Simplified Insurance for Small Businesses | Tim Metzner from Coterie

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Tim Metzner 0:00
By the way, that’s always been true in insurance. The insurance companies that have that win over time, they use data, they either have access to different data, or they use data differently than anyone else does. So what they can do then is they can, they can look at a population or risk, and they can evaluate that risk different than someone else can.

Alexander Ferguson 0:25
Welcome to UpTech Report. This is our apply tech series UpTech Report is sponsored by TeraLeap. Learn how to leverage the power of video at teraleap.io. Today, I’m joined by my guest, Tim Metzner, who’s based in Cincinnati, Ohio. He’s the co founder and chief strategy officer at Coterie. Welcome, Tim, good to have you on. Thank you happy to be here. Now, coterie is a commercial insurance platform, you’re focused on serving other software platforms, as well as agents and brokers. on your website actually says Small Business Insurance simplified how they understand him, what was the concept that you had for cluttery? What was the problem that you actually initially saw and set out to solve?

Tim Metzner 1:05
Yeah, so we’re a company who’s, you know, one of those interesting examples where our actual end customer or end user who we’re serving is a little bit different than our partners who actually are the way we distribute our products, or end user is that small business owner, and we talked about everything from, you know, called a micro business or a freelancer, contractor, that single person, you know, one girl and in a truck kind of thing, all the way up to, you know, a small business with, say, up to 50 employees or something like that. And really, across a broad range of kind of industries and classes. So our, our core customer is really that small business owner. And the way we get to them is through partners. So in some cases, that’s technology partners, so maybe the tools that that small businesses already using to run their business, like an accounting system, right, or a point of sale system, something like that, or the way insurance is traditionally sold today. And still, you know, somewhere between 85 and 95%, of small business insurance still goes through an agent or broker. And so we believe that we can drastically simplify the life of an agent broker make it a lot easier for them to sell that small business insurance policy. And we can add additional value to a platform or a technology that is already serving the Small Business customer by empowering them or powering an insurance buying experience, right from their platform.

Alexander Ferguson 2:30
Now, you started 20 2018, is that correct? Yeah, to begin, and I’m sorry, specifically, more is an API, first company. And so you’re providing that API to the other software platforms, like you’ve mentioned, like software, accounting solutions, like QuickBooks or other things that basically hook in and then are able to offer insurance, but it’s really going through your API to do the end. I don’t know the right words, adjusted underwriting that Yeah, underwriting, there we go. It comes back and now but you’ve opened up to actual agents and brokers. I mean, I got my business insurance through a broker that I know. So are you trying to replace the agents and brokers? No, you’re not? How what’s what’s your mission here?

Tim Metzner 3:14
Yeah, it’s not to replace agents and brokers is the reason we started with API first and through kind of non traditional partners like that, you know, accounting platform say, is, we believe fundamentally, that if we started with technology and data, first, we could simplify the whole buying process. So whether that’s an individual small business owner through a platform that has to answer a few questions in order to get a price and, quote, buying insurance, or for an agent. So we looked at it and said, agents and brokers while they have there’s an opportunity to optimize what they do, they’re pretty good at their jobs. Like they understand how to write a small business policies. They’re sort of getting it done today already. So we knew that we could enable them with technology, we asked ourselves, like, what would be the harder problem to solve here? And let’s start there. That’s why we start with API first and said, What if we could embed an insurance experience in a platform that knows nothing about insurance previously? If we could do that? Well, we certainly can build a better experience for an agent or broker to sell a policy to so we started with the API person said, if we can make it so easy for someone to get a policy through an API in an in a non insurance experience, then we know for sure, we could also power agents and brokers.

Alexander Ferguson 4:28
So what’s the what’s been the problem though? And then the business insurance side, it’s like consumer, say 15% or more cars, I mean, like Geico, places that have simplified the, I guess, the consumer side of insurance. But is this the business side lagging and the technology?

