The Ryan Hanley Show - RHS 086 - Steve Lekas on Why Insurance Needs Another Startup Carrier

Episode Date: January 28, 2021

Became a Master of the Close: https://masteroftheclose.comIn the latest episode of the Ryan Hanley Show, host Ryan Hanley interviews Steve Lekas, the Cofounder and CEO at Branch Insurance. Steve talks about what led him to love the insurance industry and shares three insights on creating real value for consumers.Episode Highlights: Steve shares why the mutual should have been the perfect insurance model. (7:00) Steve mentions what led him to love the insurance industry. (14:32) Steve shares his background. (16:34) How did Steve come up with the name for his agency? (19:31) Steve shares the three insights that led him to start an agency. (22:12) What makes Branch different from any other agencies? (26:33) How was Steve able to piece it together, when everyone else has not been able to? (35:19) Steve mentions what has been fascinating and exciting for their agency. (36:53) What does the future of working with independence look like for Steve? (52:44) Key Quotes: “Part of how we built this idea of community is with some real product innovations, and how the community can benefit each of the members. And I love the metaphor of a tree creating coverage, I love that it grows, and it was a name that ended up sticking, as we incorporated and went to market.” - Steve Lekas “I think we come at it from a little bit of a different angle because of the experience of working with consumers and understanding their buying, and shopping behaviors. And architecting a business that was built to solve the problems I couldn't solve in some of my past lives.” - Steve Lekas “I think our mission is to make insurance less expensive, and by making it less expensive, we can help more people be insured, which we most explicitly go after through our nonprofit arm safety nest.” - Steve Lekas Resources Mentioned: Agency Intelligence Reach out to Ryan Hanley Steve Lekas LinkedIn Branch Insurance Advertisers: Tarmika We Got Your Podcast Learn more about your ad choices. Visit megaphone.fm/adchoices

In a crude laboratory in the basement of his home. Before we move on and welcome back to the show, we have an incredible episode for you today. I'm joined by Steve Lakis, the co-founder and CEO of Branch Insurance, a startup insurance carrier that is doing some pretty wild stuff on the personal line side. And they're working through independent agents. Now they also, like many of the insure techs have come up, Hippo and some of the others, there is a direct arm to what they do, but primarily they are working into the IA space. They're in six states now with hoping, and I think Steve kind of mentions this, they're hoping to be in 30 plus states by the end of 2021. They have a very aggressive schedule for the rollout of their product. And

as Steve outlines, and you'll see right away, Steve is an insurance wonk, a nerd. I mean, we go deep on some stuff that only people who really love this industry will enjoy. I think you're just going to love this episode. But, you know, they can bind home auto umbrella in seconds. We're not talking about minutes. We're talking about seconds. And that's, from an IA perspective, pretty powerful. And we talk a little bit about my experience with something similar to that with Plymouth Rock and what they're doing on home and

openly and Hippo and Swift. There are a lot of dynamic changes coming to the way the insurance customer experience is presented and it feels like Branch has a chance to be one of those players. So it was a great honor to have Steve on the show. Before we get there, I want to give a big shout out to our friends, our friends at Tarmaca. Tarmaca is making small commercial insurance profitable for you, the independent agent. We've seen all these transactions, Bold Penguin getting bought by American Family. We've seen Easy Links getting bought by Applied. These are great things for their founders. And while I'm sure that at face value, nothing may change, those buyouts, they're not a net improvement for the everyday independent agent. These aren't net improvements.

And to see a company like Tarmaca founded by an independent agent, Raghav's dad is a client of Tarmaca. I mean, you have these kind of things in place when your board and your advisory board is made up of individuals who are pro-IA. What you find is a product that's pro-IA. And I just can't speak highly enough about Tarmaka and the work that they're doing and the success that companies that use them have. So go check it out, T-A-R-M-I-K-A.com. T-A-R-M-I-K-A.com.

Also huge shout out to our friends at Better Agency. Better Agency and Tarmaka are partnering. So now you have the best commercial insurance raider integrated into the best independent agent CRM out on the market. And these are the kind of partnerships and integrations. I'd love to believe that these are matches made inside the Ryan Hanley Show as they're both sponsors. But ultimately, these are the kind of tools that are lining up to help you just be more efficient. Give that quality customer experience that you daydream

about in your mind where systems talk to each other and pass data so that you're not spent double entering and your people aren't trying to rush off the phone because they know they have 20 minutes of data entry to do. When the systems that we use talk to each other, it's not just our agencies that benefit, it's our customers that benefit. And maybe even most important, it's our employees that benefit because they get more of their time back. They can work less stressed and ultimately all of that comes out in the quality of operation that we're able to run, the profitability of our agency, the growth of our agency and it's just tremendous.

So if you haven't at least taken Better Agency for a test drive, I highly recommend that you do. Go to betteragency.io, betteragency.io. I think for a buck, you get a two-week trial or a 30-day trial, something like that, and just take the tool for a test drive. I use some of the features, other features I don't, but as a collection, the CRM is absolutely tremendous and it's getting better every two weeks. Every two weeks on the dot, they drop four, five, six, seven feature improvements, just expanding what the tool can do. And I just think Better Agency is a great tool that you need to be aware of. So go to betteragency.io. Okay, let's get on to Steve. Steve.

