2206 - The Essential Role of Insurance in Today's Entrepreneurial Landscape with Flow's Sivan Iram

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1:05With us right now, Sivan Aram. Sivan, you are the founder and CEO of Flow. You are found on the web at flowspecialty.com. Very excited to talk about this. Platformless AI, we will be talking about this. But before we get going, Sivan, what are you into lately in terms of hobbies or music, movies, TV, just anything that you're kind of geeking out on lately? Yeah, first of all, Josh, thanks for having me. It's a pleasure to be here. You know, I've played semi-pro basketball all of my life, so I'm still trying to be loyal to at least once a week pickup at the local gym. Um, I definitely try to work out as much as I can.

1:55Yeah. Movies. We're, we, we started to see my wife and I, we started to see, I think it's called adolescence. Oh yeah. So that's on Netflix right now. I hear it's pretty stunning. What is it? Do you, do you mind describing it? It's a, uh, masterpiece of a show, um, basically describing, um, uh, a situation where a young adult 12 years old 13 years old is being um taken from his home and being a suspect of murder and the entire episode is shot with one take which is mind-blowing um earlier you know in my childhood and young adulthood i was really into um movies and video editing and i was actually doing some of my own movies and in my mind again i'm not nowhere near like that level of production naturally but to do a 45 minute or an hour long episode with one take on one shot is just mind boggling even from a production standpoint it's it's a marvel but the it's an it's such an intense script and cast and edit and the entire thing is just like it's very hard my wife and i we had to take a good week off between episode the first episode and the second one before we we kind of we were emotionally ready for the next step so we have to watch wow so it is a masterpiece definitely stands out in everything else you see nowadays um so yeah it's not often you see something that has a 99 on rotten tomatoes adolescence does okay i just texted my wife i said we need to watch adolescence too because we're always like talking about stuff like we Thank goodness we track everything.

3:39Well, let's, Sivan, let's talk about Flow. And tell me, explain to our friends that are listening to us right now, what is Flow? So Flow is an insurance brokerage. We're what's called a wholesale broker. We help businesses buy commercial insurance. But we take a certain position of expertise and knowledge. Most companies buy through a broker, what's called a retail broker. They need to know what they're shopping for and they need to get access to the best carriers. With the most rudimentary insurance products, your business owners or your general liability or your workers' compensation, typically that broker is going to do a great job giving you the right coverage with the right carriers.

4:29When it comes to the more specialty, unique, nuanced insurance products, whether it's directors and officers or cyber or professional liability, typically brokers really can't put their finger on the pulse and stay abreast with every single change that's happening with those specialty and unique coverages. So they use what's called a wholesale broker like us to get additional expertise, extra hands on the account and access to broader markets. So we bring in that capability and expertise. Our approach is to employ AI to deliver faster, more consistent, more insightful service as a broker, especially to SMBs.

5:15The challenge that SMB companies have is that on one side, they need the handholding. They need the expertise. It's not a small purchase decision to buy a$10 ,000 DNO policy for a small business owner. But on the other hand, traditional brokers like us, well, we're not traditional, but traditional companies that do what we do, those relatively small accounts are just not profitable. So they can't really spend a lot of time because of how manual and antiquated their systems and processes are. So then we come in with a fresh approach, AI driven. We don't have any logins, any platforms. I know that, you know, a few years back, that was the approach.

5:56An intermediary, like a broker, would say, I can't place this account profitably. I can't make money on it. So I'll just build a platform and give it to my clients to self-serve. We don't think that's a good solution. They don't, people don't know what to shop for. There's too many systems, too many logins already that they need to be kind of worry about. So we really take an autonomous approach or not a semi-autonomous approach where we use the best combination of insurance experts that we have in-house. We are a fully licensed broker, but then we build our own AI technology that allows us to be, as I said, providing better service through consistency, proactiveness, and a more insightful level of delivery.

6:39So that's what we do. We started in 2021. We focus on specialty insurance products. Anybody that's looking for management liability type products, whether it's directors and officers and crime, fiduciary employment practices. We also cover cyber, which is becoming a real pain port for small businesses. There are tens of thousands of incidents per year and many small businesses are not yet insured. Many small business owners don't yet acknowledge the need for cyber policy in place. So we definitely take care of that as well. And then the last category would be professional liability. We do a lot of lawyers, accountants, architects and engineers, tech companies, and on and on.

7:25So those are the solutions that we provide. We are venture backed. We have some of the best investors in the world on our app table, Lightspeed Ventures, other really kind of tier one investors. And we're just excited to, you know, be in this moment of time where, you know, they have this massive opportunity to employ this innovative technology in a way that really matters to business owners. Yeah. And so for the business owner who has, you know, maybe they've had a, gosh, what do we have? We have a, we have a general, you know, kind of business liability product. I, you know, I don't love it.

8:02I don't, you know, to me, it's just like a tax I have to pay. I'm never, I feel like I'm never going to use it. Like, what do you think in the kind of the entrepreneurial world or the business world, like, how do you think most folks perceive business lines of insurance? To me, again, it just feels like a tax. Yeah, your sentiment is a good sentiment. And it's not only from a business owner standpoint, even as a consumer, you definitely look at there's a lot of cynicism and there's a lot of skepticism around the need for insurance and even the process of processing claims and your position versus the insurance carrier's position.

8:44When I started in insurance, my background is software. I'm not an insurance expert by any means. Now I know much more than I used to. But when I got into the space, I came in with the same level of skepticism and cynicism even. And probably the things that changed most for me in this journey with flow is the recognition of how important insurance is for kind of being the foundation, and I'm not exaggerating here, the foundation of a strong entrepreneurial-based economy. If as business owners, because your listeners, and myself included, we are small business owners. At the end of the day, Flo has 35 employees.