Tim Metzner 4:44
Yeah, that’s a really good question to two big things there. Yes, absolutely. So there has been a faster and larger investment in technology on the personal line side, so the home and auto insurance industry, that they have seen more innovation, more investment Technology there sooner, probably a lot of different reasons for that. But for you know, it’s not new in the personal lens world that you could find a direct, you can buy directly from an insurance carrier. That hasn’t happened, you know, up until very recently on the commercial line side, so there’s not the investment in technology. The second part of that is a couple other parts of that. So for the small business owner, the way a small business insurance policies got created, traditionally, from carriers was they actually built insurance policies initially for very large companies. So they look at large organizations that we they have very complex risks, there’s a lot of questions, we have to understand a ton about this business to know how to rate this risk, right. So what the carriers did was when for a small business, they said like, okay, let’s use that same idea, right, have this, this rate, the risk, and let’s kind of fit it into a small business. So what that ends up looking like is a way longer application than you actually need, like most small businesses are not that complex, when they get started, like those first handful years, and for a small business with 15 employees, that never gets to be 1000 person company like, it gets a little more complicated over time, but it’s still not that drastically complicated. So you don’t need a 30 page application filled with questions about every part of your business, and have 95% of those questions be totally irrelevant for a small business owner. So the way it works, historically, is like the agent and broker or broker would sit down with me and go, I’m gonna answer all these questions like, let’s just get through this, right. And for a lot of it, you’re just like checking a box, or skipping it or recording as fast as you can, because it feels so irrelevant. So that’s broken, right? Like just the process of having to answer a ton of questions, most of which are not relevant either because of industry, because a company size for your business, like that’s just a broken process. The other side of that is for the agent and broker because that takes so long. And the policy is so small, they don’t make very much money on a small business insurance policy. Like there’s very little margin in that policy in the first place. If they have to spend, you know, three, four hours getting an application out, and then back and forth with carriers to try and get questions answered. Because there’s follow up underwriting questions after that initial application, like, by the time they get that policy bound, if they actually did the math, they’re probably not making much money on it. And so you would ask them, well, then why are you doing this? Right? And the answer is like, well, I still make a lot of money. In most cases, if you’re a small agency, like you do personal lines and commercial lines. So I do, yeah, I do your home and auto. And also, if I can’t help you, with your small business policy, when you come to me, you’ll go to someone else, guess what that person you’re going to, they also do home and auto. So if I send you away, I risk losing your whole business. So it’s one of those things where it’s like, in many cases, an agent will tell you like, I don’t actually like writing small business insurance. Because it’s complicated. It’s hard to understand for the agent, even, it takes a lot of time, and I don’t make that much money on it. So all that doesn’t sound very good. And we said, What if we could flip the script, significantly reduce the amount of time pull the data from, like, pull actual real data from sources that already have the data that exists? So you don’t have to spend all the time on the application? Now you can actually spend time as an agent, just understanding the business and the individual.

Alexander Ferguson 8:19
But let’s let’s actually dig, take a moment to dig into that. The tech stack, like how does it work? How do you actually make the process simpler? Are you just automatically filling out the answers? So they don’t have to? Like, what’s the process look like? And the tech behind it?

Tim Metzner 8:33
Yeah. So there’s a there’s a lot to this, but it to try and simplify it for you. The first part of it that makes it work is we’re not just reselling an existing product. So instead of going to the carriers and saying, hey, let’s build a platform and make it easier to shop for commercial insurance. We said we have to actually build new insurance products. We can’t require a small business to answer all these questions and expect to have a great customer experience for them.

Alexander Ferguson 8:58
So are you had to provide the technical assurance Are you actually connected still to insurance providers.

