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talking about the past and the future i mean five years ago uh people who sold marijuana were criminals today they're entrepreneurs they were already they were always entrepreneurs they just now happen to be legal entrepreneurs so this is an exploding business hey everybody it's tony caldwell welcome back to another episode of uncaptive agent the future of insurance and today my guest is mark still mark is a fascinating guy who's involved in a whole bunch of things related to the insurance business first of all he owns an insurance agency and secondly he uh is the ceo of a company called avest which is has a goal to disrupt the way insurance agents do business good news uh he's not interested in disrupting insurance agencies or insurance agents he's interested in really helping us be more effective more efficient save time effort and money and do a better job for our clients and we'll talk a little bit about that as we go along uh mark also has a software company that is tangentially involved in the marijuana business which is exploding exponentially in fact mark as we're sitting here today it's thursday the 5th of november and i think another half a dozen states legalized marijuana on tuesday during the national elections so anyway welcome thank you i might start off by saying five years ago i was telling people that i wanted to be a disrupter and then the more i got to know the business the more i realized is that i just needed to be an an enabler of really talented wonderful folks in the independent sector that do a that really are a huge benefit for their um insured customer base huh that's interesting so um you know you have an interesting background so uh before you got into insurance you were a risk arbitrager on on wall street or working for a wall street firm now and got into merchant banking so you've got a lot of experience in doing deals is that how you got into the insurance agency business or did you come in a different door well i kind of these days call myself a recovering investment banker and uh about nine years ago um i uh my my business partner of many years a brilliant guy named paul voorhees and i uh we we've been business partners for 25 years i started at bear stearns and he started solomon brothers and we met in dallas and we met a young lady whose name was gail jordan who we now co-own the agency with and that's how we got into the business we started an agency where we were essentially backing gail and now gail is running our development team at avest and is very very specifically building what we internally call the avis interview which um the uh the the first specialty line that we're focused on is cannabis okay so um so anyway in the insurance agency business and out of that you ask the question there's got to be a better way which really led to avest which you know our previous conversations about this and what you just said is it's a way to interview uh clients or prospects and much faster than typical uh get them to the place where you can deliver quotes and proposals and things like that so just if you don't mind just take a minute and talk to us about the avis process when when we first started out in this business um we were like every other kind of small independent getting started uh we created what we thought was a very different way to go to market to get to get prospects um and and our and our strategy paid off so we went from getting you know four referrals a day or or four referrals a week to sometimes getting you know between four and 44 referrals a day and what we found is that our is that our is our csrs and our producers were completely overwhelmed and that the process that you go through in order to gather information at the point of sale was was a horrible process and as we looked around at who in the industry was able to solve the problem we couldn't find anybody that could solve the problem and that's where avas came into being almost five years ago okay so what ios does is automate that that conversation that that an insurance professional has with a prospect about their their insurance needs is that and then is that what it does essentially yes and so it turns filling forms out into a rules-based conversation that's guided by our our uh intellectual uh well it's really artificial intelligence that ultimately creates an interview where you will get a hundred percent of the necessary data and hopefully no more than two or three percent of data that doesn't matter okay and and you do that through just asking questions in real time and as you get an answer the system then prompts for additional questions based on the answers the prospect or customer's giving at that moment is that how that kind of basically works you hit the nail right on the head okay and and and so that not only makes a better customer experience and make the process more efficient it also puts csrs and producers in a place where they don't have to have 10 years in the business to know what to ask okay now i'm getting excited because when i started in the business a long time ago uh you know i'd go out and see somebody and come back with about a third of the information that i needed and then my uh csr or my partner would go well you forgot to ask these 15 questions go back and ask that and then i'd come back now i had most of it but i have to go sometimes back a third time and you know i'm not stupid but i look that way to the prospect right what you're saying is someone starting off in the business could literally never make those kind of boneheaded mistakes again well it almost educates them on the fly and what what i found when i went to talk to to kids coming out of college so i actually went to the university of colorado denver that had a specialty in risk management and insurance it was a four-year business degree and when i talked to those kids about what they wanted to do none of them wanted to work in an agency okay because they all thought that they were that they spent four years being trained for something better um and then they also didn't want to go anywhere where people still had fax machines um and so i think in this industry up until this point a brand new person