Business Breakdowns
· Geoff Collette
They have an agent-facing comparative rater that simplifies and speeds up the quoting process, improving the client experience and conversion supported by agent-driven machine learning for predictive coverages based on tens of millions of quotes. Since 2018, they've created what's called a digital agent which is a unique self-serve consumer shopping experience that matches clients to best coverage in under two minutes with as little as three data points. Clients combined quotes through a brief call with local agents that have expertise in their specific market. All client data is treated confidentially. This type of experience does not exist on the market today aside from Goosehead. And they are also increasingly building out what's called quote-to-issue or QTI technology whereby you can actually bind a carrier's policy within Goosehead's proprietary agent-facing rater rather than the carrier systems, which just speeds up the process that much more. In terms of recruiting corporate agents, they basically have a value prop where it's an 18 to 24 month paid apprenticeship to master insurance and develop this referral partner network, offering compelling career growth with multiple opportunities. And on the referral partner side, they're really offering that unrivaled product choice that maximizes the likelihood for their client to get best pricing. It's particularly important these days with the affordability challenges in the housing market. They have best-in-class service that basically provides these binders that are part of the home closing process within an hour of receipt, preventing the insurance from ever holding up a closing. They help those loan officers grow their own business by giving them insights from the technology that they have that has the details around additional real estate agents that they could be working with. And lastly, on the carrier side, Goosehead efficiently drives profitable growth where and when carriers need it most through its broad scale distribution capabilities that have centralized quality control. By leading with that home insurance customer, Goosehead is bringing high-quality bundled clients to carriers who retain well, supporting more favorable loss ratios.
· Geoff Collette, Matt Reustle
And by working very cohesively with them, they're able to understand a carrier's risk appetite and basically use their technology to deliver the exact type of client that those carriers are looking for through one scale distribution partner. In that sense, effectively Goosehead is getting increasingly scarce capacity in certain instances where carriers may be shutting off distribution to all but Goosehead, which can be particularly important given the discussion we had around the availability of product and what that means with respect to retention and writing a business. [00:00:00] S0: I want to break down a few things in that. On the point about 200 providers that are in the network, how does that compare to some of the competition? [00:00:00] S1: If you think about the typical mom and pop agencies, they don't have the scale to essentially support as many carriers. At the end of the day, you don't necessarily need an endless amount of carriers, but you need enough product choice. There are instances where Excess and Surplus insurance that's less regulated has actually become a critical product to have. In markets like Texas where the traditional insurance market has become so scarce in terms of product availability, that ends up being a critical thing that Goosehead can bring to bear for its clients. Whereas I think a lot of other insurance agencies may not have the wherewithal to really stand up those relationships and offer it to their clients, forcing clients to look elsewhere for business and creating difficulties in retaining existing clients.
· Geoff Collette, Matt Reustle
[00:00:00] S1: If you think about the typical mom and pop agencies, they don't have the scale to essentially support as many carriers. At the end of the day, you don't necessarily need an endless amount of carriers, but you need enough product choice. There are instances where Excess and Surplus insurance that's less regulated has actually become a critical product to have. In markets like Texas where the traditional insurance market has become so scarce in terms of product availability, that ends up being a critical thing that Goosehead can bring to bear for its clients. Whereas I think a lot of other insurance agencies may not have the wherewithal to really stand up those relationships and offer it to their clients, forcing clients to look elsewhere for business and creating difficulties in retaining existing clients. [00:00:00] S0: Is there a segment of the market that is outside of the small mom and pops, not captive, but looks similar to Goosehead in some way, shape or form? Breaking down what you mentioned, the 200 providers—let's say, even if it's 50 or 100 providers—are there a lot of competitors that kind of operate in that scale?
· Matt Reustle, Geoff Collette
[00:00:00] S0: Is there a segment of the market that is outside of the small mom and pops, not captive, but looks similar to Goosehead in some way, shape or form? Breaking down what you mentioned, the 200 providers—let's say, even if it's 50 or 100 providers—are there a lot of competitors that kind of operate in that scale? [00:00:00] S1: There's certainly competition without question. I think the important thing to understand is all the different components that go into the value proposition within their specific go-to-market approach. So by focusing on the home purchasing process, winning in that specific channel, that's how they're driving success. Whereas many other agencies are basically spending a lot of money on mailers or Internet leads, which are highly inefficient relative to what Goosehead's doing. And by bringing to bear not just product choice, but the technological capabilities and the service levels, it's the totality of what they do that leaves them in somewhat of a category of one within their preferred way of going to market.
· Geoff Collette, Matt Reustle
[00:00:00] S1: There's certainly competition without question. I think the important thing to understand is all the different components that go into the value proposition within their specific go-to-market approach. So by focusing on the home purchasing process, winning in that specific channel, that's how they're driving success. Whereas many other agencies are basically spending a lot of money on mailers or Internet leads, which are highly inefficient relative to what Goosehead's doing. And by bringing to bear not just product choice, but the technological capabilities and the service levels, it's the totality of what they do that leaves them in somewhat of a category of one within their preferred way of going to market. [00:00:00] S0: I sometimes try to overpower and isolate things which I understand can't really be isolated because it all operates in a system together. On the referral partner aspects and what that's doing, I thought it was interesting. You mentioned there's not actually a payment made. It's much more about what they can do. In my mind, I'm thinking if I am one of those referral partners, maybe I'm the real estate agent, I would certainly prefer to get dollars in if I can. Is Goosehead really just filling a void in the market where those underwriters that might pay that referral don't have policies but you know you can rely on Goosehead for it? How would you describe that? Because it is an interesting dynamic when there's not dollars and cents being exchanged.
· Geoff Collette
[00:00:00] S1: You have to really think about the different types of competitors that they're competing against. A captive, as we discussed before, they're not able to compete in the vast majority of situations in terms of the best price for a given coverage. If you were a referral partner that's relying on a captive, your clients are being underserved from a product channel choice and pricing perspective. I think that with the affordability challenges today in the housing market and the dynamics around monthly payments, if you're able to bring down that insurance cost, it can really move the needle with respect to people being able to get into the homes that they need. So that part is really important. A more traditional IA lacks the service capability that Goosehead is so known for. Go back to the business model design of separating sales and service. A lot of traditional IAs are overwhelmed with the various aspects of running their business, including servicing their clients, that they're not able to be as responsive as Goosehead. And so in the context of the referral partner, they want to solve for that financial aspect to it. They want the service aspect to the binder and the closing process to always go off without a hitch. And effectively they want their client to feel really well served and be willing to refer that loan officer or real estate agent to their friends or do business with them again. And so I think that in my discussions with referral partners and Goosehead agents, the cohesiveness with which they work together in shared outcomes is really paramount relative to what's really a nominal fee that someone could be paying them to get business that really isn't matching up against everything I just described.