--:-- Ryan Hanley: In a crude laboratory in the basement of his home... Hello everyone, and welcome back to the show. Today we have an absolutely tremendous episode for you with Kevin Abramson, the President of Cover Whale. Cover Whale is doing some really innovative things right now in the commercial auto space, but as you'll hear from Kevin, they have plans to expand outside of commercial auto.
--:-- Ryan Hanley: I think Cover Whale is one of those companies that we're going to hear more from. I think it's early days for them, although they're already doing tremendous things, so I certainly don't want to downplay the success they've already had. But it feels to me like they've got a lot of good people in place, and it seems like one of those insurtech-oriented companies that is going to be a player as we move into the future over the next 5 to 10 years.
--:-- Ryan Hanley: That's exciting because I think more fresh blood and fresh ideas makes the whole marketplace more dynamic and pushes legacy players to innovate. We love our legacy companies, but we need them to innovate too. Companies like Cover Whale push them to do so. This is an awesome episode. You're going to love this. Kevin's a good guy and I was excited. We've been trying to connect for a while and I'm glad we finally did.
--:-- Ryan Hanley: With that said, I want to give a big shout out to today's sponsor, Coterie Insurance. Another insurtech-oriented company in our space doing absolutely tremendous things, hitting the small business world. We write a ton of GL and PL with them. They're a big partner for us and a big part of our future at Rogue Risk. If you're writing small business and you want someone who's going to help you get it done fast, easy to work with, easy for your clients to work with, go check out Coterie Insurance. Absolutely tremendous company.
--:-- Ryan Hanley: I want to give another big shout out to our friends over at Donna for Agents, Arias Analytics. Donna is doing tremendous work, helping pull together data, making it manageable, making it easier to understand, and then pulling in third-party data to make the data you have inside your agency more valuable. It means understanding where there's cross-sell and up-sell opportunities, getting a feel for where potential clients may be starting to look to leave, and being able to address those issues through their sentiment score.
--:-- Ryan Hanley: Donna is doing very big things. Whether Donna is right for you today or not, I think it is worth going and getting the demo to understand what they're up to. That way, when you are ready to make a move into a tool like Donna, you know what it's all about and you're ready to make that move. Google "Donna for Agents," go to Donna for Agents, check out the tool. Arias Analytics is the parent company. Ron and the whole team over there are doing absolutely tremendous things. I'm very happy to have Donna as a sponsor because we use Donna here at Rogue.
--:-- Ryan Hanley: All right guys, let's get on to Kevin Abramson. You're going to love this episode. Here we go.
--:-- Ryan Hanley: Hi, how are you?
--:-- Kevin Abramson: Good man, what's going on? Sorry about the connection.
--:-- Ryan Hanley: Yeah, I don't know. Gotta love the Zoom.
--:-- Kevin Abramson: Yeah, exactly.
--:-- Ryan Hanley: How are you?
--:-- Kevin Abramson: I'm good, dude. I appreciate you having me on the show. Looking forward to it. Excited for the chat.
--:-- Ryan Hanley: Yeah, so let's get right into it. I feel like a lot of people who are in the insurtech space, or who are looking into new companies doing interesting things, have maybe heard of what you guys are doing. But I'm sure there are a lot of listeners who just aren't aware of what you're up to. So maybe we start with the basics. Give us the rundown. What is Cover Whale? What problem are you trying to solve?
--:-- Kevin Abramson: I love it. That's a softball of a question. I like to start with something I could probably talk for an hour about. At the core, Cover Whale is a tech company. We are focused on changing the landscape of insurance. That's a broad, sweeping statement, but it's pretty plain and simple. When I say insurance, I don't just mean a sub-segment of it. We're focused on small fleet right now, but we have much bigger ambitions that don't stop at commercial auto. It's the entire industry as a whole.
--:-- Kevin Abramson: We are bringing a proprietary tech-enabled platform that, at the core, leverages and, more importantly, digests massive amounts of real-time data to more accurately price risk. In the end, for any insurtech or traditional player, it's about pricing risk and who can do it better, faster, and more accurately. There's a lot of data out there, but who can digest it in a way that really makes sense? Quite frankly, I think the traditional players have proven an unwillingness to think outside the box and innovate when it comes to pricing risk. That's where a tech company like ours comes in. It's all about data and technology, and changing the approach of how we look at the business.
