RHS 123 - Alex Bargmann on What It Takes to Innovate the E&S Market

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Speaker 6 In a crude laboratory in the basement of his home.

Speaker 8 Hello, everyone, and welcome back to the show. Today, we have an absolutely tremendous episode for you.
A conversation with Alex Bardman, the CEO and co-founder of PathPoint.

Speaker 8 PathPoint is changing the game on ENS insurance. When I say change, I don't say changing the game a lot because I'm a hype man.
That's what I do. I have a podcast and I hype shit up.

Speaker 8 That's what I do. But honestly, you know, when I say these things, I believe them.
Like, they're making ENS super easy. PathPoint is making ENS super easy.
And frankly, I was almost kind of pissed

Speaker 8 halfway through this episode because I don't really want you guys to know about...

Speaker 8 Pathpoint and some of these other companies because like then you're going to start doing the stuff that Rogue is doing and you know

Speaker 8 Whether you can execute it the same way we can or not, I don't know, but you certainly will know all our little tricks and secrets and Pathpoint is definitely one of them.

Speaker 8 They are making ENS easy easy easy like tarmaca and I was just so excited to talk to Alex. This was our first conversation.

Speaker 8 I'd spent time, you know, talking to his underwriters and other people on his team

Speaker 8 because we use Pathpoint all the time, but at Rogue. But this is the first time I talked to Alex.

Speaker 8 And, you know, when I asked if he'd be willing to come on the show and just talk a little bit about what they're doing, I was excited when he said yes. So

Speaker 8 this is really good. This is tactical, nerdy.
You're going to like this one. We talk about different things we're doing.

Speaker 8 We talk about why some of the innovations they're making in ENS are so important to the industry. And I think you're absolutely going to love this episode.

Speaker 8 Before we get there, I want to give a big shout out to today's sponsor. Podium.
Podium is what we use for our web chat feature.

Speaker 8 We also do a lot of texting through podium and we're starting to look at some of their other features like campaigns and

Speaker 8 like the strategic review link. You know, they have like a deep link that you can use for reviews and reviews not just to Google, but to Facebook as well.

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Speaker 8 you know I recommend before also want to give a big shout shout out to uh mick hunt and the team at premiere strategy box guys you've heard me talk about mick mick is the best um

Speaker 8 just absolutely

Speaker 8 we couldn't be where we are today at rogue if it wasn't for mick just working with him week in week out being able to set uh appointments uh or set meetings with my people with his people so they can talk about detailed and nuanced stuff and work through process just couldn't i just can't recommend mick and premiere strategy box enough and uh if you have some, some, some strategy issues, some process issues, some questions around sales, around service, retention, this is what they do.

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Speaker 9 All right.

Speaker 8 Let's get on Alex Bargeman.

Speaker 10 Alex.

Speaker 6 Yes. Hey, how are you? Good.

Speaker 10 What's going on, man?

Speaker 6 Good. The old quit Zoom and reload it and it fixes itself type thing.

Speaker 10 Well, I could be a jerk and just let you think it was your fault, but I had my microphone plugged into the wrong computer.

Speaker 6 So

Speaker 6 good. That means I can use my headphones and microphone, which will be better audio then.

Speaker 6 That might have been the factor.

Speaker 10 I'll try to start our relationship with honesty, you know, to some extent.

Speaker 10 As I'm sitting here going, you know, I wonder what's happening, you know, because you just never know and then i look down and i see that the so i do my editing you can't see it it's off screen but there's a computer over here where i do like any video or audio editing or whatever and this morning i was dusting up some episodes that have to go out and i forgot to plug my microphone back into this

Speaker 10 that was 100 me

Speaker 6 um well i'm glad it's working now can you hear me okay yeah yep you sound great So appreciate you coming on the show, man. Yeah, yeah.
Thanks for having me on and working with with us.

Speaker 10 Yeah. Well, I'm super, you know,

Speaker 10 I'm interested, and we can kind of get right into it. I,

Speaker 10 you know, I was interested in

Speaker 10 how you got to insurance, because if you look like into your background, LinkedIn, and some of that kind of stuff, it doesn't look like you have a ton of insurance in your background.

Speaker 10 And I might just be wrong about that, but I'm interested in, you know, kind of how you got to this space.

Speaker 6 Completely by accident.

Speaker 6 And

Speaker 6 yeah, I don't think if you asked me 10 years ago at age 22, if I'd be a lot licensed surplus lines broker in 40 states, I would have one, been able to answer the question, but once you explain what that meant to me,

Speaker 6 been on board with that idea.

Speaker 6 So

Speaker 6 it was all sort of by happenstance.

Speaker 6 My background is in software development and product management, sort of like technology software companies. And I

Speaker 6 took a job working at a

Speaker 6 investment fund that did seed stage technology investing, but also incubated companies.

Speaker 6 It's called, it was called HVF Labs. It's now called Sci-Fi Venture Capital.
They're one of our investors, but they had an

Speaker 6 interesting model that

Speaker 6 they'd sort of hire a small team to work on a problem that they thought had legs to spin out into a separate business. It was very focused on fintech or sort of adjacent businesses.

Speaker 6 And almost all of them started with kind of like an initial partner or even customer from the industry. So like a legacy company, for lack of a better word.

Speaker 6 And the idea was like, and that's sort of how we started exploring what became PathPoint because a PNC carrier had a relationship with HVF and they were like, we have a huge wholesale distribution business and we'd love to see more technology and software being deployed into the wholesale channel, just sort of at large, like no real point to it yet, right?

Speaker 6 And they, I think it was

Speaker 6 in part that carrier had seen.

Speaker 6 what had happened in the standard lines market, both with like captive and independent agents starting to place business through software and then sort of looking at their wholesale business and being like, huh, commissions are going up, but it's not getting faster for anyone.

Speaker 6 Like, what's the deal here? And so they kind of brought that prompt to us and we did,

Speaker 6 you know, three months of research, like interviewed 120 people and sort of like got excited by it.

Speaker 6 And that's kind of how I fell into it. It just had a lot of like patterns that were interesting to me and the people I started working on it with.
Like

Speaker 6 from the outside, pretty opaque industry, but huge market.

Speaker 6 From the outside, as when you're ignorant about how the market works, you're like, why haven't they digitized? Right? Classic Silicon Valley arrogance.

