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InsurTech Ohio Spotlight with Steve Reffitt

Steve Reffitt is the VP, Head of Agency at Branch, a full-stack insurance company that uses data, technology and automation to make home and auto insurance simpler to buy and less expensive. Steve was interviewed by Andrew Daniels, Co-Founder and President at CrashBay and Founder and Managing Director at InsurTech Ohio.

What happened to the insurance market over the last year?

“It's a myriad of things, but certainly inflation was a big driver. People are probably tired of hearing about inflation, but in truth, the cost to repair a car, the cost to replace a roof and the cost to rebuild a home all went up. There are a lot of reasons for that, most having to do with the after effects of the pandemic. For example, the shift to working from home caused people to do more projects around the house. This leads to more demand for housing materials. More demand coupled with supply chain issues caused by COVID drove the price up. And so on…

Leading into 2023, it was the culmination of all those things that affected the industry. They all came together and started to hit the bottom line of most insurance companies. Severity was up, in part because of inflationary pressures. Furthermore, frequency was up due to weather and increased driving activity. Insurance companies are paying out more in claims and depleting their surplus. So, you’ve got unprofitability driving a depletion of surplus which puts insurance companies in a challenging position.

While inflation cooled in 2023, it’s cooling more slowly than expected, and insurance companies had to make the hard decision to slow down new business. With that, you get layoffs across the industry. Moving into 2024, the entire industry will continue to push through the required rate changes, and with inflation now cooled, there’s a lot of optimism beginning to return.”

Do you think there will be carriers who have an easier time rebounding from this tough market?

“We've already seen some rebound pretty quickly, and Branch is part of that conversation. I believe most insurance companies will come out better from this moment, but how quickly is dependent on how swiftly the tough decisions were made in 2023. 

I think the carriers who emerge from the moment much faster are going to be the ones who made those tough decisions - strategic rate adjustments, expense reduction, etc. sooner or saw the moment coming sooner than others did.”

Many have predicted that as insurance goes through digital transformation, it will lead to the demise of the insurance agent. What do you think about the future of insurance agents?

“Ten years ago, I was sitting front row at a conference for insurance agents, and they brought in a consultant who said IA’s days were done. They need to sell their agencies as we’re moving to a digital world. Ten years ago, I didn’t believe it. 

And the truth is, today, I still don’t. Not long ago, I spoke at a forum about the reality that we as people want to talk to somebody else about insuring our most valuable assets, and we want to be comfortable in the decisions we make. Now, that's also not to ignore that there are people who are comfortable making that purchase online, and those experiences have obviously improved - in particular with carriers like Branch. But, the insurance agent is an incredibly valuable asset to someone shopping for insurance. 

At Branch, we're all in on the independent agency channel. We believe that when we equip an insurance agent with the power of our technology, we can actually make them even more valuable to their customers. Because we take away so much of the data collection, which takes a ton of time, we actually put that agent in a position to have an entire value-add relationship with their customers about how to best insure their risk. 

In effect, we help transform the independent agent into an even more value-add resource for their customers. And clearly, it’s working. We’ve grown significantly in the channel over the last two years, and we continually get feedback from our partners that what we offer them is so valuable. To answer your question simply, we think the future of insurance agents is very bright and of even greater value-add than it is today.”

What’s still missing? What are some of the problems that no one is solving?

“The biggest problem that not enough people talk about is the uninsured/underinsured problem in this country. Upwards of 29 percent of people, depending on the state, don't have car insurance. If you think about that, it’s incredibly dangerous as far as ensuring the well-being of our fellow citizens. So many are one accident away from, what could be, financial ruin. 

Our belief at Branch is that if we can structurally lower the price of insurance - by taking out cost, operating more efficiently, growing less expensively - we can make it easier for more people to become insured. That’s our mission. But, we all need to understand the problem much better because the penalty for us all is great if we don’t.”

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