Tim Metzner 9:02
So it’s sort of a middle ground, think about it as white labeling. So we went to some insurance carriers and said, We have insurance expertise on our team, our co founders, and you know, our CEOs and actuary by trading background, we’ve got very deep insurance expertise and our early stage founding team that understands how to do commercial insurance. So we had to convince a carrier to say, hey, you can take our products and basically build rebuild them, right. So the way insurance works is it’s regulated on a state by state basis. So when in all 50 states in fact, 51, including DC, you have to work with insurance regulators. So you file your insurance product, so you get approved as a carrier in a state. Now, what happens in some cases is there are carriers who have been approved in states but they’re not actually selling in those states. So for a company like ours, we can go to that carrier and say, Hey, we would love to get access to your product and actually sell it, but to rebuild it ourselves and actually manage insurance. We’re effectively acting like a full stack insurance company, but we’re writing on someone else’s paper. So they’ve given us permission to say you can use our licenses to file insurance products in the States, but you’re gonna build the products, you’re gonna manage the underwriting, you’re gonna manage the pricing. So we’re, we’re managing the entire insurance product, which lets us underwrite differently. So we can ask a different set of questions. And you would have to sell a, you know, a Hartford small business policy, say or someone else’s existing, traveler’s, like, all those guys have traditional questions that if you’re going to just build an aggregator online, the minimum set of questions you have to ask is massive, right. But if you start your own product from scratch, you can ask your questions. And because we built with technology and data in mind, we also have the ability to leverage third party sources of data to answer those questions instead of a traditional application.

Alexander Ferguson 10:50
So is the two combo here, you actually rebuilt a new product with the backing of an insurance company, but you’re you’ve white labeled, providing it forward, which allows you to customize more the experience and what you need to be able to underwrite it. And then you’ve also collected the data. So you don’t have other third parties, you don’t necessarily ask as much. So it’s surprising.

Tim Metzner 11:12
Yep. And we have goals to drastically simplify that. So like in a future state, you could answer two questions. And that’s all we need, because we can get access to all the other information we need from from sources that exist. Number one, by the way, those are oftentimes even more credible, too. Because not that you’re trying to mislead us when you’re filling out an application. But again, it’s not one of the highest priority things for an entrepreneur. So you’re trying to get through this thing. Like sometimes you’re you’re guessing at a number you’re pulling a thing, you’re you know, you’re you’re just getting through it versus you’ve already, this data already sits in your accounting platform, right? We know actually what your revenue is, because it’s there, like, we don’t have to ask you that we can just pull that from a verifiable third party. So that’s just an example of how that might work.

Alexander Ferguson 11:54
Gotcha, gotcha. This comes down to if you if you buy white label, approximate etc. That means you have one price. And so you’re still also when you’re when someone says I’m going to sell this, you You are a price compared to others. Correct. It’s like you kind of compete, Then am I getting that right? Among other products?

Tim Metzner 12:12
Yeah, we’re another option and a market for that kind of, you know, small business. Yep. Gotcha.

Alexander Ferguson 12:17
Gotcha. Okay. Now, for an insurance agents. They’re often thinking, though, when it’s when they think of tech, that you’re you’re here, you’re here to do my lunch? You know, removing me from the piece? Well, I wouldn’t just then the customer skip me and just fill out the application and sign with you. I mean, why and how are you still involving the agents?

Tim Metzner 12:38
Yeah, so Intertek is a scary word for most agents, because they’ve like historically, over the last five years, when they hear that, like, oftentimes, when you think about insurance, innovation, or disruption, like the first place people go is like, will will disrupt distribution, right? Well, we’ll do an end around, we’ll go around, agents will go direct to the small business owner, direct to the customer, whatever it might be. And I get it like that makes sense that has happened, there is some pain that agents have felt around that. And some of our competitors are sort of notorious for having started that way, by trying to go direct. We just believe like, number one, it’s a massive industry, like there are so many small businesses out there that need policies, and some of these starting every single day. And for many of them, like when you get to a point where you need insurance, you’re gonna go to what you trust and what you know. So if you have that agent you’ve already been working with for a long time, like, we still think that agents can be the first call. So to not be available for agents and brokers, we think is a disservice. Because while small businesses are simpler, in many cases, they still should talk to an agent or broker, like there may be complexities about that thing that it might be hard to just automate with technology, right, like, and the other part of that is like, you’re always growing and evolving as an organization. So to have someone you can talk to him about and say, Hey, here’s, here’s what we think’s gonna happen this year. Are we still properly accounting for the risks that we have, you know, are we protected properly, based on the, you know, the new equipment we’re going to buy based on the growth trajectory based on the new employees, we have, like the new store, we’re opening, like, there’s a lot of factors that we can’t just automate. And we can’t expect to know without a human interacting, so we believe agents and brokers have a great place in the market will always have a place in the market. And also, we believe that new entrepreneurs starting might look to new places to acquire an insurance product. So our thing has always been like, let’s just be available wherever that small business owner thinks to get insurance. If that’s through QuickBooks, fantastic. Let’s power and experience within QuickBooks. If by the way, they go through QuickBooks, and they still want to talk to an agent, guess what, there’s an agent available to them. So we don’t see it as an either or thing like I’ve throughout my career been a huge believer in like human plus technology. And I think if technology what technology really enables us to do is to better interact with other humans, we can spend more time understanding your business and talking about where you’re going, talking about potential risks and how we get ahead of some of the challenges you might have, and spend less time doing data entry so that I can actually still make money on this policy. And now we can we can be humans together.