--:-- Ryan Hanley: What was the moment where you said, "This is not being done right, and I want to be part of making this change"? When did that hit you? Was there a specific moment, or was it just being part of the industry and seeing things?
--:-- Kevin Abramson: It's another great question. We've got a lot of tech people at our company, but at my core, I'm an insurance person that really loves tech. It's not the other way around. I've spent time at various corners of the industry, whether on the underwriting side or as a broker. In my former role at Tiger Risk, I came across all the insurtechs. I was heavily involved in that aspect of the business. I got to see what people were doing and had the purview to understand who maybe had the right recipe.
--:-- Kevin Abramson: I met the folks at Cover Whale. They were a client of mine before I joined. I really got to know the inner workings of the platform and how the team was going about their approach. There was just so much opportunity that told me I wanted to be a part of this. Nobody has figured it out, but it's about taking a calculated risk to say, "This is the right time, the right company, the right space, the right everything." It just felt like now's the time.
--:-- Kevin Abramson: Dan Abrahamson, the founder and CEO, did a really good job laying out the vision, building that proprietary tech platform to attack the industry, and focusing on attracting really talented people. That's what gets me excited. It's fun to be at a place where you're building and attacking the traditional players. But it's not easy. I've said it to the team on a consistent basis, and I say it to myself probably every day: startups aren't for everyone. It's hard. You've got to be mentally prepared for it. For me personally, I'd been in the industry for a couple of decades, and this was a challenge I saw and wanted to go after.
--:-- Ryan Hanley: I can reiterate that a startup is not for everybody. The emotional roller coaster you have to deal with on a day-to-day basis... I've always had an appreciation for it, but now that I'm actually an entrepreneur, I have an even deeper appreciation. It's easy to snipe from the outside and question different decisions. But when the buck stops with you, when the decisions you make have real consequences... Most people are used to the fact that if they make a mistake, the worst thing that happens is they get fired. Someone will straighten it out and everything will be okay.
--:-- Ryan Hanley: But when you're in the leadership layer of a non-established startup, if a couple of big contracts go away or if the tech doesn't work, there is a level of consistent, underlying stress in every decision that most people who haven't lived that just can't relate to. When you're able to execute despite that, even if I don't agree with your decisions, I have tremendous respect because it is not easy.
--:-- Kevin Abramson: I couldn't agree more. I talk about this with my wife. I feel like I'm playing a real-life chess match. I'm constantly making calculated decisions, trying to connect the dots, absorbing and digesting every piece of data from your people. Everything is connected—finance, tech, data, telematics, underwriting. In my position, I'm trying to lead this organization to get it to the next level and the level after that. You're going to be making those decisions with imperfect data in front of you, and that's the stress.
--:-- Kevin Abramson: We've got a lot of people who have bought into what we're trying to build here. They've given up pretty cushy jobs and taken a shot because they want to get on the rocket ship. I don't take that lightly. I reiterate to people that startups aren't for everyone. I've worked at large organizations. I started my career at one of the largest reinsurance companies, went to a big three reinsurance broker, then went to a boutique reinsurance broker with Tiger Risk. I saw how it works at different organizations at different sizes. The stress level when you're really early stages is just that much higher. There's that much more at risk. Each decision matters the most, which is also what makes it so rewarding.
--:-- Kevin Abramson: I know I'm going to get a lot wrong. There are probably more days that I make wrong decisions than days where I make right decisions. But as long as you have the North Star in front of you and you know where you want to get to, that's the key. My team would say it, and my wife would surely support it, but I screw a lot of stuff up. As a management team, we fix one thing and break two things. But that's what's important.
--:-- Kevin Abramson: The path we've taken at Cover Whale is not about hype or talk. It's about results. We made a decision to bootstrap this from the early days. We didn't go raise money like most insurtechs do based on a theory. We had hypotheses that we tested. We stressed the system. We broke a lot of stuff. We had to get on bended knees and say, "I'm sorry to our partners. We screwed it up. Give us a second chance." But that will lay the foundation for us to take Cover Whale where we're trying to get to.
--:-- Ryan Hanley: Plus, no one's going to remember any of that. It's amazing. Every once in a while, you see these stories about really successful companies and the bad decisions they made. A product that didn't go anywhere, a logo change they immediately reversed a year later. If that article was never written, I wouldn't even remember that it happened. It takes guts to continue to push forward despite mistakes. That's what people ultimately respect and admire—that they kept going and kept pushing. You get to a certain place and people forget most of the missteps it took to get there because what they care about is that you now have a product that works for them.