Speaker 6 Then you actually learn how the incentive structure works. And you're like, wow, this is fascinating.
And also

Speaker 6 definitely like ripe with opportunity. And kind of just pragmatically, we we decided to get started on on uh on building a business here um

Speaker 6 it took us a couple years to get to building a ens brokerage uh digital ens brokerage but but uh here we are yeah um what was one of the first things that you ran into that

Speaker 10 obviously i'm always interested in people who who

Speaker 10 because

Speaker 10 um

Speaker 10 I don't know. I find this to be a, I know, I know a lot of industries think that they're unique.

Speaker 10 I feel like insurance is one of the few that actually is for certain reasons.

Speaker 10 And

Speaker 10 I'm just interested in like, what were one of the first things or anything that like

Speaker 10 from the outside seemed like this should be a problem that's solved. And then once you got in, you're like, oh, I can see why this hasn't been solved yet.

Speaker 10 Like, I can see where some of the struggles may have been and why this still isn't already a thing.

Speaker 6 Yeah.

Speaker 6 That's a good question. There's a lot.

Speaker 6 I'll give you like an academic one and then a more like cocktail party one.

Speaker 6 This is like going to make me sound like I don't know what I'm doing, but it took me a long time to like really appreciate

Speaker 6 ENS underwriting and rating and how those concepts are quite different from like a process perspective in some ways. Obviously, they're deeply related if you're a carrier.

Speaker 6 But coming from a fintech world, like where it's just like reduce friction to zero, price the risk accordingly, and then just like have some controls in place to make sure you don't get out of bounds.

Speaker 6 Like understanding that that's just like not the model in ENS and how it's working day to day took me quite a bit to wrap through my, like get through my head and was kind of interesting to come to appreciate,

Speaker 6 you know, like we're in a segment of the market where like,

Speaker 6 you know, like binding authority and MGAs and programs and like, there's just like 12 different ways to talk about how insurance is distributed. Like you just have to.

Speaker 6 come to appreciate the different models and why they make sense for different strategies or different products.

Speaker 6 The second thing, which is more frustration than like anything like an epiphany, is just like, there's so much jargon in ENS insurance. And

Speaker 6 this is kind of where I feel like the door has been shut to new entrants into the market, which is a mistake.

Speaker 6 Like you need to be bringing in new and younger people, but like the incumbents use the jargon, they weaponize the jargon.

Speaker 6 Like I would be in like meetings trying to like learn how an MGA like set up its business. And again, like, yeah, I'm using, I'm taking their time, like, I understand it, and that type of thing.

Speaker 6 But they would like ask me trick questions just by like using like, you know, esoteric insurance concepts. And I don't know if they're, they're not being malicious, right?

Speaker 6 But it's just like, they're just testing your knowledge. And obviously, obviously, I failed.
And, and so it's like, you just got to keep banging your head against the wall to like get the jargon out.

Speaker 6 And I don't want to like accuse the industry of like, I don't think this is some like cabal, right? But I'm sure you've seen this, right? There's so much terminology in insurance. Oh, yeah.

Speaker 6 I'm guessing you've come across it too.

Speaker 10 Yeah, yeah, yeah. I was

Speaker 10 trial by fire that you were most likely put through.

Speaker 10 And, you know, it is, it's,

Speaker 10 you know,

Speaker 10 I tell this story a lot on the show, but I think it's very important, especially when we're having discussions like this.

Speaker 10 Do you know Sheffield Ben Hutta from Coverager? Are you familiar with her?

Speaker 6 I know of, do not know personally, though. Yeah.

Speaker 10 So Sheffie was on the show, geez, it was probably six months ago now, but

Speaker 10 and I'm a huge fan of hers and have a lot of respect for her viewpoint. And we were having a discussion around

Speaker 10 how insurance in many ways is still done

Speaker 10 in a dark room, you know, in the back of a dark room over a glass of scotch or whiskey or whatever, bourbon, depending on where you're from, how sophisticated you want to be,

Speaker 6 how big a premium the policy is, yeah, yeah.

Speaker 10 And

Speaker 10 she said, her comment was, I hate that insurance, that the industry is still run that way.

Speaker 10 And, you know, I pushed back on her and said, you know, I

Speaker 10 hate that oftentimes

Speaker 10 that I think too often that table is just two fat old white guys. And that part bothers me.
But the fact that it, this industry still runs in some modicum of the old school concept of trust and

Speaker 10 loyalty to a certain extent, although, you know, that's kind of being torn down a little bit.

Speaker 10 And

Speaker 10 I think is a good thing, right? Like they're testing you because they want to make sure you're going to be around. Like this industry, I think more than any other still values

Speaker 10 Are you going to be here? Like things are going to go wrong, right? They're going to, we're going to have a hurricane. Shit's going to get super hectic.

Speaker 10 There's going to be money flying all over the place. And I need to make sure that you're still going to be here when that happens.

Speaker 10 And like that testing and prodding and like backroom kind of mafia style relationships.

Speaker 10 You know, again, I'm

Speaker 10 anti any kind of like, you know, someone's not allowed in that room, but I do think that the level, the

Speaker 10 testing and the requirements and like the prodding and the, you know, kind of punching bag at the, at the carney fair kind of test your strength kind of thing.

Speaker 10 I do think that that's, um, I don't know, I've come to value that. I've been in the industry for 16 years now, and I've come to value that aspect of it.

Speaker 6 I think you're right. I mean, like, particularly

Speaker 6 an agency, a brokerage, a broker, whatever role they're playing, like they're selling trust to the client.

Speaker 6 And, and so, um, and like if you decompose a carrier into like its absolute like atomic entities, it's like price risk, underwrite risk, take risk, and pay claims, like build a brand that has the trusting ability to pay claims.

Speaker 6 And so I think that that, and I've seen that too, like going back to your question around like, what did I have to figure out?

Speaker 6 This is an industry where you have to

Speaker 6 Like it's capitally intensive because to your point, you have to prove that you're going to be around. And that's not even as like creating a carrier, right?

Speaker 6 Like there's these companies in SureTechs that are on like multi-year long sagas to create carriers. Some are now sort of achieving that.

