Phillip Napes, founder/CEO of Layr discusses risk management and insurance in depth with risk management student Ayesha Munnaza of the Georgia State Robinson College of Business Risk Management and Insurance department. They discuss the evolution of Layr as a digital commercial insurance broker and the massive opportunities for Insurtech in the industry. There is also comments on recent news from the fintech industry.
Phillip Napes, founder/CEO of Layr discusses risk management and insurance in depth with risk management student Ayesha Munnaza of the Georgia State Robinson College of Business Risk Management and Insurance department. They discuss the evolution of Layr as a digital commercial insurance broker and the massive opportunities for Insurtech in the industry. There is also comments on recent news from the fintech industry.
spk_0: 0:06
Welcome to the Georgia Fintech Academy podcast. The Georgia Fintech Academy is a co operation between Georgia's FINTECH industry and the University System of Georgia. This talent development initiative addresses a massive demand for fintech professionals and gives learners the specialized education experience is needed to enter the fin tech sector. Hello, everybody. This is Tommy Marshall, executive director of the Georgia Fintech Academy. And welcome to Episode five of our now weekly podcast. Um, in terms of just a historical perspective, we've been noticing or noting where we are in terms of the public health crisis that we find ourselves in at the moment the covert 19 crisis. As of today, which is April the 2nd 2020 We're at over a 1,000,000 cases identified in the world, and, uh, we just crossed over 238,000 aces in the United States. Um, we all continue to be very concerned. New York City is the really center hot spot in in the United States. Um, the governor of Georgia, Just, uh um, but guess 24 hours ago created a full work from home or do not not work from home. But, you know, stay in place. Order off. The governor of Florida just made a similar declaration yesterday. Oh, sorry. This morning, Um, and we're continuing thio of maker way day by day with this crisis we we've got, uh we've been getting some great reception from all of youse listeners in terms of engagement with our now weekly format and, um, unfortunate today to have Philip Naples joining from Layer and Aisha Munoza from Georgia State into our conversation. Philip, I use a welcome
spk_1: 2:20
thanks for having me.
spk_0: 2:22
Uh, let's start with you in terms of intros. I am. Um I'm very happy that I've had the good, great pleasure of knowing you now for four years since when you started layer. And, uh, we got to know each other because you came into the er what we now call the Fintech South Innovation Challenge. Uh, four years ago, when you and your colleague Andrew were beginning to put layer together, So it's really been a great pleasure. Thio know you as you've been building this company and see your success, but tell us more about you and, uh, Layer.
spk_1: 3:07
Yeah, well, thanks for having me on.
spk_0: 3:08
I
spk_1: 3:08
appreciate, um, and it's been it's been great to engage with you and work on context. Alphas. Well, that's been a great event in the past. So thanks for that. I have been in the insurance a world for over two decades, actually started my career when I was 16 or 17 at any on in the Atlanta office, Um, and really got to learn the end announce of insurance while going to high school and then while going to the Georgia State University as well. Um, my role in a on is actually what caused me to change my major from the Georgia state from information systems, uh, into risk management, and I really never looked back, but, um, from Georgia State, I I did a quick stent at Beecher Carlson. Been went to a wholesale operation in Atlanta called Cheer Trust That wrote the first cyber liability policy, Um, back in 1999. And, um, a few years they're working on some of the largest e commerce department of the retailers or brands that you might be familiar with. Um later left that and moved to a brokerage called at the time called the Car Group, which is now epic insurance. And then finally wrapped up my traditional career. Um, a group here in town called Christian and Jordan. Um, I had a great, great, uh, experience along the way. But what I found is that each each place that I went to, um, the process was very similar. What really differentiated one broker from the other broker outside of the relationship they may have may have had with the customer service level in their ability to communicate that service level two the end customer. Um, what I really found as a big challenge in the industry as a whole is that the modern professionals students go into university and going to college. We're looking for that education or even teaching themselves upside of formal. We're looking for some sort of education not to go work for a big enterprise, but to work for themselves. Um, if I has kind of looking at my career and job function, um, I realized very quickly that the current insurance distribution strategy simply can't support the buying behaviors of a modern business. Today in the US alone, there's a little over 30 million small businesses, many of which I would define as modern business owners on just to give you some context around that those air business, others at a using technology toe off the Meyers, um, the measure of other business. So they're using cloud basic county technology or social social networking solutions to advertise and promote their product or service. Um, and that modern business other was growing rapidly. The only reason there's traditional business owners over modern business owners, in my opinion, because they haven't been exposed to the technology yet. But once they do become exposed to it, they very quickly wants without core technology, because it enables them to do more with their business, Um, with less people and more efficiently. But we're tied it back to insurance. There was no solution. Insurance that really addressed there need to be able to confidently identify their exposures and build it in Shiring solution to wrap that expect exposure and protected protect the business. So around 2016 is when I exited the traditional industry and look to begin forming layer,
spk_0: 7:15
yeah, fantastic and down in the You know, it wasn't until I started to think about who to invite to this podcast that I realized, well, first building, who had this degree in risk management from Georgia State, which is been a school. I've been really fortunate to get to know in the last five or six months, as I've been in this role, partly because the Georgia Fintech Academy sits at Georgia State, physically are residing at the Robinson School of Business. Although we serve all 26 schools in the university system and, um, one as I've gotten to know, um, a few of the risk management professors, it's just become clear to me at this risk management program at George State is one of the best in the country. And it's, um and then I shall we have you is a remarkable soon to be grad of that program. Tell us about yourself.
