There’s a new kid on the block with the potential to disrupt the wholesale insurance market as we know it. Armed with game-changing technology, Pathpoint has launched as the industry’s first digital wholesaler for excess and surplus (E&S) lines business in the United States. The company connects retail agents and E&S carriers through its proprietary platform built to quote and bind E&S lines coverage, at the same time promising to offer expanded distribution, reduced costs - lower operating costs and reduced placement costs - and increased market intelligence.
Pathpoint was born at a software incubator event run by software engineer and entrepreneur Max Levchin (one of the original founders of PayPal) in San Francisco. The incubator specializes in financial services innovation and brings together people with diverse backgrounds across finance, technology and software development, encouraging them to marry their ideas to pursue compelling commercial opportunities. It was at one of these events in 2017 that software specialist Bobby Touran met his fellow Pathpoint co-founders and gained a fascination for the robust E&S lines insurance market in the US.
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“We were working on a few ideas, but commercial insurance was what stuck with us the most. As we were learning about commercial insurance, we became really fascinated with Lloyd’s of London and how that market operates, and that led us to learning more about the robust US E&S market,” said Touran, CEO of Pathpoint. “We learned about the tremendous value that the E&S market creates, but we also heard about a lot of opportunities to make it operate more efficiently. That was really compelling to us at the beginning of Pathpoint, and it remains no less compelling to us today.”
Pathpoint is a digital platform that enables retail agents to submit, quote, and bind E&S business. While technology is integral to the business, there are elements of traditional wholesale broking at its core. The firm employs experienced surplus lines professionals to handle both referrals and submissions that require some correspondence with E&S carriers. It’s team of experienced insurance professionals ensure that compliance is observed at every step of the placement, binding and risk adjustment process.
“The key difference is in what happens between submitting and binding. We want to make that process as efficient as possible,” Touran explained. “The more efficient that can be, the more we can control the number of people that have to be involved to ultimately make the business run. We want to have as many people focused on software development, and the development of tools that enhance a lot of the functions that a typical wholesale broking employee would conduct, and we are constantly working on that software in order to provide the most value.”
Wholesale brokers currently sit at the centre of the E&S distribution model. According to Touran, Pathpoint is a direct competitor to the wholesale incumbents, having assumed their role and built software into every step of the procurement process. Retail agents receive their commission for every risk bound on Pathpoint, and there is no cost for them to use the platform.
“What’s been going on with a lot of the consolidation of the largest wholesale brokers that really drive so much of the premium volume in the business, is that carriers have fewer and fewer alternative channels through which to access retail agent demand,” Touran told Insurance Business. “Pathpoint is a step in that direction because we think about how retail agents can access E&S products more efficiently, we think about how we can help them access E&S products, and then we have the software make it as low touch and low friction as possible.
“We do everything from organizing the data that an E&S underwriter would need to underwrite a risk, and then sharing those insights back with the carriers, allowing the agent to submit to multiple E&S carriers with a single submission. These types of things are becoming more like table stakes-type expectations, certainly across most personal lines, but increasingly also in commercial insurance, with the exception of the very large placements. And so, we just saw that was sort of underserved in the E&S market and have been trying to be bring that to bear.”
While Pathpoint is a digital E&S wholesaler, the firm understands that the challenges and complexities of E&S insurance sometimes require a more nuanced human approach. Touran commented: “The process is greatly improved by technology, but it must also be informed by people who understand the unique nature of this type of insurance, and the challenges that come along with it. Our ultimate goal is to improve efficiency, reduce costs, and deliver better outcomes for the end-insured.”