Speaker 6 But even for us, as purely just a distribution platform, we would be trying to work with underwriters at carriers where their boss's boss had already said, I want to digitize this product with a new entrant.

Speaker 6 And they'd be like, yeah, but you got to show me how the numbers work. Like you can't just disappear in 18 months.
And so like, cause it's just, it's, it's too

Speaker 6 risky for us to put our product onto this and then not understand how it's going to play out. And so we definitely

Speaker 6 had to figure out how to get around that and sort of prove that we weren't, you know, just a bunch of people in a basement, basically.

Speaker 10 Yeah. How did you do that?

Speaker 6 We,

Speaker 6 I think ultimately what did it is we uh raised venture capital and including included in that fundraising round was uh

Speaker 6 a few carriers in the sort of ENS market or have ENS units. And so that

Speaker 6 was important because it was like very top-down buy-in from them and effectively de-risked the supply side of our business substantively because we had this executive buy-in on putting products or giving capacity to PathPoint to sort of digitize the wholesale distribution platform.

Speaker 6 And so that's like an expensive way to deal with it, you know, like,

Speaker 6 but

Speaker 6 it's worked. And

Speaker 6 I think

Speaker 6 other insurance have obviously done this. This is not

Speaker 6 a novel idea.

Speaker 6 I think a lot to like, I don't know Hippo personally, but I think Hippo has also done this on the demand side, right?

Speaker 6 Like they've taken strategic capital from distribution partners, insurance entities and non-insurance entities.

Speaker 10 And I think that's also really interesting as a sort of weapon to prove like legitimacy and get sort of buy-in it's again very expensive but seems to work the other thing that hippo did that was very smart is right from the get-go they were very accommodating to the independent agency force yes and that you don't i think we're i think the day is gone where

Speaker 10 you know there's still some curmudgeon legacy agents that if you have a direct channel they you know won't write with you or whatever i you know it is naive to think that Travelers, Hartford, Liberty, you know, all these big guys that we, you know, that everyone writes with, they all have their own direct channels.

Speaker 10 So I, you know, I think it's, I think it's a little, you know, talking out of both sides of your mouth to

Speaker 10 then knock someone like Hippo. But from my perspective, I think what they did right is right from the get-go, they were very amicable to the independent agency for us.

Speaker 10 You know, they went there, they were also going direct, which, which, but they were upfront about it. They were clear about it.
And they didn't tailor their product direct.

Speaker 10 They actually tailored the product more for independent agents and just had a direct channel. And that to me, I think opens a lot of doors.

Speaker 10 Even if the independent channel isn't a huge part of your business, what it does is it says, I have respect for where this industry came from and I'm willing to play that game.

Speaker 10 And obviously I'm going to do other things too, but I'm going to make sure you guys are taken care of. Here's, it's kind of like.

Speaker 10 you know, you're going to the godfather and peeling off, you know, his portion of whatever you just, you know, whatever you just acquired, you can say, you know what I mean?

Speaker 10 It's kind of like, here you go, independent names. Like, if you want this, you can have it.
Here you go. I'm going to make sure you're taken care of.

Speaker 10 And then I'm going to do these other things over here, but, you know, I'm going to make sure that you have access to this.

Speaker 10 And that just, to me, that, that, that brought down so many barriers to them because now people are like interested in it. They're like, is this going to be a good product? And, you know, truthfully.

Speaker 10 There are places where hippo's pricing is great.

Speaker 10 There are other places where their pricing is atrocious, but that's every carrier and everyone's accepting of that because they know that's how the game works because they kind of were upfront about engaging everyone.

Speaker 10 So I thought that was, that's another way to kind of indoctrinate yourself with Lemonade being the polar opposite case study on just

Speaker 10 creating absolute hate fire and roadblocks everywhere you go to distribution because of the way that you handle yourself, you know, and the things you say in the marketplace.

Speaker 10 Like I think about a company like Lemonade and, you know, obviously their founders and early employees got paid, right? Absolutely paid. They're all making money.

Speaker 10 But when you think about the legacy of that company, it's kind of like whatever. It's like a, it's kind of like a dry fart.
You know what I mean? Who cares?

Speaker 10 It, they had a big, you know, they just, they're a non, you know, an unprofitable IPO'd business that isn't really a good investment, but makes splashes every once in a while with a headline.

Speaker 10 And, and that's fine, you know, good for them. But I felt like they missed the ultimate opportunity.

Speaker 10 if they had taken the hippo path, embraced some of the legacy market, opened up some of their tools tools to them, still done all the crazy shit that they did direct, you know, and that's fine, but just been a little more friendly to the industry, man, I think they, I think their legacy could be completely different personally, but yeah, I, you know, I don't

Speaker 6 know Lemonade too well. Obviously, they've built a huge business and and but to back to the independence thing, like.

Speaker 6 One thing I really liked about PathPlan where we were able to sort of figure out our differentiators is is like we didn't have to deal with this notion of do we go direct or do we go through agents.

Speaker 6 Like the problem we're solving is that there are so many independent agents and they're so frustrated with wholesale insurance.

Speaker 6 And so we just back out from that and we don't have to deal with any of this like, oh, when are you going to go direct? Like

Speaker 6 that's not, that's not our business model at all. And

Speaker 6 where we sit in the market, because there's a whole other insurance market that has to be intermediated by a whole other type of intermediary and so on and so on like we just can really back out from what the

Speaker 6 independents in particular need i mean we don't work with the agency

Speaker 6 you know we have a couple offices at at large brokerages that sort of function like independents very sort of you know fiefdoms and sort of independent in the nature of they operate but we we kind of are bread and butter is working with those uh uh smaller more independent agencies because they just it just sucks to get like a four thousand dollar ens policy through

Speaker 6 typical channels in many cases.

Speaker 10 Yeah. So when you first started examining this, what was one of the most glaring

Speaker 10 difficulties when you're doing that? You know, you said you did 120 or 150 interviews, whatever it was, and you're starting to, you know, you got a page full of notes. You know, this sucks.

Speaker 10 This is tough. This takes too long.
This is frustrating. When you started to like.

Speaker 10 kind of compile those what was one of the first and and most glaring issues that that you knew you'd have to address either immediately or at some point in putting PathPoint together?

