RHS 120 - David McFarland on Why Speed, Simplicity & Service Win Small Business Insurance

in a crude laboratory in the basement of his home welcome back to the show thank you for being here i love you for being here we have an absolutely tremendous guest today it is david mcfarland the founder and ceo of Coterie Insurance. Now, you've heard Coterie Insurance.
You've heard about them from, I'm sure, many of the things they're doing. And maybe you see some of their LinkedIn posts and you probably heard me read some ads for them and stuff, talk very highly about them.
We don't talk about Coterie a ton in this episode. We do a little.
But more what I wanted to learn about was David's experience essentially founding an insurance carrier and why he did and what he has to think about. And I just think this is, I think it's a wonderful episode.
I had so much fun. I've known David in the past before he started Coterie.
I think just this is a smart dude doing really smart things. And remember when I told you that we had Stephen Lakers from Branch on, Like I just said in the intro, I think I just said, this is a dude that just freaking gets it.
This is an insurance guy. Branch is doing amazing things.
You can go back and listen to that episode. I have no idea what number it is.
David is cut from the same exact mold. This is an insurance guy through and through, understands our business, who's incredibly smart, hardworking, and is changing the game.
And those are all things that we can take and dissect and kind of pass through our own filters and apply in our own business. And it's why I love having guests like David.
But before we get to David, I just want to say thank you for listening. So at the beginning, subscribe if you're not subscribed.
That helps push our numbers up in my ego. Love that.
And then I get to rub it in Carruthers' face and Cass' face and Bradley and Scott's face when my numbers are bigger because, you know, what don't we love more than smushing our success in our friends' faces? I'm joking. Only a little bit.
But our sponsor today, Tarmika. T-A-R-M-I-K-A.
Don't call me Tarmika Tarmika. T-A-R-M-I-K-A.
Don't call me Tarmica, Tarmica, T-A-R-M-I-K-A. Tarmica is making small commercial profitable.
Coterie is on Tarmica. So if you have a coterie appointment, you can quote them as part of all the other carriers that you have.
And if you're an Indium agent, you also get Indium carriers, Indium, goindium.com, the best network in the country, in the business, in the insurance. Just GoIndium.com, GoIndium.com.
Not a sponsor, just a huge fan. Been a member of the network since day one.
But Tarmica is changing the way we do small commercial. Changing the way we do small commercial.
It makes it possible to rewrite small commercial, to work with small commercial, to spend an extra few minutes with them on the phone solving their problem because you know you're not going to have to go into 17 systems to try to get quotes. You're just going to go into one and you're going to find the best quote and you're going to put it with the carrier that you know is the right fit and off you go.
It's taking two hour, two hour long quoting processes and bring it down to 20 minutes. So changing the game for small commercial, go to tarmika.com.
And if I haven't said it enough, Premier Strategy Box, the all powerful, all seeing, all knowing, all awesome Mick Hunt from Premier Strategy Box. If you need to improve your processes, if you need someone to help you get over that hump, to break that plateau, to push you through that ceiling that you just can't seem to get through, Mick Hunt and his team at Premier Strategy Box is the team to do it.
Just Google Premier Strategy Box or Mick Hunt. You're going to find Premier Strategy Box.
Reach out to them. I am batting a thousand on referrals to Premier Strategy Box, batting a thousand.
Every single person that I've personally referred over has worked with Mick Hunt, every single one, because his team, what they're doing, their method is that good. All right, guys, let's get on to David McFarlane.
Hey, Ryan. What's up, man? How's it going? I'm going good, bud.
Good, good. How are you doing? I'm doing well.
It's been a pretty good week, so can't complain too much. Yeah, that's a good thing.
I just talked to your buddy, Ray, last week. And we had a good kind of high- level discussion on a lot of things and um i'm looking forward to kind of maybe going a little deeper and maybe a little nerdier with you so this will be fun all right i'm in cool cool i um you know i think i think one of the things that i think a lot of people who are in insurance know the term but don't necessarily have any clue what they actually do you were uh in a previous life the chief actuary at clear cover what the heck is an actuary what the heck do they do because you know I mean everyone you hear insurance people spout off about actuaries all the time but'm like, you don't even know what those people are doing.
You've never even met one, most likely. So talk to me a little bit about like the super hyper nerdy side of our business and just, you know, kind of get into, I want to start there.
Yeah, happy to. So I actually had no idea what an actuary was when I set out to become one.

I was a math major, but even that was a little bit odd.

So I was a history major, and then I switched to math in my junior year.

And so I just had to figure out how to get done as soon as possible.

And there were two tracks.