--:-- Ryan Hanley: It's not easy to get to that point. In the moment, you sometimes have a hard time, but if you can remove yourself even for a few minutes or a day, it's like, "Okay, that's behind us. Next problem. Let's go solve the next one." Keep moving forward. So my question for you is, what was one of those things? What was something where you had a hypothesis, you moved forward, and you solved it? What was one of those big first challenges that maybe you didn't see coming but you overcame?
--:-- Kevin Abramson: One of the realizations that really struck me was that we are a tech company. That's what we are at our core. But there is a human aspect to this business. This is a relationship business, and you can't lose sight of that. Whether it's your partners, your carrier partners, your brokers, agencies, or your reinsurers, to do what we're trying to accomplish, it's going to take really strong, long-term, sustainable relationships.
--:-- Kevin Abramson: I'm not saying I ever discounted that, but there was a side of me that maybe put more of my chips on the tech side. I think we realized that you're not going to be successful if you do that. Maybe you'll hit a double or a triple, but that's not what we're going for. We're going for the bottom of the ninth, grand slam, walk-off, game seven. You need people who buy into what you're doing. You've got to be honest with them, transparent with them. You can't overpromise.
--:-- Kevin Abramson: What I really love about this industry and the relationships I've been able to build is that being honest is okay. There are forgiving people out there. They just want to know what you're trying to achieve, and they'll support you in it. That was getting back to the North Star I mentioned. Tech on its own, I think you're going to struggle. But being tech-forward while knowing that relationships and the people side of this business matter—that's really important.
--:-- Ryan Hanley: I completely agree with everything you just said. We call it "human optimized." It was one of the core aspects of our business. When I look at the landscape we're competing against in the digital brokerage space, most of my competitors have lost sight of the humans. They're all operating off evaluations based on spreadsheet tech numbers, not on the fact that to retain insurance business, you need humans involved.
--:-- Ryan Hanley: I haven't seen a use case in my 16 years in the brokerage and agency side where someone could present numbers showing you can retain beyond the 40s without humans involved. That makes it incredibly more difficult because humans are the hardest part of the business. If it were just tech, it would actually be really easy. The humans make it very difficult. Never losing sight of that is a big part of how you find success.
--:-- Ryan Hanley: There are many aspects of what we do day to day where we need to remove humans from processes where they don't actually add value. That's really what the "optimized" part of "human optimized" is. But the human part still has to be there. If there's not a phone number I can call to yell at somebody, or if I can't drive to your office and yell at you, I'm not going to stick around. These lessons and core concepts are almost like the baseline, but they also present a major opportunity because so many of our peers in the industry have forgotten them or chosen to ignore them because they're harder to do.
--:-- Kevin Abramson: I agree with everything you just said. The human aspect is not easy. The tech side is unemotional and factual. You can run with it. But even from an internal standpoint, understanding that trying to build a culture is hard. Making sure that people on the team understand where we're trying to get to is something we've struggled with. I haven't done a good job of that. I need to continue to get better because in my mind, it's so clear. I can see it. I know where Cover Whale 2.0 is going. I know where 3.0 is. But articulating that and making sure everyone, no matter their role, truly understands it is something I've got to work on.
--:-- Ryan Hanley: Why start with small fleet commercial auto?
--:-- Kevin Abramson: In a way, it's a no-brainer. Sometimes it's better to be lucky than smart. It's an area that just needed technology. Small fleet owner-operators are in high demand. Commercial trucking insurance is in high demand, and that's a trend not expected to reduce anytime soon. Number two, this insurance is a "need to have," not a "like to have." It's required. It's a key component of a trucker's livelihood. It's their second highest cost behind fuel.
--:-- Kevin Abramson: Number three, it's complexity. Commercial trucking insurance is complex. It's not an easy line of business. People have gotten it wrong for many decades, and that's what makes it attractive. Number four, it's expensive. This insurance can be pretty high. These insureds are paying at times $15,000 to $20,000 a truck. There is a commitment from the insured. There is a willingness to do whatever is humanly possible to lower that cost. How do they get safer? How do they make sure that based on their behavioral driving, they can reduce the cost?
--:-- Kevin Abramson: That was the key. We've got to find a group of insureds that actually buy into our mission, which is to lower the cost of insurance, especially for the good drivers. Many of them are overpaying. The good drivers are paying based on the averages for the bad and the really bad. We are attempting to diversify the charges based on better behavioral models, real-time data, and technology.
