Transactional surety has long been regarded as a nuisance by insurance agents and carriers. The pain points are tenfold, but they tend to revolve around one key theme, which is that the effort required to manually process surety bonds is not worth the commission. Part of the problem is that traditional players in the surety market have been slow to adopt new technology and digitize their platforms … until now.
On June 02, a new player arrived on the surety block. Called Propeller, Inc., this Philadelphia-based digital distribution agency has launched an automated, instant issue surety bond platform for agents and brokers, thus removing the paper intensive processes that spur on distribution headaches. The platform, which is white labeled for agents, supports nearly all commercial surety and fidelity products, including license and permit bonds and ERISA bonds. Through Propeller, agents can either purchase bonds for clients or they can empower commercial clients to purchase bonds directly via their unique site link.
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Propeller was co-founded by Aaron Steffey, an independent agent with a niche in securing insurance for international companies trying to gain a foothold in Pennsylvania and the Greater Philadelphia area. The firm was born from Steffey’s relationship with Axe Group, a leading Australian technology business that helps organizations, insurers included, to automate and streamline processes. Steffey entered a joined venture with the firm to create Propeller, which he describes as “an insurance automation company”.
“We chose transactional surety first because it’s a really difficult problem to tackle,” Steffey told Insurance Business. “Agents have to deal with different bond forms for every municipality and every state; it’s high touch with lots of manual processes; it’s low commission; and the bonds are often mailed to customers when they actually need them really quickly. Agents offer surety mostly as an accommodation to their commercial clients. They don’t typically market is because it’s high touch, it’s painful, and it’s low dollar value business. These bonds are often $100 to $300 in premium, and most people consider it to be a low return on investment to actually market it.
“These challenges have spawned a lot of direct dotcom writers. They haven’t automated anything; they’ve just digitized it, so they’ll accept a digital form and then they’ll call the customer and try to write them a bond. But what may eventually happen is that these bond companies use their relationships to start selling more commercial insurance, which means agents could end up losing some accounts. By white labeling Propeller for agents, we’re giving them a way to bring the surety business back into their fold. They’ll get paid almost exactly what they would have been paid if they placed the bond through a carrier; there will be way less touches; and they will sell more of it. Essentially, we’re returning the relationship to the rightful owner, which is the insurance agent.”
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Agents who work with Propeller will be given a link that they can use in their email signature, on their website, on their social media channels or any other digital avenue. When a customer purchases a surety bond through that link, the agency will receive 25% commission without even having to touch the business. Behind the Propeller platform is a team of surety professionals who will handle everything from onboarding through support and billing. This team will be managed by Chris Kolger, who has joined Propeller as director of operations after more than a decade with Chubb, where he most recently served as assistant vice president of commercial surety.
“The Propeller platform can also serve as a lead generation tool,” Steffey added. “If people are buying surety bonds through a link on your agency website without you even knowing it, they could be potential customers on the commercial side as well. To help with this, we’re providing an SEO package for agents to help them really stand out in local searches online. We’re reversing the entire philosophy of surety being a pain and we’re turning it into a real opportunity – not only on the surety side, but also in cross-selling other products to those clients. I’m a firm believer in the relationship piece of agents, and I truly believe this is an amazing opportunity for agents to build on that relationship.”