Speaker 6 I think

Speaker 6 so, like

Speaker 6 taking a couple steps back, like

Speaker 6 we can make this process more efficient if we get the data about the applicant or the policy or whatever part of the process the coverage is in, get it out of a document,

Speaker 6 out of a spreadsheet, ideally, into a database.

Speaker 6 And that sounds like really simple, but like is profoundly difficult because it's either like a deeply technical problem, or it's like a really complicated user interface product problem where you're asking someone to key data into a web form or something like that, right?

Speaker 6 Which is

Speaker 6 asking them to do work. So you better be delivering value on them.
And when we were

Speaker 6 first

Speaker 6 researching this, like we could not figure out,

Speaker 6 and we, to this day, I don't know what it is, we could not figure out an incentive structure for wholesale brokers to take on that work to get it out of spreadsheets and SOVs and accords and into software or digital database.

Speaker 6 And so that's kind of in many ways why we then took our research to learning what the agency perspective was on accessing the ENS market. And,

Speaker 6 you know, like there's definitely a

Speaker 6 meme, if you will, in InsurTech of like portal fatigue, right? Like, oh, more portals. Well, like, go to an independent agent.

Speaker 6 Like, they use portals all day to place all their business and the successful ones do it. And so I think like there's some value in being able to digitally quote business.

Speaker 6 And so that the value prop of like, okay, if we can work with the carriers to automate the underwriting and quoting of this coverage, ENS coverage, right?

Speaker 6 True, non-admitted coverage, and give that an interface to agents.

Speaker 6 That is that those incentives work, basically, the CSRs or the AMs who are just following up on the email for like the 20th time to be like, hey, can you quote?

Speaker 6 Like, they're like, wait, hold on a second. In like four minutes, I can at least get some sense of if this is going to quote or not.
Like,

Speaker 6 boom, gladly, they'll do that basically. And so figuring out that structure, I'm sure to you, you're like, yeah, if if you'd asked me when you were starting, I could have told you that.

Speaker 6 But it took, you know, it took us a little while, if that makes sense.

Speaker 10 Yeah, no, I get that. I mean, it is,

Speaker 10 you know, it's one of the, it's one of the reasons that I was searching and ultimately found you guys.

Speaker 10 And then full disclosure, everyone listening, I write, we write business through PathPoint and record it all the time.

Speaker 8 And,

Speaker 10 you know, the, the whole thing is

Speaker 10 agents have stayed away from ENS for a long time.

Speaker 10 You know, if you're coastal you know i got some buddies in uh new orleans and um and alabama and and they deal with ens every day but for a lot of other agents you know ens is something they they really don't want to work with yeah it comes in and yeah they deal with it if they have to or if it's a client they really want to write but they try to avoid it at all costs and

Speaker 10 you know i've always struggled with that because you know the way i i think about business in general is what is the shitty parts that no one wants to do?

Speaker 10 That's where the opportunity is, you know, like there's a reason why, you know, if I look at, so we do, we do, we're small business, we write in small business, right?

Speaker 10 And I look at a lot of like the companies that have just been funded and God, it's just like, it's like they're copying each other verbatim, right? Like if you're a consultant, great.

Speaker 10 If you're a startup, awesome. If you're Main Street, great.
It's like, okay, so you've taken like the three or four easiest classes to business, easiest classes to write in the world.

Speaker 10 And now you're super slick at that. Like, congrats, you know, where's the hard stuff? Like that's the easy part.
Like, let's talk about the hard stuff. And, and that's, um,

Speaker 10 you know, that's why, you know, when we, you know, I made this with our team, we did a lot of talking. We have this no cup.

Speaker 10 This is going to be no customer gets left behind. We're going to, we're going to find a way.

Speaker 6 Well,

Speaker 10 if we got to do accords and handwritten affidavit C's and all this other crap, like that's going to destroy us.

Speaker 10 And then that's when a Google search brought me to you guys, or no, actually, it was, it was Greg Parker. Greg Parker reached out to me.

Speaker 10 And then I Google searched and I was like, this looks, this looks great. And then that's how, obviously, how we got hooked up and we started the relationship.
But it

Speaker 10 to me, this is a problem that had to be solved. Like it just had to be solved.

Speaker 10 What I didn't know, and this is what I'm really interested in, this is what all this big dunk diatribe does have a question is what I,

Speaker 10 what was it like getting

Speaker 10 you know because you think like hartford can return a quote that makes sense right you're like you know they're main street you know that kind of stuff that makes sense that they could return a quote in real time and that you might be able to compare it against like a tarmica kind of thing or whatever um but the idea that in the ens market you can do that because i think a lot of people still think of it as like hand hand underwriting you know someone's got an abacus and one of those little wheel things that no one actually knows how to use and they're still like coming up with the rates that way you know uh how difficult was it or were there products in the market already to get ENS carriers that could return digital quotes that could do that in that format and had that kind of setup?

Speaker 6 That's an interesting question. So

Speaker 6 we,

Speaker 6 I think when we started first working on Outline,

Speaker 6 I would guess that a lot of people were like, there's not enough digital product out there.

Speaker 6 And when I say digital product, I just mean accessible through an API, at least quoting, maybe rating sort of thing.

Speaker 6 Obviously, binding and issuance is great too, but I'm kind of in the trenches of insurance over here. So I'll take what I can get.
And

Speaker 6 I certainly the rate at which APIs have been leveraged as distribution interfaces in ENS has accelerated over the time. Like we have,

Speaker 6 we used to have to, you know, turn the backpack upside down and shake it out to find carriers that had APIs.

Speaker 6 Now we have a list of people that like, we don't, I'm like, we're not staffed to actually bring on board because

Speaker 6 yeah. And, and so

Speaker 6 it, you know, like that's a macro thing. Like it's just sort of changed.
But I think our,

Speaker 6 I think the thing we got lucky with, like, whether this is insight or luck, like you tell me, but

Speaker 6 we do a lot of small commercial ENS

Speaker 6 because it's where the pain's the worst, right? Like it takes so much time to do a small policy. Everyone's losing money.

Speaker 6 To your point about it, like agents not wanting to do this, like

Speaker 6 the best analogy I heard from an advisor of ours is that small commercial ENS or even ENS at large is like plaque. Like just by eating, you get plaque, right?

