The Ryan Hanley Show - RHS 064 - Dax Craig on How Pie Insurance Turns Analytics into a Competitive Advantage

Episode Date: September 16, 2020

Became a Master of the Close: https://masteroftheclose.comDax Craig, co-founder, and President of Pie Insurance joins the podcast to talk about how Pie leverages a deep understanding in analytics to create a competitive advantage in the small business insurance marketplace. Get more: https://ryanhanley.com/Learn more about your ad choices. Visit megaphone.fm/adchoices

In a crude laboratory in the basement of his home. Hello everyone and welcome back to the show. Today we have a dynamic episode for you with Dax Craig, the co-founder and president of Pi Insurance, an insurtech startup that launched three and a half years ago, began selling insurance two and a half years ago, and from day one has had a foot in both the direct bucket and the independent bucket. And it's why I'm so interested in this company. And so you guys know, I've written a few policies with Pi, a few workers' compensation policies through Pi myself.

I like their product. They have some incredible pricing for certain classes. They're easy to work with. I've had clients who've gotten some certificates directly from Pi who have given tremendous feedback in terms of the customer service. And when you listen to how DAX approaches the business and why one pie chose workers compensation to focus on, why they've stayed in only workers compensation for this long, what he sees coming down the road, this is an episode that's going to get you thinking about the business and hopefully get you thinking about the markets that you place business

with, why you place business with them, and what potentially is out there in terms of opportunities to partner with companies that aren't necessarily of a traditional ilk but could be incredibly valuable to your agency. I think you're going to love this conversation. Dax is a great guy, and it was a real pleasure to have him on the show. Before we get there, I want to talk about a brand new sponsor to the show. That's right, that's right. Everybody, wake up.

Brand new sponsor of the Ryan Hanley Show, and that is Agency VA. VAs are talked about all the time we had. I had Wes on the show, one of the co-founders of Agency VA. And I know that episode got a tremendous number of downloads, listens. A lot of you actually consumed that episode. And then the feedback, the number of DMs I was getting on Instagram and Facebook and Twitter about virtual assistants after that episode. And really all I was doing is directing people over to talk to Wes. But, you know, Wes and Ben are doing things at Agency VA that I don't know that the industry has seen before.

Their technology is second to none and is really becoming a gold standard for remote work and working with virtual assistants. And about three weeks ago, I got my first VA. I started to get to the point where things like accounting and data management and onboarding and follow-ups and first touch on inbound service requests, these are things that I just wasn't getting to fast enough while doing the sales and marketing and closing that needs to happen in order to continue to grow Rogue Risk. So I reached out to Wes and got my first VA and I'm loving it. I mean, it really is. I mean, it's like any other employee. I mean, a virtual assistant is like any other employee.

You have to train them, but they really do a great job of positioning your agency with the talents of the individual and what you're forming as a partnership with that person. I mean, they become a vital part of your business. And I just couldn't be any happier to have Agency VA as a sponsor of this show. I mean, the portfolio of companies that are sponsors of this show, I think is a testament to the types of individuals that are building supportive businesses for our industry. And I just couldn't be happier to have Agency VA as a partner of this show. So go to agencyva.com, go to agency, the letters VA.com, agencyva.com, reach out, connect, have the conversations. Like I say with all our sponsor partners, you don't have to use AgencyVA.

You don't have to have a VA but know what they're about. Get the demo, have the ammunition in your mind so that if you need them, you can pull the trigger because you don't want to wait until you have the need to start doing the research. Do the research now so when the need presents itself, you're ready, you can move forward. And I just could not think of a better partner to do that with you than Agency VA. So go to agencyva.com today. Now on to Dax Craig.

I didn't know that you founded or were part of founding Valen Analytics. I was. Yeah. That was my first foray into insurance and insurance technology and analytics. How did you find yourself there? Well, I had sold a prior startup in the wireless space in 2000, which turned out to be a pretty good time to sell a business. And was doing my obligatory couple years with the acquiring company. And a good friend of mine was a data scientist. And's like hey we should start something together and we took two years trying to figure out what

business would be appropriate for the use of analytics whereas much more of a greenfield opportunity settled on PNC insurance. I didn't know how Greenfield it was. Yeah. It's funny. It still doesn't feel like we figured it out. It's still Greenfield. Spent, uh, geez, spent a long time, uh, you know, 14 years basically building that business, um, ups and downs, fits and starts, trying to convince insurance professionals that analytics could help them make better business decisions was a super big challenge. To spend a lot of time in boardrooms and in decadent rooms working with companies to do their analytics strategy and out of that saw a super good opportunity in the small commercial area. Thought it was a really good opportunity to drive the use of analytics to help small businesses. What do you think now? It seems like today, even five years ago, the idea of using analytics outside of maybe this kind of ethereal, you know, I'm sure a Travelers or a Hartford uses analytics, but it feels like that has started to leak down into some of the super regionals and even smaller carriers. And then certainly there are plenty of vendors that are using different analytical tools

