked ourselves when we started this is, is there a way to quantify this in the universal language that everybody understands dollars and cents? So what it meant was, can we assign probabilities that contracts might default? And if they defaulted, what would that total fallout be? And extrapolating the probabilities with the dollar values, how much is this risk worth in dollars right now, so we can make very educated procurement decisions, be the stakeholder a construction manager, perhaps an insurer, perhaps it’s a captive, we’ve had some interest from charities, we even had a little bit of interest from lenders just everybody who’s kind of interested in an eyes wide open approach to default loss assessment. So on the front end, we do that default loss assessment. We also believe that the best way to keep track of these losses is to monitor it throughout the life of the whole project. So projects change. We all saw COVID start and we saw it through however many years that was. We saw the lasting effects of COVID, the market has changed. And for us to have done an initial risk assessment in August of 2019. And for that to be that Guiding Light throughout the course of the next calendar year would be misleading with certain decisions. So we want to be there to reassess month to month to month. New information comes out, we want to recalculate the risk levels in dollars.
Beau Lunceford: So it sounds like that’s a big differentiator not only in the way that you guys are producing the information in dollars and cents as compared to a letter grade or a color or higher low. Y’all are also taking it a step further and saying, we’re going to evaluate and reevaluate and reevaluate throughout the lifetime of the project to keep things up to par and keep people in the loop.
Thomas Kellogg: That’s exactly is. And how we go about that is kind of an interesting story. In the event of a default, you have the contract that needs to be replaced, but how much does it cost to go to the next company? And how much inflation has occurred? And if they defaulted, how does that affect the project schedule? And how does that affect staffing and cost? So there’s all these primary secondary and tertiary effects that we absolutely want to capture in the calculation. When we wanted to recalculate this as frequently as we can, we wanted to consider what is it today that is impacting companies such that they may default on a construction contract? And is that the same as it was last month? Is it the same that it was 10 years ago? I think there’s a lot of very seasoned folks in the construction industry. And some of the observations that folks had 10 years ago are different than the observations that the same folks would have today about perhaps leading indicators of default. So early on in the game, we had this question, how can we take historical information and study? What might be factors that lead to default? And what we did in the folks that we were working with, when we were in this really early brainstorming stages, we were finding these parallels between the goals that we wanted to accomplish, and the path that we believe would lead there with similar types of work in other fields, the first being epidemiology. So one of the individuals who was involved in with us very early on, she’s a Johns Hopkins PhD candidate. She studies the propensity of people to contract certain diseases and for spread of diseases in communities. And what we found is so fascinating. Whereas we are testing for signs of “Business Disease,” she is testing signs of human disease, and then the statistical models and the way with which we’re getting from ‘Point A’ to ‘Point B’ were extremely similar. We took it a step further, we connected with a PhD who works in the child psychology field. He’s testing for the propensity of children to suffer certain injuries during certain activities, if they do or don’t exhibit certain behaviors. And again, we found this really interesting overlap that instead of looking at blood pressure, or this behavior, we’re looking at certain cash metrics or we’re looking at revenue metrics, or balance sheet positions. It’s kind of the same. We’re asking the same questions in different languages, it’s the same journey to get there. And we were able to benefit on 100, 200 years of this statistical precedents for that kind of work, which was really awesome.
Trevor Casey: So if I’m hearing this correctly, and just like layman’s terms, you’re like “Medical Records” for the job site or a sub or just like, I mean, that’s the easiest way to think of it if we’re relating it to like that doctor is. You have all of their information from start to finish, losses, rates of they’re doing, job income, whatever, and you’re able to calculate that to the likelihood of them defaulting.
Thomas Kellogg: Yeah, that’s kind of in a nutshell. What we also were well aware of this is also kind of a product of my experience to really well established companies is that, anything that’s in that health report, we wanted to make sure is accessible, and it isn’t burdensome to anybody in the whole process. So we thought, do we look at a million different things? Do we look at five different things? Do we look at, whatever it is? I think we found a healthy balance and assessing information that is easily or readily available information that doesn’t put a strain on anyone in the process via a subcontractor or a CM or an Insurer. We wanted to use the information that was already being collected, and that’s customary for folks to either provide or prepare from one stakeholder to another. So we take that information, we make sure that that same information is usually available from everyone so that we give the same fair assessment to every potential procurement decision across the board or past procurement decision across the board. And then we use those as inputs to perform some of those calculations.
Beau Lunceford: So because of that you’re creating really a very universal measurement tool for everybody, because you’re using the information that’s available for all of these different people. Wow, that’s great.