--:-- Ryan Hanley: One of the things you said early on about what Cover Whale is, one of the words you used was "digesting data faster." I'm interested in that. What does "faster" mean in real terms? What does that actually look like? Why does digesting the data faster improve the process or add value?
--:-- Kevin Abramson: Data and insurance is nothing new. It's been an industry where data has been prevalent with heavy amounts and massive amounts of data. But the difference maker is being able to digest that data, and also to digest it faster in real time. How do we take that data and make real-time decisions based on it?
--:-- Kevin Abramson: In the traditional insurance model, there's a lack of innovation. Innovation is not a core tenant of large insurance companies. It's almost frowned upon. Data in that sense has a lack of technology, lack of collection, and suboptimal use. Actuarial models are based on historical, easy data correlations that infer the likelihood of a claim taking place, rather than live data that's predicting on a real-time basis what events could be happening soon, as well as catching bad behavior in the act.
--:-- Kevin Abramson: That's the key. How do we identify those claims before they take place? How do we rectify them? That's where digesting the data quicker is important. That's the game changer. That's where we're going to be able to define whether we won or lost in this race. Our mission is that based on the traditional models, risk modeling is based on a portfolio approach where the averages—the bad, the good, and the ugly—mix together, and the good pay for the ugly. It should be where you attempt to diversify the charges based on a better behavioral model focused on the individual.
--:-- Kevin Abramson: Some drivers out there should probably be paying half a million dollars for their insurance because they're that risky. Other drivers should be paying probably $27. It's unlikely it'll ever get that low, but that's where the digestion of that data comes in—to lower the cost and make it as affordable as possible, passing that cost savings on to the insured because you can do it in a very tech-efficient manner to reduce the expense ratio, which we all agree in this industry is just way too high.
--:-- Ryan Hanley: Is that telematics? How do you catch bad behavior in the act? I think everybody philosophically would agree with you. Anyone who's sold insurance for any period of time would say we've heard similar language before. Progressive has been trying to stick dongles in cars for 25 years now and nothing has really changed. How does that start to manifest in a way that actually produces real results? Root can't turn a profit. Metro Mile can't turn a profit. All these usage-based methodologies haven't seemed to bear fruit yet. Is there a different way? How are you attacking that problem?
--:-- Kevin Abramson: It's a great question. I'm not going to sit here and give up the secret sauce.
--:-- Ryan Hanley: If you want to give up the secret sauce on a Ryan Hanley show exclusive, I'm okay with that.
--:-- Kevin Abramson: No, I'm just kidding. Mark this down. I'll take 20 seconds, 2021. But yeah, it is about trying to leverage every piece of data you can get your hands on—real-time telematics, every aspect of data. That's the key. But then you've got to do something with it. That's the big difference. You've got to identify what the risky behaviors are. Then you've got to coach. You've got to reach out to these drivers before the risky behavior leads to an accident.
--:-- Kevin Abramson: The loop of collecting the data—historical as well as real-time—and then trying to figure out that your algorithm really is a better predictor of that risk, and then pricing for that risk. That's what's fun about this. There's no right answer. I've got a lot of confidence in the people we have and the mousetrap that's built. But we're not resting on our laurels. I was up in our New York office for the last three days, standing in front of a whiteboard, putting marker on paper, talking at the 30,000-foot level, the 10,000-foot level, the 1,000-foot level.
--:-- Kevin Abramson: We don't have our blinders on. We are constantly trying to improve what we are doing and what we're building. That's what makes it exciting. That's where being at a startup is fun. You've got to enjoy the journey of a startup. It's a grind. But if I gave you the secret sauce right now, I can guarantee that if you asked me that question six months from now, it would be a completely different response. It is every day pushing for more and getting better. That's the competitive advantage that startups have.
--:-- Ryan Hanley: We had David McFarland from Coderion on the show. I've had Dax Craig from Pie Insurance on the show. I think what a lot of you guys share is this ability, unlike the large traditionals—who I give a hard time to but who have done a lot of really good work for a very long time and still present the bedrock of our industry—you can turn on a dime. You can test things. You can spin off little test cases and test algorithms and data sets and try things. For a traditional carrier, when you think about how large some of these carriers are—a Travelers, a Nationwide, a Hartford, a Liberty—really, all change can do is hurt them, right?