and even some agencies, some as small as maybe my agency, but some of these middle market focused agencies have started to really dig into what's going on inside their agency. How can they use the data they have to better serve or find other... Knowing that, yes, it's still very much

a green field. It does feel like there is a transition. One, do you agree with that? That it seems like we now have momentum rolling towards people having a better understanding of what's going on in data and their business in general. And do you think there was like a trigger point or a pivot point of any sort? So I don't think there was a trigger. I think this has been slowly building over the last 15 to 20 years. It really started with progressive and using credit score for personal auto. That's where it all started. And I thought there'd be a wave after that and why I found it Valen,

but there wasn't, uh, especially in commercial. Um, it's an, you know, a commercial is, is sort of old line underwriting,

right? It's, um, I've been doing this 30 years and I know a good, you know, plumber when I see one and that, that's still pretty pervasive, uh,

except for the large national players and some of the super regionals. I think you're right. And there are a few pockets where we're seeing the use of analytics take up in smaller companies, but I wouldn't call it broad-based at all. First of all, analytics are very expensive. They're counterintuitive, right? And so they fly in the face of everything you've ever learned about underwriting. And so that's really hard for companies to grapple with and to grasp and to sort of change their mindset on. And then lastly, which is probably the biggest problem, the systems that are out there today, the core policy admin, claims admin systems are really difficult to deal with. And they're very difficult to get data out of. And they're very difficult to leverage to drive appropriate use of analytics. I think that's maybe even a bigger problem than mindset is today. I think mindset is something that the carriers are slowly starting to come around to, even

some of the smaller ones, but they don't have the systems. Yeah. They don't have the money. I heard somewhere, and this could have been tongue in cheek, but like 50% of all the COBOL programmers left in the world live in Hartford. I wouldn't doubt it. I don't know what the statistics are, but I think banking and insurance are keeping them going. Nice cottage business. Yeah. Yeah. That was, I don't know. that could have been completely made up or you know or someone was joking or whatever but i i had the same reaction to it i was like if you told me

it was actually true i might believe you it's a believable statistic for sure so um you know one of the things that that that really turned me on to to you guys. And one of the reasons why I wanted to have you on the show in general was my, so I'm startup-y. I've been in the industry for 15 years. I don't know how much you know about my background. Yeah, I read your background. Yeah. So I kind of was an agent.

Then I went to kind of, I've always been a marketer. It's been my background, but kind of went into the technology world for a little bit, learned a ton there, and now have started my own agency. And my expertise is comp and I've always known about you since you launched following the space. And then I actually got access and have written, I think a couple of accounts with you guys through a wholesaler. And I was interested, you know, just some of the markets that you attacked and the way that you priced it. And then I started digging in and, and you know, the common belief or the common perception of independent agents

of a company like pie is these guys are full of shit. You know what I mean? Like that's, that's just like your first reaction. That's, you know what I mean? That's just what it is. You know, you can't help it to be true or whatever. Yeah. Yeah? Like that's, that's just like your first reaction. That's, you know what I mean? That's just what it is. You know, you can't help that. Jeff Lerner, Too good to be true or whatever. Aaron Levy, Yeah, yeah. Like we've, you know, how, you know, how have we not figured this out in 400 years that they're going to come in and punch some numbers into a keyboard and figure something out that we haven't figured

out? That's kind of the classic take. And then, so I had, I had a really interesting experience. I, you know, place this policy with you guys. Everything went smooth. Um, I, my client has dealt with your team or, you know, your, your company a couple of times in, in some certificate requests and stuff like that. And everything was super positive. And, um, and not that I wouldn't expect it to be, but you know, as a brand new carrier to essentially, you just don't know what you're going to get. And I came out of it. And I was like, you know, this, this is a pretty,

there's something here, like this is meatier than just a fly by night kind of insure tech company that, that, frankly, we're kind of used to for and from an independent space, you know, I mean, so I, I'm just, I'm really interested and want to dig into some of the core concepts as much as you can share without giving away all your, your secrets. You know, the core concepts where you see you're taking it, because I guess my, my whole goal for this show in particular, this show, like talking to you is I want to start to open up agents and carriers' eyes to finding partners that look more like you guys that can help them in their business and opening their mind up a little bit to what's possible and what you guys have going on. I guess that's

my overarching goal to this conversation. So what was it about small commercial and in particular workers comp, you said that you saw something, what was it that really you were like, bang, that's the next thing. That's where we're going. Well, I mean, it comes from a lot of struggles trying to sell analytics to insurance carriers. And if anybody has paid attention to any blog posts I've written, articles I've written, speeches I've given over the last 10 years in particular, they would know that this shouldn't be a surprise because I tried to get insurance companies to do exactly what