And I just said, put me on the one that makes me graduate soonest. And that was the actuarial track.
And again, didn't know what that word meant. And then one of the girls who was in my class, she asked me, she goes, are you studying for the actuarial exams? I was like, of course I am.
And that's how I became an actuary. So I, I, I'm not kidding at all.
And I ended up knocking out the first couple of actuarial exams. I got a job at the National Council on Compensation Insurance.
I guess that's really where I first kind of realized what an actuary was because I was doing the job. And what we do is we like really succinctly, we quantify risk.
So risk is this abstract idea, right? Like that we generally don't want. Sometimes we do want it, but it's something that people are willing to trade away in exchange for something else.
So like insurance is really the market for selling risk, right? Like I don't want this risk. I selectively say, I will trade this risk for something else.
Usually it's in the form of like you give someone money to take your risk, right? You give the insurance company money to take that risk. But the people who find out how much money that should be, that's what the actuaries do.
And now that's generally like a rate-making actuary, then there's reserving actuaries. But even reserving actuaries are using mathematical concepts and models to figure out how things are going to develop over time and understand the cash flow.
So that's generally what actuaries are doing. Is it fun? If you like solving problems with math, it's very fun.
So I really liked it. And in the CCI, one of the things that I did was I did legislative pricing and analysis, which just sounds totally boring.
But I geeked out on it because we had tons of data. And I would come into my cube, right? And I would have an email that basically had hundreds of pages of legislation saying, this is what we want to do to the Louisiana workers' comp system, figure out how this is going to impact things.
You literally have to read through, figure out what's changing, and then you pull all of this data and you just have a real life math problem of how are people in this state and the employers going to be impacted by this change in workers' comp? We're going from employee choice to employer choice. So we're going to increase our compensation rate from 55% to 66 and two thirds, like all these things.
It's a really neat job. Yeah, that's interesting.
You know, it's funny you're talking about being a math major. I was also a math major.
I also became a math major by walking into my counselor's office or whatever in college and was like, what allows me to graduate on time my I have a feeling my reasons for becoming a math major last minute were different than yours I was I was a uh a failed engineer my experiment into engineering failed miserably and I literally walked in and said hey uh I don't want to have to come back here for another year nor can I I afford that. So where, how do I course correct and graduate on time?

And they're like, you have to take like double courses. And, but you know, they like basically etched out this path and it was math.
And that was it. That was the only thing I could do.
And that's how I became a math major. So you were taken, you know, like 20 plus hours a semester trying to cram it all in.
Yes. Yeah.
Also, also had a female who was, um, you know, that I didn't mind hanging out with, who was taking math class at the same time that I was like, I can do this. Like, I'm going to take, you know, Hey, what's on your syllabus this year or whatever.
And, you know, and then that decision, like course corrects your life and, and here's how you're making it. You know what I mean? That's right.
Desperation and using the wrong brain and all that kind of stuff. It's amazing how we're motivated.
It's funny how – I shouldn't say funny. Our industry is so compartmentalized in many ways.
You have the sales arm gets so much attention, marketing, you have the manufacturing piece with carriers. And even inside of that, you have underwriting, you have the actuarial piece, you have the claims piece.
And so many aspects of our business just simply do not interact, do not understand each other, oftentimes have very little respect for each other, certainly don't always have the best working relationship with each other. You know, having now jumped from being in the actuarial side, one of those kind of compartments, and moving now into the role of founder and CEO of Coterie, having a broader view.
Now you kind of see all these pieces.

Do you find, you know, how do you navigate some of that? How do you get these departments talking to each other? What, what are maybe some of the ways that you've operated inside your business to, to, I don't know, solve what seems to be a fairly common problem inside of carriers? one thing that we do and and it's not unique to Cotery, but I'd say it's more on the software side, is we create cross-divisional teams to accomplish certain missions. So if we have a particular objective or key result, we will put together a group of people who are qualified to tackle this thing.
And that is their job. And they have to work together.
So it's no longer just an actuary in the back room saying, this is what we should charge, right? Like actuaries, underwriters, back-end engineers, front-end engineers, product managers are working together to bring something to fruition. And that helps in a number of ways.
One, it builds camaraderie across the team. Two, it makes an autonomous group of people who have the full responsibility of carrying this out.
So they have the decision-making authority and they have all the resources they need right there. They don't have to like trek into the other silos and open the door and hit the magic button so that people will answer them.
Like they can actually work with people in a group that are dedicated to bringing this mission to fruition. And I think what happens is in the other world, right, the legacy insurance world is you have all these silos.
People don't want to encroach on anyone else's space. And so you end up just having more and more separation over time to where you actually, when you want to do something new that requires actuarial and underwriting and engineering to get together, there is no relationship of trust or anything there to push something forward.
And it's just this kind of general agreement to work together and not harm each other, rather than like people getting together and having close ties and relationships. Yeah.
I mean, sometimes people are literally physically separated by buildings or even cities. You know what I mean? You look at an organization like Travelers and not a knock on them, but they will have entire operations in separate cities from each other for, you know, just, you know, acquisitions and over time.
And it's just the way that it ends up happening. And literally you're just, you're hundreds of miles away, thousands of miles in some cases away from someone who may be interacting with on a day-to-day basis.
And I think in a distributed workforce, that is going to be more and more common. But it does add, especially if you haven't built the culture that you've described, it does add to that kind of siloed, compartmentalized nature.
The other side of it is, and I'm interested in how, you know, just this isn't a question that you will necessarily have an answer to, but I'm interested in what your mind goes but um do you think that that territorial more uh compartmentalized nature that traditional insurance tend to find themselves in i don't want to take a shot at them i don't mean it to be this is all businesses i'm right like i've been here for 10 years i'm taking care of my family in this job i need to make sure sure that I keep this job. I need to protect my fiefdom.
I mean, it's kind of a self-preservation thing too. How do you, as you grow this company, as you guys go from being startup to insure tech, whatever that means, to being a major consistent player in the spaces, as I'm sure your goal is, how do you fight against what feels like a very natural tendency, you know, that, that, that stag, you know, stagnation of an, of a, of an enterprise? What, what do you, how do you think you'll approach that? I mean, one thing is, is hiring, right? And the second thing is firing, right? And the third