Speaker 6 Some of your clients, for whatever reason, one of the things they need is going to have to go to the ENS market. It builds up.
Over time, you got to go to the dentist to get the plaque off.

Speaker 6 You don't really like, no one likes going to the dentist, but you still have to do it because you just want to keep your teeth.

Speaker 6 You want to keep eating, basically, you want to keep servicing your clients. And so, completely agree with you that this is not something agents want to do.
And

Speaker 6 the point being, is we realized in trying to solve this that the binding authority segment of the market, even if there weren't APIs already deployed, the nice thing about the binding authority area, where you're outsourcing underwriting to an intermediary, right?

Speaker 6 You have actually built the algorithms for at least the underwriting piece of it.

Speaker 6 Yes, they're in a 350-page PDF called Underwriting Guidelines, but those are algorithms and algorithms you can put in computers. Maybe 25% of them are referrals, right?

Speaker 6 Okay, but that leaves 75% to either immediately decline or immediately say, we will quote this. Then you just need the pricing.
The pricing, that is, is a much shorter put.

Speaker 6 for a lot of these carriers to get pricing in an API, basically, particularly for a specific product. And easier said than done.
Like I know how complicated these things are. But the

Speaker 6 thing we were able to leverage is that we didn't actually have to convince them to automate underwriting because they had incidentally already done it by writing these binding authority guidelines.

Speaker 6 They wouldn't tell you they automated it. They'd be like, oh, we rely on the MGA's underwriting expertise.
Well, that's true if it's like an MGA that does massive parking garages or financial lines.

Speaker 6 But for artisan contractors, it's just rules-based, right? And so we just take the PDF,

Speaker 6 turn it into software, and then give the agent an interface to run through those rules in an efficient manner. Like dynamic forms only ask what we need to run the logic tree.
And that

Speaker 6 gave us, and again, we're not the only people that do this.

Speaker 6 you know, RT Connector, Amwins, they've all automated sort of some of their binding operations and some of their products too.

Speaker 6 So nothing, you know, that we've only discovered here, but that did give us a leg up in that you don't actually need the full, fully automated API the way you might think of as like, okay, a Hartford bop,

Speaker 6 I need to quote it, I need to bind it, I need to issue it, and I need to do servicing and endorsing and all that.

Speaker 6 You can, because of the way the binding authority contracts and structure works, like we can kind of cobble together software plus services.

Speaker 6 And, you know, we have both of those capabilities to give a fully digital experience to the end user, which is typically a CSR at an independent agency.

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Speaker 10 Yeah. So, so

Speaker 10 I, you know, this to me, these are the type of

Speaker 10 leaps that I I feel like are underestimated in our industry. I spend a lot of time, we're a fully digital agency.

Speaker 10 I have employees

Speaker 10 in other countries and

Speaker 10 other states that seem like other countries.

Speaker 10 And depending on

Speaker 10 how difficult it is to get a tax ID in that state,

Speaker 10 so it's like, you know,

Speaker 6 it.

Speaker 10 To me, I'm constantly thinking about

Speaker 10 every minute that my people, that is unnecessary for my people to take right like to i want to make the the things that are unnecessarily that take unnecessary amounts of time to be reduced to zero as much as possible aspirationally because that'll never happen but but if we're always thinking about that then you know i've i've had conversations because um

Speaker 9 you know

Speaker 10 you know i've i've looked at Amwin's access RT connector we do we do do some stuff there because you guys have different appetites And

Speaker 10 then we use you guys. So really, really, we don't really use Amlins, but that's nothing against them.
We just don't.

Speaker 10 I kind of ping pong between you guys and an RT connector based on who has the appetite for the thing. And

Speaker 10 what I've seen is we now can write ENS business as fast as we can write a Main Street Bop.

Speaker 10 And to me,

Speaker 10 when I get a contractor with a loss or that also does excavation or a carpenter that also gets on roofs, it used to be like, oh, God, no, no, throw it on the floor.

Speaker 6 We don't want that.

Speaker 10 You know, we're not going to waste our time with that. And now I'm like, are you freaking kidding me? Throw it in PathPoint.

Speaker 10 We'll have a, we'll have a, now, granted, is it going to be as, you know, the ENS rate because they're getting on roofs versus standard contractor? They're going to pay more than their buddy.

Speaker 10 who also owns a pickup truck and drives around town because they get on roofs.

Speaker 10 But they're going to have insurance and it's only going to take us five minutes, just like it would take us five minutes to quote that that standard carpenter and those kind of leaps in time where my counterpart down the street is is that's that same account has taken them two hours before they put together accord forms and supplementals and all this crap and i've just gone into your platform quoted it gotten a rate and figured out yeah maybe do i still have to eventually do an accord something you know maybe maybe still eventually have to fill out a supplemental but i now have a rate that guy has said I accept it.

Speaker 10 And we're moving on to the next stages before my counterpart has even considered putting the quote in. And that to me is such a huge win for independent agents.
And

Speaker 10 that, you know, I feel like it's lost on a lot of people. They're just set up with their, with whoever their ENS person is, whoever their wholesalers.

Speaker 10 I like my underwriter. I'm like.
Your underwriter could be the,

Speaker 10 you know, the best person in the history of the world. They could send you tickets.
Well, if my underwriters sent me tickets to Bill's games, I probably would do more business with them.

Speaker 6 But

Speaker 10 my point being, like,

Speaker 10 you can't get back that time.

Speaker 10 If it takes three hours to put a submission together versus 20 minutes to fill out a form and answer a couple of questions and maybe one follow-up email and you got a quote, like that to me, you can't get that time back.

Speaker 10 And that is the most valuable piece of this is, is how much time are you getting back into your day? Because now instead of doing one quote, you're able to do four quotes.

Speaker 10 And that just amplifies your business at a level that I think people aren't really considering today.

Speaker 6 And

Speaker 6 that's really cool to hear. And because like if you're positioning yourself, you're outselling or just meeting people and you're like, I am an expert in small business commercial.

Speaker 6 The painter that also goes out on the roof or the carpenter also goes there,

Speaker 6 they don't know that like they need to go to a specialist, right? They're just like, oh,

Speaker 6 I run a small business. I just started it a year ago or I'm just starting it right now.
And they're going to come to you and you, you're going to be like, ah, crap.