Pi is doing. And it, although most people think it starts with the technology, it actually doesn't. It starts with a customer, like the real customer who is buying this insurance policy. You know, the person writing the check. God bless agents and the distribution partners we have. Like, they're amazing and we love them. But we start backwards from the customer. And what does the customer need?

What does the customer want? The customer wants the best price they can get with the least amount of friction possible. Right? And that's true of an agency relationship and or a direct relationship that's why we we we do both we we're multi-channel there there are a class of business owners that are shopping for work comp insurance 10 30 at night in their underwear right you got to be there for those people too they're generally fairly very small and then your your agent needs they need to be there for those people too. They're generally fairly, very small. And then your, your agent needs, they need to be so fast that it pays to write small commercial.

So we started with that, that backwards look, right? Let's, let's not start with a regulatory environment. Let's not start with email. Let's start with, with what the customer needs and build technology that allows the customer to get that. So that was the first step. That was the first thing that I tried to get companies to do for years and years and years. And then the layered on analytics. So at Valen, we had a contributory database where we had, I don't know the exact numbers they are today because I'm not involved with the company, but, you know, it's five, six, seven million detail work comp policies with claims, history, everything. I mean, this is a lot of data, bigger than Hartford and Travelers combined. And we could see in the data where the pockets of opportunity were. And we kept telling people,

oh my gosh, these small businesses are underserved, right? Most agents don't want to deal with them because they're too small. It's just too much of a headache dealing with the carriers it's too big of a headache to deal with this two thousand our policy it's not worth it so that they were underserved and they were systematically overcharged you know 30% in in many cases and so you see that kind of you know problem in the marketplace and it's like well we can solve that with technology. If you make it super easy for the agent to do business with you, they can actually serve that small business, right? So no longer are they ignored.

And if you use analytics, you can actually drive pricing down where your pricing across the spectrum is much more competitive, right? There are a lot of players that will write restaurants, right? Write a clean restaurant. Well, so what? Everyone will do that. That's no shakes. Who cares? Tell me how many people will write a trucker or a landscaper or a painter or some of these harder to place trades that are small. And so we kept trying to get people to, to pay attention to this and nobody would. And finally I was like, you know what, let's go see if we can do it ourselves. And that's how, that's how pie was born. Yeah. You know, one of the things that I was talking to a buddy of mine the other day, and we were talking just in general, we'll call it, we were bitching.

We were just catharsizing about different things. And I said to, I said to him, you know, you know, one of the things that I'm kind of relearning lessons about the business for eight years, I lived this life every day. And now I'm kind of reliving it again. And I forgot about some things. And one of the things that I forgot about is how everybody writes everything until it's not in this nice, pretty box and then no one wants it. And I, you know, I was saying to him, I said, you know, it's, it's,

it's funny. I'll have marketing reps and carriers banging on my door, emailing me, calling me saying, Hey, well, we, we write this now. And it's like, that's great. Except how many bakeries with no delivery with no, no deep fryer who, you know, don't do table service, who don't do any kind of, you know, whatever, you know, how many of these perfect box risks actually exist in the world? Like, yeah, you know, how many of them are there? Because the moment that there's anything outside of the box, it goes from super fast to incredibly slow, or at all follow-up questions and the premium goes starts

skyrocketing and you know it becomes very difficult and people have been dealing with this forever i'm not the first person to deal with it i just feel like you know i feel like these are some of the problems that that companies like yours are starting to chip away at. And I wonder when some of the legacy carriers start to pick up. I think some are, but I think there's a lot that still haven't picked up on this idea of how do we do the things in an expedient way that aren't the perfect packaged box. Well, I think it starts with understanding your underwriting appetite and why you have that appetite.