--:-- Ryan Hanley: Because even a good change will be so incremental to growth for the most part, unless it's some revolutionary thing. It'll be so incremental to growth that the risk isn't worth the reward. For you, finding that little piece of the algorithm you can tweak, or that one data point, can have such a large impact on your business and its trajectory. The change is worth it to you to have all these different tests going.
--:-- Ryan Hanley: I think that's why, while we always need to have respect for where we came from in the history of our space—because that's a big part of success—we have to continue to support and appreciate it. It's why I love having people from the insuretech and change-maker space on the show. This is how we get to the next level. We need you to be successful so that everyone over time lags behind, you have your success, find your spot, and build your market share. But over time, the change you've made gets understood and disseminated, and the industry as a whole grows and continues to prosper.
--:-- Ryan Hanley: It's so important that we understand these concepts and support companies so people are aware. It's why I love helping people become aware of companies like yours. It's an important part of our space.
--:-- [Ryan addresses the audience directly]
--:-- Ryan Hanley: What's up, guys? Sorry to take you away from the episode, but as you know, we do not run ads on this show. In exchange for that, I need your help. If you're loving this episode, if you enjoy this podcast—whether you're watching on YouTube or listening on your favorite podcast platform—I would love for you to subscribe, share, and comment if you're on YouTube. Leave a rating and review if you're on Spotify or Apple iTunes. This helps the show grow. It helps me bring more guests in.
--:-- Ryan Hanley: We have a tremendous lineup of people coming in—men and women who've done incredible things, sharing their stories around peak performance, leadership, growth, sales—the things that are going to help you grow as a person and grow your business. But they all check out comments, ratings, and reviews. They check out all this information before they come on. So as I reach out to more and more people and want to bring them in and share their stories with you, I need your help. Share the show, subscribe if you're not subscribed, and I'd love for you to leave a comment about the show because I read all the comments. Or if you're on Apple or Spotify, leave a rating and review of this show. I love you for listening to this show and I hope you enjoy listening to it as much as I enjoy creating it for you. All right, I'm out of here. Peace. Let's get back to the episode.
--:-- Kevin Abramson: Yeah, I mean, from our perspective, we're clearly two years in. We've got thousands of policies, we've got a lot of premium on the books for where we are. But if we look at where we'll be two years from now, one of the core tenants in our business and our mission is that we will continue to take risks. That is something different that the larger players can't do. To your point, the risk-reward just isn't there for them.
--:-- Kevin Abramson: For us, no matter what size we get, failure is okay. You just have to identify failure very quickly, rectify it, and change course. If you can't do that, then to your point, it's just not worth it. That's the key of where we're starting. That's one of the things we try to tell people when they're joining the company: "Look, we're going to mess some things up. Failure is okay. Let's have our eyes wide open, identify that failure quickly, and then change course. Let's experiment, but let's not do it at the risk of screwing up a relationship."
--:-- Kevin Abramson: That's the key thing from our perspective of being a startup. It allows you, it affords you, you're expected to take that risk. I'd like to think years from now, no matter what our size is, we'll still have that. It will still be in our DNA because I just don't think you can continue to push the organization to that next level—or the six levels above—if you're not doing that.
--:-- Ryan Hanley: Yeah, I agree. So to give people some more context, you sell through brokers, right? Through agents. Do you have your own paper? Are you an MGA? Are you a wholesaler? Give people some more tactical context to what you guys have going on.
--:-- Kevin Abramson: Yeah, great question. At Cover Whale, right now we are kind of an MGA model. But different from most MGAs, we have multiple carrier partners. Right now we have eight carrier partners that support the vision of what we're doing. We're focused on the commercial auto space, mainly on the small fleet and mid-fleet size of trucking. But obviously, we have plans for other relationships outside of that little niche.
--:-- Kevin Abramson: We operate an MGA model and partner with retailers and wholesalers. It's a traditional approach from that standpoint, but we offer our distribution partners a chance to get an instantaneous quote or declination within seconds of keying in a pretty painless application process. We try to identify, based on the risk characteristics of the insured, which of our carrier partners has the appetite for that risk. We match the risk with the carrier appetite.
