Amit Kalra is the Vice President of Insurance for billy, an insurance and risk management platform built for construction and real estate. Amit was interviewed by Michael Fiedel, a Managing Director at InsurTech Ohio and Co-Founder at PolicyFly, Inc.
Amit, do contractors and insurance brokers share a common thread in terms of how they approach new technology?
“Both industries have been lacking for quite some time with emerging technology. Starting with the insurance side, brokers, as of late, have found a way to make small commercial and contractors a more profitable quoting and binding experience. Whereas, in the past, you're spending time tracking down leads, calling, emailing them, filling out applications, etc. The margins on some of those accounts were so small. You weren't seeing a lot of brokers that were chasing those types of accounts. As technology evolves, you're seeing companies that have automated the application process, which makes it easier to quote and bind. A lot of brokers are finding niches where they can find profitability writing small commercial and construction type risks.
Similarly, for contractors, carriers will ask me to send a six or seven page application and a two or three page supplemental. Who has time to do all of that these days? In a time where we want contractors to be able to perfect and work on their trades and crafts, why do we burden them with having to fill out manual applications when we can automate that process and still collect all the information we need to underwrite the risk? Brokers are finding ways to optimize the customer life cycle from quote buying to servicing to certificates. Contractors are finding a better way to work with brokers, so they can focus more on their trade and not have to worry about how they're going to get their insurance.”
Are you seeing contractors all too often flirt with being underinsured and how dangerous can that be?
“You can see a lot of it, but I don't know that it's necessarily intentional. A lot of it maybe has to do with just a lack of education for small contractors. A lot of times they're trying to work in a job, and the GC (General Contractor) or home builder is like, ‘Hey, I need a certificate showing you have this insurance’. I can say in my past life, I saw a lot of people that were just cert (certificate) shopping, where they're buying a policy, submitting the COI and letting the policy lapse. There's also not a heightened level of awareness from the GC or home builder level to say, ‘All right, do all my subcontractors have the proper insurance?’ That's where billy also helps to relieve that burden for the GCs and home builders; they're just as invested in making sure that not only do they have the right insurance, their subcontractors do too.
Giving them a way to seamlessly track insurance for their subcontractors can alleviate risk. For the actual artisan contractors, a lot of it is just a combination of not understanding what they need and also just thinking the big builder they’re with will pick up anything that happens with any claims.
A lot of other contractors are realizing they’re only doing a couple projects a year. Why do they keep an annual policy? The exposure is not matching how much they’re paying if they’re only doing a month or two of work a year. Because of this, they are definitely flirting with being uninsured or underinsured. Again, it's just a lack of industry education and knowledge out there. That really comes back to the broker to be their fiduciary and make sure that their clients are properly insured and protecting not only themselves, but their business.”
In terms of insuring contractors and managing job sites, what are some of the nuances about this type of business that can make it hard to insure?
“The first thing that comes to mind is at state level: some states are more litigious than others. It's so much harder to get insurance at affordable rates for contractors in New York, for example, because of the action over labor law litigation that's in this area. The other thing is some of these contractors are on multiple jobs, and they don't all have the same requirements. It’s difficult having to make sure you have the proper insurance for all the jobs that you're doing throughout the year.
Contractors have so many policies they have to maintain. A lot of small businesses don't get a whole package, but for contractors, there's so much going on and so much risk that they have to make sure they have the right risk transference in place.
The other nuances right now involve material cost and labor cost increases along with higher payouts on claims. In turn, the cost for contractors to get insurance has been skyrocketing over the last four or five years. That has made it tough for a lot of smaller contractors who don’t have a lot of revenue to begin with.”
For billy, in what ways does this all come back to empowering brokers and protecting the customer?
“At the end of the day, we're the fiduciary for a client, and we should be educating the customers on what their needs are, learning about their business, understanding their risk profile, really getting them everything they need to make sure that they can focus on the trade. We educate them after we learn about their business; they really just need the confidence that they're covered. That's a concern when contractors work with direct-to-consumer carriers. I firmly believe that, especially for construction, there's always going to be a role for a broker because there's so many nuances to construction for coverages and different forms you need.
It's hard to be able to go buy that type of insurance by yourself and not have anybody advise you on what you need. At billy, we're trying to put customers at the center of everything we do because their success and their ability to build is going to be our success, and we want to help them find the right protection for their business at the right price.
As the industry has evolved, even into the insurtech world, it's becoming more of a business and less about what's best for the customer. What comes with technology is there's a drop of the standard of care and attention to detail. I think brokers play a pivotal role in preserving a standard of care that treats each client as unique and provides a proper level of advisement to ensure they’re getting the right insurance at the best price possible. As we've made the process a lot easier to get insurance, we need to brokers to make sure we don’t lose sight of the education part of insurance that comes with finding new clients.”
In what particular ways, even on a technical level, is billy improving that standard of care?
“For my team, we have a lot of carriers, and the last thing that we're looking at when we're trying to place a piece of business is who's paying us the highest commission or who we have premium obligations to. We're putting the client first, which carrier is the best fit for this client at the best price, regardless of how much we're going to make. You have to take out the aspect of who's paying you a commission to properly advise your clients.
Sometimes you lose sight of what's most important for the client, which again, we're putting them first, and we're making decisions based on what their needs are. Our goal is not to get rich at the expense of giving somebody an insufficient policy they're overpaying for. That's what we're trying to do differently than the traditional brokerage model. We’re taking out the carrier and the commission aspect and starting fresh with the customer by filling the gaps they need support with to thrive.”
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