A lot of carriers have an underwriting appetite. And if you ask them why, they actually can't articulate it. It's not data driven. It's, you know, somebody got burned on a plumber in the 80s. And so we don't write commercial plumbers. Like really, that's the most ridiculous thing in the world, but it's true across the board. Uh, and so you see a lot of that. You also see companies come in and go out of different classes or different States or different types of business, you know, they've got a premium target they want to hit. And they're like, well, if we write a bunch of this, we can hit our premium target, then we'll come out of it. So they don't provide consistency. So you never know if they're going to

decline it, accept the risk or not. We hear that We use data. And so we're in the classes we're in because we believe they're good business in each of those classes. There's also bad business in each of those classes, right? Think about how most underwriter, underwriting companies work. They look at an individual piece of business and they say i don't like this business or i do like this business instead of thinking about it as a portfolio if you think about it as a portfolio you can actually do a lot of different things and a lot of different pricing mechanisms because that's what actuaries do right i mean and they're quite good at it on a broad portfolio. Problem is when you take

that portfolio and you make it narrow, their science starts to break down, underwriting know-how starts to take over and it's just very difficult. And so I can't stress enough how important the data and the data science behind it is. And that's, that's where the other carriers have got to catch up. Yeah. Where do you see, you know, you guys have, you guys are, are multi-channel, you know, one, why go multi-channel? Why involve agents at all? Or, or, or, you know, and the opposite is true too. Why spend pay-per-click dollars on

direct business like when you make when you look at that or is it something you're still evaluating are you still in the testing stage for distribution or do you feel very comfortable about being in multiple channels and and and how that works we're super comfortable multi-channel we were always multi-channel from the very beginning even though people like to put us in the direct box, never been direct only. And never thought that we were going to be direct only. We want to meet the customer wherever they are. Right?

And there are some customers that do want to buy direct. That's just, right? They might be younger. They might be Gen Xers, you know, millennials or Gen Y. They want to buy direct because that's how they're comfortable. But, you know, what, 98, 99% of all comp is bought through an agent. You'd be pretty stupid just from a business standpoint not to work with with agency partners. And agents provide a huge value to their customers, right? They have knowledge that the customer doesn't have, and that's incredibly hard to replicate in a direct environment. So I think that direct will always be there. I think agencies will always be there. They'll live in, you know, in a symbiotic world. Um, and I think your smaller and smaller risk will go more and more direct,

uh, and your larger risk. And I don't mean big, I mean like 5,000 and premium and above dope. They'll continue to stay with agents. And it almost feels like, and I think this is just starting to happen. So I do not think this is a trend, like a widespread trend. But I do think, at least in some of the circles that I run in, it's very much taking place. That what was maybe a very clear five to 10 years ago, delineation between the people who took business direct offline and really tried to automate and then agencies, those were two very different business. They are every day mashing and, and, and, and merging more. And this, uh, hybrid agent, you know, I refer sometimes as like a human optimized agency. Like, you know, you're, you're doing everything you can

with automation up until the point that you need a human. And then you're bringing them in to really provide that additional value where, you know, when I learned the business, I mean, there were one, we were still writing things in pen on, on, well, actually pencil, face it when you made a mistake. I mean, this is how far we've come just in not a short amount of time. And where do you see some of that going? Like, do you see more? You know, if I were to Google workers comp right now, I'd probably get two independent agents that are trying to drive business in and I get maybe you guys and buy Burke or, you know, Hartford run some paperclip. And there's this mashup of agencies. And how do you see that continuing to evolve? Or, you know, Hartford runs some paper, and there's this mashup of agencies. And how do you see that

continuing to evolve? Or, you know, and do you? I mean, I think it's going to continue to evolve as more and more. Let's call it the buying process, the insurance buying process moves online. online yeah there's got to be a blend I think it's it's challenging and it's expensive for a carrier and an agent to acquire customers yeah it just is right and and whether that's a human being dialing the phone or it's pay for click or something of that nature or some kind of oddball partnership, it's expensive to acquire customers. And so the companies that are going to win are going to figure out how to acquire customers in a cost-effective manner, whether that's direct or through agency partners. Up until now, it's always been a lot cheaper to acquire customers through an agency force for a carrier.

Now, as more of that moves online, is it cheaper for the agent to acquire customers? I don't know. It's a pretty competitive world. So it'd be interesting to see how, how these things come together, you know, symbiotically. I think they will. I think they have to, cause there's, there, there is an element of trust and you know, the, the insurance knowledge that the consumer just doesn't have. Yeah. Right. And whether it's comp or it's bop or it's,

it's some complex package thing, the agent knows how to do that. And the consumer doesn't. Yeah. The trust piece is still for me, what we actually, what we actually operate in like that, that to me is whether you're, whether you're direct captive, you know, some crazy version of that, whether you're doing cold call emailing or knocking on doors, it's really just how much trust can you drive into a client to break whatever their threshold is, right? And everyone's got a different threshold for how much trust they need. And that's really what the game we're playing. And it feels to me like the cost of acquisition on the agent side is going up. It does not feel like digital has brought it down. It just doesn't feel that way. I think it's too competitive. Yeah. It just today to get in front