--:-- Kevin Abramson: It's traditional in the sense of the MGA model working with traditional retailers and wholesalers, but not traditional in the sense that we haven't just partnered with one carrier who has a single appetite. We are really trying to be a distributor of risk and add value on both sides. To our carrier partners: "You want this particular risk? We can get it for you. It'll fit your box." And the same thing on the retail and wholesaler side. So, traditional but not traditional, if that makes sense.
--:-- Ryan Hanley: Yeah, that does. And I need to be transparent about this. At Rogue, we are a partner with Cover Whale. We are testing the waters on trucking. We get a lot of inbound trucking opportunities and we are testing whether or not we want to build a trucking division and really go all in. It's a big commitment if you do. It is not my personal expertise, but we have some people in house who have wanted to take it on and make it theirs.
--:-- Ryan Hanley: I see what you guys are doing as a major component of that. I couldn't imagine trying to take on trucking and not be partnered with what you're doing. I honestly believe that. The way you're approaching it is tremendous. That excites me when you say you're not going to stop with small fleet trucking, because that tells me you're going to start to approach other markets and attack them. If you do it with the same methodology, that could be really interesting.
--:-- Ryan Hanley: Do you have the ability to share where some of the places you might be trying to go? Or just at a high level, some of the philosophical beliefs on where things are going and where you're looking?
--:-- Kevin Abramson: The easy answer is taking what we've learned in that small fleet space and deploying it elsewhere. The wheels business across the board is the easy, low-hanging fruit outside of small fleet trucking. But what we've learned over the last two years, and continue to learn every day, will lead us to what the next line of business is. There's no question that what we do might not be perfect for every single line of business. We're never going to get into Fortune 1000 D&O. It's not going to be a fit. But we are constantly kicking around what that next move is.
--:-- Kevin Abramson: We also want to make sure we nail what we're focused on right now. We have to have confidence that we have nailed it before we move on and bite more of the apple. As a startup, that's the other part of the decision-making process. There are so many different places you can focus, so many different things you could test and experiment with, but you have to get your core business nailed really, really tight. Take all the lessons you learned, and then try to find where you deploy those lessons and do it even better in the next line.
--:-- Kevin Abramson: To be honest, we've got a handful of areas we're really focused on researching and testing. But right now, it's about the core: let's get this nailed and do this right. From there, we'll be able to grow into these other lines pretty easily.
--:-- Ryan Hanley: I think that's a really good point. It's actually an early mistake that I made. We were primarily focused on workers' comp and doing a very good job growing rapidly with comp. Then we started to expand a little too much into other lines as lead-ins. Obviously, we write full-spectrum property and casualty, but on the commercial side, we don't do a whole lot of personal. As a lead-in, being that source where you think comp first and then cross-sell into other lines, that was working very well and continues to do good. But we probably could have pressed that button ten more times and gone even deeper into it.
--:-- Ryan Hanley: We kind of came out of the little swell we had from expanding a little too rapidly. Things will work out in the end, but when I look back at spring of 2021, making that move outside of comp and starting to expand into other lines first—like cyber first—was a really difficult sale. Cyber first is a really tough place to go. Cyber second or cyber cross-sell can be a no-brainer, but cyber first is very difficult. We learned that lesson by taking it right on the nose. I can agree with you wholeheartedly now, but I made that mistake. I feel you on that.
--:-- Kevin Abramson: Well, give me a little bit more of the Rogue Risk story. We've chatted before, I know it at a surface level. I did some homework and listened to some of your podcasts, which I loved. Give me a little bit more about what you guys are trying to achieve. Your approach is attacking it from a completely different mindset, which I think we love. That's exactly the type of partners we want.
--:-- Ryan Hanley: I came at this from 14 years of being both Chief Marketing Officer for two different insuretechs—Bold Penguin and TrustedChoice.com—and then eight years as a broker. I've hawked home and auto across kitchen tables, and I've sat on the 42nd floor of just about every major carrier in the country and heard CEOs tell me they can't wait to get rid of agents. I've seen both sides of that. That's how I got to the "human optimized" piece first.
--:-- Ryan Hanley: I said, "I'm going to build a digital brokerage which removes the non-value touch points so that the humans can spend more time on the real problems that drive retention and relationship." One ten-minute call where someone on your team solves somebody's problem could create a ten-year customer. They may never talk to a human again in those next nine years. But if you can give them ten minutes of your attention and solve that problem in the moment, they'll just assume you're always there forever and never leave. I think that's a lost concept in the digital brokerage world.
