Pathpoint's recent addition of Vave commercial property coverage to its excess and surplus (E&S) coverage quotes service is the next step in its efforts to reduce the pain agents experience when providing coverage in the space, according to CEO Alex Bargmann. Pathpoint operates as a digital wholesale intermediary or broker for E&S insurance.
"Placing small businesses into the wholesale channel is traditionally very labor intensive for agents," he said. "You're filling out lots of paperwork, there's an additional compliance burden, lots of emails. You might be dealing with multiple people at the wholesaler. And so a lot of times agents need to go to wholesale out of necessity."
Often, the E&S policy is one of a few that an agent may be writing for a small business at the same time, Bargmann said. Unlike other coverages, however, E&S policies can take longer to bind. This conflicts with insureds' motivations to get covered faster.
"Our value proposition is saving them a lot of time and a lot of pain that hits their bottom line," he said. "They can spend their time on selling and client services. It also helps them access this market more easily, in a compliant, very straightforward manner."
Pathpoint can handle more business with the partnership with Vave, which is a MGA and a Lloyds Coverholder underwriting U.S. surplus lines for property. Pathpoint can expand its auto-quoting for covering all-new occupancies like hotels and distributors, and doubles its total insured value limit from $2.5 million to $5 million.
Pathpoint launched in 2018 as an E&S underwriting software business but in 2020 pivoted to become a wholesale E&S intermediary, in part as a response to growth in E&S insurance.
"The economy has gotten more complex and climate change has driven more property risk into the E&S market," Bargmann said. "That's been going for over 10 years, but it's coupled with a hard market cycle in the insurance market. In property, that specifically has driven even more business into E&S."
Specifically, the increase in weather-related events has strained CAT property coverages, driving that out into E&S policies. "If an agent is increasingly placing business through wholesalers, they're increasingly dealing with the pain of the manual process," Bargmann said. "A digital alternative is fortuitous timing for us and that's one thing we've seen in our go-to-market."
Although any push of a type of coverage into E&S coverage can be cyclical and later revert back, Bargmann believes, climate coverage is going to remain a "hard market" for some time, he said.
"Anywhere that hurricane or flood damage would be an annual or biannual occurrence, it's very, very difficult to place business right now," he said. "We generally feel like we're still in that moment of fortuitous timing."