of someone, to get the time that they need to build that small amount of trust. You know, like what you guys are doing, you know, I see you guys running Facebook ads, you're running ads all over the place and you're doing that to build trust. You know, some of those, I mean, I see the playbook. I mean, some of them are branding, some of them are trust building, some of them are storytelling, some of them are direct, you know, driving in hardcore CTAs and you're doing that because that's what you have to do. Agents have to do the same thing. They have to brand either locally or nationally or in their niche. That costs money, cold email. So I think what's interesting is, and I actually had this conversation with us and I said that's because it's really hard to cool business with you and they said what do you mean I said I have six direct appointments for this

line of business this line of business that I attack you are the hardest one to do business with you are that you are unless I can unless I see that you are an obviously lower than any of the rest you literally aren't even getting options. You're not even getting shots because you're tough to do business with. So that, cause that drives my cost up that, that time cost, I think is a big part of the equation, especially for small accounts, especially for small accounts and especially for smaller agencies or agencies that haven't adopted any kind of automation, if you're trying to do that, that piece I feel like is a big part of what,

as analytics start to permeate deeper into our business and we can start to see where we're spending time and how much that time is costing us, I feel like there's an enormous opportunity for be it a carrier or technologist or whatever who can start to find that time and then find ways to chop it out of the process because that's where you spend you know that's where that's where you lose or the that's where so much of the cost of acquisition is being driven up is just in time it's just in ticks of the clock well i think

that's right i i think um most people that have been in the business for a while don't appreciate how much their time costs. Yeah. Right. Cause it's always been the way they've done it. They've, you know, taken people to lunch, they've gone to seminars or whatever it is, how they acquire customers. And it's worked right. And then it becomes an annuity. So it's, you know, it's a, it's a great life. If you can build that up, I think it's painful, right? And then it becomes an annuity. So it's a great life if you can build that up.

I think it's painful to get started. But most people aren't thinking about scale, right? And so like a pie, all we think about is scale. I'll give you a very good example. So you probably have marketing reps that call on you, right? Constantly. Incessantly essentially we could even say and pre-covid that was likely in person right or they wanted to right donut dropping and whatever else they wanted to do you think about the the amount of windshield time those marketing reps have. Yeah.

That's just totally wasted, wasted time. You know, instead of having 12 meetings in a week, what if you said, I'm not going to get in my car and I'm going to have zoom meetings and I'm actually going to provide value to the agent, not just pester them to give me more binds. Oh, now all of a sudden you think about scale. And instead of 12, you can have 60 or 100 meetings that provide value to the agent, not just pester them and want something from them.

I mean, that's the kind of mindset Pi has, right? We're not going to bug you unless we have something to say. Yeah. And we want the proof to be in the pudding, right? We're not going to bug you unless we have something to say. And we want the proof to be in the pudding, right? You're not going to send us business if you don't get something back quickly and it's going to be priced well. So you're not going to do it. So like, that's our part. I'm not going to badge you to send us submissions when everything that I, you send us, we decline. Well, that's not a good experience. Yeah. You know, I think, um, I was actually talking to one of my marketing reps and I give them a hard time. Many of them, I mean, they're all great people. They're trying

to do their best. The COVID for all its awfulness has actually, I think drastically improved the marketing rep agency experience for the reason that you just defined. It has forced them to go to Zoom, which saves them time, which means you can have a 15-minute meeting or a five-minute meeting because they didn't drive an hour to get to your office. Exactly. And, you know, that really amps, because I'll talk, if you're going to say, I need seven minutes, I can give you seven minutes that's no problem let's you know tell me what you need to tell me I'll hear about the new service line coverage endorsement for seven minutes but you want to come over for an hour well that that doesn't work and I

really think that a lot of marketing reps have taken it to the next level and but one of the I want to talk about scale for a second, because this is, this is a, so I've been doing digital marketing and growth keynotes in our industry for, for literally a decade. My first one was in August of 2010. And, uh, and one of the very first things that I would say at the beginning, partially because I like aggravating people was, you know, if you aren't dedicated to growth, then you need to get out right now, because this is going to be awful, you're going to hate everything that I have to say. And what would be interesting is, I would see people kind of look around. And you could tell they, they actually were not interested so much in growth. They had reached their number.