Speaker 6 Like, and now, you know, it should all, it ought to be as easy as the other stuff, certainly, particularly for these, for these smaller accounts. I'm curious, like

Speaker 6 contractors is our largest segment.

Speaker 6 uh with with sort of lesser's risk as as the second right now pretty 1a 1b um i'm curious like from your perspective, like the carpenter on the roof, that's like a canonical example.

Speaker 6 Like we talk about that internally too, the handman that does a little bit of other stuff, the

Speaker 6 gardener that does snow plowing in the winter, like, right? Like all the classics, like what other stuff

Speaker 6 gets to the cutting room floor that you wish didn't?

Speaker 10 Basically, people that dig, tree work.

Speaker 10 You know, it's really heights and digging are the big ones.

Speaker 10 And also multi, multi-discipline, you know uh so i do plumbing and i do electrical well you're gonna get you're gonna get bumped out of a lot of standard markets for doing both now if you're a big shop you're a 10 person shop and you do both and you're like i have specialists well you know that might be but a special like a smaller shop doing multiple things that can get bumped out um any you know people who work on vehicles you know uh vehicle stuff um

Speaker 6 you know the multiple the multiple classifications thing took us a while.

Speaker 6 I think we're still working on adding,

Speaker 6 you know, like we think pretty granularly about our appetite and like making sure that we are

Speaker 6 not just adding class codes where we're just adding some raw number of class codes that we quote, but we're adding class codes that we know are table stakes plus the ones that are inherently going to lead to it going to the ENS because those correlate with each other, right?

Speaker 6 Exactly what you're saying. They get used together on the same quote.

Speaker 6 And so that took us a while to really figure out both at the UI level, like how do we make it easy to do multiple classification, but also at the integration with the carrier product level, because that's to your point.

Speaker 6 They're either trying to package like property and GL and some feature of the property and the GL is sending it to ENS, or they're trying to do the GL and some feature of the operations, some class code is sending it to the ENS market.

Speaker 6 And so you have to really solve for those things, both at a what appetite do you offer and also how do you make it easy to do it, which is not easy.

Speaker 10 I just had a really good one

Speaker 10 that was janitorial services, where they had a proprietary chemical mix to clean gym floors.

Speaker 10 So they had a proprietary chemical mix that they had created that allowed them to clean a gym floor to get that nice, crisp, grippy feel that you want if you're playing on a gym, but didn't erode the layer of and

Speaker 8 whatever, the

Speaker 10 epoxy or whatever that you put down on the top of the floor. It didn't erode that, but it got it clean, right? So they had figured out what this chemical, okay.

Speaker 10 So the issue was that one, that they're mixing, they have their own chemical mix. That was a big, you know, it's kind of a no-no immediately.
But the second issue was they have to purchase

Speaker 10 this chemical in bulk. So they can't just like get a little bit of it.

Speaker 10 They have to purchase basically $30,000 to $50,000 worth of the chemical at a time, store it, and then over time, you you know, they may only do three or four orders a year, but they would have to then mix it out of that.

Speaker 10 And they had this little dilution process they did. And I mean, basically, everything I just said, a standard underwriter is like their hair is starting to fall out.

Speaker 10 So that's a no-doubter risk that, you know, you, you, that, uh, that's not going to be kicked out.

Speaker 10 And I think what's interesting is, and, and, you know, one of the things that we always have to, and I'm sure you've heard this from a lot of your advisors and people that you've interviewed, is while, and this again is an interesting part about the insurance industry.

Speaker 10 And one of the things that I think makes it unique is while, you know, we all, why I firmly believe that we have to be leaning into as hard as we can, making the process easier and less questions and all this, at the same time, we are, we are literally managing the future of these businesses.

Speaker 10 Like if we make a mistake because something is, because we wanted something to be easy and we skip a step, we could really hose people up. So you were talking about the multi, um,

Speaker 10 uh multi-class code, right? So I had a, another guy come in and he um

Speaker 10 did uh uh sports things. Like he would set up like um like backyard sports.

Speaker 10 He'd build like a little basketball court in a backyard or like a tennis court in your backyard. Like, yeah, he did like.

Speaker 10 like any kind of like sports feature in a park or something. That's what he did.
And he put up jungle gyms or whatever. And like that's, that's one, essentially one class code.

Speaker 6 Um, but he also

Speaker 10 rented some of that equipment, like portable hoops, like other things that could be portable. He would rent them to people who wanted to have like a basketball hoop and an event.

Speaker 10 He would rent them the hoop.

Speaker 9 Well,

Speaker 10 what are we going to, it's the same company. You can't, you're not necessarily that kicks you out of all the standard markets because now you're renting stuff.

Speaker 10 And, you know, you look at that and you say to yourself, like,

Speaker 10 okay, he didn't have, and this is how I got the account, was he didn't have the rental piece on his policy.

Speaker 10 What the previous agent had said was, oh, if the renting is incidental, then it should be covered.

Speaker 6 Just if

Speaker 10 right there,

Speaker 10 now we're in trouble to begin with, if it's incidental. So who's determining whether it's incidental or not? And what does that mean? And should be covered is like.

Speaker 10 You know, you should have like every warning sign off this because this is the guy telling me.

Speaker 6 So I say, well,

Speaker 10 I don't know, man. I'll be honest with you.
If I, if, if someone gets seriously injured on a hoop that you rented somebody and I see on my policy that you don't have rental coverage,

Speaker 10 I'm not going to pay that. Why would I pay that? That's crazy.

Speaker 6 And he's like, doesn't sound too incidental. Yeah, he goes.

Speaker 10 His exact response was, oh, shit, man, I'm in trouble.

Speaker 6 Well, I said, ah, you know, not really.

Speaker 10 You know, and then whatever. So, but it's like those kind of little things are to me what make

Speaker 10 um ENS interesting.

Speaker 10 And if you can make it so it doesn't suck, the interesting part and the not sucking part come together. And I think that's where the magic happens.

Speaker 6 Yeah. Yeah.
The

Speaker 6 one carrier we started working with very early on, very, very early on before we knew we even had it incorporated.