Ryan. How are you? How are you? Nice to meet you. Yeah, nice to meet you as well. I love that New York Central Mutual sign. Oh, yeah. Not a lot of folks are rocking that one.

Yeah, well, I've been saying for years, they're one of the best companies in the entire country that, you know, only New Yorkers know about. Um, you know, I'm sure you know this, but a lot of people don't realize who don't write in New York, a lot of agents, how, you know, mutual company and domestic and specific domestic company driven our marketplace actually is. I think we have something like 300 mutuals and 100 plus of them are domestics or something like that. Some number around there, which makes it a, it's just a unique ecosystem for a lot of reasons. And then most of those won't, won't write down in the city, you know, or, and then some will only write down there. So.

Yeah. I mean, I've been up to the Edmiston office up there in upstate New York. It's a, it's fascinating. I mean, I know what people don't know is that in 1960, we had over 6,000 mutual companies in the United States. And they grew up for a really specific reason, which was there wasn't regulated surplus and people were just banding together. It's actually one of the core principles on which branches founded. The mutual should have been the perfect insurance model because perfect is frequently defined by our customers as efficient and mutuals don't have a profit motive. The problem has been it's actually been a problem of motivation. NYCM is a great company. It's got great service, great people, but no desire to leave new york right i mean best kept secret not because the rest of the u.s you know wasn't interested the new york central never cared to try out outside new york yeah um and actually like state farm who's probably the

whose market share rides on the greatest innovation and personal insurance in the last hundred years, just barely, right? We're right at the cusp there. That, you know, a lot of people don't know that Nationwide only exists because State Farm was blocked from entering Ohio, and the president of the Farm Bureau here paid State Farm to send employees and license the business model, right? right i mean like the mutuals have such a strong part of our storyline in u.s personal pnc pnc especially but um but it's always a little bit confounding to trace all the tales of it because of motivation yeah uh without the profit motive like why progress uh and And such an interesting part of our story.

Yeah. And you talk about the ease of business thing. NYCM, New York Central Mutual, they have a great auto home umbrella rater. I'd put it up against any of the travelers, Safe safe, I mean, actually, they're probably better than those two guys. But you still quote rental properties on a Excel spreadsheet that you can only get to from a Windows PC computer. So like, it's just funny how, you know, and this is one of the things and they even said, like, based on their current rating models, or, you know, their current rating system, that there's not really a big drive to move from that. So you're quoting home auto umbrella. And then if they have a rental, you then go into this Excel spreadsheet and use like macros to generate the quote. And then, you know, it's just funny how, you know, we're, we're in a day and there can be so successful. I mean, they're, they're incredibly successful and profitable company. And I think either number six or seven for auto insurance and all of New York state. So, I mean,

I think that's a fairly unheard of thing that a domestic would be ranked that high in a state, um, for, for, especially for auto insurance. So, um, it is is it is interesting. I mean, it's one of the things about our industry in general that that I've, you know, again, I don't know that that any little boy grows up dreaming of being an insurance nerd, right. But we find ourselves in these places. And one of the things that I find to be so intriguing are are those stories, you know, you just run into all these unique stories about how different companies evolved to serve certain needs and how the decisions they made over time impacted where they are today. And I think it's very, very interesting. I agree with you. I mean, I would

add about mutuals, which is so fascinating, is owned by their policyholders, but the policyholders have no understanding of what that means or even that fact. And that because of the way capital works, which it's all our businesses, right? Moving capital. If you're a mutual, it's really hard to raise capital if things go bad. And so the reason the mutual should have been so efficient, and remember, like when the mutual started, policies were all accessible, right? So you paid in a small premium, and then if premiums didn't cover claims, we'd all chip in the difference. So it should have been perfectly efficient. But for a million reasons, you can imagine, like that's really hard on consumers to have that kind of uncertainty and then get a big bill at the end of a period. And so we moved to this, you know, the statutory capital model. And then it became regulated. So regulatory capital.

But in this model, when you have to stow so much money away, you don't have a way because your customers are owners, but they don't know their owners, then how do you get more capital when you need it? And insurance is built for volatility smoothing, right? And so you end up with this long-term problem for mutuals, which is give the money back. And how do you do that? Especially when like that doesn't actually like no one gets no one is bonus better if you give if you give the money back and so that led us to like you know is it the late 80s or early 90s demutualization of met and crew right tens of billions of million uh tens of billions of dollars going back to owners that didn't know they were owners. But then you hear the kind of the same subtext with some of the insure techs, of which you'll hear it from me, which is we built it so it can be hyper-efficient and our customers are

owners. But what does it mean and how would it be different? And why does it bend that long-term conflict that mutuals have had with themselves and their customers? Because they are built for the community only to serve that community, but give the money back. And then having to fend off your policyholders in lawsuits and things. It's the dynamics. And who else's marketplace that's $400 billion big is dominated by nonprofits? That's by itself a super interesting question.