And I guess my question is, like, with companies coming in, and I say coming in because, what, Pi's been around for three and a half years, right? So still relatively new in the spectrum of- They've been selling for two and a half, but yeah. Two and a half, yeah. In business for three and a half but yeah two and a half yeah so so um when when when when new entrants are coming in who have a very legitimate product who have history

in the industry who understand what's going on and are growth focused you know where do you see i mean how long can can can can entities that are not growth focused, how long can they stick around? And this is the last thing I'll say before you respond because I know I'm on a diatribe now. The good news is my show, so I can't get in trouble. So as I had a carrier say to me the other day, we have 40% of our agencies are losing so slowly that they believe they're winning. And I thought that that was one of the most profound ideas that I had heard in a very long time. And it made me nervous for those agencies because a lot of good people, but very excited because that means 40% of

agencies are going away. And how can we capitalize on it as organizations that want to stick around? Well, I mean, I don't know the answer to your question about how long they can live. I think that depends on the size. If they're big enough, they can live for a long time. If they're smart, they'll sell, right. There are lots of people trying to aggregate agencies to do exactly what we're talking about here is to get scale. Uh, and a lot of private equity money has come in, you know, to, to do just that. Um, you know, I, I have a philosophy, right? If you're not growing, you're dying. Uh, and if you're dying, you'll be dead. Um, so I'm, I'm all about growth, like, and, and how you get growth and how you, uh, continue to grow your business.

If you're not growing, how do you attract top talent? They're not going to come to work for you if you're not growing. Hey, come and work for my dying agency doesn't sound very appealing yeah um and i do think that uh i don't know what the average age of um insurance agent principal okay so it's and that's probably generous um It's a, you know, generation that's closer to retirement. Maybe they don't need to do anything. I look at it along the lines of innovator dilemma. I don't know if you've read Clayton Christensen stuff, but I mean, this is exactly what's going on.

It's that, you know, small upstarts are finding little pockets, little niches to be successful in and building and growing from there. And pretty soon those little bitty niche players are now big players because they've taken market share from everybody else that was not paying attention. I think there's so much focus on insure tech that I think people are paying attention, but I wonder. Yeah. So one of my favorite books in the technology space

is Crossing the Chasm by Gregory Moore. How, you know, you guys are, do you, one, which side of the chasm do you think you're currently on if you were being you know as honest as you're willing to be and um so then my depending on what your answer is uh how do you either get across it or how did you get across making that jump what's interesting crossing a chasm um i mean it's a seminal book right it? It's like it's a technology Bible piece.

And I think very, very appropriate for most markets. I think the difference in insurance is that they already exist, right? I mean, work comp, you have to have it, right? There's not a product market fit that we have to deal with. And that's usually what you're trying to cross a chasm is to get that product market fit right.

And, you know, once you get the product market fit right, then you start to scale the business. Well, part of the reason we chose comp was because it's mandatory in most States. So they had business, we don't have to convince anybody to buy it. Um, so from that perspective, we not really cross the chasm. Um, I think we are, I think we started on the other side of the chasm. Um, and we're growing like crazy, uh, to answer that part of your question. Um, you know, we started two and a half years ago. Um, we'll, uh, I mean, we, you know, we'll get ready to publish some numbers, uh, coming up. Um, let's just say that, uh,

we finished year around 40 million last year, and we're going to far exceed that this year. So we're growing like crazy. And you can, of course, in comp, you can grow all you want if you don't care about the loss ratio. And I think that's an attack that's sort of the next question is, oh, yeah, you can grow. But if your loss ratio is 140%, who cares? Well, that's not how we operate. You know, we're, we're at a 30 point loss ratio. Um, so we're really watching our P's and Q's. Um, so growing that fast with a low loss ratio is, is, you know, all about the analytics.

So I'm going to take it back then, because that's super interesting to me because the experiences that I've had with you guys so far is even on just a straight lcm level you've you know i i wrote an account with you guys um i was a hvc contractor not not terribly large but but you know decent size and uh you know they they had a a good good market currently and, um, they were getting poor service. So instead of just straight BORing it, I said, you know, let's see what else is out there. And you guys were competitive underneath that, underneath that number. And to see those kinds of competitive rates and to still be at, you know, a 30% loss ratio is, is, is pretty impressive.

