Katie Wexler is the CEO of Pavo Insurance Solutions, whose goal is to bridge the gap between insurance finance and technology platforms. Katie was interviewed by Michael Fiedel, a Managing Director at Insurtech Ohio and Co-Founder at PolicyFly, Inc.
Katie, how is the premium financing landscape changing?
“Let’s start with the current state of the market. The premium financing industry is significant in scale with over $50 billion in originations annually. Yet as an industry, the premium finance industry has been slower to evolve compared to the massive innovation and investment in the insurtech industry. For example, there are fewer than ten technology-focused Premium Finance firms compared to hundreds of insurtechs. However, several new trends are gaining momentum in premium financing. Traditionally financing was solely reserved for the retail brokerages, but there's a growing trend of new players like MGAs, wholesalers, program administrators, and insurers creating their own financing programs. These programs lower costs for their clients and expand the suite of products they can offer. Another trend in the segment is digital integrations with billing and financing companies. This is driven by the need for the efficient transaction of business and seamless workflows. My firm, Pavo, is leading the segment in finance innovation. We have created a digital API environment to engage leading financing companies and embed into existing platforms with the best premium finance marketplace. The goal is to provide insureds with new financing options and improve the experience for brokers and consumers.”
What should the customer and broker experience actually be?
“The insurance experience should be as seamless and integrated as possible which was the true vision of insurtechs. Digital platform distribution and embedded insurance are titanic undercurrents driven by customers and brokers demanding an amazon-like experience for insurance. The current premium finance process is clunky and requires a broker to go to a third-party finance company and manually submit account info to obtain a finance quote. Most systems and companies require duplicate manual entry and provide the broker with one option for financing. When a broker shops insurance, they often provide 3 or more quote options for the client. Shouldn’t brokers provide a similar service for financing products? If their client wants or needs multiple financing quotes, the broker has to go to several companies and repeat the process. This limits the exposure for many of the medium to small premium finance companies to compete in the space, and it's hard for the small companies to compete. How does a broker know they provided their client with the best option for them when there are many available finance options out there? To solve this issue, Pavo has developed new integration methods by connecting financing companies directly with insurance platforms in the existing broker workflow. Creating an embedded experience within an existing workflow will make the process faster, reduce errors and provide a turnkey solution for brokers and insureds.”
Are banks aggressively interested in this evolution around premium financing, or are they cautious in creating friction?
“Banks and lenders are surprisingly optimistic and excited about the evolution of premium finance. The underwriting models of premium finance for lenders are sound and when they operate diligently, write-offs and losses are marginal compared with origination revenue. Finance companies are eager to explore ways to increase their user base and generate organic growth. As the E&S market and premium grows, the premium finance industry has tailwinds which can drive growth. Many firms are leaning into digital acquisition and servicing, which creates new opportunities. In fact, they've been excited and helpful in creating the marketplace. They see the benefits of increased exposure to new distribution streams and entering the InFinaTech (Insurance/Finance Tech) world.”
How quickly and broadly do you expect this better future for premium financing to take hold?
“I think we're in a fast-paced world where changes are dictated by young brokers, market demand, and novel customer experiences. I expect the finance world to adopt increased technology and a seamless experience in the next few years. Look how fast we adopted Buy Now Pay Later, Digital Banking, and Venmo. Pavo created an environment where clients can get multiple premium finance quotes in seconds embedded in their existing workload. Our customers and brokers believe this is the future of premium finance and the standard within several years.”
Why are you passionate about solving these issues, and how did you get here?
“I enjoy building companies that improve an existing product and make it easier for people to do their job. Combining that with the fast-paced world of the insurtech industry is thrilling. We started with a simple idea - How can we build the world's best premium finance solution and experience for brokers? As we explored the landscape, I noticed a death of technology in the space which I wanted to solve. It excited me to see a future where clients have various options in front of them and allow them to have a say in how they can best afford their insurance. I'm a big online shopper, and I love that when checking out, you can choose to pay in full or to finance your purchase. I’m driven to build a company that can help small and medium businesses pay for their insurance without breaking the bank. I believe that creating digital premium finance space and footprint is an exciting movement.”