Yeah. So, you know, you have a pretty, you know, doing the LinkedIn stalking of your profile, you have a pretty dynamic history in the industry. I mean, give us the 10,000 foot, you know, and that's going to be tough. I mean, just looking at some of the places that you've been and some of the things you've done, but kind of walk us through how, you know, maybe not necessarily to right up to the formation of branch. So I have some, some questions about that, but I, but I'd love to hear just a little bit about

your backstory because, um, you know, most of my guests don't start. So, um, authoritatively nerdy. And I mean that in an incredibly positive way, uh, right off the rip. So, um, so how the heck did you get all that information? You know, the, know, starting with your last question, Ryan, I was at a big company and, you know, we hadn't grown policies in force in a long time. And, you know, trying to figure out how to help, I started asking the question of, well, how did we get this big in the first place? Big, really big. And that was a hard question to answer. And, you know, the first observation as I tried to research it was no one record keeps in our marketplace. And, you know, the rationalization was, well, because nobody would read it if someone actually paid to publish something. And so it's really hard to cobble together the history. But I was obsessed with the question of how did big insurance companies become big?

And that led me to kind of a love of insurance history, but for its prescriptiveness. Right. I mean, it's actually kind of amazing how short our viewpoint is, right? I mean, even if you're kind of old guard, you're talking about Hurricane Andrew and its impacts on the industry. And maybe if you've been around a really long time, you're talking about when we invented homeowners as a product in 1950. But like, it's reasonable to believe that the biggest impacts to our market cycles have been caused by regulatory changes and natural disasters. And those things are not multi-year cycles, right? We're talking multi-decadal or maybe multi-centennial. And so how I got the information was just cobbling it all together. I'll tell you, I stumbled across this place that anybody

listening to your show should visit at some point. I think it's called the Insurance Library of Boston. Oh yeah, that is phenomenal. I mean, like if you're trying to find answers to why the things that occur today exist the way they occur, there are these gems of places and the state of Massachusetts industry funds the Boston library. But if you walk in, you know, the librarians I'll look at you a little bit funny because they just don't get a lot of foot traffic. But the librarians, I'll look at you a little bit funny because they just don't get a lot of foot traffic.

But the answers, the information is deep. And, you know, a lot of the things we talk about today aren't new. Right. And the way we talk at branch is we're not trying to disrupt a market. We're trying to introduce some of the oldest ideas of insurance, which are that it's a communal good, that it is good. And this all stems from a really long view. But your question about my background, you know, I grew up, I was a sophomore in college when I started working nights at Allstate Insurance. I was there, started taking first notice of loss and claims, then small claims adjusting. I was going to school for tech, moved into tech, realized that they probably weren't going to compete from as far back in the back office as I was, and I had a desire to help them win. And so I tried to find my way into the business. I got into underwriting, then into a strategy function, and then into product development and product management. It was at a time where Allstate was kind of

slowing down its own direct business and bought a company called e-surance. And so as they published on the web to Wall Street, you know, the desire was that insurance could be the all state of the web as the direct revolution was, you know, well underway. And I had the cool opt to go to San Francisco and help create the first online home insurance program in the United States. It's a great business. You know, you start from scratch. We didn't have the risk tolerance to be coastal. So in the inland market, you know, it grew to 100 million in five years and it ran its target loss ratio the whole time. But, you know, it's interesting as you think about the bones of organizations and places, Allstate's got a strong pedigree in underwriting and tends to make its targets like some other companies like Progressive and Auto. And so that was all built into the fabric of that business. The downside was, even being the first, it was 83 questions to purchase, far shy of a

digital experience standard for most consumers. Soon after, I left and went to a company called Barrisk Analytics. I'm sure you know, in the industry, it grew out of the insurance services office and had a chance to run the personal insurance arm of the insurance services office. And the moment I saw the way data worked and grew my relationships across the data aggregator world, I saw a model of underwriting that wouldn't compromise on underwriting integrity, but would allow for different and unique business models in insurance that could be really powerful in creating price value and convenience value to consumers. So my background and the Branch background,

very intertwined. Yeah. I mean, it sounds like the perfect cocktail for starting your own insurance company. It might be. No one else has used that particular cocktail, so maybe not. We'll see. So where does, it It's okay. Now we're at Branch. Where does Branch come from? The name Branch was my own placeholder. It's from my favorite insurance history story, funny enough. The very first underwriting ineligibility in the United States, as far as my own research goes, was the Philadelphia Contributionship from Protection of Lost Homes by Fire, I think was the name of the company, decided that homes with trees around the structure were no longer eligible for fire insurance. And this was maybe, like I'm not sure, but you know, Ben Franklin was on the board and also causing the first fire brigades to exist in Philly. Maybe some confluence of information there, but a couple of the employees from the Philly