So kind of going back to something you said earlier, so I can better understand this. Cause I think I glossed it a little bit and I apologize. You had made the comment that where, where a lot of underwriting is done is they focus on a singular risk, this specific, you know, X x risk and what you guys are doing is looking at the risks as a pool and and that's helping you better price and better understand that even if this particular risk isn't you know the cream of the crop risk it fits this pool that we're looking at is that is that giving me is that a better way a little bit okay let me let me try and and help you um sorry if you look at a bureau price

okay so you get a bureau price say it's ten thousand dollars on a risk so let's just say that's the average price that the market's gonna gonna charge ten thousand dollars some carriers are gonna say you know that's a little riskier than $10,000. So I'm going to, I'm going to surcharge them. And some are going to say, ah, it's pretty good. And we like this agent. So we're going to, we're going to, we're going to discount this. Right. And that's, that's kind of the job of the underwriter to understand the market and deal

with the agent and stuff. Well, that's not how we think about things. So what we think about is, okay, that particular risk, are they below average risk? Are they an above average risk analytically? Not, you know, do I feel like they're a better risk? It's like analytically, can I tell you emphatically they're better than average risk? And if they are, right, that fits into the pool of better than average risk. And that group of better than average risk is going to perform much better than your average risk. Likewise, but if you plot that same kind of thinking from an underwriter's perspective, might as well throw darts. It's random. So that's how we're using the analytics. It's really, is this risk better than average or not? And if it's better than average, we're going to price it accordingly.

Yeah. So we don't write everything right. But we can't, was very difficult for agents to, to understand about pie. They want class based business. Like, okay,

will you write landscapers? Yeah. Then they sent us a landscape. And when I, well, you said you wrote landscapers we're like well we don't write them all

yeah we write the ones that are better than average that we can analytically show are better than average well this one's only had two claims it's like

yeah but a two claim landscaper in Queens is a hell of a lot more risky than a than a zero claim landscaper in Mac queens is a hell of a lot more risky than a than a zero claim landscaper in macon georgia as you know that's a super simple example yeah so we price them differently yeah no that makes a lot of sense to me i do think that um so so do you see a place for, cause, cause sometimes the, the other way is true too, right? Sometimes the, all the, well, I, you know,

all the numbers may show or the system shows or the computers show this thing is outside of what we want. But as an agent, knowing the business owner, walking the building, knowing the employees, seeing the operation, you're going, look, they had a bad day, but in general, this is a profitable risk long-term. You know, do you, and, and what I found is there are, there are carriers who will come back and go, if you think, if you're willing to sit on this and you think that this is good i'm listening to you and you sent me pictures and we've you know and then i'm willing to give it a

shot and then there's carriers just like nope computer you know i got a big x on my underwriting screen here so no thank you have a nice day you know do you see the side for some human stuff do you have that as part of it or you know is it kind of cut and dry that the analytics are the game? No, I, and, and, and we've studied this for years, uh, at Valen trying to understand, right. The analytics only human being, underwriters only some blend of the two. Yep. Uh, and what we saw emphatically was that the combination of the two yep uh and what we saw uh emphatically was that the combination of the two actually gets the best outcome now that doesn't mean that you should believe every story an agent

tells you yeah you shouldn't no you definitely should not that no especially because they have a different motivation than you do yeah it. It's called bending the submission. You massage and bend the submission to... Yeah, because your interests aren't necessarily aligned, right? The agent wants a commission and the underwriter wants a good portfolio business. So what we do, the analytics obviously come first. And when there is a compelling argument that the analytics are wrong, and they can be wrong, they are wrong. Analytics don't know that there was a discontinued operation, as an example. Analytics doesn't know that you sold off that piece of the business that had all the claims. Analytics doesn't know that new management came in, right?

Or they moved to a new facility or whatever. They put in a lockout tagout program. Who knows what they've done? The analytics doesn't know that. And so as an agent with, with a carrier that uses analytics, you know, my quest or request is for you to tell us that, right. Not just pie, anybody else that does this to tell us that those kinds of things are important. Um, and smart carriers will listen. Yeah, I agree. I, I wholeheartedly agree to you. I agree with you. I think, you know, I I'm, I'm yet to run into a system, a process in our business where all tech or all human is the answer. I just have not run into that yet. I,

and then the more I get into running this agency, the more accounts that I've written, the more people I've talked to, the more experience that I've had, it just keeps coming back to there's some middle area. And for every process and organization, it'll be maybe skewed a little more human or a little more, we'll call it, you know, computers or whatever, even though it sounds like, I sound like I'm like seven years old when I say that, you know, the, the, those, that magic box with the pictures. You know, that to me is where we all need to be going, is how do we continue to mash up all the access to data that we have and the insights we can drive out of them,

and then use, you know, some sort of rational thinking, some sort of logical thinking matched with just some, a little bit of intuition to come out with what feels like a very good answer. And it seems like everyone wants to push. I shouldn't say everyone. It seems like a lot of people who are, who are struggling in this new environment have continued to either push all digital. They just want everything to be streamlined, no humans, you know, complete self-service. And then, and then the other side is, you know, screw the computers, you know, we don't want Terminator 3, you know, you know, judgment day coming. So, you know, that it feels like that middle ground is the answer here. I think it is. And, but I also think it