spk_2: 8:24
Well, thank you told me so I came to us four years ago, and when I came to us, I first ran to on a school in Nebraska, and then I heard about insurance program at Georgia State University. So I transferred here and I was actually actuarial science major before I changed my major to risk management insurance. It really attracted me a lot. The insurance industry, because I saw the growth and I saw like where this industry is gonna go in the future. And with that, I got involved with Gamma Rho Sigma, which is a business fraternity for risk management, extra old signs, and it gave me an exposure to different different lions like commercial Personal. I was able to go attend AA lot of different conferences like the the Room's Conference, the Gamma Rho Sigma National Conference, and with that, I also was able to participate in Wall Street program. That's one of the Panther emotion programs from Georgia State that I was part of a cohort. We was it. In New York, we visited Bangs that we visited the big financial institutions. So this program really gave me an opportunity to network with a lot of people up in New York and expired. Expand my network over there and during my time, I also did my internship at Locked In, which is a brokerage here in the U. S. And here in the Buckhead area. And I was I was working as a summer associate in their commercial lines, especially their casualties. Oh and ah, casualty lines and over there over that period of time, I really got interested in analytics and stuff. And I was exploring my interest and I took an intra Tate. I started taking a tragic class this semester and that really made me go. Interest in extra LL Signs Field and I applied for a judge is straight for the master program, which isn't a nation's number one right now. And through that, I also met you, Tommy at a program. Sorry, I don event. I think I can get you in a couple of events. There was an F i s We met through Fiserv limits for a lot of events, and I really got curious about what Fintech is about. And I just joined your academy and a couple of my friends who I know are in this academy, and I'm just looking forward for this opportunity.
spk_0: 10:50
It's wonderful to have you. And I know, um, you've had on outstanding career. Um, as you've been working on your degree at Georgia State, I mean part of that, I just note that panthers on Wall Street, just getting into that program is no easy feat. I mean, I've come to come clear to me that the the highest performing kind of best of the best of Georgia State Robinson are the ones that get into that Panthers on Wall Street program or the Panthers in the Valley program. So that's remarkable. The end. And I want to ask you about that. Like when you when you were part of that program. I know there's a lot of different programming that happens here in Atlanta. And then there's the kind of big, culminating event and going to New York and spending time visiting with different companies and executives on Wall Street. What's there was took to what degree were their risk management company engagements on that trip On the trip you went on.
spk_2: 11:48
So we was it a definitely Munich re Okay? And And we visited, I think, like when you think about risk management, I think every company does risk management. So, um, we visited BlackRock. They have another insurance side that you can get in wall with. We visit a Goldman Sachs, so I feel like when you think about risk management, you also think about like all the companies have that department and you know you can get involved with all those financial institutions. But if you're looking in particularly I think we was in a Munich re, and I personally went ahead on network with people at a I G. So I was into their 80 pine, I believe, is the address where on their building. I also went to Marsh. So I think it was It was the companies that we were getting involved with, but also, like, I took the opportunity to stay a couple of days and get never with people up there.