quit and started a company called the Mutual Assurance Company for protection of homes by fire. For protection, it's a very long name. And they bifurcated the rate. And so they charged X for homes without trees, and they charged X plus for homes with trees. So you've got both the first underwriting ineligibility and the first pricing segmentation in the United States insurance marketplace as a result of trees. And I loved part of how we built on this idea of community

is with some real product innovations and how the community can benefit each of the members. And I love the metaphor of a tree creating coverage. I love that it grows. And it was just, you know, it was a name that ended up sticking as we incorporated and went to market. Yeah. So, I mean, why start the company to begin with that? What was the spark that said to you, you know, there's something missing in the market that, you know, there's been, you know, I was at least from an editorial standpoint on the front lines of the 2016 insured, we'll call it revolution or evolution, whatever you want

to call it. And a lot of players came and went at that time. It feels like our system has found a little bit of equilibrium in recent years in terms of the agency and carrier world working more in kind with InsurTech and new insurance players versus fighting against them, which is a good thing for all of us. So I'm just interested. It's not a small thing to do what you're doing. So I'm just interested, you know, it's, it's not an, it's not a small thing to do what you're doing. So I'm just interested what the spark was. Yeah, you know, it was, it was the combination of these three insights. First was insurance would have to be cheaper to be better to its customers

in the commoditized market that is auto and home. Second is that technology and data could change the underwriting model in a way that it could be incredibly easy. And in the frictionless acquisition, new business models that could also make insurance less expensive, you know, appeared in my head as obvious. And then the third was that insurance could be good, right? Like good, like orthogonal to how most of my customers and focus groups have ever gone about how people think about their insurance, but insurance provides such a wonderful thing to society. Like how do you pull that through in a, you know, in a different kind of brand? And if you could make insurance less expensive, right? I mean, I think Geico's business model is the moat that it's had for 40 years since its near insolvency in the 70s, right? It's difficult to match because of others go to market. How could you take that a step further in real economics, in appropriately pricing the product and create real value for

consumers? And what I knew was the biggest and most, or the biggest and highest lifetime part of the market was people who owned homes, who owned cars, who frequently needed umbrella. And these multiple needs, consumers were unserved digitally. And so all of this kind of was hitting me at the same time. It was this confluence of experiences and this real eye open in the capabilities of data as I ran a large data aggregator. And at some point, I just, I started penning it out, and I couldn't sleep. Like it was, it felt like it had to be done. And that led me to making a first pitch to a VC, corporate kid here, right? Like I didn't know anything about fundraising.

And getting some advice I should think about, a technical co-founder, and called up some of my friends saying, hey, do you know anybody? And I had the wonderful fortune of Joe Emerson, who had founded five companies, five or six by then. And the last one being BuildFax, which is a data company aggregating building permits from across the US and for 10 years been building products and selling them to home insurance companies. His deep background in tech, but also an understanding of insurance. He got got what I explained, like the moment I said it, and we'd been at it together since. So definitely some good fortune. But I think we come

at it from a little bit different angle because of the experience of working with consumers and understanding their buying and shopping behaviors and architecting a business that was built to solve the problems I couldn't solve in some of my past lives. So, um, I'm trying to figure out the right way to ask the question that I want to ask. Um, so what I heard, what I, what I heard you say is that there's a market opportunity from the standpoint of consumers who own a home, own a car, and sometimes buy umbrellas, you know, at face value, every agent who heard that went, really? Every carrier rep who's ever walked into my office ever has told me that they're the best at writing homeowners who also have vehicles and sometimes write umbrellas. So what is it about, you know, as much as we're not giving away the secret sauce, you know, you don't have to drop into ones and zeros or whatever. But, you know, what would, what is it about Branch that makes it different than any of the other companies

who've been underwriting for 150 years or whatever? Yeah, well, and Ryan, maybe level setting. If I turn you back the question and ask you, why do you think Geico and Progressive Direct have moved 20 points of market share over the last 35 years? Why do I think they have? What do you think? Yeah. I mean, I think part of it is pricing. I think a big part of it is brand.

Those would be my, I mean, that would be my two big, if I were to pick two, it would be pricing and brand. Yeah, I mean, I think those companies do a ton of things well. But like, you know, Progressive, by the time that we're in the early 90s, was already the largest auto writer in the agency channel, independent agency channel, and had essentially no brand unknown to consumers. But both Geico and Progressive Direct have a business model price advantage, right? It's an expense structure advantage that they give back to consumers because of a lower expense ratio. If they paid the same in claims, you'd have a higher loss ratio, but lower average price for the lower expense ratio. And so you can think of that as why Geico can say, you know, say 15%, you know, it's kind of the simplistic way to think about it. And no one was doing that for home and auto.

We wrote the first online umbrella policy last year when we launched as well. And so inside, I think our fastest customer buying both home and car insurance purchased insurance in 37 seconds. With two more clicks, they could have had umbrella as well, been fully underwritten, fully insured. We don't quote, we only give prices. And so it gives us an ability to do something that's hyper unique, which is we flip the model in its entirety. And we love agents, right? We've got an agency business. We've got an ourbranch.com business. And then we've got a business that's entirely new. And so the way we think about it is consumers will want to buy in many different scenarios and settings. And in each setting for each customer, they'll think differently about how important price is. And agents have great distribution. They've got great relationships. It's why that business can be so sticky for them.