--:-- Ryan Hanley: The second thing I wrote down was "no customer left behind." When I look at the marketplace, everybody's going after the easy stuff. Easy consultants, office risks. You look at a company like Vouch that writes startups. Now they have to expand because surprisingly, you can't be profitable just writing simple startups. All these companies are fighting over the same easy market. I said we're going to do the easy stuff easy, just like everybody else. That's the baseline. But we're going to do the hard stuff easy too.
--:-- Ryan Hanley: That hard stuff is how we're going to differentiate ourselves. I don't believe a small business owner should get shitty service or get ignored because they have to go E&S, or their premiums are too small, or you can't get an online quote bind rate. So what? I have to have a human touch that quote. Is that the best-case scenario for the largest profit margin? No. But you don't know whose niece or nephew that is, or whose uncle owns that business and is the biggest lawyer in this city. You don't know any of that stuff. So treat everybody like their account actually matters.
--:-- Ryan Hanley: Then do the hard work of streamlining that process. There's RT Connector, Pathpoint, Amwins is coming out with a thing. There's you guys for trucking. Digital solutions are popping up all over the place to solve these harder-to-place risks and make the process easier. Our goal is to be the universal connector for those people. We plug into channel partners and help them monetize 90 to 95-plus percent of their B2B customers, where all of our competition is somewhere in the 35 to 55 percent range.
--:-- Kevin Abramson: I love it. It sounds great. It's exciting. You guys have made a lot of progress in a short time. I can hear the passion, which is great.
--:-- Ryan Hanley: Plus, I want to shove it down the throat of every MBA dick who's done a regression analysis in some MBA class and then wants to come into the insurance industry and tell us brokers that we don't know what we're doing. In 2015 and 2016, I put a chip on my shoulder when everybody who'd ever said "InsureTech seems like an opportunity" came in and told us that the last 440 years of our industry's history is crap and that they're going to do it better.
--:-- Ryan Hanley: We need innovation. Absolutely. There's no questioning that. But I have a problem with people who come into our space wanting to change things but do it with disrespect for how we got here. If you don't insure something properly, you ruin someone's life. This isn't like a new iPhone widget that doesn't work and you can't text your buddies for three hours. If you don't insure someone's home, their home is gone. It doesn't magically reappear. We have to have respect for how we got here. That being said, we need to change. Things can be done better. Those are the people I love supporting and talking to and learning from.
--:-- Ryan Hanley: It would be intellectually dishonest of me not to say that I do have a chip on my shoulder. I can't wait to be on stage with one of these assholes and just shove it down their throat.
--:-- Kevin Abramson: I love it. I love it.
--:-- Ryan Hanley: Plus, I'm from the insuretech haven of Troy, New York. There's just so much insuretech happening here. I think what we do is really interesting. The lack of sexiness of insurance is what makes it interesting. If you can find ways to make it cool, engaging, and fun, and get smart people passionate about this, the opportunity is endless. That's why I've stayed here as long as I have and will not leave.
--:-- Kevin Abramson: I think you touched on something there. Insurance is viewed by many as boring. My wife jokes about it all the time. It's easy to take shots at insurance. But the value proposition is necessary. If we can change the way we approach insurance, I'm not saying we can put sexy back in insurance—
--:-- Ryan Hanley: Well, sexy would have had to be in insurance for you to bring it back.
--:-- Kevin Abramson: Fair enough. But it can be fun. It can be dynamic. It can be interesting. There are problems that need to be solved. It can be analytical and thought-provoking. That's maybe the sexiness of insurance—as sexy as it'll get. But we have done a disservice by not broadcasting and making brand awareness of what insurance is and what it means, and why young people should be flocking to this industry.
--:-- Kevin Abramson: The joke is that it's just a bunch of C+ students. That is so far from the truth. The people who are successful in this business are the ones with grit, the ones who are hungry, the ones who keep digging and keep going. That gives you an opportunity to differentiate yourself personally and the company you work for. But to your point, we have to do it differently. The old model is archaic and silly. How do you price a risk based on retrospective data and then not touch it for 365 days? That's crazy. You cannot pinpoint down to pennies what the right price of that risk is.
--:-- Kevin Abramson: That's where tech was needed—to create the efficiencies, to leverage the data, to digest the data. The word "insuretech" is used a lot, and "disruption" is thrown around a lot. But I really do think that's why this isn't just because you studied it and wrote a thesis in some MBA school. It's about understanding what's been done in the past and how do we improve the process. How do we tweak it? Because we've kind of flown under the radar, that's why it's such a great opportunity.