Thomas Kellogg: That’s exactly is. I’ll even take it a step further. Another pillar that was very important to us is, the science needs to tell us what’s what here. 2023 Tom Kellogg believes that this is an important indicator of potential problems down the line, but then 2025 Tom Kellogg believes that this is an indicator, and everybody’s at the mercy of what I’m deciding is what’s important, what’s not important. We wanted to study it very scientifically with the same statistical models that had been around since, however long and of course, they’ve developed over the decades. But we wanted to rely on that. So everybody is getting a fair scientific eyes wide open, fully transparent insight into the dollars and cents and the percentages.
Beau Lunceford: So, Tom, you talked a lot about the ways that these default identifiers have grown and changed over decades. So what are some things that you’re seeing right now in your reviews that people need to know about and they need to be aware of?
Thomas Kellogg: Sure. We set out with Maple, we had our hypotheses. We’ve all had, I think every construction procurement professional had that, every time I see this, this happens, I’ve seen this before this happens, all these. You’ve touched the stove once, and now you just know not to touch that hot stove again. So some of the indicators that we had that feeling about are those observations are showing to be statistically significant and weigh more heavily. Some of the indicators that we’re finding be significant are deeper than the original symptoms that that we had thought were telling. For example, in the last run of the model, some of the indicators are a three year trend in one way or another of a certain balance sheet or business health position. We’re finding that we can’t rely on those surface level simple metrics, what’s the working capital position? What’s the cash on hand position? What’s the biggest project they’ve ever done? How big is this project? Where we’re finding that there’s other factors at play, and we want to study those individual factors, because we believe that those surface level indicators don’t do the industry justice in either direction. For example, let’s take the instance of a painting contractor who does $4 million of work a year, and they are just awarded a $10 million package. Products that are out there. And conventional wisdom would tell us that that is too large. However, when we dig into that contract, if that’s a 10 year bridge maintenance, bridge repainting contract, that’s a million dollars a year, that’s not that big of a deal, that’s not going to affect their business such that it puts strain on it that might lead to a default. So a lot of the indicators that we’re looking at are how would this contract today here with this subcontractor with this position? How would that strain their business if it would? And if it won’t, let’s not penalize them for it. Let’s make the decisions that help us and help them using those kinds of eyes wide open insights.
Trevor Casey: This is so cool. And one of the things that I’ve keep thinking about and have been stewing about is so you said this is a service. So who would be looking to procure this service? Is it more going to be the ownership? Are they looking at say, “Hey, what is my potential risk on this project so that they know dollars and cents? Is that a carrier so that they’re looking at what is our possible losses?” Or who’s going to be the person who’s actually like seeking out Tom and saying, “Listen, we were interested in this data on X, Y and Z.”
Thomas Kellogg: Sure. Great question. When we started off, we thought this is something that’s probably best for carriers. And we kind of developed it like that. We developed it with carriers in mind as the primary client, but what we got really early on was interest from CM’s saying, I want to do a better job assessing my risk, and perhaps I can procure credits for it, and maybe not. Maybe if I have an insurer and there would offer credits, perhaps that’s an angle Other CM’s who have a captive are saying, I have a captive this risk is reinsured. But I’d like to understand my exposure here to make sure that the captive component of this is healthy and we can predict future profits. I think with that kind of led to some interest from group captives, who are just managing the captives. We’ve had interest from sureties who said, we understand the full product, the scope of what we’re doing is a little bit different. We need touch points. And then we need a litmus test to understand that bad things aren’t happening without us knowing about it, but we probably don’t need the full service. And luckily, because we kind of had built out the service is as robust as I think it is, we’re able to offer that and it kind of easily trim out the important components to them. We’ve also had a couple lenders and developers reach out and have said, we want to make sure that things aren’t getting off the rails without us knowing about it. Sometimes we’ve had pushback from CM’s to use one service or another or one insurance product or another, we would like a way that we can kind of just track and make sure that everything is going according to plan. So long way of saying we’ve gotten a lot of interest from really every stakeholder in that risk and indemnification line. We’ve also had these really interesting conversations of CM’s considering. We already have a risk assessment process, but we needed to be more nimble. We need to be allowed to make those decisions that, “Yes, they might lead to a loss, but they could also stand to make us a lot of money.” And we need a way to substantiate these potentially very profitable decisions for which we are all about. At the essence of it, there’s no reason for anyone to collect a fee on anything if there isn’t some risk being taken. So if we can help them better take on healthy risks and make better profits, that’s we love it. We’re all about it.
Beau Lunceford: And it really sounds like you’re offering really customizable services at all these different levels based on whoever your client is, might need that you’re not saying, “Well, we do everything that’s going to cost you a bajillion dollars, no matter what.” Like, you’re really able to say, what are the concerns that you’re looking for? What are you asking about? And we’re going to be able to give you exactly what you’re looking for.
Trevor Casey: You’re not cookie cutter. You’re more or less ala carte, I guess?