spk_0: 12:38
Yeah, that's cool. The one of the jobs that I had before I got engaged here, Um, with the Fintech academy Waas, um, at Accenture and, uh, ex center. We have the Fintech Innovation Lab in New York City on I guess, about three years ago, he added, ah whole insure Tet track into that tin tech innovation lab. And, um, it really just opened my eyes to what Companies like the Hartford Met life New York life, you know, several other and basically all about most all of the insurance companies I've come to know as if they're not headquarter in New York. They got mean it very meaningful presence in New York. And it was a great, um, really just fertile ground for us with the Fintech Innovation Lab. Kind of as we moved into this this ensure tech area. Um, and it brings up a point that kind of drives me a little crazy at times, which is like in my mind when I say fintech insure Tech is part of that for me. And But I know not everyone views the world in that manner like I do, because I know I'll get in a lot of conversations Where, um, you know, folks will come at in shirt tech and a very distinct in away, and they will think that they want consider in sure Taggart's part of intact Bill considered very, you know, separated, Different, which I appreciate. But it when I bring this up because we have started conversations with the risk management team that professors at Georgia State about How can we have a more defined offering around Chair Tech in the George Fintech Academy? And Rich Phillips, who's the dean at Robinson, is an insurance guy, right? I mean, he he reminds me of that often that he is, um, he got his PhD at Wharton in risk management, and, um, it's he still teaches risk management at Georgia State, and he's been a fantastic leader and mentor to me as we've been building towards, if intact out of me. So he and I both share a desire t determine or figure out how to get more of it. Kind of concentration of immature tech efforts going on in Tech Academy and then Philip E. I mean, you mentioned it a little bit when you got started. Was is the use it on the board of the research? Um uh, risk management institute, right at Georgia Started
spk_1: 15:39
Foundation. Yeah. So, uh, last year I joined the board of the Are my foundation. Um, it's It's a great group of professionals both internal to Georgia State as well as professionals outside working in the industry. Really trying to make George states are my department for class, which it is. But to keep something world class requires just as much or not even more effort than it did to get it there. Um, they brought me on board, um, with intent to help build some curriculum, insure attack, because that is, do your point. Something new, Tommy. And it's something that's going to help moderate. You're in industry and it couldn't come at a better time than now.
spk_0: 16:35
Um, let's talk a little bit about layer. Um, so and help me out here, I usually I mean, let's let's think of, like, more questions. We can ask Philip to really understand this company deeply. Um, but I know you know your your tag line on your website it is. Get the right insurance for your company fast. Tell us what you're trying to convey. Their.
spk_1: 17:11
Yeah, I'm sure you've seen that That that, um, internet mean that says, you know, cheaper, better, faster. Pick to that thing. I don't believe that at all at all, I think with type of systems and technology and automation, there's absolutely no reason you can't get all three. Um cheaper, faster, better. I believe that wholeheartedly. Um, the challenge, though, is And what that really try to convey is when people are small businesses in particular, even even global businesses, um, engaged in the insurance process. It is a very lengthy and high time commitment process that in many cases, the fire has no idea what they're about to spin until the last second. Um, that's not okay, in my opinion. So what we're trying to convey to the business owners of that with our technology, we can get you exactly what you need very quickly. And we can give it to you in a way that you can afford it so that you business owner can get back to doing what you need to do, which is growing your business. Because if you're not growing your business, then you're going to go out of business, which means I'm gonna lose a customer. So I need to make sure my customers are focused on growing their business.
spk_0: 18:40
The I remember Philip when we first were getting to know each other, I guess about four years ago you were educating me on the, uh like the middle market. Um, you know how insurance is bought by different employers and the companies in the middle market space? There's this kind of broad spectrum of middle market, um, companies in how they buy insurance. And I have a take away that I remember from those conversations where you were telling me that like the the intrigue stage or level or tear of the middle market was one that the larger commercial underwriters it kind of ignored or they didn't serve very effectively because it was hard to, you know, get in front of those people and an effective, effective way. Am I remembering this right?
spk_1: 19:47
So I think he's talking about the small business sector. So the true s and bees of the world? Um uh, it's not that the underwriters ignore them. The other riders in the carriers love small business. They want to get more small business if the agents and brokers of oId the small businesses, because they simply can't be profitable working with them. So it's not like they're just saying I don't want to work with a small business. It's because it costs too much money to distribute insurance products, um, to a small business other. So they focus on the upper middle market to global companies.
spk_0: 20:28
It makes sense. Yeah. And then is it fair to say that layer has a way to very efficiently and profitably address the insurance needs of this small business population?