coming into the industry as a csr or a producer or any anywhere real in the organization looks at it and says i'm going to spend five to nine years developing enough expertise where i really know what i'm doing every day right and and so what the avest interview has always sought to do is that is to give that brand new producer or csr that capability in a matter of weeks or months instead of years well that's exciting you know um so we're talking uh about the future of insurance distribution the future of the insurance agency and one thing i mean there's a lot of disagreement about the future because obviously it's a crystal ball exercise and everybody has a different view but one thing there's universal agreement about and that is that the industry is facing a huge talent gap because so many people who look like you and me uh are likely to be exiting over the next five years in fact some people estimate that as much as 70 percent of the uh of the industry's you know people are going to be leaving in the next decade that's an enormous challenge not just for agencies that are starting in business but agencies that want to stay in business and uh agencies are getting acquired uh you know all this is creating a huge talent problem and and again to your point five years at a minimum that's that's what it i always used to say you know i felt like it took me five years before i became halfway competent as a commercial insurance professional uh and you think that this technology that you're developing can cut that down to what uh 60 days 90 days a year uh i i i think within 60 to 90 days um you can have someone who you know they obviously would would have to have a license to to get started but that that gives them sort of the the base level knowledge that they need to get started um and and in an example of one of the csrs in our agency who doesn't know very much about commercial and knows nothing about cannabis uh can actually actually use our tool with a live client to talk to a cannabis owner and and i did it as a pure experiment and she was able to get all the way through the interview and and it's actually built so it's got uh cheat notes i i think uh you know tony you and i would have called those cliff notes back when we were going to school but but on every question as they go through if there's an insurance term that they don't that may or may not understand they just click on a box and it it pulls up that definition in in less than a second and in the case of cannabis if they're talking about cannabis and they don't understand um something about some specific cannabis term those definitions are also built in so as they go through the system um they never have to stop and go and you know and go ask the office manager so what does this mean what does that mean and so what we do is we give them the confidence that they're going to look smart the very first time they talk to someone who's in a business they may or may not understand okay so um tell me how this was working let's say pre-covered when conversations with producers typically took place face-to-face uh is your technology mobile enabled so they're do they work off an ipad or how does it typically get get done uh well so pre-covered we we all know most well not most there are a majority of the way things happen today is people would fill out those forms and if they didn't know the answers to some things or they or they had a csr or or some other admin person that would fill it out they'd hand that person to the that you know they would hand the piece of paper to the person next to him and they'd fill it out and then they'd have to go pdf it or do something else to share it well now you can't hand it to anybody because they're not there their home in your home so what the eforms wizard um and and we have users that said they would never use this because they like to do it the way they did it where they passed the paper around the office they can't do that now but what they can do is they can they can fill out as much as they want to fill out they can then then share that with whoever they want to share within the office they can all work on it get all the forms filled out and at the end of that they can then digitally send that to one or two or three or however many carriers or mgas or wholesalers and they can do that all electronically so how does the information get into the into your product is it is it verbal or does it get typed still um it it still gets typed in in the eforms wizard um and it still gets typed into the interview but in the interview a lot of that information gets auto populated so so for example we have apis with with google and and other services that i can't name because of nda but um we can gather a bunch of that information and never have to ask that question okay so you're actually getting information in the background much as some carriers are doing as they're as they're doing rating systems on their websites exactly um yeah so um so this is pretty interesting because uh you know a lot of people in our business i think are are really frightened whether they admit it or not about technology i mean i think there's a feeling that technology is somehow going to disrupt the business and by a disruption i mean something different than what you're talking about in other words it's going to put them out of business that um you know that the people who are writing insurance on the internet are going to take their market share away or that you know some way technology's going to disrupt them and what i what i hear you really describing is is another tool where technology actually enables to use your term the agent first of all to be successful faster but also to be successful much much more efficiently and so you know one of the concerns that many agents have is hey commission cuts you know have been taking place now for a long time but they've actually accelerated uh over the last couple of years and so there's obviously a pressure on agents to get more efficient to save money in their costs because their gross revenue is going to take a hit so they have to produce more business they've got to do it cheaper have you done any cost studies to look at what the capability of something