Alexander Ferguson 15:16
I love that tech company who fully believes in the power of humans still being a human types, that human element being in the play, and technology is there to to empower or enable us to do our jobs better? Yes, exactly. The the future, what can you paint as far as the roadmap of where you’re headed, and maybe some features that you’re excited about that are coming up?

Tim Metzner 15:40
Yeah, good question. So one of the things we’ve been asked about a lot from agents is how can I even further simplify the process of like data data gathering up front? So today, there still are a number of questions, it’s pretty small steps that we asked, but there’s still questions that could ask up front. And in most cases, the entrepreneur is the best person to answer those questions. So what happens often today is an agent gets a call, and they spend time on that call, literally, just like, I’m just going to ask these questions, I’m going to fill it in as we go. What if instead, like, you could just go to that agent’s website, click a link and fill in that that stuff yourself really quick? What if instead, I as an agent could just have a conversation with you and say, by the way, I’m going to follow up and send you a link, I just need you to answer these few questions. And we’ll be on our way. So I’ve already gotten the stuff I need to get out of you. And also, I’ll have you actually accurately fill that out. So we’re launching something we’re calling quick quote, that will be a unique link that any agent or broker can have, it can live on their website, it can be in their email signature, it can, they can use it however they want to. But what it does is just enable that user to enter enter information in a way that they understand super quick, so they can get the information needed to generate a quote, if that quote makes sense. The agent can look at and go Yep, it’s done. bind it, send the policy docs right now. And we’re on our way,

Alexander Ferguson 17:02
it simplifies both for the insurance agent, because let’s say here, just fill it out right here and for the entrepreneur business owner, because then they can just give me a link. Let me just fill it out. But they can still call and talk and ask questions if they want to.

Tim Metzner 17:17
That’s right. And it was actually one of the big advantages of starting with that like API first mentality of like, empowering an experience through something like QuickBooks was, we have to really simplify the way we ask a question if there’s not an agent involved. So in the QuickBooks case, we’re powering an experience there. If we can simplify it enough for that end user, will then get an agent also take advantage of the fact that we’ve simplified how we ask those questions. That’s exactly what it was, like, we took that technology we built here. And we said, Actually, I think it’s really applicable in this role to to really simplify that agents life.

Alexander Ferguson 17:52
Is it? Is it both liability insurance and like equipment? Or is it both sides? Like what’s the To what extent are you covering?

Tim Metzner 18:01
Yeah, good questions, because they’re, you know, the Small Business Insurance world is vast, there’s a ton of products out there. We have three live today. So we have a general liability. So think about the kind of classic slip trip fall like someone gets hurt in your store, and they try and sue you, you’re covered with general liability. A business owners policy is that general liability plus coverage for their building, or their equipment or their stuff. So if you own the building, or if you have a bunch of equipment, like this also provides coverage for your stuff, your business property, in addition to that, to the general liability, and then professional liability, is liability for knowledge workers is the easiest way to think about it. So if you’re an accountant, and you’re providing a service to a business, and you make a mistake, you know, it’s often called errors and omissions, right? I make an error when I’m working with you. You could be liable for that error that business could in theory, sue you as a as a knowledge as a service provider and say, Hey, you really messed up my business, you want to make sure you’re covered in the event that something like that happened. So professional liabilities that other kind of the third product we have live today.