And in that model, we have a price that considers agency commission and reduces the amount that we would spend ourselves on acquisition. In our branch.com price, we have a price that considers our own advertising expense, but doesn't have a commission expense. And then you'll see us in new places, like as you're buying a home in Rocket Mortgage, you may need insurance still. Get an instant price, check out, have us cancel your existing insurance for you on your closing date,

have us transmit all the documentation digitally back to the mortgage underwriter, and have to exert no effort of your own. And this becomes very unique, and unique to us because we can serve that need of a consumer to bring multiple products in a frictionless way. You know, we had an agent we were working with who said, who heard what we were doing and said, there's no way you can instantly purchase the bundle. And then they did, right? They actually purchased policies and were insured in seconds. And it's high quality, good coverage, but that's the big flip. And so, you know, we're not necessarily pushing any specific model, but we are the first to truly embed insurance, right? Leverage the full stack

to create value across the value chain from the customer's point of view, allowing them to buy when and how they want, but at the most appropriate, unblended price point. And so you'll pay less with us through Rocket than you'll pay with us on ourbranch.com. And you might say, well, doesn't that bother you? Doesn't that worry you? No, I think our mission is to make insurance less expensive. And by making it less expensive, we can help more people be insured, which we most explicitly go after through our nonprofit, Arm Safety Nest. But that's why, that's the space that is unfulfilled, because you really can't buy

insurance bundled except through branch digitally today. It's very difficult to do. The phone rings and it's that one man contractor and he needs that general liability and he needs it quick and he was referred to you. So you've got to do everything you can and you're really not going to make any money because you know it's going to take a lot of time and heck, you probably can't even get anybody in the office that's going to want to quote it. And so after hearing that pain and that frustration, Tarmaka, T-A-R-M-I-K-A.com. They'll solve everything I just said was terrible. Check them out. Tarmaka. They're awesome. You'll love them. Yeah. You know, it's interesting it it's interesting to me that um that that this is a conversation that we still have to have you know what i mean like why how is it that that uh how is it that we still don't have multiple players who are able to do this why

why is it still so challenging and um i mean i know i know the answers i guess that's more rhetorical or philosophical question or we would call it waxing than it would be like a real question. But, you know, I think, I mean, I, there is, it's funny, I have a lot of emotions with something like that. The, the hardcore independent agent in me says, you know, I, you know, you always hate that someone like Rocket Mortgage, who, who at any, who in large part can take a lot of business from the independent agency channel and direct it away. Because obviously a lot of agents do business with mortgage brokers who refer business to them and Rocket Mortgage is one of their biggest competitors. So the more business Rocket Mortgage does, the less business independent agents do. But that's not your fault. The other

side of it is, I work with a company here in the Northeast called Plymouth Rock. And you may or may not be familiar with them. But they are a more traditional independent carrier who has put in a tremendous amount of work to become more of a leader in the digital space from the standpoint of making it easy to purchase policies. And I think they've done, while not perfect, they're way, way ahead of a lot of carriers. And man, I've seen the way even my own company, myself, and and I have I have a personalized producer the way we've gravitated towards geez if it's a hundred bucks and we know Plymouth Rock is gonna be take us 10 minutes you know I'll gravitate towards the one that's gonna take 10 minutes versus the 30 minutes I know it's gonna take to quote unquote finalize a quote from someone else.

And, you know, so it's really hard for me to not think what you're talking about isn't the future of how we're going to do business. It just, to think that, you know, we're still going to be plugging all this information into systems or even still using Raiders like PL Raider, which is still a duplicate entry machine, regardless of, you know, what carrier you have. It's, I mean, it really is. I mean, it's exciting to think that there's options like that. So, so how are you, as much as you can, like, how are you making it happen? I mean, how are you getting all of it? Is it, you know, proprietary systems you've been able to piece together is it, you know, you, you slip the right number oflymouth Rock guys a bit and, you know, are familiar with the new homeowners product, especially. And I love that the industry is advancing, right?

It's going to be, ultimately, it'll be the benefit of consumers. You know, it's funny, too, as we started doing some business with independent agencies, the challenge for us was, you know, the agent's process is about throughput, right? And you get processes, you try to scale them, you try to be efficient so that you can be quick for your customers and also, customers and also deploy your resources effectively. But so many independent agents then relying on comparative raters, we had early chosen not to get involved because our superpower was that it was instant. You could be insured in less than a minute. You could have one of your customers have three products in less than a minute.