like your product gives the agent in terms of driving costs down it's a little all over the board right um but but um [Music] our our first studies that we did it was about a 75 savings in in terms of time okay and and that so then you can just on an agency basis you can you can look at that and say i can either reduce overhead right right because i don't need as many people because i'm because i'm getting more work done faster right or or i need to do more top-line business using the same people but i need to actually grow the business okay well 75 is huge so you know the the typical insurance agency spends 50 to 60 percent of its revenue on people um right and you know of those people um you know typically 25 uh of revenue represents the customer service function and again a lot of those people are doing things that apparently you can now do with your software so so does that mean that if i'm if i have customer service folks that are say doing cross marketing account rounding activities that kind of thing that uh i could drive that part of the cost from 25 to seven or eight no um so i i should have been more specific this is at the point of sale okay right so so this is so if you think about so get four producers for the cost of one is that correct because they're going to be well so so think about if you can ask a hundred percent of the questions that need to be asked on the first phone call right um because what we found in our agency is you're going to touch that client somewhere between three and six times okay just like you said earlier oh i didn't get all the information i got to call them back i got all the information uh but the but the quote that i thought that i was going to get came in 15 higher and so i had to go back to another carrier right so i had to go and and and they've got seven other questions that carrier a didn't ask so every time you touch that customer it costs money every time you pick up the phone every time you spend a wedding on hold um and then you're gonna have the same number of touches probably going back to an underwriter so by the time you write that business you've you've you've touched that piece of paper 10 times yeah and so if you touch that piece of paper once two things happen one i take that average touch from you know four to one point two and then the customer experience is better i mean way better because especially if you look at kind of personal lines um you're going to compete against state farm right they got one set of questions to ask you and at the end they don't say let me get back in a day or two with some quotes they say uh so do you want the premium super package or do you want to pay by the quarter you want to pay by the year and they can begin and end the conversation and actually sell insurance so just to clarify i mean your technology works both in personal and commercial insurance as well as standard insurance okay correct yeah so you know um let's let's use this experience that that you have had over the last few years the product that you developed to kind of segue into a discussion about technology and its capabilities for insurance in general so again a lot of agents out there looking at the next three to five years have seen that okay technology's coming it's scary and then covet hit and either they're adapting to it or it's accelerating their uh thinking about i gotta get the heck out of this business because i don't want to um but you know one of the things that technology is increasingly becoming is easy so uh you know 15 20 years ago and i add technology to your business meant you had to do a lot of work a lot of learning you know manuals in fact i remember um you know 15 years ago getting a new agency management software program spending three days in training just to fill out applications and said screw it i'm gonna i told my my p rtner i'm not doing that i'm just to do papers somebody else can i mean it was so confusing and hard right right today technology's easy uh you know and and how do you think that changes adoption rates and and do you think that agents are going to rapidly uh embrace tools like the one you've created um or is it going to be a slog for another few years trying to get people to try things how do you see the future of all of this well i think you make a really cool point as it relates to the influence of kovid i believe that kovid was an enormous paradigm shift forced upon the independent agent industry um because much to your point lots of lots of people in this industry have hair the color that you and i have and they're and and they're leaving and and and their um willingness to try something new uh was an enormous push and and as a result when there was better technology they didn't care now they have to have it um so so unless they brought all their people back into their offices which by the way um i don't i don't see that trend changing and well and as i talked to people around the country you know from big and small um people are down are downsizing their physical office footprint period right um and and and it's it's even forced folks who are you know you would have think would have been very traditional got to have a nice office and and now suddenly they're thinking wait a minute i've been paying you know 38 bucks a foot for this for this office space and i'm doing as much or more business with everybody working from home um and if you think about the cost of that overhead so i think that this business is going to become more and more technology driven and that those who are adapting today are going to be really successful and those who don't adapt will either fail or or they'll be or or they'll be the agency that that gets that gets gobbled up by someone at at low valuations so you know obviously there's still a huge amount of private equity and and private equity backed firms that are that are i mean there's there's a deal every day or two right right and and there's some of those big agencies are selling for multiples or you know 10 to 13 times ebitda which is which is obviously a great price if you're a seller if you have a business with no technology and it's and it's sort of falling off the wheels you you you might get three times epidemic