Sandeep Gupta is the Chief Operating Officer of Keystone Agency Partners, a rapidly growing insurance brokerage platform that acquires and partners with independent insurance agencies throughout the United States. Sandeep was interviewed by Michael Fiedel, a Managing Director at InsurTech Ohio and Co-Founder at PolicyFly, Inc.
Sandeep, how do local insurance agencies play a critical role in the modernization of small to medium-sized businesses?
“Insurance agencies help the small and medium sized business modernize both their core business as well as their insurance interaction. There's really two things that an independent agent will do to support modernizing the client’s core business. First is provide security for a client to grow and invest in their own business. You can think about this as providing a BOP (Business Owner’s Policy) or CMP (Commercial Multiple Peril) coverage that allows them the peace of mind to invest in a local space and/or changing the flow of their store.
Another way is providing products or advice on making their core business better. A great example of that is loss control. Think of a restaurant where we can help modernize their processes, knowing what can drive loss and really help the company manage both their expenses by lowering premium and improving the experience of their staff and customers with, for example, better slip and fall protection or traffic flow. Another example of that is providing a cyber product, which allows the company to take a more modern stance on technology because they feel the comfort of having cybersecurity behind them.
From the insurance side, we strive to modernize how we're interacting with our small and medium-sized businesses. Agents have greater access to helpful resources clients are seeking such as digital certificates of insurance through their network or an ownership group. For example, an agent might have that photographer who has that last minute call to do a wedding shoot, and they need the certificate of insurance to secure that event. Providing that access digitally is a way that they can have their insurance needs met and keep doing what they do best.”
In terms of these agents improving their knowledge of changing risk, what should they be doing in order to become that trusted advisor?
“There are three things successful agents seem to do well.
First, local agents have a tremendous breadth of customers across different industries that can serve as bellwethers. An agent might see risks or market dynamics in transportation that will apply next to the restaurant or to a small bank. These risks often hit different industries at different times and weights, and we can provide that trusted bridge. Providing that insight and support on how that risk might apply and when it is relevant to the small or medium-sized business is a fantastic asset.
Secondly, great agents are constantly learning and open to change. Local agents have a lot of resources available that can be a bit overwhelming at times. But those resources, such as the big I, a carrier, a network like Keystone Insurers Group or an owner/partner like KAP, can provide access to visionary speakers, great articles, cross-agency sharing, as well as classes that will not only continue education credits but improve their value and relevance to their clients.
Finally, great agencies add new products and either add or upskill team members in focus areas. Examples include cyber as a line or autonomous vehicles as a risk. Those are two emerging areas where you might need to add a new product, a new team member or provide access to training to get existing team members up to speed to help clients understand the emerging risks and how to manage through it.”
How would you score the independent agent in attacking these opportunities for personal knowledge and growth proactively?
“It really varies by the individual; I don't know if there is a blanket statement. If you think about the desire to learn and grow, it’s very much there for many agents that I talk to. I think it's a question of creating capacity to pick up from the here and now; trying to help clients with current issues but also spending 10% – 20% of your time looking and learning about long term risks. That's something we at KAP are starting to provide our agencies. For example, during our monthly meetings, we are talking about topics like AV (Autonomous Vehicles) to give them exposure and create interest. I don't think it's a ‘will’ question, but I do think it's a time-allotment and capacity question for many of them.
Can you elaborate on how to identify the difference between core-adjacent and transformational innovation?
“I have to give full credit to Deloitte-Doblin who created the framework. It's one that I’ve always liked because it's simple and clear. Core innovation is really how you can operate your business better. It's actions like leveraging an outsourcer or contractor to do blocks of work or digitizing payments if you're a restaurant. Instead of taking a credit card swipe or cash, you're doing the tap, or you're doing a mobile app. Those are all core transformations – things that have been in the market that help you move your business forward.
Adjacent innovation is adding new services that are tied to how you run your business. A good example of that in an agency space is a digital service app. A customer can go get a certificate of insurance or check billing across multiple carriers. It's tied to your core operation.
Transformational innovation is the one that attracts the most attention. It's simply what's outside your world but impacts your business. It may even be new value streams. Examples include drone delivery and crypto-currency; often known as buzzwords, they are ‘out there’ but have a potential for long term impact.
When you think about a business and where you want to spend your time or money, the framework suggests a 70/20/10 split. You see 70% in core because that gets you immediate value, 20% in adjacent and 10% in transformational. The pitfall is often related to transformational innovation – either under or over investing time. Having that balanced approach allows you to make sure you're knowledgeable in providing the services, but you're not over-investing, for example, in providing autonomous vehicle insurance products and advice before it's time.”
How do you see agencies evolving over the next five to ten years?
“There are a few things that are happening that will impact how agencies will continue to be a viable source of trust and protection. The first one is the macro economic environment. The economic environment will be a big driver for agencies, impacting everything from rates in a hard or soft market as well as valuations driving further local agency consolidation and/or new independent agency starts.
Secondly, it's the resiliency in the mid-market and the high-end of small commercial to use a local agent. There's been constant, continual insurtech and carrier entry to serve this market, but to date, none of them have really succeeded in a way that has revolutionized insurance distribution for this segment. That’s not to say insurtech isn’t relevant and valuable–there are a lot of great enabler insurtechs. Think of some of the rating platforms, appetite guides or digital service creators; they’re fantastic ways to modernize the insurance experience. This is not the same story in personal lines, as the insurtechs and carriers have made inroads and have shifted many agent portfolios toward the commercial and benefits/life side.
Finally, being even more proactive to develop or hire the key skill sets to meet the emerging risks of clients. For example, many clients are thinking about the gig or remote worker economy–questions like how does that affect liability? Is regulation changing? If I am interested, what’s the playbook to move forward? We will likely see more ‘centers of excellence’ be created as agencies develop greater focus and specialization, leading to even more sharing of accounts and revenue to provide a best in class experience for the client from the initial quote through renewal.
The next five to ten years will definitely be an exciting one for anyone in agency distribution!”