spk_1: 20:46
Yes, and not only do it in the proper way, but do it in a way that in the best interest of the business of there, So let me first take a step back and say plenty of digital insurance brokers that are putting a slick website up that air connecting to insurance carrier rating so that they can distribute small business insurance that small business customers and what they typically operate, as is what I call a compared. So I'm gonna feed, uh, this online broker all of my information it could take me anywhere from 45 minutes to hours. At the end of it, they were gonna pump it through the integrations with the carriers that have those integrations and they have appointments with, and they're gonna present back with you multiple quotes of insurance to review. Um, there's a lot of things that I just said that I'm assuming you're working, but it does. It does not work that smoothly, but for argument's sake, let's just assume it done. There's a few things that are wrong with this process. One. You're assuming that a business owner has the capacity to fully understand and compare the various insurance programs that are being presented to them. Our belief is that not true. You cannot. You cannot compare business insurance online the same way you could compare hotel rooms just doesn't translate that way. Um, the other piece to it is everyone forgets about that last option that's not presented, which is do nothing right that that option unfortunately provide the highest level of confidence to the business owner. They know exactly what's covered, which is nothing, and they know exactly what it's gonna cost them, which is nothing. And that's why we see a very low penetration to the small business market from from digital brokers. I think today it sits around half a percent, so there's not a lot of penetration whatsoever. Uh, the other piece of that model is, even though the AP are the integrations, or FBI that carries air. Putting out there are relatively automated. It's being blasted out. Every single carrier, regardless of the digital broker they're going to, um, well, it's a machine whose doing most of the work that all of the work there are still business unit, that each and every individual insurance carrier who have to evaluate every opportunity that comes in, what why they're closer issue is not what they wanted to be. So it actually creates a lot of unnecessary costs for the insurance carriers. Um, so really, that's all he said. It's not providing value to the customer. It's not providing value to the carriers. So ultimately nothing's gonna happen. Where were different is that our technology has two key features that really build confidence in the small business owner, which is the most important thing. First, our technology uses artificial intelligence to automate. The role of the insurance broker with a really exceptional insurance broker does is that they will be able to assess the client's risk and share within the types of policies. Um, and how those policies need to be structure to best UH, two. Best manage that said risk. Second, they should be able to give them pricing expectations of what each line of coverage is going to cost that customer right so that they can adjust the policies that fit their cash flow. That's exactly what our system does. It does both of those process, and it's a two step process that feels like one unified solution. So firstly, it's using the technology to make Taylor in Sharon's recommendation, particular business against gay, this set of hundreds of thousands of small business customers across the US and it shows them from a policy level and structure what they need the body. This is the very same time we have technology, the bull of predicting insurance company pricing, an appetite. So this is just a very fancy way of saying we have the capability to accurately underwrite. We don't have the authority, John the right. But what it does allow us to do is apply pricing to those to those recommendations and now are insured has a tailored insurance proposal and price that we also let him pay monthly with a credit card. So now it's fully aligned to cash flow, and they know that this proposal is the best solution for them. We haven't data not based upon a broker's 30 years experience, which may be exceptional, but it does not hold a candle to the data set in the growing data set that we have acquired and used to provide those recommendations. So if the customer agrees all that, they entering their credit card information and this is where it gets really slick for the carriers, um, the system can determine each product line of coverage where it needs to go to which insurance company. So we don't believe that what insurance company can adequately ensure every exposure it's all business over might have and this technology based on cruise, it says. For example, if a company says it needs G L, this is, it said in the G L worker's comp and fiber. Our system has the intelligence and know that that G. L politan knees replaced with job insurance, a worker's comp need to be placed with a C and A and A cyber anyplace with Axis. And then our system sends it to those insurance companies for acceptance isn't just like a traditional broker will send it to deal with differences. They have perfect information. They know exactly with the risk factors are they know exactly the policy structure and how it needs to be. They know what our customers willing to pay by the way they have bind us. I've already collected payment, got inventory from the customs. So our carrier partners actually have industry leading hit ratios across the board. I mean, I think the digital brokers have single digits. The very low double digit ratios, really exceptional. Brokers probably have 45 55% get three issues. I mean, we're north of 75 80 consistently with our carrier partners. Now where the customer comes through, there's a 95% chance sedated place with with it the right carrier. But sometimes it has to kind of acclimated to the, uh, the environment that that carrier is going through right now.
spk_0: 27:39
Um, Isha, I saw you nodding jump in here.
spk_2: 27:44
Oh, so since I was hearing what you're saying, I had a few questions. So since it eliminates the process off sending the courts or marketing the count So how is it received on the underwriters? End?