so it so if you want to make your business worth you know 400 times more um that means you oh well not 400 times 400 percent more i'm sorry um i was really looking for your answer for the four hundred times i gotta tell you i'm sorry i got my pen and paper out right here so if you wanna create value you're and and and you wanna monetize that value whether it's in a year or five years and you don't use technology right it is not going to happen for you right well um how is that playing out so over the last say six months or so as as you uh as your sales teams you know are talking to agents uh what's happening to your to your pickup rate because that would be a good stand-in for you know how agents are thinking about what's happening right now because of the coven is there more interest are you are you installing in more agencies is that accelerating or is it staying about the way it was say six months ago uh it's it's accelerating a lot um you know in kind of i'd say kind of march april i think people were sort of just stunned um and by the time may rolled around um folks like vertifor who are great partners of ours um we've been in their orange uh technology partnership since they since they started that and i guess it's been almost two years now um and vertifor cares a lot about their customers and so we got a call from from them in early may as they were putting in programs to specifically help their customers during this covert time and as part of that they asked us to uh you know what we would offer to the vertifor base and so we gave him the uforms wizard um basically free of charge for four or five months as just a way to try to help everyone as we as as they were trying to seek what um whatever help we could all get when we were all sort of panicked and trying to figure out how to read i i it's it's not revamping but but this this forced everyone to reorganize and so we were really pleased to be part of that and we clearly picked up you know lots of uh eforms wizard users which we obviously think will turn into avest interview users down down the road so it's been really good for our business to be candid and i don't like to take advantage of of you know things that are that that take place that are bad for mankind but you know this is clearly going to force people to use technology because if you don't you will not keep up right so you know it's interesting i was talking to randy swans just the other day randy is uh a longtime sales coach in the independent agency industry uh written a number of books probably the most famous of which is called the wedge and you know his point was was look this business that has been around for 100 plus years is going to continue for another 100 years because uh people need the experience and expertise of human beings they need to trust people you know they want to feel like hey uh we you know we want we don't want to do business with an algorithm we don't want to do business with a faceless you know thing we want to do business with a person in fact i got a real insight a few years ago a partner of mine in a in another business they they have a uh auto club but it's for commercial truckers and they have big groups of people in their client base that either speak punjabi or russian or some other you know language other than english and so in their call centers they've got lots of employees that speak those same languages and they said that you know that we we do that because when people are really talking about super important things to their business or their life and things like contracts and stuff like that they want to do it in their native tongue and and it just points out again that people are people and we're always going to want to deal with you know really important things with another person so anyway randy's point is you know producers aren't going anywhere but what technology does and he agrees with me that technology just makes takes the drudgery away and i really sense that what you're trying to do is take the drudgery away so that producers customer service people or whatever can focus a hundred percent of their attention on the person they're talking to to solve problems dig deep for uh what keeps them up at night and then um use the technology to create uh you know lots and lots of options for solutions so that that's kind of how you see the future of the business too i think yes i i actually couldn't agree more and then ultimately you know it's um look if if you've got a 300 000 home and a and a 1920 you know a 2014 honda you can go to geico and spend 15 minutes and probably say 15 that's probably true if your assets get any any more complicated than that like you know yeah yeah i've got this house but you know we have this rent house when we've got airbnb exposure you can't go online and fill something out and really personally get your risk managed and ultimately you're going to need somebody to help you and and that's why i think that the independent agent i see decades where people are going to need that expertise well you know they may be able to get some more complicated questions answered i mean you've you've talked about artificial intelligence and certainly artificial intelligence is increasing in its ease of use and sophistication in terms of what it can deliver as a as an answer to people but it also strikes me that artificial intelligence is going to increasingly give agents options uh to present to people that maybe they didn't have the time or the ability to create for themselves i had an interesting experience about five years ago so ibm created uh watson uh watson's pretty famous and you can make maybe you use watson in your product but you know watson's just an artificial intelligence engine that you can program and it comes up with really you know interesting and creative solutions so at this at this conference they they said hey we want you to take uh avocados and peanut butter and oil and a whole bunch of food ingredients and make cocktails out of them and make them taste like you know martinis or whatever and it was it was really bizarre because you're drinking this stuff in a glass it doesn't look like anything you've ever seen before in your life and it tastes just like