And you could focus on relationship and coverage, right? Like the decision to make is how much liability insurance you need, not tell me your escrow account number, right? Like we're wasting time in the wrong places. But putting branch in a comparative rater just meant that we had to wait until all of the data fields were entered for other people before the process drained and we just looked like another travelers and so we decided not to instead what's been fascinating and exciting for us is our independent agents and as we grow our footprint and our relationships in that space, you know, they're installing us differently so that they can max value for themselves and their customers. And I do think like,

you know, like that's got to evolve. You know, when I was a data aggregator, we were making products to make these processes faster. But you get into this place where carrier A would say, well, I'm not buying data earlier in the process because it's just going to advantage my competitor in the radar. And it's like, well, you guys know you're working against each other now, right? And so like, you know, the, the independent agents, you know, you're kind of wedded to your weakest link, which, you know, will evolve. But I think it takes a little longer, because a lot of that is owned in the stack by the carriers. And so like, they need pressure from guys like me to care, and then

they'll invest, and then it'll trickle down. And like, you know, the raters will evolve, and the method will evolve. But I agree. I mean, I think that's a barrier. And what you don't want, worst case scenario is, because we know, like, we know that on average, Geico has a cheaper price point than the independent agency channel in auto. That's been true for decades. Certainly for 27-year-olds and below. Well, it's not the only value that an agent provides what we don't want is that the agent would be further handicapped in ease and um and so like now i felt as a consumer and i'm you know i'm a very old millennial like the most ancient i think i'm thinking right on the front end of it

yeah i think we're the same age graduated college in 2003 yeah yeah yeah yeah we're the same age. Graduated college in 2003? Yeah, yeah. Yeah, yeah, we're the same age. Yeah, yeah. So as ancient millennials, I love relationships and I love low friction. And so agents can be great with those two concepts in mind, but the tech's got to be there. And there are a bunch of companies in the startup classes that are really focused on the agency space. I think we're kind of evolving from direct to agency, which in some ways is neat because when you're the agent can solve so much friction.

Right. We relied, you know, when I was an agency writer, we relied on the agents to solve how bad the systems were, like, you know, engage the customer during all the waiting periods, like clean it all up after the fact, like just get through the sale. But when you have to build all of the UX, like every corner case, every unhappy path for a consumer, you build things that can work exceptionally well in an agent's office. And I think that's a really bright spot for our future. We're excited about that. And your, your question to Ryan then about, I'm sorry, I talked myself out of your question about it. That's okay. Cause I forgot whatever I asked you. So it's fine. I have another question anyways. So, you know, I think, I think about, you know, I look at branch, and I look at some of the things that you've said, and it, it reinforces an idea, or a concept that I, you know, so I don't know how much you know

about my history, probably not that much. But I have been preaching for more than a decade now, you know, that marketing has to move out front of an agency and be, you know, as much a pillar of an agency's operations as any of the classic, you know, operational segments that more of like an acceptable idea. Back in 2010, when I did my first keynote on content marketing, I had kind of cut my teeth using early YouTube videos and stuff like that to grow an agency back a decade ago. You know, and I was sharing that case study and people would look at me like I was freaking crazy. And I think about how much of running an agency is the operation side. And I think, I'm, I think, you know, now owning my own agency, looking at, looking at where you spend time and resources. And I think about a company like branch and I'm like, imagine how much of your day as an agency owner,

imagine how much of your day is freed up to be a marketer, to be a salesperson, a relationship builder. If you aren't spending so much time dealing with the nonsense of the systems, like I just processed an auto renter's policy. This is $1,100 in premium. No one's getting rich off $1,100 in premium. But this individual needed an auto and a renter's policy. I process it. I put it in, get it all through. And this is 400 fields later.

Verify no errors. Click verify no errors. No, everything's good. All green checks. Everything's fine. Submit business. Whack. Underwriter referral. Mother. You know what I mean? Like you, if I was a cartoon, you would have seen all these crazy emojis coming out of my head because it's like, what is going on? So now I'm calling people and I'm going, guys, all I need is to get this poor woman a freaking auto ID card. And your stupid system won't give it to me because I got an underwriter referral after an hour for an $1,100 premium freaking account. And I'm like, what am I even doing? Like, what am I doing for $175 in commission? I've now spent three hours of time on this thing that should have taken 15 minutes. And I like literally want to put my head through a wall and then you're getting, you know, and then it's, well, does she have five years of prior auto policy?

And I'm like, who the heck keeps five years of prior auto policies? Like I have her deck page right here from last year. What are we talking about? And I like get into that and I'm going, okay, so imagine if that was a more reasonable process. And let's just say it took a half hour to quote and bind an issue, an auto renter's policy for a single woman. Let's just say who was paying in full. Let's just say that took a half hour. That gives me two and a half hours of my life and a reduced blood pressure back. I just start, I'm going, imagine what the rest of my day would look like after that.