spk_1: 28:00
Great question. And it's one that has actually helped us being successful as we have been, we do not require look in a different way. We meet the insurance company where they are technically so. If they do have an A p I, we can integrate with it. Once we get confirmation that the customer wants it and the system says it needs to go to the FBI, pushes it through, it matches up the prices. If everything works that bind, it moves on. Um, other carriers don't have that. They have agency portals. If it says it needs to go through the agency portal, some of the other team is notified and they just keep the information, make sure being matches up. That's actually gonna get even further. Automated as we're introducing robotic processing automation basically makes the court will think it's a human, but it's actually our machine. Put it through. And then finally, there literally hundreds, if not thousands, of insurers across the world who had zero technology outside of email because of the methodology. Tess is that we have created we can now distribute their product digital. They still have staff it right inside off it. But ultimately, when they see a deal, come on their desk from Layer. They have all these all the basics. Mission of mission they need. They know the price work they're willing, willing to pay and that they agree to it. They have bind the thorn so they literally can write complex businesses. Um, in a matter of minutes, they can do what they were designed to do, which is under right not just be competitive on the writers with habits. Throw out something that they take. Hartford's not gonna be as competitive, but it's not gonna be as cheapest. I'm company X Y V it is. Does this picture model. If it fits your model, find it. Send us the policy and we'll move on to the next one.
spk_2: 29:48
Does it apply also when the insurer comes for renewal? So if it comes for a renewal, will it Will it also like, see, what are the pricing of the incumbent and then go around and see what other insurers have to offer and then place it?
spk_1: 30:04
Short answer is yes, it will do all of that. Um, the more complex answer is there is a benefit in having longevity with a particular, uh, carrier. So unless there are major issues but say, let's say the pricing increases by more than 10% in a single policy year, Um, for reasons unrelated to a major change in exposure or changes in Los yeah, it'll move it. But if it increases by three or 4% like that, three or four additional percent that this customer of ours is paying to the carrier is gonna benefit them in the long run. If they have a claim with that carrier because they'll see the carriers appreciate the longevity of any clients. Right? Um, but again, shortages. Yes, it does. All of these things, but there are. There are rules in place to prevent, if you will, a race to the bile.
spk_2: 31:08
You said like it accurately underwrites. So it's that have that capability off. Also predicting cleans
spk_1: 31:17
we got That's where we want to go, right? I mean, that's gonna that's gonna be super beneficial to the carrier partners. But I don't think I'm sharing anything out of the ordinary. Our three year trailing loss ratio is 1.1%. So the way I don't have enough claims data to build predictive modeling. But fortunately, our carriers of us, because they're making money hand over fist with the types of companies we've been able to secure
spk_0: 31:56
and fill up, like what's the, um I mean, help me. You know, I kind of understand. I know the growth has been remarkable of layer over the last four years. Kind of what are your You're kind of key unit economics that you you watch every day on your on your dashboard.
spk_1: 32:18
Yeah. So, um, cost of acquisition is huge, right? So be our digital broker. We have to find very efficient distribution digital distribution channels to make all of the market. Uh, Michael would you like some? It's work, but I will say is Aryan economics, Um are very, very profitable. Um, R l TVs are significantly greater than our digital competitors LTD's um, I think that's because we've been able to acquire customers, want a more profitable way, but also deliver much more value to that customer. And we get to capture some of that value creation as well. So our average customer dinner income for hostin it would, or any traditional digital broker. Um, but we also look at, um if you, uh oh, you know, the tam, if you will in the U. S. Is estimated to be $140 billion on that's blood. On the two sections, 40 billion is undersold or unsold, and the 100 billion is currently sold. Um, we have to build out models and distribution strategies to go after each one. That 40 billion, in my opinion, um, is where that modern business owner lives the rejecting or refusing to engage in a legacy process or even work in a process that has a digital rap to it. But it's just it's just lipstick on a pig. Um, but they're highly sophisticated business owners. So even in the absence of insurance, they have been able to run a very successful business. And that's a different. That's a different strategy than going after the currently place business. I think in 100 billion losses will probably be a little bit higher. Um, that's okay. I think we still have a ways to go after that to drive those losses down and also acquire them in a way that is still still makes it profitable for four layer to target.