Alexander Ferguson 19:04
Gotcha, gotcha. Well, I love this this integration of technology still is the human element to make everyone’s life simpler. Just Just for fun when you think of technology if you could wave a magic wand and have any futuristic technology be in existence right now. What would you choose anything?

Tim Metzner 19:24
Man, so not necessarily related to coterie? Just anything in general?

Alexander Ferguson 19:28
Anything?

Tim Metzner 19:32
I mean, I don’t know it’s To me, it’s probably something around traffic. So I don’t know if it’s autonomous vehicles flying like I don’t know what it is. But reducing the amount of time we spend in a car sitting in traffic. Go work from home certainly helps that but I don’t know that. That’s one that jumps to mind.

Alexander Ferguson 19:50
Would I be interested though, because of the exact field you’re in. Insurance, the business side? What will insurance look like for flying cars or autonomous cars?

Tim Metzner 20:00
Well, that’s so it’s actually a really good point. So one of the reasons we view ourselves as you know, really more or as much technology, as we do insurance is, the world is going to change the insurance company that’s able to adapt most rapidly to the changing environment to work from home to, you know, whatever, to COVID. Right. So whatever the case might be, like, they’re going to have a leg up, because insurance is really just risk transfer. That’s it right? As risks evolve, the way we transfer them should too. So that I think it’s a fantastic question, right? It’s like, well, in that future state, when people are no longer controlling the vehicle, shouldn’t auto insurance change? Also? Absolutely, it should. The companies that can leverage data in a unique way are going to be the ones who can more quickly understand how do I rate that new risk?

Alexander Ferguson 20:53
That’s gonna be a fascinating environment to be in of, of data is gonna be king of Okay, what data points are we using to say is this a safe vehicle is what’s the maybe the roads that are that are this will be driving on, I don’t know that the future will look like to write insurance.

Tim Metzner 21:10
By the way, that’s always been true in insurance, the insurance companies that have that win over time, they use data, they either have access to different data, or they use data differently than anyone else does. So what they can do then is they can read, they can look at a population or risk, and they can evaluate that risk different than someone else can write. So I believe everyone else thinks this is a super risky class, like let’s say, you know, a certain type of driver, right? Like, a good example is like a driver who gets a DUI, like, you know, you might look at and go, like, every driver with a DUI, we don’t want to touch it. Like, that’s super risky. That’s really crazy. And our CEO tells the story, he’ll he’ll tell it tremendously well, but another company goes, actually, one of the things we’ve noticed is if they’re 35, or over, when they got that first DUI, they actually become a better driver for the next five to 10 years, because they just got scared straight. So while everyone else goes, Oh, my gosh, DUI, we don’t want to touch it super pricey, another carrier to go, Hey, actually, if they’ve got a DUI, but they’re 35 or older, we could actually charge them less than everyone else is charged and still make money on it, and basically capture the entire market of the good risks. And now the bad risk is still left sitting out there with other carriers. So that like it really is how insurance companies have historically one is is by being able to look at data differently. So we believe as a data first company, that gives us a massive advantage where like, we don’t even know how we might be able to use that data. But we know that by ingesting more of it and bringing like data science in as a core function early on, like we’ve got a chance we got a right to win in this category.

Alexander Ferguson 22:50
Data first that that will will will save save the day and in the future. Thank you so much for for sharing this. For those that want to hear more, though about the journey that Tim’s been on stick around for part two, are we hearing the founders journey of building a sexual company in the last few years and the insights there, but those who want to learn more about coterie and be able to get involved you can go to coterieinsurance.com that’s coterieinsurance.com and hopefully can just get started become an agents is a good first step. They’re just like, yep, that’s perfect. Awesome. Well, thank you so much for your time, Tim. And we’ll see you guys on the next episode of UpTech Report. Have you seen a company using AI machine learning or other technology to transform the way we live, work and do business? Go to UpTech report.com. And let us know.