thing is fostering the culture that you need. And part of that is hiring and firing.
So on the hiring side, you've got to consistently hire bar raisers, right? People who are going to be culture and value adds to the company, not people who you feel pretty comfortable that they're not going to threaten you. Like hire people who you feel are going to threaten you, right? Like that's a good thing.
And then we're big fans of the whole first or negative, second order, positive thing at Coterie. In other words, like there are some things that are first order, positive, second negative, like which like eating, eating cake, right? Like tastes delicious, but may not be the best thing for you long term if you just eat a bunch of cakes and donuts, right? I'm not bashing on cake, but I'm a big donut guy myself.
Yeah. I mean, no judgment or like, you know, heroin, right? Like wouldn't really recommend doing heroin.
May be great. Can't say from experience, but long-term, probably not the best effect.
Yeah. And that's separate from things that are short-term negative, long-term positive, short-term negative things like saving for retirement, right? It stinks having to put money away, but long-term, it's going to be really nice when you're able to reap the benefits of 7% to 10% growth year over year.
And this applies to how we do things at Coterie in general. If there are team members that you're concerned about, people who are either blocking great people from being hired or creating these little siloed fiefdoms so that they aren't going to be appropriately challenged, have that conversation with them immediately, document it.
And if it doesn't get resolved quickly, fire them. That type of culture is not acceptable.
And that's a lot of times like we want to just say, well, they're not royally

screwing up anything, right? Like let them do their job. But those little sideload fiefdoms grow over time and you've got to put an end to them because they just like, you know, this, like we, we, we've seen what they do, right? Like, and you can have lots of talented people in a siloed fiefdom, but it's a siloed fiefdom and you can't get information out of there, right? Like there's no transparency and that lack of communication and lack of cooperation across the entire organization, it corrupts it.
And it also shows the rest of the organization that you permit that. So other people will start doing it too.
And like that, that's, that's unacceptable. So we're, we're big fans of helping to foster the environment by hiring the right people and firing the wrong people and setting, setting good examples along the way.
Yeah. I, this, you know, as, as also someone who has led companies is now building my own.
This is, this is the hardest part, in my opinion, having the vision, piecing the things together, even sales and raising money, which is a pain in the ass, but hiring and knowing how to set those guardrails and goals and then communicating that and then ultimately letting someone go if they don't hit them, this is the game. Because all those plans, all the money, all of it doesn't mean anything if you don't have the bodies behind the scenes to execute the plan.
And, you know, it's the whole game. I feel like this topic gets a lot of lip service and it really is

the whole game and the, and the, the business owners and the founders and the, you know, the, the, the, the managers, the leaders, we'll put that as the broader category who, who I have the most respect for and really admire or aspirationally want to grow into, you know, grow to be in a position that they're in. This is what they spend like 50 plus or more percent of their time on is this not in whiteboarding out world domination, which is fun to tweet about, but it's actually on the people and this process.
And, you know, it, to me, like you can, you couldn't read enough on this. You can't talk to people enough about this topic.
Like this is the game is having the right people. I couldn't agree with you more.
Right. Like that.
That's why like, I mean, Starbucks is a coffee shop, right? Like that is not a unique idea. Like there are many, many coffee shops, but Starbucks is an amazing organization because of execution, right? Because they've been able to, to build group of people and a group of stores, right? And run in a way that that type of scale, it's not because their coffee is exceptional.
There's lots of other really, really good coffee. But to your point, like that execution of bringing people together, bringing a culture together and building it, that type of scale, that's something special.
And it's people, right? People are the most valuable asset of any organization. If you can figure out the people side of things and shoot, you can up a shoe store, coffee shop, doesn't really matter what it is.
It's going to go decently well. Yeah.
So on that topic, how do you find, what is your method? And don't give away any trade secrets here, but what is your method for our space? Our space is unique in that people inherently hear the word insurance and they're like, nope, I'm good. Now that's not to say that maybe as the industry evolves and now FinTech is starting to mashurtech a little bit and there's a there is a lot more talent starting to look at our space but it still feels like the and i and i don't want this to be a knock on anyone who's in our space obviously we're both in it but like there is this lack of just like the most talented people bum rushing hey look at all the opportunity here.
So you do have

to search and work to find people who want to really see what we're trying to do. Additionally,

I find that, and again, a lot of people listening, please don't take this the wrong way. Obviously,

I love all you guys, but many of you are corrupted by the traditional way in which insurance has been

done. And you look at middle market producers.
this is a problem that I have had in general, I got I got very lucky in that the producer I have today are the insurance advisor, he's great. But in interviewing people, I had to deal with a lot of anyone who was currently licensed.
They, they all had this delusion of being this chest-thumping LinkedIn middle market producer who tweeted about their $500,000 account they just wrote. And it's getting them to think about the way we do business, which is digital.
We've met two of our 250 customers. We've met two of them in person., it's a whole different way of doing business and thinking about it.
And I know what you guys don't model as well in some aspects. And just how do you start to sell the vision? How do you start? How do you sell our industry? And how do you get people? And you can answer these in whatever way you want.
But how do you get people to buy into, hey, I know it has always been done this way.

We're doing it slightly different. And I need you to kind of forget everything you learned in the past.
How do you navigate those things? That's a good question. um honestly like transparency and just like genuine passion for what we're doing kind of

shines through and uh at least helps alleviate some of the more logical concerns that they have um like you know when when you see your you know ceo who is you know a fellow in the casualty actuarial side, you're like, is from the insurance world, knows a little bit about it, get, you know, start nerding out about how tech and data can actually change the space and, you know, change it from like a 55% expense ratio to a, you know, 35 or 30% expense ratio side of things, and just buying small commercial in ways that no one else can do, can do, that hopefully gets them a little excited in general. It doesn't answer any of their questions of how we're actually going to do it.
And to your point, they're just loaded with biases about like, well, this needs to happen. This needs to happen.
And like, we run into this every, I don't want to say every day, but a lot where the insurance veterans are like,

but what about this and this and this and this and this like valid concerns. We can figure this out,

right? Like, and you gotta, we are very stuck in our ways of this is how we have always done things.