spk_0: 34:29
I love it. Um, Isha tell Tell us more like, as you've been studying over the last couple of years and have gotten, um, into this topic of insure tech, which is, you know, Layer to me is a sure tech company. Um, you know how what? What's your advice to us? Like, how do we how do we think about this? This'll area of the market.
spk_2: 34:57
So I think like what I started like I was introduced to insure tech in one of my risk management classes. And then I started researching and stuff, and I heard about root insurance because I was working on a project with Assurance America, which is a non standard auto insurance company they wanted. So I was a student consultant, part of paste class through Georgia State, and they wanted to go direct. And when I was analyzing all their competitors, I saw boot. And the way they do is they compare online all the other not grew dizzy. Brok so would basically, like uses their use, their mobile application. They track how you drive your car. They have, like, they see your video and stuff like that, and you have to drive the car for one week. And they they use is behavioral economics. So and that's how they place your insurance and reading that. And then I'm taking an intra tech class right now, which will it was talking about before, Um, in that I'm looking. How? Machine learning Blockchain Smart contracts like how lemonade, which is a renter's insurance, the mobile app, how they're using it. But so far I was only seeing it in terms of claims. The predictability in terms of claims are underwriting, but like after researching about layers so interesting that you can make brokerage online to so not just like, maybe just not just like personal lines, but also like Maybe there's a future to get into commercial lines. Even that insurance industry is highly regulated.
spk_0: 36:33
Yeah, I think it's I just I know that since your tech space is one that's just been exploding in terms of opportunities really worldwide, Um, and I think about, you know, personal lines has been where I first became aware of, um, of insure Tak coming with, like lemonade, for instance. Um and but it just seems that now, um, maybe for five years, five years later. Now, from when some of these first insure attack coming, starting to come around, we're seeing in kind of every part of the insurance value chain really remarkable offerings from an insurance tech standpoint.
spk_1: 37:27
Dad agree. I mean, a personalized space. That's where it started. The way to rate underwrite and compare and personalize is a little bit easier than commercial lines, Right? So
spk_2: 37:43
if
spk_1: 37:43
you're if you're if you're a man driving in Georgia Hey, Dr Ah, Hyundai, you're probably gonna be paying less than a 20 year old man in California driving a Ferrari, right? It's just it's just it's pretty easy to understand that commercialize. It gets very complex. Very fat, because while all the policies air kind of name, the same thing. They provide different coverages to different industries in different parts of those policies are higher, higher rated than other parts for different industries. So you can look at 50 different rating factors per policy her industry. So it gets very complex very, very fast. And that's why I'm a big believer that brokers will always be a part of this value chain because again, earlier, much to my earlier comment, there's no one insurance carrier that could potentially provide every light of coverage to a business, so it's just not possible. So you're gonna need a A a broker to help you assess what it is you need and what specific insurance carriers need to be represented in your insurance portfolio and to bring that solution. Or that that Consul Tate of approach to the masses to the 30 million and growing number of small businesses in the U. S. It will require automation 100% will require automation.
spk_0: 39:11
Yeah, it's really it's really exciting, and it's, um it's been great just to see the insurance industry embracing these opportunities.
spk_1: 39:25
They really have what we've seen just the last few years is that the brokerage community agent brokerage community have just have adopted insure attack. So when we first started, you know we go direct the business owners, but that's mainly because brokers wouldn't work with us when we first started, and they mainly because solace. Threat. Um, now we actually have a solution that we distribute through brokers. Do brokers have big books of small business customers? They are lost leaders in there in their overall book portfolio on performance. Um, with our salute, allow the broker to deploy our technology down there. Book of Small business customers. There's just two things when it gives that customer the digital experience that they're demanding in a way that gives them confidence in doing it themselves. But from the broker perspective, it creates, um, incredible value to them. Because again, what was derived, deriving negative profit margin now has created a margin it creates the value to enterprise value in their company increases considerably. If you look at agents and brokers today, there's a lot of consolidation, and typically when a broker is acquired, they hack off what they quote unquote dean of small business, because if they included it in the evaluation, it would actually bring it down.
spk_0: 40:53
So
spk_1: 40:54
with our solution, it actually allows that big chunk of business to be added into the valuation and create a multiple greater than what they would see without up. So, um, but this is all this is all because our focus 100% of time every single time is is what we're doing or is what will contemplating doing next in the best interest of the small business customers, when you are laser focused on the business, owners need you unlock value for everyone. And that includes the small business owner, the carrier, and now the broker.