And I could maybe write another account. Imagine I could write another account because I had that time back. And like, these are the kinds of things that agency owners have put up with for so long. And unfortunately carriers will look at you like you're crazy when you tell them that their system is terrible. And like, like my travelers, my poor travelers rep, I, she, I give her so much. It's not her fault at all. It's her bosses, most likely her bosses, bosses, bosses fault, but it's someone's fault there that their system is still terrible. And, but she's like, no, it's fine. No, I never hear any complaints from my agency force. And I'm like, that's because they're just used to it. And

they're nicer than me. You know, I just, this is the kind of thing that gives agencies back their life to be marketers and salespeople and relationships. And it allows them to reduce the burden in operations. I mean, is that, I don't know, that was more of a diatribe than a question, but, you know, I'm assuming this is where you're going and probably the type of agents that you're looking for are the ones who that's what they actually want out of their company. Entirely. And you know, it's funny, I was on a panel back when I was at Verisk with one of the executives from the Hartford, really, really good guy. And they were asking us each, you know, about insure tech. And they said, Well, what do you guys think about

it at the Hartford? And he says, we're gonna wait. And we're, you know, they're, well, what do you guys think about it at the Hartford? And he says, we're going to wait. And we're, you know, they're going to watch like they always do. I mean, this was his point. And the thing that I think is so interesting about that point is in representing the industry, you, our market moves slowly, largely because of the regulatory structure, but nothing happens overnight. And so like, you know, I was a company and, you know, Geico and Progressive's autos weren't growing off of unbundled customers, right? There wasn't a such thing, you know, like State Farm who made the market, they launched auto in 22, and then they launched Life Next and then Fire, which became homeowners. And, like, these were the core things people needed, and they did a great job of bundling them. And when customers are bundled, I mean, you know this, but their lifetime is much higher.

They retain much better. The complexity of the need means the effort to shop goes way up and the price benefit is all baked in. But for all those reasons, natural retention is high. You've got less than 15% of the market that shops every year. And so if retention is high, the urgency is low because that person's boss's boss's boss, it's his replacement's replacement's problem. But by then, it'll all be bookended differently because the starting point will be reset because it's such, no one can see it look like this. So why have urgency, right? I mean, the market has changed.

I mentioned 6,000 mutuals in 1960. You know, over a 50, 60 year period, the world is so different, but it took 60 years. And that gives every, and by the way, like, you know, I know what the comp structures are. Everybody's making comfortable livings. Wealth creation is occurring. And so like, even and by the way, half of the industry or more than half the industry gets to make its own paychecks, because it doesn't isn't publicly traded, isn't privately held, it's nonprofit with no governors. So like, you know, the question to ask is, if they tell you that the system is going to get better, the big question would be why, in any reasonable time frame?

I mean, I think the best thing that will happen is those of us that stand to gain something from turning it all upside down will make progress because everyone needs that impetus for innovation. And otherwise, things move crazy, crazy slowly. Yeah. Yeah. I, I, I, you know, I remember I was at Agency Nation back in 2016 and we were doing a tremendous amount of reporting on, on InsureTech and everything that was going on and had a ton of the, you know, hot new startup CEOs and stuff on our podcasts and we were interviewing them and, you know, and then, and obviously being associated with, I don't know how familiar you are with that or Trusted Choice, being familiar with the Big I National, we were able to, we also, you know, had access to a lot of super regional, regional, even some of the national carrier CEOs and top executives and got their opinions. And it was very interesting how, you know, basically, the major movers and still even today, investors are the super regionals, not the nationals. The nationals tend to play an even longer game, you know, like. When they say they're playing a long game, it's like, yeah, we might adopt that technology in a decade.

And again, like you said, there's a reason for that. And when you have as much to lose by making a bad decision, regulatory or otherwise, as they do, you don't just turn on a dime. It just, it doesn't make, that would be a, as much as it's fun to bitch, it wouldn't actually be prudent, nor would you expect an executive in any capacity to make that kind of decision. But these super regionals and some of the mutual super regionals, you know, I think about some of the things that Westfield, Central, Acuity, Grange, Ohio Mutual, some of these companies have made really substantial investments into insure tech companies and been leaders in partnerships in different technologies. And I think that that has been, I think that's been a huge driver of both insure tech companies in general coming to the industry and in general agents greater willingness to adopt both new

startup insurance carriers and insuretech companies that before they were completely turned off by, right? It was, well, if the Hartford isn't buying into them, I'm not buying into them. You know what I mean? Like, you know, nothing against Hartford. I like the Hartford, but it was this mentality. And I feel like now people are much more open. Like if you had come into the, I mean, I mean, ask, ask, um, a son from hippo and stuff. I mean, when he first came, came into the space four or five years ago, I mean, they were getting slaughtered by agents. I mean, they would, they were getting trashed all over the place. Now, uh, I feel like the agency plant is much more open and I'm sure a lot of people listening are probably on your site right now, figuring out how to get appointed. And I'm sure a lot of people listening are probably on your

site right now figuring out how to get appointed. And we're going to get to that in a second and talk about where you're trying to go. But I feel like today, the independent agency plant is much more open to what you're saying and to a carrier like yours and what you're trying to do. And there's a lot of, you know, what's really interesting is for as much M&A activity as you read about, and there's a ton, obviously, in the agency space, there are a lot of startup agencies, a lot of driven, sales-focused startup agencies that have come into the marketplace that would die to be able to operate with a company like yours. So I guess that kind of leads me into my next question is, where are you guys today? Like, what does the future of working with independents look for you? You know, that's obviously the independent space is most of what listened to the show. So that's why I'm asking in that direction. Well, probably about 10 minutes to set up the podcast, about 20 to 40 minutes to record it, and that's it.