Speaker 6 was we were talking to them about ENS and like the types of risks that go to ENS. and you know at that point

Speaker 6 you know you google ens and it's like marine and mud maps and shared and layered business and lloyds of london and so you know it's like residual aircraft insurance and all that type of stuff and and this carrier is like forget the aircrafts like it's about abattoirs and of course they use the sophisticated word for slaughterhouse and they're just like it's just about the small businesses out there that have something weird about them and that's who needs this type of product and if you can figure that out, like you'll make a lot of people pretty happy, I think.

Speaker 6 We don't have appetite for abattoirs yet. So I'm still trying to figure that out.
Yeah.

Speaker 10 You know, it's,

Speaker 10 it is, ENS is such a, is such a rabbit hole. And, you know, I'd say when I started my career, I was scared of it like anybody else, right? The policies look different.

Speaker 10 You got premium financing involved, which is like why, you know, that's different than how you're kind of learning. So everything about it is different and a little, a little just weird, right?

Speaker 10 You're, you know,

Speaker 10 it makes sense. You, you have them sign the Harvard quote and you take their credit card and you stick it in Harvard's portal and boom, they're all set.
They're good, right?

Speaker 9 That's easy.

Speaker 10 And, but then you get this whole other side of it and it's a little nervous. But once you start to dig into it and really get a feel for what it is and what it can be, again,

Speaker 10 I,

Speaker 10 you know, I would not have wanted it to be part of Rogue

Speaker 10 if I hadn't started to see what was possible. And

Speaker 10 with some of the stuff that you guys are doing,

Speaker 10 I look at an ENS policy today the way I look at a mainstream policy. I'm just like,

Speaker 10 what's the difference? If I can quote it through you guys, or I can quote it through Tarmica, what's the difference?

Speaker 10 I mean, seriously, what you know, I mean, to me, what is the actual difference?

Speaker 10 Like, maybe we got to notate a few more things, maybe we have to, you know, um, think a little bit about premium finance, but you know, I don't know.

Speaker 10 Uh, we use ascend, which is making finance so easy. Um,

Speaker 6 And yeah,

Speaker 6 the uh, that's great to hear. I, I, uh, I've met Andrew and Praveen, and they it seems like they're really onto something with ascend.

Speaker 10 So you like it, and they've been awesome to us.

Speaker 10 You know, I don't know if we're, I know we're way early and we're probably one of their smaller agents, although we do, I mean, we do a decent amount of ENS for our size.

Speaker 10 Um, you know, I've been trying to give them a lot of feedback, and they've been awesome about taking that and helping us. And

Speaker 10 I do think it does feel to me like they're on the right path with payments. I mean, I think, you know, I've been saying this for a few years now.

Speaker 10 There is such an enormous opportunity in payments in general.

Speaker 6 Do you

Speaker 6 prefer that the carrier or the whole, like, do you like direct bill as an agent or do you want to

Speaker 6 offer sort of invoices?

Speaker 10 My ultimate goal is to be 100% agency bill.

Speaker 10 Now, today, that would be a nightmare if you had to run your agency bill primarily through agency management system, because most agency management systems are terrible.

Speaker 10 That being said,

Speaker 10 I think there is an opportunity.

Speaker 10 And whether Ascend is the one that capitalizes on this opportunity or someone else, I think they're on the right path, you know, but I don't necessarily have a dog in the fight other than I like them.

Speaker 10 You know,

Speaker 10 there is an opportunity to create a portal where, and any VCs that are listening to this that want to fund this idea, I'm 100% open to working with you.

Speaker 10 You know, that this,

Speaker 10 I don't think a lot of VCs listen to our show, but,

Speaker 10 you know, I think there is an opportunity to create a single point payment structure

Speaker 10 portal, right? So, so that you as an agency can control the entire experience, whether it's, you know, whether you're sending it to

Speaker 10 Hartford Travelers Guard employers or it's going to ENS wholesaler, you know, or ENS broker, wholesaler, bonding company.

Speaker 10 You know, what, what I looked at our, so we use a tool called Agency Zoom, and they recently launched this

Speaker 10 part of their tool called the service center. And part of their service center is it allows you to track both time, touches, whatever for certain tasks.

Speaker 10 And when I look at the amount of time that billing takes, it makes me want to gag.

Speaker 10 Like it's, it's a choke point in our agency because Chubb doesn't, you know, will take ACH and credit card and they have five payment options, but they, they mail you like physical mail you cancellations and you're, you're like, what?

Speaker 10 And then Hartford won't take credit card for first year payments. They'll only take it if you pay in full, which is bananas.

Speaker 10 I mean, I don't even understand the thought process behind that, but they won't. So how do you figure that out?

Speaker 10 So what do you do if you've forgotten that and taken the credit card from the person, but they want to make payments? Now you need to go back and get their check.

Speaker 10 I mean, dude, this is like all day long. You need to have a PhD and understanding all the different payment process for all these carriers.

Speaker 10 And they all think that their way of doing payments is right.

Speaker 6 So

Speaker 10 my, so my thought is, and where I ultimately want to get to, is, is

Speaker 10 we take all payments, all payments through one portal, right? Payments come in.

Speaker 10 We give people the option to either finance those payments or pay in full or finance them quarterly, whatever, you know, like two or three payment options, but financed payments if it's not pay in full.

Speaker 10 And then we just agency bill pay every carrier in full on every policy. Now, here's what that solves.
It solves one, I'm only sending my customers to one place all the time.

Speaker 10 Two, I now have the ability to know and control

Speaker 10 messaging. Hey, you're 30 days out from your payment.
Hey, you're, you know, if they're quarterly, hey, you're, you're seven days out from your payment, just let you know you're going to get a

Speaker 10 notice here to make your payment or your recurring payment or whatever, right? And then if they don't pay, hey, your customer is three days late on their payment, you may want to ping them.

Speaker 10 Because what happens now is I don't get a non-payment email for seven, sometimes a month later. I mean, I got carriers that still physically mail me, cancel for non-pays in the mail.

Speaker 10 I mean, that is just stupid.

Speaker 6 And

Speaker 10 so this all being the case, you now control that place. I don't know, I'm solving a problem that has nothing to do with your business.
I'm just talking this very hashtag.

Speaker 6 No, it actually,

Speaker 6 it actually has quite a lot to do with it. And not a lot.
I mean, it's, we just see this. Like, so we agency bill everything,

Speaker 6 but but with our interface is just email to the agents, right? Because we, we have a, we have a payments portal, ACH,

Speaker 6 you can mail us a check. We prefer you didn't.
People still do.