something that you didn't expect and the point is that watson is able to take uh information and recombine it in ways that no one could have ever envisioned and so i'm thinking hey i'm talking to you you're my insurance client i'm having an interview with you i'm asking all these right questions but in the background artificial intelligence is slicing and dicing insurance policy forms in a way that is completely unique to your situation and and that's a wonderful thing for the consumer but somebody they trust has to make sure it's still okay and that's a human being yeah and look there may be technology in the future where um in fact uh one of the one of the guys that's on our advisory board is a guy named dave anthony and dave created call of duty um so he's known as that as the trillionaire gamer um and so he thinks combining a i with with augmented reality that you can actually ultimately create characters that can that can that can speak to someone about whatever it is they're selling um he invested in avis because he thought that that we were at a very unique place and he wanted to be involved with us because he sees insurance as a place where augmented reality could ultimately be very impactful which i believe it will will be very impactful but going back to your first point ultimately you got to start in that first three feet where you're talking to the talking to someone to understand what it is that their needs are and you know i can't get your social security number and figure out what you ought to buy for insurance i've got to be able to talk to you about everything that's in your world right so you know it's interesting that you bring up uh augmented reality so i've done a lot of experimentation with augmented reality and it's fascinating to sit across a virtual desk from another human being who's just an avatar that and after you know a minute or two you forget that this is all electrons and you're really having a conversation with somebody it's face to face what to me what that means is not that a that an avatar replaces a person like in the case of soul machines i don't know if you're familiar with that company but they have amazingly lifelike computer generated avatars but you know it's still a little bit of stepford wives ish if you will but but you know what this what what to me augmented reality means is that um i can sit across the desk or the table from somebody anywhere in the world just as easily as i can here in oklahoma city and if i have a fabulous interviewing system that asks all the questions that ever need to be asked and is using ai to prompt you know as as you give me an answer uh well here's another question that you really ought to ask is as a consequence of that that as an insurance agent or an insurance agency owner now my marketplace is the entire united states for example not just my home state and every industry is equally uh you know i have capabilities to write business in that industry even though i've never done it before right and i can do it seamlessly and easily and in a way that uh the prospect you know really has confidence that the product i ultimately deliver to them is real and so what does that reduce me to uh and what i think it reduces me to is the the capability of establishing the relationship in the first place you know that unique chemical thing that happens between two human beings where we like each other and we create a bond of trust which is just reinforced by you know the transaction and the the questions and all and all those things so um it's interesting i mean i think technology is going to be fabulous personally but i think what it really does is it shines a light on this these intrinsic human skills that the talented agent both comes with naturally but also gets trained to improve yeah i think you make really really great points um i do believe that this paradigm shift that's taken place um i don't i don't i don't see a threat to the independent agent in the next decade um because you know when i first started looking at this business ten years ago um there were you know there were folks out there saying you know within a decade all the independent agents are going to be gone because of all the things you just talked about um but ultimately i think when somebody's insuring their business or if they've got lots of assets they want to have a relationship with who's ever helping them protect that and and i think that personal interaction has been key to that it it'll be really interesting to see how different life gets when you know you're not meeting you're not meeting your agent for gin and tonic to talk about your insurance needs you're going to zoom meeting with him or some other such thing and does that change the way that relationship is um it probably does for guys like you and me right because my friends are my friends and and you know i i'm basically i mean sort of a joke that i'm the ceo of a technology company i'm a salesman that's what i am and i do that because i've built great relationships with really great people um i don't know if i could meet somebody brand new over the phone and have that same kind of interaction and that same kind of relationship um but i think the generation after us tony is going to be used to doing that and and there's and and they still might want to be able to look somebody in the eye even if it's across the zoo to say is this guy really looking out after my best interest and do i really trust this guy with my home and my cars and my boats and my wife's wedding ring and do i really trust this i'm really getting good advice here and can i really look at that you know looking look them in the eye like i've done all my life um yeah and i think i think that's already happening i mean i you know i know my own personal experiences i have friends all over the world that i've met um online and zoom or it's equivalent technology is just making those things better and so we see people in the face-to-face after a decade of talking to them you know online it's just like it didn't change anything so uh and it is like a little bit like virtual reality once you enter a virtual reality world your brain within about 60 seconds to 120 seconds it's real and so this