And you kind of have to like have a little bit of a period, especially with the insurance folks of just like breaking that down and easing them into this idea of like, this is a, this is a new airplane that we're building. Yes.
We're flying it right now. No, it does not have landing gears or seats or a control mechanism, but it's going to be okay.
We're going to, we're going to, we're building it midair. Don't worry.
Exactly. Yeah.
There's parachutes. Well, there's not parachutes, but it's okay.
We brought the parts maybe, hopefully. Yeah, exactly.
And that's, I'll say like that, that's, that's a challenging part to it. And thankfully I think that same message message really resonates with people who aren't from the insurance space, who are creative and very intelligent, passionate, because they're just like, oh yeah, we can totally do this.
And admittedly, like sometimes that creates problems because they'll, they'll build things. And then it's like, oh, that we, you know, you may have missed something there.
But even so, like, this is, this is a very agile world, both agile in terms of the product development, but it also in terms of just like our ability to move quickly. And, you know, we can pretty rapidly fix things with tech, you know, make things right.
So it's, it's less to worry about, but I guess in the, you know, legacy insurance space, you don't have that, right. Any type of change is going to be a year in the making.
So you have to kind of make sure everything gets right. Right.
Yeah, it is. You know, I know some people, sometimes I like, I like to be fair to, cause this is one, I think that the issue always comes down to me when What I'm looking for when I talk to somebody is you have to have a respect for how we got here, but a curiosity as to how we move forward, right? Or whether curiosity is exactly the right word or not.
But that's kind of the idea is like the companies that I've seen get smashed up against the rocks have been the ones that have had a complete lack of respect for how we got here. That like if you can't honestly look at our ecosystem and say insurance isn't actually broken.
Now, ripe for invention, ripe for innovation. There is absolutely all these gaps in the market that can be filled and should be filled.
And that's incredibly exciting. But it's not actually broken.
When a house burns down, someone comes in with a check and goes, here, rebuild your house, as long as you're properly covered. And that to me is just lost so often on pure technologists.
And then, you know, to your side, that other end of that spectrum, the pure traditionalists, they look at the world and just tell you every reason why the things that you or even I are doing just cannot happen, impossible. You know, we're in the middle of raising money.
And, you know, we're operating off of a 25% EBITDA percentage is what our projections are based off of. And some people look at it.
It's just funny. The people that see where we're going, don't even question it.
The people that come from a more traditional side are like, you're going to need to have a hundred person call center and da, da, da, da, da. And there's no way in the human cost of the market.
And I'm just like, and they just can't, you know, and it's just funny how those two perspectives mash up against each other. But when you find someone who operates in between those two things, who kind of has that respect for where we came from, but sees where we're going, man, that those are as many of those individuals as you can stack up inside your organization, I think is that they're, they're as valuable as their weight in gold.
I mean, it's just, it's unbelievable. A hundred percent.
I mean, that's one of the reasons why we, we hire on humility, right? Like we hire on four things, uh, integrity, intelligence, passion, and humility and humility elevates all the other three. And the one sentence way that we describe it is we're smart, passionate people who do the right thing, and we're not going to brag about it.
And when we have these people who are humble, even the technologists, they can take a look at the history of the insurance space, and they're not just going to bash it the whole time. Because the reason why the legacy insurance space is where it is today is one, because it evolved like that.
Workers' comp started in the 1920s. What did you expect? They didn't have anything.
Of course, the people went to insurance agents and brokers and provided them information on salaries, and they would write it down and give it to an insurance company. And then we evolved it with the forms and all that stuff.
But of course, it's not going to be as advanced nowadays because now even with the rapid advances in technology, it's a matter of opportunity cost. How in the world are these giant insurance companies who are making money hand over fist going to invest a ton of money in something that's only going to marginally impact their bottom line.
They're not going to. They're going to focus on especially mid-market and up.
That's where they're making tons of money, just from a large carrier perspective. You're raising money.
Growth equity funds that have $350 million and up under management, funds under management, aren't going to invest in series C companies. They're going to invest in series B, series C.
They're going to write a $50 million check because if they write a $3 million check, it's not going to move their bottom line, even if it's an amazing series C company. It's the same thing.
The Hartford, Travelers, Liberty Mutual, why in the world are they going to invest in this tiny little sliver of the market when they're pulling in over $10 to $15 billion of TAM? Yeah. They're not going to do it.
You know, so we're both, both of our companies are partners with Tarmaca in different ways. and um you know to your this is to your point when you next time everyone who's listening the

next time a commercial lines rep walks into your office, ask them if they've heard of Tarmica. And the answer is 90% of the time is going to be no.
And you know why? Because even though that company, there's like a 90% chance that company is on Tarmica, they just don't care to push that information down to their, to their people that are actually boots on the ground with agents because all the company really cares about is Gallagher on the platform, is Marsh on the platform, is NFT on the platform because that's what's moving the needle. And again, I think we have to, and I do have a point to where I'm going with this part of the conversation, but it's one of the reasons why I'm so bullish on a company like yours, why I've invested in our relationship in terms of being so promotional about it and working with you and kind of we're talking about doing some things at a deeper level as well.
that is because it's almost like this is going to be a terrible example,

but I'm not even going to,

I was going to kind of equate this to like cryptocurrency.