depends on, on the size of the policy right minimum premium you know 700 dollar deal it's pretty hard to go to these arguments all the time because it's just it's just there's not enough money in it yeah um but larger policies you should always you know try and get that human element in yeah because it does it does matter. So, um, you know, I want to be respectful of your time and I really appreciate this conversation. I think a lot of people are going to take a lot out of this. Uh, where, where is, where's pie going? What's, what's the next, you know, you're two and a half years in a selling three and a half years in the business. You know, we're staring at what feels like, what feels like a lot of open ground for you guys.

You guys are out ahead, you know, in terms of maybe your positioning and your technology. And as you're building relationships, you know, you have a lot of steam, like, like where, where are you going? What are you excited about coming down the tracks here? Well, let me answer the first question. Sort of the longer term question. I want to create the largest small commercial insurance company on the planet. I want to stick to our knitting and keep it small. Love small business. My great grandfather was a small business owner. My grandfather was a small business owner. My dad was a small business owner, right? It's like kind of family blood. So I love small business owners. I think there's a lot of hay to make there across the planet. I can't predict exactly what's going to happen, but I can tell you that's our goal.

And I love, you know, 20, 30 years from now for my grandkids to say, my grandfather created that, you know, signs on the door kind of stuff. Yeah. When we get there, I don't know, but we're sure going to try. Okay. One follow-up question to that. You keep saying small business. Does that mean you're going to come out with a bot product or you stay in and comp? Great question. So we're sticking to our knitting today in comp because we have a competitive advantage.

Our data pricing, our data analytics give us a pricing ability that I think is second to none. For us to go into other lines of business, we have to figure out some kind of similar competitive advantage. And that's challenging today to see the path there. I do believe that our customers

want to buy other small business insurance products from us. Certainly our agency partners want us to sell other stuff. So to the extent we can figure that out and figure out, you know, a competitive advantage we will. So I, I do see that in our future is at six months from now, six years from now, 16 years from now, I'm not sure. Yeah, no, I, that seems that that's a fair answer. You know, I think, you know, the tough part about, you know, you definitely, I can see

what you're talking about with the competitive advantage on comp. You know, with so many companies already having $500 minimum premium bops available, like what's the differentiator when so many, when, when every company is basically willing to write a million dollars in liability with all the things that come in a package of a bop for 500 bucks, you know, there's, that's a tough one. Commercial auto would be one. I mean, the mark, I mean, and markets getting slaughtered, but man, if you could figure out a way to, to, to, to clean up commercial auto a little bit there's so much opportunity there

that that that is yeah and auto you know wheels are are something most of our clients have right because we do a lot of stuff in the construction trades right they've got trucks and vans and whatnot um right now we're we don't think we can beat progressive commercial auto. Uh, so we're, we're happy to sell it. Um, I don't know what we'll see. It's, it's gotta be something we, we can sink our teeth into and get some advantages. Yeah. I think that's fair. Well, uh, Dax, I, I appreciate it, man. I appreciate you coming in and having this conversation. I know you're a busy guy. I know you got a lot going on and I just love exposing the audience here, the independent agency ecosystem to, you know, I think companies that sometimes

are misunderstood in general. And I think that's the case with you guys. I know I probably, I didn't really know what to expect. And then my experience was so positive, you know, I didn't necessarily have negative feelings. I just didn't. And then my experience was so positive. You know, I didn't necessarily have negative feelings. I just didn't. And then my experience was so positive. And I just said, you know, this is more agents need to understand that here's a resource for them and a market for them. And then I operate with a lot of other agents that focus on workers comp and it seemed like a natural fit. So I just appreciate you sharing your expertise, how you guys operate. I think it's, I think it'll be very interesting for a lot of fit. So I just appreciate you sharing your expertise, how you guys operate. I think it's, I think it'll be very interesting for a lot of our listeners and I just appreciate the time.

Awesome. Well, I appreciate the opportunity to come aboard and talk to you about it and appreciate the opportunity to work with you as a producer as well. Thank you. Yeah, we, we're gonna make it Yeah, we, we're gonna make it Yeah, we, we're gonna make it You go fuck yourself and your fat fucking ass Yeah, we, we're gonna make it I'm gonna ask. Do you want to have a few drinks and smoke a joint bubbles? Yes. Oh, yeah, me Oh, yeah, me Oh, yeah, me

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