spk_0: 41:33
Um, well, business owners have been, I guess, on all of our minds as we've gone into this massive public health crisis over the last month, they're just getting hammered. Um, What? What are you seeing out there right now with your customers? Um, as a CZ, this crisis continues to unfold.
spk_1: 42:03
Yeah. I mean, our customers are in a bit of shock, just like we are. We more classified the small business small business company as well. Um, what we're trying to do for then, though, is to provide guidance on how the insurance industry is responding to coated future pandemics, but also how to providing content that's not insurance related, but does that does help them operate as a better business of the show. You're the steps we have taken to having now, in an instant, a fully distributed team. Here's what you could do or hear ways that you can apply for fun day or figure out ways to sustain to get through this. But right now, what we're trying to do for our customers, it is not be the insurance sales person or insurance consultant. We're just trying to be an advocate for whatever they need. Like we're gonna give them content. Um, that that has been meaningful to us as we kind of navigate these waters. Um, and hopefully it can. They can find some value in it as well. Um, this is not the time to go out and try to take advantage of small business owners And hey, and put the fear into you need to buy coverage or you need to buy this product or that product to get through this. This is not time for that. Um, the unfortunate thing is, no one really knows what's gonna happen for. I'd say the next 3 to 6 months like we have even after all these, all these, uh, the care act goes through and all the individual checks go out like that, that that is a Band Aid and we will not know the full ramifications to the economy for potentially years. Right? So all we can do is just be here to help and answer any questions they may have and provide content that we have found valuable for ourselves.
spk_2: 44:06
We
spk_1: 44:07
found valuable for another client
spk_0: 44:09
issue on your belong Argue. You just kind of went out there. And you're like, Listen, you know, here's comment questions we're hearing related to business insurance in the middle of this crisis you like, Will my general liability insurance cover my business? If it's impacted by the pandemic, quell my umbrella insurance. We'll see. And I see how your you know just tryingto the lives of perspective and some fact base to these,
spk_1: 44:37
uh, mean for anyone to re read it. Like I'm not sugarcoating anything like No, it's not gonna be covered today. And there have been lawsuits filed already trying to get the carrier to pay business. The Russian. That doesn't mean coverage is goingto happen. Or be be offered right. Those carriers are going to fight it because that was never in their intense to provide coverage for this. It's actually specifically excluded in the policy. Um, that's not to say we don't need that coverage. Like, if we have one, Pandemic will probably have another one, right? I expect everyone nor in my lifetime, and maybe my kids might have three in their lifetime. So this is the time where the insurance industry needs to come together and figure out new solutions to address the next the next pandemic. The unfortunate thing is, with this, the scale of economic crisis and burden on all businesses, not just small businesses. It it's so excessive. Yeah, today bring the insurance industry to its knees and just crippled entirely. It would not. There's no way the insurance industry could survive paying claims related to Cove. It specifically business interruption claims that being said, I mean, there's there's several insurance company are groups that are trying to lobby the government. Two make pandemic insurance insured by the federal government. I think that's a great idea. They did that with aircraft liability after 9 11 they did that with TRIA as well after night or terrorism after 9 11 they do with flood coverage, right? The reason the government in those particular areas are best suited to provide the coverage is because if you they can generate cash, insurance carriers have a lot of cash. But to to properly underwrite for the severity of those types of situations again would cripple the insurance industry. Because they couldn't they couldn't collect enough premium to properly right a plane. Right
spk_0: 46:57
example.
spk_1: 46:57
Right. I'll give you example, The light. The likelihood of a loss is one of the severity of 100% right? So that basically means they would have to come to a business owner that is doing a $1,000,000 a year and say, Okay, we know you're gonna have a claim at some point, so we have to collect the premium around the $1,000,000 to pay your pay your $1,000,000 plates, so it just it doesn't work at that point. I
spk_2: 47:22
also like talks about how the market has been hardening because of the hurricanes and tornadoes, and we're watching the hurricane and tornado season now settle with that. Given that pandemic is already here would be hard for insurance insurance companies to pay for that, right,
spk_1: 47:39
The FBI on it, and incredibly hard A credit cards, this legislation that they're tryingto get started. And I know you think it's just an article at this point, um, they're screaming out for help from insure text because there has to be, if you will, a digital on boarding or underwriting to obtain the information on the respective 30 million companies who are gonna want it, Um, if not more. And then when the event happens, Well, now you have probably say conservatively, 25 million individual claims that need to be filed. So again you have that digital distribution of claims payouts and first notice of claim and so forth, and so on. The current is the industry, as it stands today, does not have the capability to even address the distribution of the time of policy or the claims of that policy. So, again, I said this earlier, and I don't want to downplay the pandemic that there's a lot of silver linings in this, and I think we're gonna see insurance, uh, speed up its modernization very quickly.