Like if you've already missed on Bitcoin, right? Like thinking about a company to me, the way I think about it as a company, the coterie, I can you're like the ETH or the Cardano. Like I'm going to catch.
Here's a company that cares about it. Like my putting some amount of premium on the books with you on a monthly basis impacts you guys and you will develop towards towards a company like ours.
And not that you don't want the big guys too, but there's just a certain level of company that has moved past caring about a standard agency. It's not that they actually don't care.
It's just you could hit all-time sales numbers with them, and it's not even a blip on their radar. It's just a nice checkbox.
Oh, great. They're doing good.
That's wonderful. And, and it's completely understand.
And it's, it's okay for them to feel that way. I guess that's where I'm trying to get to it.
So recalibrating, um, we have to think about our own agencies and our own businesses and coming back to codering in particular, like, what are you doing different? Like, that's, that's a question I get a lot. Like people will say to me, like, Hanley, you know, just wait, give them three years and they'll blow up and their rates will triple.
And, you know, none of this stuff ever works and insure tech this and insure tech that. And, you know, I just said to them, I said, guys, you know, I know a lot of the people in there and, you know, not that I know all the nitty gritty details, but the people inside that business are doing things differently.

Like I know that that's why I've spent time and really gotten to know you and we're working on

implementing you deeper in our agency. So what is different about Coterie? Like, how do you,

how, how do you respond to that agent who sits there and is like, ah, just give them three years

and it'll all blow up because that's what happens with every insured tech carrier.

What's up, guys?

Sorry to take you away from the episode, but as you know, we do not run ads on this show

and in exchange for that, I need your help.

If you're loving this episode, if you enjoy this podcast, whether you're watching on YouTube

or you're listening on your favorite podcast platform, I would love for you to subscribe, share, comment if you're on YouTube, leave a rating review if you're on Spotify or Apple iTunes, et cetera. This helps the show grow.
It helps me bring more guests in. We have a tremendous lineup of people coming in, men and women who've done incredible things, sharing their stories around peak performance, leadership, growth, sales, the things that are going to help you grow as a person and grow your business.
But they all check out comments, ratings, reviews. They check out all this information before they come on.
So as I reach out to more and more people and want to bring them in and share their stories with you, I need your help. Share the show, subscribe if you're not subscribed.
And I'd love for you to leave a comment about the show because I read all the comments. Or if you're on Apple or Spotify, leave a rating review of this show.
I love you for listening to this show and I hope you enjoy it listening as much as I do creating the show for you. All right, I'm out of here.
Peace. Let's get back to the episode.
Yeah. I mean, I, unfortunately they, they have, uh, some empirical evidence that supports what they say.
Sure. Yeah, for sure.
For sure. Uh, we, what we bring to the table and we really focus on three things, speed, simplicity, and service all and all for the sake of our distribution partners we're 100 distribution partner focused um we don't do any d2c right that's our model is helping our partners run in ways that you know they they couldn't run before right and to your point right like when you know the people who you're talking to say like oh no, no, no, no, you can't run an agency like

that. You know, you're going to be, your call servicing center is going to be massive, all that

kind of stuff. Like we recognize that the way of the future for agents, brokers, you know,

distribution partners in general, it has to be efficient, right? Like, and we make it so that it

is efficient for our distribution partners. And we do this in a number of ways.
Like,