Do that twice. I think it's about two, two and a half hours. Do you have two and two half hours? Because we will help you at WeGotYourPodcast.com. We take everything else. Yeah, yeah. It's a great question. Thanks, Ryan. We are live today in six states, which are Arizona, Indiana, Illinois, Missouri, Ohio, and Texas.

And because of our unique model, where sometimes I am working with major US corporations, you'll see us in the press in a really neat way in a couple of weeks. On that point, I need to be nationally available much quicker, right? I mean, the insurance company side of this, you know, it's hard to be an insurance company. There's a great V.J. Dowling quote from a long time ago, I think it's Dowling's, that says, there's nothing that looks worse on paper than a growing insurance company. And in some ways, it's not totally unlike the pain of growing an agency because you are extending acquisition in anticipation of residuals, right? And so like you're always out a little bit ahead of your skis, just that same model, but amplified. And then you have to put just for the scale of

cost, and then you have the regulatory capital to solve at the same time, because, you know, the whole game is paying claims, like that's your privilege here, right? Yeah. And so, you know, those for the race to scale then becomes critical, right? And if you choose to be full stack, which I don't recommend for most, because it only makes sense to be full stack if you're more than a marketing organization, right? You should be innovating on the whole stack. And, you know, branches are reciprocal. It's an esoteric model, but even a unique model in reciprocals because our customers who are owners vest in the dividends. It's a really neat model. You'll see more of it as we do some experiments in press. But we've got to get everywhere quickly to get to scale and to be able to appropriately serve all

of our customers. And so you'll see us launching States fast and furious all year long. So probably most of the folks that would be listening will be there soon if we're not there now. Yeah. When's New York, when's New York going to happen? Is it going to be 50 out of 50? It's not, it's not, you know, we budgeted 12 months for New York, right? You know, we know New York. You know, we've been doing this a long time. And so you can kind of predict how long each state takes. Yeah.

But you should expect 12 months from New York, which means that we were working on it in 2020. Sweet. Well, I look forward to the day that, uh, that you guys launch here. And, um, I I'd love to, I'd love to be part of part of the journey. I think, I think what you're doing is, is really interesting. I think that, um, these new, um, carrier opportunities, I think new models, I think they deserve our attention. I know a lot of independent agents say, you know, stick, stick to the old guard. There's a reason they're the, they're the old guard. And, and I, and I, I have,

I have a tremendous amount of respect for that, for that opinion. I think at the same time, while the players who have been around for a hundred years are due our respect because they have proven that they're able to continue to pay claims for that long. I think the new models need our attention as well. And I'm very, I'm honored that you come on and share what you have going on because I think it's I think it's super interesting, man. I think that I think that being able to put an auto home and umbrella in someone's hands, and seconds, not even, you know, not even talking about, you know, minutes, that is an impressive feat. And I think, you know, you got to, you have a lot to prove, obviously, over the long term. But that being said, you know, my hope is that you guys are open to younger startup agencies as well, because those are the ones

that often get pushed to the side by some of the older, more established carriers. And those are some of the most hungry agents that are going to be the ones that are loyal long term. So I'm going to give you my push there. But I think you're on the right path. And I'm glad you came on and shared with us. Well, Ryan, if I could too, you know, we, it was, we were starting out with agents. We were trying to understand each other. You know, I'll give a shout out to Chris

Becerra at Cleveland Insurance Brokers, scratch agent, just as you described, looking for new and better ways to do things. But we've got a number of those relationships, and we're excited by them because they're excited and they're thinking about things differently. And, you know, the old guard has tended to spawn old guard, right? Mutual Assurance Company, I mentioned, came from the Philly. GEICO was ex-USA employees nationwide exists only because of State Farm. And I had one of the big insurance companies refer to us as the Allstate group. And we have no affiliation with Allstate, but a number of us were employees there. And if you know the problems well, just as you know, right, just as you articulated, then you can engineer solutions that are unique and solve them. And so I would ask folks to think of us as folks that come from the old guard, because we've got that level of

depth. And if anybody wants to talk about it, I'm Steve at our branch.com. I'm happy to engage, but you know, wish you the best, the best of the show. I will definitely be in touch as we approach New York. Awesome. And guys, so, you know, it's our branch. Oh, you are like our, I'll enunciate our branch.com and give it a check. I mean, I, you know, I know a couple people in your organization. And obviously, this is the first time we've met, but very impressed with you and your background. And anyone, anyone who can nerd out as far beyond me as you can, is someone who we thoroughly enjoy and has an open invitation back to the show. So thanks, man. I wish you nothing but the best and I look forward to watching your success.

In a crude laboratory in the basement of his home. We'll be right back. Thank you. It is 3 a.m. in the confines of his lab. Close twice as many deals by this time next week. Sound impossible? It's not. With the one-call-cl closed system, you'll stop chasing leads and start closing deals in one call. This is the exact method we use to close 1200 clients 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.