spk_0: 48:57
Well, I wanted to Just as we move into the final few minutes. Just hit on a few kind of note news. Noteworthy items from the from the fintech space and sure tech space. Um, so I think one certainly that in the last week, um, this huge piece of fiscal stimulus legislation was passed and signed by the president called The Cares Act $2 trillion. And inside of the careers act, there's 349 billion. That is Thio. It is there to be access by small businesses. Uh, and this is around, um, kind of payroll protection is a major focus. Um, and there's a lot of discussion about how fintech will rise to help, uh, small businesses access that $349 billion. Um, Jack Dorsey found her square. Um, he's been very vocal in the last week about asking the government to engage with square toe, let square help them. Um, these efforts? No, from just different calls. I've been on with other Finn Tex. There's a lot of focus on how and tech industry can can help, um, one other news local here to Atlanta was from cabbage, which is one of our top comtech unicorns. You're in this community. They made an announcement that they had to furlough. Ah, lot. They didn't think they said directly, But I know it was a lot of their employees on Tuesday of this week. Uh, and they also, um it was reporting in several different news sources yesterday that they were freezing lines of credit. Um, which is was, I guess, for me, kind of a little shocking. It was hard to hear. Ah, that news related to cabbage. You know, they they are cabbage as well. Is getting engaged with this, uh, cares Act SB a aspects of it. So we'll see how that creates a business opportunity for them.
spk_1: 51:29
Yeah. I mean, I think, um, again, this is a great opportunity for the private sector to step in and really help the federal government execute on their on their plan. Thio help small businesses. I see how companies like square and cabbage can certainly help. Um, distribution. Let's call the on boarding of the applications for the individuals companies that need the payroll protection and also disseminate those funds. Um, it's they both of those companies have built the platforms, they function, they work. And not only would I mean, if they were able cabbage in particular, cabbage was able to hell participated support the federal government in their in their objective. Not only would it say you know, all the small businesses call it that they have access and reaching, but it also saved their employees, right? I mean, how great would that be if they could come back in the next few weeks and say, Hey, employees, we need you back now because we are. We are supporting one of the most critical pieces of legislation ever, and I would absolutely love to see that happen here in Atlanta for a lot of reasons. But, you know, that would just it would be fantastic for for Atlanta fintech community Atlanta. And I just think people in Atlanta have this overwhelming need. Well, I think maybe that's just the southeastern thing, but this is I think cabbage would be perfect for that.
spk_0: 53:12
And then I Isha, you are on our aren't as someone that is, uh, heading out into the workforce in this difficult time. Um, I've been getting, you know, frequent calls and outreach from, um, students across the system that had internship opportunities removed at the last minute. Of course. All the school classes right now or in a virtual stance commencements have been canceled. It's ah, it's It's just not great time. Um, so best of luck to you, let us know how we can help you. Thank you. As you move forward, this will pass. Things will get better. Uh, but thank you so much for joining us State. Really great to have you, Tommy. And off Philip. Thanks for being part of this and being engaged with the with the Georgia Tech Academy. Um, and we'll, uh, we'll look forward to engaging you further as we start to figure out more of these insure tech components program,
spk_1: 54:32
that will be a part of it. And thanks for thanks for having us. And, uh, you should just Just so you know, this is a perfect time to start your business or start a business literally. It's a
spk_2: 54:43
perfect
spk_1: 54:44
time. Um, every economic crisis although this one is one that is unprecedented is the time where businesses are formed. Small businesses. Your are coming out. Then I want to be able to control my own destiny
spk_2: 55:03
is
spk_1: 55:04
so if you have the smallest entrepreneurial bone in your body, it's time to take that boat. And I would I highly encourage you to think about something along those lines.
spk_0: 55:17
Spoken by a great entrepreneur. Um, thanks,
spk_1: 55:21
entrepreneur, I would say Great,
spk_0: 55:23
thank you Both appreciate it. The Georgia Fintech Academy podcasts are available on iTunes and Spotify. To obtain additional information about the Georgia Fintech Academy, please visit our website at Georgia fintech academy dot org's.