Thank you. it has to be efficient, right? Like, and we make it so that it is efficient for our distribution partners.
And we, we do this in a number of ways, like one integration, like we can integrate in whatever way our distribution partners want to, we can, we can provide a dashboard just like every other insurance company. Our dashboard is, I'd say better than every other insurance company.
But we can also integrate into the systems that our distribution partners are already using to make binding, quoting policies much better. The other component is just the conversion and policy selling process in general.
You've interacted with a lot of different things that take a long time to sell a small commercial policy. And you know how frustrating that can be, right? Like you're not making a lot of margin on small commercial policies relative to your time, right? So we take that from a, you know, hour long process to like a four minute process.
And we're also in the process of utilizing even more data to where you'll be able to bind those policies in no time. And I'm not talking just like a nice quote.
I'm saying you can bind the policy right there without talking to any human. And that's a pretty big component.
That's the speed component. And in addition to all this, like the servicing part, right? Like we're helping our distribution partners service the customer post-bind.
Obviously that helps you a lot, right? You need to be able to run your business in such a way where you're not answering calls and sending out COIs all the time. And all of this just makes it so that our partners can run in expense ratios and really like focus on what they're good at, right? Which is coverage recommendations and building relationships, right? Like getting the business in the door.
we handle the data, the servicing, all the other stuff that's in the background. And we do this because one, we control the insurance product and two, we control the tech product.
And most of the time, like you have other insure techs who either don't control the insurance product, meaning there's API and someone else. And that's a fine business model.
That's a great business model. But what we want to deliver is a product, both a tech product and insurance product, that's going to enable our insurance partners, or sorry, our distribution partners to run in ways that they just couldn't do before.
And the other side of it is the tech product. Like the reason why we can integrate and we can move fast on Rady and have API calls that are done in less than a second is because we built the tech product, right? We're not relying on Duck Creek or Guidewire, which are fantastic for other players who are doing something more traditional, but it didn't meet our standards in terms of how we needed to operate.
Fantastic is a stretch. It's fantastic.
Maybe a little stretch. But we, those things really help our partners operate in the way that they need to.
Cause I mean, small commercial isn't broken but it doesn't make a lot of sense for the distribution partner and how things are operating today. Certainly in the way that it's traditionally distributed.
Exactly. Exactly.
And we can help the Tarmicas, the Breezes, the rogue risks, right? The people who are servicing brokers and agents, the people who are brokers and agents, you know, everyone in the mix run in ways that they just couldn't run before. Yeah.
I just, you know, I give everyone just a quick use case. So we, one of the things that we've started doing because we get such a, and I've talked a little bit about this on the show before, our biggest challenge at Rogue is the breadth of types of risks that we get, right? So we've defined our niche not as a specific vertical, but as a way in which we acquire business, which is through inbound traffic and referral partners.
And, you know, most referral partners don't just streamline you. It's not like doing a mortgage.
It's not like the home mortgage thing. Everyone is a homeowner as possible.
That's sweet and easy. But with this, it's one day it's a contractor, one day it's a bop, one day it's a crypto miner, and you have to be able to accommodate that.
So what we started doing is when we get mainline stuff, especially when we get someone who we can tell is more digitally focused and we have some ways that we're starting to do that, we will just send over like a shortened version of our Coterie link and people will just go through and find the policy themselves. We did that wrong a couple of times at first and we had to, like, we didn't tag it as us.
So, you know, but Ray is the man. He helped us get through that.
But now, but what that does is it says, this person has a problem. They need to get a GL policy today, right? And granted, if that person has something more complex, we'll work them through the same process, just maybe over the phone.
But like, if they can do it themselves and write that $500 GL policy themselves, well, now we have a customer who we can now service, add value to, and potentially cross sell over time. And they got the policy they needed in like, like you said, like four minutes.
And my team didn't have to pick up the phone. They just, Hey, we see what you're doing.
The best way to get this squared is to go right to this link, put your information in. You're going to get the best quote in the market.
This is the policy you need. Bam.
And they just do it. And that to me, like, that's not going to solve every problem that you have in small business, but it does solve a very specific problem.
And it's a feature like that, that I look at and I say like, this is the kind of thing that as agents and as distribution partners in general, we tend to fight because we feel like if I don't talk to them on the phone, that they don't think that I added any value. Well, you know, you know what that person thinks in their head actually is, oh my gosh, I contacted this company Rogue Risk.
They solved my problem my problem here. That's what they think.
Now it's on us to continue to communicate and nurture that relationship, but there's no loss of relationship or value connection because they reached out to us. We provided them with a solution and now they have what they need to move forward with their business.
That's the value. And I feel like we can't overlook how important that is.
And it is those speed and efficiency features that make what you guys are doing special. And I know it's still early days.
I mean, 2018, right? Didn't you launch in 2018? So I mean, it's- September, yeah. Yeah.
So it's still super early, which is exciting to see how far you've come in that short amount of time. Thanks.
It's a paradigm shift though, right? To your point, I think in the legacy agency and brokerage world, there was almost this expectation, people had more free time, I guess, and get on a phone, talk to someone. Even in other industries, like realtors, it used to be like your realtor would come to your house and have coffee with you for an afternoon.
It's like, I don't want that. I was like, sell realtors, right? Like it used to be like your realtor would come to your house and like have coffee with you for an afternoon.
And it's like, I don't want that. I'd like sell my house, right? Like don't, don't come to me.
Don't talk to me. Sell my house.
Before you go, I just got to tell you this real quick. So when I started my career back in 2006, I would sell home and autos.
I think the first, I, I, the first 200 home and autos that I sold, I sold at the person's home at their kitchen table at, I would stack meetings. I would have one meeting at seven 15 and one meeting at nine 15 at night, people would be letting me in their house at nine 15 at night.
And I'd be like having coffee, selling a home and auto at their kitchen table. It's like, no one would ever let me in their house today.
No, that's exactly right. And like, now it's like, if I come to an agent or broker, it's like, this is my problem.
Solve it as fast as possible. If you can do that, if you can provide that to where they can just, you know, four minutes done, like weight off my, right? Like that's, and that's, that's the benefit that agents and brokers can provide, making sure that people are getting what they need done, done, and making sure that they have the appropriate coverage when the time comes.
Yeah. A hundred percent.
It's such an exciting world. So I, one of the things that I'm, I'm just, I'm super interested in personally is how you're using third party data.

Like this is just a general topic that has been thrown around a lot.

People use it kind of, oh, we're using data here or infusing data.

And I think people kind of understand what that means or how you're using it.

But I'd love to get, and again, don't give any trade secrets away unless you want to, but just in the edit,

what does that mean using third-party data? How does it work? Again, you don't have to give a specific source, but where the heck are you getting it from? I think it feels like one of those black box items to people where they're like, I kind of understand, but I don't. Yeah.
And I think a lot of the insurance world is very excited about the amount of data that's out there and what they can use. And that's a very good thing.
Whether or not they're actually able to use it is a whole nother story. And what happens in most of the insurance world, and this is speaking from experience as I was an actuary, it's like, there's all of this

exciting data.

And like, I remember I pull it up, like, oh, this could help us with this, this, and this.

And then, you know, you would go through the effort of trying to get a contract signed,

which, you know, probably would not happen.

Right.

But let's say it did.

And then, you know, this, this data starts coming over and JSON blobs or whatever, making it actionable and actually using it in production, where you're actually rating risks or changing underwriting or whatever it is real time. I don't know.
i'd be shocked if many, if any insurance companies are actually doing that, like on a very limited basis. Some, and this is on the commercial line side, personal lines, they do it.
Yes. Commercial lines, it's difficult.
And a lot of it is, you know, because of the systems that they use, right? Like Guidewire, Duck Creek,

they have a backlog of information that they can ingest and apply

to the rating engines that they provide, right?

Their rating engines are built in such a way

like it can't just take in any JSON blob

that comes through, right?

It's gotta be mapped to fields

and we gotta use it here and put it in.

And that means you have to pay your Guidewire consultants

lots of money to implement that.