is happening and it's going to happen and the adoption of of it's going to be interesting to see what it does to business models but um you know one just kind of one last thing i want to touch on with you which is is marijuana so you know again talking about the past and the future i mean five years ago uh people who sold marijuana were criminals today they're entrepreneurs they were already they were always entrepreneurs they just now happen to be legal entrepreneurs so this is an exploding business uh and you know you and i both have some exposure to it so i'm a chairman of a bank and and we have a burgeoning uh banking business for marijuana and obviously you know you're helping insurance agents that are trying to ensure marijuana related businesses you know grow and and and i think that's interesting because it's exploding so just touch for a second on some of the capabilities that you've developed with your technology to help agents help people who come to them with what is still a difficult to ensure risk well one i think you're right in terms of the growth and and and i wish i could tell you that i was smart enough to see all this coming um but about this actually in september 2019 we started looking at specialty lines for the interview products so we had looked at personal lines obviously that's and we built an enormous database to start to manage that data so as we looked at at the commercial side at pecialty lines i picked uh cannabis and hemp because it was not that big of an industry i could get my arms around having all the necessary data i hired um subject matter experts in in september that were programs experts and then we hired some cannabis experts and then you know but but we're also building technology and so it didn't just really rise to the top automatically right and by the way um the avest interview is written in in codeless technology which is a big which is the new hot thing uh i'm glad it's a new hot thing because because that's how we started this process two two and a half years ago but it basically puts us into a position where our our technology doesn't know if it's a marijuana flower or a hamburger or a chair it just it it is just rules base that says if it's this then it's that and it guides you through so everything we do from a a um um industry perspective can be done by analysts right so the other thing that i felt uh felt very strong about cannabis it was going to change dramatically and so you've got to be able to shift and if if shifts meanings i got to go rewrite the code that's not a solution that's why our industry today is essentially stuck in legacy because all the big players have to go rewrite the code we'll never rewrite the code we'll just change the business rules so in march when the world was coming apart i kind of looked in the mirror one day and said it was like day four of quarantine and said you know i'm going to take charge of my own destiny here i'm going to really go develop this digital marketplace so that the marijuana and hemp industry has one place to go where if i can force all the players to be digital we can have the most efficient commercial lines market for this one industry and i can look at that i can get my arms around it and i can control it and so that's how we started and then i started putting more resources into it when covid's get started getting worse because my belief and and then uh and and tuesday i got proven at least a little bit right is i i think the whole moral judgment in question is giving way to tax revenue for states and states and cities and ultimately i think that's why the federal government rolls over is because we all need the revenue we're all using it anyway so why don't we make this a product that i mean it can't be any worse than uh then buying lottery tickets right it's you know people are going to make bets you might as well get you know you might as well get revenue out of the betting system that's that's what the lottery system is all about so i don't see that the cannabis market's any different and i think it's going to grow like a weed all pun intended yeah and obviously your software you've already set this up because we've had conversations offline about this in the past so that agents can be immediately successful as experts in insurance cannabis related businesses so just to throw that out there that um you know you know over the last three or three to five years i think this has been a big head scratcher for agents you know how do i i've got this opportunity what do i do with it and that's really a solved issue today so um anyway if if somebody's interested in becoming uh a green uh agent and no i'm not talking about utilities here uh in their local area they should they should get a hold of you so we've been we've been working on this for over a year uh talking about uh and and and actually um uh it'll it'll it'll be marketed in the marketplace as in the weeds okay so we are really going to get in the weeds and make sure we understand your risk right and and we think we'll launch this in more of a in a in a commercialized effort you know in early 2021. okay good all right i'll be looking forward to so so anyone that's interested in the sector um i'd love to talk talk to anybody because i think we all have a lot to learn about this because it's it is still the wild wild west out there uh as relates to cannabis okay well hey mark thank you for joining me today on uncaptive agent the future of insurance i think what uh what i've learned increasingly is hey there's a role for agents but it's changing and embracing technology makes it easier and i'm super excited and we'll talk more offline later you know how your product can speed up the process of training developing new talent in this business which is going to be critical to every agent over the next decade so again thank you for being with me and uh we'll talk soon great it was a real honor to spend the morning with you thanks tony you bet i'm talking to independent agency owners about this all the time if you'd like to have a more personalized conversation click on the button or the link in the description and we'll make that happen you can also reach out to me at tony tonycaldwell.net contact