John, who was named a 2020 Mid-Atlantic Entrepreneur of the Year, has been responsible for overseeing all aspects of Pie since its establishment in May 2017. He brings over 20 years of experience in tech-enabled insurance and financial services businesses. Prior to Pie, John served on the Esurance executive team for 13 years, where he initially led all of the financial functions from 2000-03 and then became the company's first Chief Marketing Officer. Under John's leadership of the marketing team, Esurance premium volume grew from $50 million in 2003 to $1.3 billion in 2013. Esurance was sold to Allstate in 2011 for $1 billion. John holds a B.A. in Economics from Haverford College.

Highlights from the Show

• John started in insurance through his family's business while he was in college, making his way to Esurance in 2000, ultimately leading the Finance team and then as Chief Marketing Officer until 2013
• After swearing he'd stay out of Personal Auto because of the competition dynamics, he met his co-founder, Dax Craig, in 2016, who together created a different vision for small business commercial insurance buyers
• They wanted to make their offering as easy as pie, hence their name, Pie Insurance
• Small Commercial is a target market for so many, yet few have really been serving it well, despite how well it performs
• They found Small Commercial to be an underwriter-driven space even though most businesses in the space don’t have the loss history and complexity to require that kind of attention
• Instead, Pie was built to look at the data available about the business and think through the risk with an algorithm; they still have underwriters behind the algorithm
• They've found this to be critical in their lines, starting with Workers Compensation, because there is a lot about a risk that isn't available in data or as finite as it would be in Personal Auto or some other lines
• That makes it hard to figure out what the business actually does, and therefore what the exposure behind it is
• This is especially problematic in Workers Comp because you're on the risk, whether they or you mis-categorized the business as the injured worker isn't a party to the policy, and therefore can't be denied coverage
• Pie therefore looks at taking in the 'digital fingerprint' of a business through its online presence, to develop a more accurate picture of what the business actually does than you'd get on an app
• The net result of inaccurate underwriting when the market is making money is that insureds are being over-charged, or at least many risks are being over-charged to make the total risk pool profitable for the carriers writing the business
• By being able to more accurately segment and price risks, Pie is able to charge less for risks it understands better and yet still earn a competitive return
• Pie's algorithms are working to distinguish rate within a class, while the rating agencies like NCCI are determining it between classes at an average level for a given class
• This has allowed them to grow rapidly and profitably because they price accurately to win the right risk rather than doing what others have done, which is just under-price to sell
  • They've doubled the book in the last year, growing to over a $300 M run rate as of earlier 2022
  • They also sell direct, through agents and brokers and partners
• John learned lessons from his first go-round with Esurance:
  • Underwriting comes first, so you need to build a profitable book, especially if you're using someone else's balance sheet because you must have that support to do business
  • It is all about the people (which they call Pie-oneers)
• Looking forward, line of business matters, so there are lines Pie isn't considering (like Cyber), but they recognize that their customers have additional needs like Commercial Auto, Liability and Property
  • Where they can have a data and analytics advantage, it makes sense to think about expanding
  • But they couldn't start with so many lines up front because you have to have vision and focus to execute successfully
• The market will continue to digitize, but that's not the same thing as everything going direct

This episode is brought to you by Ascend (useascend.com/futureofinsurance) and by The Future of Insurance thought leadership series (future-of-insurance.com) from Bryan Falchuk.

Follow the podcast at future-of-insurance.com/podcast for more details and other episodes.

Music courtesy of UPbeat Music, available to stream on Spotify, Apple Music, Amazon Music and Google Play. Just search for "UPbeat Music"