Now, Guidewire just acquired Hazard Hub, so I'm sure there's going to be nice implementations there on the property side. Fantastic.
Great for them. But still, what if you find all kinds of other data from accounting systems or financials or just scraping the internet? You're not going to be able to just screen scrape for a while and then pull that data in and apply it through your Guidewire system.
It's just, unless you tell them to put on the backlog for the next three years. And what we're able to do because we, we built out the insurance products and we built out the system to do it is actually apply it.
And that's, that's exciting. And we do it in a, in a number of ways and we, and we really do it with the focus on that speed and simplicity, right? Like we want the agent and broker to be focused on, again, relationships and coverage.
Let us handle the data side of things, right? Like you, I shouldn't be asking you how far away that business is from a fire hydrant. Amen, brother.
Amen. That isiseled on my tombstone it's like don't gonna ask me how far away this is from a fire hydrant because i i promise and this is not a knock on agents brokers they're gonna put in an answer and that answer is 500 feet exactly business in the world is 500 this is like the, when was the last time your plumbing was updated?

Like when I see this, I feel like this is like,

I feel like this is like the insurance God's messing with us.

I'm like, who is going to put outside of 10 years?

Would you be stupid?

You're going to have the risk declined.

Like they're just going to go, oh, decline, not updated.

You're like, you'd have to be a moron not to just put 2015 or, you know, five years from today.

Like you'd have to be a moron not to do that.

That's right. And it's, it's, it is, I mean, like,

what do you expect insurance companies, right? Like, of course,

this is going to happen.

Why are you asking these nonsensical questions for a premium?

That's like less than $5,000 or even more than that. Like, I just, I'm kind of shocked at that.
And especially when the data's there. And so like, again, our focus is on that speed and simplicity side.
And the fact that we're able to get this information, make it easier for the agent broker and the policyholder, right? And then not only do that at new business, but understand it and audit it throughout the life cycle of the insured to help out our partners, to help out our distribution partners. And like, hey, by the way, this risk went from a zero employee count to a non-zero employee count.
You should probably upsell them to workers comp, right? Like, Hey, they changed from personal address to a business address. Make sure that they have property coverage now.
And like, that just makes your job so much easier because we're able to pull data on this and just be like, Hey, just, just a heads up. Yeah.
I, this, so this is the part, I have a whole bunch more questions on this topic, but this is the thing that I think people are missing is I think everyone goes right to, so a couple of questions that I wrote down were like, how do you determine which data helps with the underwriting process, which doesn't, do you have a process for like testing stuff blind to say, okay, you know, you're not actually using it in rating, but you're saying, okay, ultimately this doesn't have a factor. This doesn't have a factor.
I'm interested in that, but like just, just being greedy, being greedy and selfish. Right.
If we're using this stuff properly, it helps us cross sell. It helps us sell more policies.
It helps us round out accounts better. It helps us increase the premium on accounts because you all of a sudden you found out that they put an addition on a building because they had to go with workers permits that you would have had no freaking clue until renewal.
And maybe they wouldn't have answered it right, or they would have forgotten. But because we can pull permit data, we can see that, holy crap, they put a hundred thousand dollar addition on this.
And those are, these are the places where like I look at it. And again, to your point on, on humility, I don't know that I would ever be classified as humble per se, but I do, I am completely willing.
And I think more retail distribution side partners, which is what Rogue is, what our role is in the market and what our role is not. We are not the manufacturers.
We are not. We are not the regulators.
We are not the compliance departments. We are not the data engineers.
We are distribution. That's what we are.
And if that doesn't mean we can't be good stewards of our accounts, it doesn't mean we shouldn't care about coverage and protection. We absolutely should.
That's part of that role. But to then become underwriters and to become all this.
no, that's not our job. Like use the tools at your disposal to do the thing that you were meant to do.
And yeah, man, I just, I think this is so lost on people, what is actually possible and the flags and the triggers that can come off of this information if it's coming from a good source. Yeah, that's exactly right.
I think that distinction, and that's why we call ourselves, we are an insurance manufacturer and servicer. And we hook into distribution.
We want to make our distribution partners successful. And having that distinction, right? Like your job should not be data collection.
That's what we do. And we do it to make you more successful because let's, let's be frank.
Like when you are successful, we are successful, right? And the customer is successful, right? Like we, we want the policyholders to feel, to feel like the, the distribution side, their agent and broker is, is the hero and they're taking care of them because that helps our retention too, right? They stay with you. You stay with us.
We make your life easier. It's, it's a virtuous cycle, right? Like, and that's, that's what we bring to the table.
Yeah. It's awesome.
It's awesome. So, so I am interested just going back to the, to the one question that I teased was like, um, do you have a process for, I'm sure you do, uh, of like, you know, cause, cause this is another thing that I get from some people who maybe know a little bit about data is they'll go, well, yeah, but all that, you still have to ask for the same things.
It's all the same underwriting, you know, all this kind of stuff. Take is like, are you testing different things from the standard actuarial models? Like, are you testing like, you know, if the owner has red hair, you know, all this, you know, does that, and you know, and it comes, oh no, it has no impact.
Or yeah, red haired people are crazy as shit. The, you know, they get into more accidents, you know, is, is like, um, is, is, are you testing those things to see if you can find hidden gems or is it, do you kind of have a model set and you're working that model and that's what it is? So, I mean, we have our base model and we've layered on some things on top of that that we've tested and that proved itself out pretty well.
And then there's a whole swath of things that we're testing throughout. And one, we're testing it for credibility, right? Making sure that, hey, this is something that people can validate that the data that we're collecting is accurate, right? So making sure that it's a veritable, truthy data.
But then also understanding of how impactful that data is, right? And of course, like, assuming it's not unfairly discriminatory, right? with actuarial standards yeah yeah for sure um and we've um i think there's a there's a lot of things that we use today that you know like to your point like plumbing being updated right like people are putting in 500 feet every time right like i mean, I mean, that's fire hydrant, but less than 10 years every single time, right? Same thing with distance to fire hydrant, 500 feet every single time. That's a useless field most of the time, if you're asking it to someone just fill it in, right? I don't care if it's the policy holder or the agent and broker, no one's going to put in the actual information.
They're not going to go outside and measure how far away there is.

