A better model for business insurance

These days businesses have enough to worry about without thinking about their insurance. Unfortunately, tasks like managing insurance claims and completing annual renewals require a lot of thinking.

The startup Newfront Insurance is seeking to modernize the industry with digital tools that simplify insurance processes for brokers and businesses. The company’s platform automates tedious administrative processes for brokers while streamlining a number of repetitive tasks that have traditionally taken up customers’ time and headspace.

“More than half of a broker’s day is filled with administrative work — filling out forms, data entry, following up with underwriters — stuff they don’t like and they’re not very good at,” Newfront co-founder and CTO Gordon Wintrob ’12 says. “If you look at the rest of a broker’s day, it’s this really high-value consulting work where they’re understanding what clients are thinking about, what they care about, what the growth prospects are for the next one, three, and five years, and helping them grapple with the challenges they’re facing.”

Customers can use Newfront to quickly renew their insurance, access their plans, make payments, and manage the locations, vehicles, and employees included in their plan, among other tasks. Newfront helps brokers identify the right insurance provider for each business with models that use data from price quotes and claim limits to make recommendations. The platform also incorporates optical character recognition and machine learning models to extract structured time-series data from documents, helping businesses manage risks at the best possible price.

As Newfront has grown, the company has also begun offering insurance rates of its own when it finds areas of risk it feels are overpriced in the market.

“We can look across our client base and datasets and say, ‘We think there’s an area where there isn’t a good solution, where existing carriers either aren’t interested or it’s mispriced,’” Wintrob says. “We can offer our own products to those clients, giving them better rates. Oftentimes we can also get additional coverage they care about, whether it’s some sort of loss-management program or other claims that are unique to their industry.”

Transparency and competitive coverage is especially important at a time when insurance rates are generally increasing due to risks associated with Covid-19. As the pandemic has rapidly changed the risk landscape in many industries, Newfront has used its technology platform to help customers and brokers keep up.

“It’s all about empowering people,” Wintrob says. “That broker client relationship is really valuable. It’s been hard fought over many years. We want to use software to supercharge brokers and clients and make them really successful.”

A lifelong passion

Two aspects of Wintrob’s childhood set him on a course to found Newfront. The first was his interest in insurance, sparked by his father’s career, which included time as the CEO of AIG’s retirement business. The second was Wintrob’s affinity for technology, which he says made him “basically an IT support guy” for neighbors in the Los Angeles community where he grew up.

“I’d go to neighbors’ houses and help them set up Wi-Fi or install software on their computer, and I was always kind of obsessed with MIT,” Wintrob says. “It just seemed like the place for technology.”

As an undergrad at MIT majoring in electrical engineering and computer science, Wintrob worked on projects including building a money transfer system for people in developing countries. He also participated in the MIT $100K Entrepreneurship Competition as part of the only undergraduate team to make it into the final round.

“Classes [with professors] like Tony Eng and Patrick Winston were incredibly eye-opening and helped me learn about taking technical concepts and translating them to different audiences,” Wintrob recalls.

A year after graduation, in 2013, he started StackLead, which aggregated data around sales leads from across the internet. StackLead was quickly acquired by LinkedIn, where Wintrob worked for the next three years.

While at LinkedIn, Wintrob’s friend introduced him to Spike Lipkin, who was attending Stanford University at the time.

“My friend basically said, ‘You’re the only two people I know interested in insurance,’” Wintrob recalls.

The co-founders began exploring ways to improve the industry in 2016.

“We’d bounce different ideas off my dad, and he said, ‘I’ve been working with brokers my entire career. You need to understand brokers and the important role they play for clients and carriers,’” Wintrob recalls.

The founders began shadowing brokers, and they quickly noticed how antiquated many of their processes were. One broker, for instance, would scribble on call intake forms each time he talked to a customer, then hand those notes to an assistant to type into their computer system.

On the customer side, the process of buying commercial insurance is time-consuming and confusing.

“Anyone who’s gone through the process of buying commercial insurance knows it’s a big headache,” Wintrob says. “They typically get a 200 to 300-page set of PDFs. That’s what they’re buying. They have no real insight into what they actually purchased. Is it the right coverage? How does it compare to what their peers are paying? They’re kept in the dark.”

Renewing insurance is similarly difficult, often requiring customers to fill out lengthy applications that ask them the same questions repeatedly. Newfront has reduced that process to what Gordon calls “a Turbo Tax-like experience” where customers answer simple questions about their business and Newfront automatically fills out the myriad renewal documents.

“We started Newfront to modernize this industry and deliver a better experience for clients, and in the process build up a better platform for brokers so they can deliver that better experience,” Wintrob says.

A better model for a new world

Newfront currently works with more than 5,000 businesses, which span from huge public companies to local pubs, in industries including agriculture, hospitality, financial services, and real estate. As such, the Covid-19 pandemic has impacted everyone differently. Change is the one constant for everyone.

“Of course, we’ve been concerned about Covid-19 impacting our clients, and there’s a portion of our business, restaurants and hotels, that have been super negatively impacted,” Wintrob says, noting that other businesses in industries like health care and construction are busier than ever. “If previously they were used to meeting with their broker in person, they need everything to be available 24/7 online so it moves as quickly as their business does.”

With Newfront’s team already used to online processes, Wintrob says the company has been able to adapt to Covid-19 disruptions more quickly than its peers. Newfront’s automation has also allowed its brokers to scale their client bases without compromising on service.

“A lot of what brokers offer clients is helping them think through these existential risks,” Wintrob says. “It could be something as simple as if you operate a food processing facility, how are you making sure people coming into work are safe, both in terms of ongoing work and following practices like social distancing, wearing masks, making sure they’re not coming in if they’re sick, etc.?”

As Newfront continues to expand, the data it collects will be used to further reduce headaches and costs across industries.

“With every client, we’re getting this really rich dataset around their risks,” Wintrob says. “Then we’re getting data about how the insurance markets are pricing that risk, and we’re also looking at claims data over time. The more customers we bring on, the more we can leverage that to deliver a better experience and make sure customers are getting the best coverage at the best price.”

de MIT News https://ift.tt/3r4DibM