--:-- Ryan Hanley: I'm with you 100%. I was thinking about the audit process for general liability policies the other day. On day one, you say, "How much revenue do you have? How much payroll do you have? Okay, here's your price." Then you don't think about it again until a year later and you go, "Hey, was your revenue this much and your payroll this much? Okay, here's your new premium."
--:-- Ryan Hanley: I could understand when we had to hard mail documents back and forth or fax them. That was as fast as it got, so you would think about it in those annual terms. But the audit process is such a pain in the ass. It's a transfer point or a move point for so many insureds. They fill out the forms, give you crap, then they get a bill and have to pay it in a lump sum in 30 days. They think, "This is terrible. These guys are awful. I'm moving to this carrier over here." Then it's the same over there.
--:-- Ryan Hanley: There has to be a better way to manage whether payroll and revenue for a GL policy are simply the best ways to price a risk, and that annual audit process. The hate that every insured has for that—there has to be a way to make it better. I'm not the guy to figure that out, but listening to you, I think people like you who understand actuarial models better than I do could drastically change the way we real-time price what someone is paying for insurance and what their risk actually is.
--:-- Ryan Hanley: Ultimately, it would give them a better experience so they don't hate doing business with an insurance company because they're so nervous about accurately reporting their revenue and having to pay an extra $3,000 in a lump sum. So they lie, and then we price in the lie. Now we're all playing this big game where we're all kind of lying to each other. It's terrible.
--:-- Kevin Abramson: And you're going through a fundraising round right now, putting together budgets and models, projecting out three years, five years. You put a hand grenade in all of that. To your point of trying to identify the right metric to price off of, and whether it's an accurate metric, we have set ourselves up to fail based on what you just said. People are incentivized to not give you accurate data, which makes it even harder. Pricing on an individual risk basis is hard enough. How do we understand the behavioral analytics of that individual insured? Let alone how do we make sure we're getting the right data?
--:-- Kevin Abramson: You're making million-dollar bets on oftentimes imperfect data. That's the side of the business where you just scratch your head and people look at it and say, "Oh my gosh, this is crazy. This is what these guys are doing?"
--:-- Kevin Abramson: I do think we as an industry can figure this out. We're getting better. Even the big boys and girls are aware of it. But as you said earlier, it's hard for them to change. It's hard to take those risks. Do they know who Cover Whale is today? Probably not. 99.9% chance they definitely don't know. I think at some point they're going to know, and it's going to be pretty soon. That's what makes it fun. Coming at it from a different angle allows us to take these big shots. We'll get a good portion of it wrong along the way, but we're okay with that.
--:-- Kevin Abramson: Our carrier partners are long-term, sustainable relationships in this business. I said it early on: that's the key. You cannot burn carriers. You cannot burn reinsurers. Our approach has been to build a long-term, sustainable company, but the rocket ship is going. We are not putting this in second gear. We're moving as quickly as possible, but we also recognize we need partners to get us to that next level.
--:-- Ryan Hanley: That's why I think you guys are going to be successful. You are walking that line between having respect for the industry and what you're doing, with the absolute positive need to innovate, try new things, test things, break things, and fix things. I wish you guys nothing but success. You're going about it the right way. It's exciting to watch companies like yours do new things. I hope there's a day that some of those big companies wake up and they're a little nervous.
--:-- Kevin Abramson: That makes me feel good.
--:-- Ryan Hanley: Everyone should be a little nervous every day. I'm rooting for you, man. Where can people learn more? If someone is doing trucking and small fleet and wants to learn more about you, where can they go? Where can they connect with you?
--:-- Kevin Abramson: CoverWhale.com. The website is very simple. You can reach out to any of our management team. We've got a great team that's growing. With contractors, we're close to a hundred people right now. The team just continues to multiply. I welcome it. I look forward to working more with you guys and your team. I'm on a different side of the industry now, getting to meet folks like you. In my former life, I was a layer removed. This is what's fun—chatting with folks like yourself, understanding how you're attacking the business, and figuring out how we collectively change the industry. I appreciate the time.
--:-- Ryan Hanley: Yeah, glad to be on. I wish you guys the best of luck as well.
--:-- Kevin Abramson: Thanks, buddy. Be good.
--:-- Ryan Hanley: All right, man. Sounds good. See you.
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