And that's, so why keep asking, right? What are some other things that we can say are more correlated with the expected property losses, right? That we can actually measure and are going to give us more lift on that. And if, you know, bonus, if we can actually use data and not have to ask the person, all the better, right? And so we do that constantly, like constantly looking at new sources of data, understanding how this is impacting the customer and if it's truly accurate.

So yeah, we do that a good bit.

I want to be respectful of your time because I know you're a busy dude, you're running a new insured tech carrier manufacturing plant empire. Where do you see small business insurance going? What excites you about the small business insurance market? Obviously, it's where Rogue is dedicated.
It's what we do every day. Everything we build towards is helping serve it.
And again, another reason why I'm excited about what you guys are doing is because this is your segment. This is what you focus on.
I see this and I've said this in countless times. I see small business insurance is one of the very few remaining blue oceans that exist in our space.
I know people write it, but no one owns this space, not like personal insurance, which is very difficult to kind of disrupt and wedge your way in any meaningful way. I feel like small business insurance is still the wild west, right? It's still the Louisiana purchase before everyone had kind of staked their claim.
What do you see as exciting? What do you see coming down the road where, you know, anything that kind of what's getting your juices going with small business insurance in the next few years that, that people could kind of grab hold of? Efficiency. I, I, I don't want to give away too much, but what we have, what we're building out right now on the efficiency side of things, I think it's just going to change how small commercial is done, right? Like agents and brokers are actually going to be able to bind these policies in ways that make them money, right? Like, which, you know, today, like the amount of time that you put in relative to the money that you make on small commercial policies, it's not there, right? can flip that.
And this is going to have huge impacts, not only for the agents and brokers, but also for the end policyholders. Because 40% of commercial aren't insured.
Small commercial, I'm guessing that's 60%. It's in the fact is, it's like, they're not doing it because it's an arduous process relative to, you know, all the work that they're trying to do.
Like they don't need that. They're focused on their business and going out and talking to an agent for a few hours and then faxing them, all this stuff, like that's difficult for them.
And we have more and more small businesses today, right? Like people who are operating consulting shops, people are just doing DoorDash and stuff like that. Those are all little LLCs running around that need protection.
And at any moment, they can essentially be out of a job with no indemnification. And we can add so much to this market just in the name of efficiencies, right? Like just making things such that like, Hey, don't even worry about sending over your financials.
We, you know, my insurance manufacturer pulls up all that information. We'll, we'll get this taken care of with a couple of clicks, right? Like that kind of efficiency is what, what we're aiming for.
Yeah. I love it.
I couldn't agree more. And, you know, one of the things, you know, one of the, you could say it's kind of a marketing message, but it's philosophically what we believe is that insurance provides the foundation upon which entrepreneurs have the possibility of taking risk, right? Like they can extend farther.
They can hire that extra person. They can take on that extra business line because they have that foundation that if something goes wrong, they're going to be able to rebuild quicker.

And I think for too long, particularly with small business owners and a lot of these consultants and especially now with, we'll call them gig businesses, side businesses, all the things that people are doing, doing Zoom calls on their regular job.

They can't, you know, There's a hesitancy to grow there or maybe even an unspoken fear because if something happens there, that can come back to them personally, it can come after their assets, it can come after their savings, whatever. And the deeper we can extend into these markets and The easier we can make it for these people to get coverage, the better it's, I couldn't agree with you more.
Efficiency is a huge part of it. I think messaging is a huge part of it.
I think the messaging to small business owners around insurance has been terrible for so long. And, um, and I think that, you know, hopefully organizations like yours, like mine and others can help change this.
And I think it's a very exciting time for the piece of the market that we're going after. And I just appreciate being partnered with you, man.
I agreed. It's been great partnering together on this.
You know, I love just like what you're building and you understand it, right? Like the focus on making these things efficient because it's going to not only benefit you as a, as an agent broker, right. But also it's going to benefit the end policy holder, right? You're, you're providing the actual service that they need, right? Solutions and coverage, right? Not, not just, you know, an hour long coffee that's going to make them more stressed because they have all these other things to do.
Yeah. Agreed Well, hey man, I wish you nothing but success.
Where can people get at Coterie? If they're interested in partnering with Coterie, who's the best person or where's the best place to go to reach out and start to learn more about a partnership with Coterie? Yeah, so Coterieinsurance.com, that's the first place to go. There's a partnership page.
There's an agent resources page. Ray Lynch, Raymond Lynch, Yeah.
So Coterieinsurance.com. That's the first place to go.
There's a partnership page. There's an agent resources page.
Ray Lynch, Raymond Lynch. I mean, is there anyone better to talk to? He's

fantastic. Yeah.
He can get you set up. And if all else fails, you know, just shoot me a message

on LinkedIn and we'll get you rolling. Fantastic, man.
Appreciate you. Appreciate the time.
All right. Thanks, man.
Cheers. Close twice as many deals by this time next week.
Sound impossible? It's not. With the one call close system, you'll stop chasing leads and start closing deals in one call.
This is the exact method we use to close 1,200 clients in under three years during the pandemic. No fluff, no endless follow-ups, just results fast.
Based in behavioral psychology and battle tested, the one call closed system

eliminates excuses and gets the prospect saying yes more than you ever thought possible. If you're

ready to stop losing opportunities and start winning, visit masteroftheclosed.com. That's

masteroftheclosed.com. Do it today.