Speaker 6 But we have to send invoices to all our agents. And then sometimes they forward those to the clients and the clients just click the link and pay it.

Speaker 6 Sometimes they have to go to another team within their agency. And so it's just not, it's all this spaghetti, right?

Speaker 6 And there's no structured way for us to make it, like we can automate our follow-ups on did you pay or did you not, right?

Speaker 6 But there's no way for us to actually get visibility into making the process sort of easier.

Speaker 6 And like that, you ask most agencies about this, like, like, oh, integrate with their agency management system. Well,

Speaker 6 like, first of all, like, it's going to take me 18 months to convince Verta4 to do anything with me. So, so, like, see you in 2023, unfortunately.
And same for applied.

Speaker 6 And, and so, like, it's kind of frustrating to, I'm kind of with you.

Speaker 6 Like, there's, there's something missing in this part of the back office that, that probably could be a lot easier if it was connected, the value chain was connected through software, maybe.

Speaker 6 It might be too, like, I might be romanticizing it, but no, you definitely can get the pain.

Speaker 10 here's here's how and here's the beauty of it if i'm

Speaker 10 if i'm agency billing everything and paying the

Speaker 10 um

Speaker 10 uh paying all my carriers net

Speaker 10 i have day one

Speaker 10 100 commission day one in my agency all the time so now you know time value of money i'm not getting a year from now you know 33 from some stupid policy because they made their payment that month i've gotten the full commission up front day one.

Speaker 10 The carrier is paid net in full, so they're happy, right? They're getting their money up front. And the customer doesn't know the difference.
They're paying a small finance charge to make payments.

Speaker 10 Who loses?

Speaker 10 And we have all the benefit of knowing, I don't have to know how Chubb wants to be paid and know how to navigate their system versus Liberty versus employers versus insert all these different carriers and how they want to be paid.

Speaker 10 It's all done in one platform. That to me is a game-changing concept.

Speaker 10 And if I wasn't running an agency right now and was broke because of that idea, I would, this is what I would be doing because I think this is, this is like the next problem that has to be solved in our industry is this problem.

Speaker 10 It's just, it is, you know, you, right now, you can now get multiple commercial lines quotes, multiple personal lines quotes. Propeller bonds has completely changed the game for how to do bonding.

Speaker 10 You know, you guys have changed the game for for how to get a quote for ENS. Yeah, it still takes us an ungodly amount of time to make payments.
It just

Speaker 10 doesn't make any sense. I can buy crypto from 17 different apps on my phone with a button click, but it takes me 40 minutes to figure out how to pay my insurance premium.

Speaker 6 It's like insane. Yeah,

Speaker 6 it's

Speaker 6 so true. And the

Speaker 6 so again, like, I think this is structural to wholesale, like our the carriers we work with don't have

Speaker 6 they don't have direct payment relationships with clients or agents, right?

Speaker 6 Or they have obviously with their wholesale agents, but so that's like kind of that opportunity for us, like why we think about this, because structurally the carriers, ENS carriers like don't want to deal with this, right?

Speaker 6 They're like, they want to run, we want to want a leaner carrier specialty focus on specific strategies and specialty, and we'll rely on the wholesaler to deal with the process.

Speaker 6 And that's sort of how it's been traditionally and so there's a lot of opportunity for us to actually run kind of in this area and if you look at our

Speaker 6 our

Speaker 6 engineering team is approaching 20 people right now and i would guess in 2022

Speaker 6 over 50

Speaker 6 of their time will be spent on problems around like process and back office and i don't use back office in a pejorative way like this is like

Speaker 6 um like we still like like, there's so many subjectivities to bind or to issue an ENS, right? Inspections would be like a simple example, but affidavits, you know, other things.

Speaker 6 And those are all, those vary by state. So like automating those documents is a quite an arduous process to like go through.

Speaker 6 And just riffing on what you're saying about payments is I suspect we'll probably be doing a lot of thinking on the

Speaker 6 whether you call

Speaker 6 invoicing payments, collections, whatever, because there's this gap where you can sort of just reduce friction by deploying some software into it.

Speaker 6 And like, you know, maybe you pay when you bind on PathPoint or something. I'm not sure how it'll manifest, but we kind of plan.

Speaker 6 We think that as much of our value prop is about access, like every wholesaler can offer access. We have to make it easier across the whole life cycle too, to actually win the business.

Speaker 6 Like we're just, we're just an upstart, right? We, we can't blanket the market with the submission. We just don't have that capability.
So it has to be easier for for us to continue to differentiate.

Speaker 10 Well, dude, I want to be respectful of your time. This has been tremendous.
I appreciate you spending this time with us, talking about what you're up to.

Speaker 10 I hope everyone listening will spend, you know, take two seconds, go to, it's pathpoint.com. You just, I just Google Pathpoint

Speaker 10 and you'll see it come up.

Speaker 10 you know, super easy to get connected, get signed in, get appointed. And

Speaker 10 man, you know, for contractors, for LROs,

Speaker 10 you're going to get quotes or at least know whether you have the opportunity to get a quote in seconds or, you know, minutes, if not seconds. And,

Speaker 10 you know, it's really changing the game for us. I mean, we've rebuilt some workflows in our agency that have really helped us save time and effort.

Speaker 10 And it's opening up a whole market to us because of that time that, you know, that we kind of avoided, that we all avoided. You know, we all kind of avoided the ENS market on purpose.

Speaker 10 So I'm glad you guys are out there. I'm glad you're pushing the envelope.
I'm glad we had a chance to connect and just appreciate it.

Speaker 6 Yeah, I appreciated the conversation.

Speaker 6 And please reach out whenever if you have feedback or stuff we can help you with.

Speaker 10 Yeah. Can people get at you on the LinkedIn or what's your preferred

Speaker 6 LinkedIn works? Or my email is my first initial and my last name at pathpoint.com. So a bargman at pathpoint.com.

Speaker 10 Awesome, man. Appreciate it.

Speaker 6 Cool. Thanks so much.

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Speaker 11 Hey, it's Parker Posey. How did I get here? I love improvisation when it comes to acting, but when it comes to a real-life plan, I stick to a script.

Speaker 8 Cue the music.

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