Thomas Kellogg: I would say that the backbone of everything that we provide in the way that we’ve kind of originally envisioned the service and everything that we built in the construction of that service, let’s say there’s 10 blocks, and let’s say for one client all 10 apply, for another one four will apply or for another one three will apply, we already have all the blocks there. So we can curate, “I understand what you’re looking for it, you probably don’t need the whole package. But it’s easy enough for us to take out the three that do make sense to you and curate the service to your needs.”
Trevor Casey: That’s awesome. So you’ve really powered up a ton of information and we appreciate it. If anyone wanted to reach out they wanted to learn a little bit more information, maybe they’re interested in some kind of Lunch and Learn type thing. Or they just want to know more about Maple. Is there a way that people can connect to you? Where can they find you, social media, website, email?
Thomas Kellogg: Happy asked. So our website is mapleinsight.io, no‘s’ at the end, mapleinsight.io. Feel free to drop me a line personally and my email is TKellogg@mapleinsight.io. I’m active on LinkedIn. That’s a great space as well.
Trevor Casey: Awesome. Tom, we appreciate your time so much. This has been eye opening and exciting. I want to learn more in depth offline and will ask you some more questions. But before we log out, is there anything else that you want to mention bring up talk about?
Thomas Kellogg: I think that’s Maple in a nutshell. I’m really excited about it. It’s exciting to see all the positive feedback. It’s exciting to be in the room with so many people with the same wants. I think this eyes wide open approach is really going to help us all.
Trevor Casey: Well, we love that. And thank you for your service. We really appreciate that.
Thomas Kellogg: Thank you.
Trevor Casey: And as always, everyone thank you so much for tuning in to the Inside Insight podcast. If you ever have any questions, feel free to drop us a line as Tom said. We will also put his information down in the show notes. We’ll see you next time.
OUTRO (25:00 – 27:46)
Beau Lunceford: Wow that was so great. I like, Tom, so much.
Trevor Casey: Tom is an awesome guy, super intelligent as you can tell, and incredibly hardworking guy. I’m super excited to see where his company goes. And just honestly, I’d like to get my hands on some of those reports and see the breakdown and what makes them tick. It’s so incredibly interesting. And I think the carriers are going to find him so invaluable. He’s going to be one of those people you can’t get a hold of because he’s so busy so super soon.
Beau Lunceford: I think Tom does a really good job of exemplifying that line that Amy Lam always says “It’s all about the risk”. It’s all about the risk, like really diving into what’s causing some of these issues, what’s causing some of these defaults to happen. And I think people are going to absolutely go crazy for this data that comes out of it, or the way that they’re reporting this information. Tom’s going to have more to deal with after this podcast, I hope that he knows what to do with.
Trevor Casey: Absolutely. And I think some of our listeners are really going to find some serious value from his company and some of those insights. So we encourage you to reach out to him learn more about what he’s doing, ask for any kind of demo he may have, asked to peek under the hood a little bit as you will. I know, he’d be more than happy to explain more in detail, tell you about the awesome innovations that they have going on. So we’ll link all that information below.
Beau Lunceford: Well, Trevor, I think this is a great way to kick off the New Year, “Happy 2024”. We’ll have another episode coming up soon. We’ve got lots of great guests lined up for this year. We’ve got more people coming in from SML Capital Advisors, we’ve got people from the carrier side, the broker side and we’re bringing in more risk management people. We’re going to do everything we can to give you guys, the listeners, everything that we can to equip you for a great 2024.
Trevor Casey: Again, as always, if you’re ever looking for specific information, or you have ideas on guests, please send it our way. We’re more than happy to research something for you or to learn some more about it, to learn more about your company or your product. So please reach out to us and don’t forget, it’s 2023 now, not 2024. I already did it.
Beau Lunceford: Wow. You’ve already messed it up.
Trevor Casey: You got to put the four not the three.
Beau Lunceford: You know how elementary school you used to have to write the date in January and like all those threes have fours written over. That’s exactly what this that’s why.
Trevor Casey: Everybody enjoy correcting yourself for the next six months.
Beau Lunceford: Trevor, this was great. Guys, thanks for listening in. Have a great rest of your January and a Happy New Year. And until next time, stay covered.
PODCAST CLOSER
Thanks for tuning in to Inside Insight presented by CR Solutions. If you like anything that you heard today, subscribe, follow and rate the show so that other industry pioneers like yourself can find it. Maybe even share it with someone you think might benefit from this episode. Do you have a question that you want answered or a concept that you need explain, you can email us at info@c-r-solutions.com with the subject line “Podcast Question”, and maybe your question, we’ll make it onto one of our episodes. You can also submit a question via our website at c-r-solutions.com/podcast. There are no dumb questions, only opportunities to learn something new. Now that’s a wrap on this episode. Join us next time on Inside Insight presented by CR Solutions. Stay covered.