9:23Many of our listeners do as well, or watchers do as well. And if we had, as business owners, as CEOs, if we had to bear every single risk, every single peril that can happen, whether it's getting sued by somebody that felt wrongdoing, or maybe somebody slipped and fell during work. Maybe there's a cyber incident where a phishing email was sent and somebody accidentally clicked a link. As a business owner, if you had no insurance and it was on you to potentially pay the cost of every single peril and everything, every single thing that can go wrong, people would not start businesses. 80 % of businesses experience at least one claim within their lifetime.

10:04So the notion that we can transfer risk to someone else, yes, we need to pay this tax. Yes, we need to pay premium. And oftentimes you end up not using that. But the fact that you can do it allows you to free up your mind of potentially having to pay the cost of everything that can go wrong and focus on building a business, focus on scaling, focus on creating value for your clients. And I take the position of obviously being an insurance broker, but I'm also small. And I buy insurance for our company as well. And that shift in my mindset of how important insurance is for entrepreneurs to be able to focus on building business without bearing risk really materially changed over this journey.

10:50Yeah. And so cyber is certainly a product line. cyber liability is certainly a product line that has become much more necessary. Do you mind just in a couple minutes just explain what that line is and who that might be so critical for? Yeah, today, more than 92 % of medium and large businesses buy cyber, but less than 20 % of small business owners buy it. There's very long tail of education that still is happening because it's relatively a new line of business. Traditionally, 20 years ago, people had IT systems and cyber was bundled with professional liability coverages. It wasn't as a standalone product.

11:42It wasn't very deep and very thorough. Today, anybody with a technology stack, anybody that's using cloud services, anybody that's using Stripe for payments has a point of system. Many people who just interact, business interaction over email and other systems need cyber coverage. The number of ransomware attacks, the number of phishing emails, the number of fraud that's happening is mind-blowing. 99 % of incidents actually happen to small business owners. The average loss per claim today is more than$150 ,000 on average. So to have a policy in place, sometimes it can cost$2 ,000,$5 ,000 a year.

12:33to have a cyber policy in place with potential limits up to a million dollars in losses, I think it's a fundamental coverage that businesses need nowadays. Every business is exposed to this today in today's kind of business interaction and the way that we do business today. And we're continuing to see the market being educated and buying more and more. There's still a long ways to go. Yeah. And of course, I think the exciting thing here is that AI can really improve experiences, making sure that we're getting the best policy, that we're getting the right coverage, that at the end of the day, we're able to do what we need to do in the market and do so and mitigate that risk.

13:20that the thing that's always in our threat box and our SWOT analysis, right? Is we ought to make sure we've got the proper lines in there. And so AI just, I guess what you're saying, I mean, just really improves the whole experience. Well, AI does two things really well. The low hanging fruit for AI is automation and streamline of really kind of what's traditionally been very archaic, very labor intensive process. So the fact that you can take an email, extract information from a PDF, it can be a structured PDF, it can be handwritten and scanned to reliably, to very high levels, degrees of accuracy, extract information, create an object in our system, then check compatibility of coverage against our trading partners.

14:09We have more than 100 carriers that we work with today. You want to make sure that you approach the best ones for every risk. And the best one is a contextual statement. What is the state? What is the business we're dealing with? A startup in California is very different than a restaurant in Michigan. So really being laser focused with our approach to going to the best trading partners really is important. and do it across the organization. Naturally, we have insurance experts and they have the best markets in mind, but that lives, you know, traditionally this lives in the mind of every broker.

14:49What we're doing is we're systematizing it. We're making sure that as an organization, we raise the floor, we raise the bar of the organizational knowledge, making sure we're going to the right business partners. So that's kind of the first low hanging fruit that AI helps our brokers with. The second thing is what can the concept of digitization of knowledge, this expertise that exists in the minds of people is not scalable. When we have this living, breathing system that you can teach what we're taking from a technology standpoint, we're not building the base model. Today, there's a handful of base models, really good.

15:30They have various strengths and weaknesses, but all of them know English really well. And we've taken a model that knows English well and we taught it insurance. And the ability to tap into an organizational digital knowledge that scales up with it, that you can expand and deepen as you grow your team, as you grow your client base, as you have more data, is mind-blowing how fast it is. when we started working with our AI system, it was like an intern. It's a 20-year-old graduate. They know English pretty well. No, they know English well. That was a joke. But they don't know much about insurance.

16:11And you teach it and you deepen the knowledge base that it has. And you're showing it great examples of what a quote analysis looks like, a quote comparison. When you get a policy from a client and they say, hey, what are my gaps? Am I overlooking something? You're able to use AI to do it. So fast, over the span of 18 months, we've built an AI insurance broker that works with our brokers. And actually, Josh, three months ago, we had a big press release. There's an establishment, there's an association called plus in insurance. And what it does, it gives certifications to ex-brokers. If you want to be a broker, you have to be certified by this organization.

16:57A good way to think of it is like the bar exam for attorneys. And we ran our AI through the certification exam and it passed with flying colors. So every single question it got right to show that the level of expertise we're teaching it is on par with the best experts in the field. Wow. All right. The website flow specialty to brokers. Can you give, I'll let you kind of give the call to action, Sivan, in terms of who should be reaching out, who should be connecting, who we should be sharing this podcast episode with and or flow with. So we don't work directly with businesses. We work through retail brokers.

17:42We can definitely, We have oftentimes, you know, when I go on podcasts or we do campaigns in various platforms, people, business owners do reach out to us. It just means we need to connect them with one of the agents that we work with, and then they would process the account through us. But really, I encourage business owners who are looking for great coverage options, who are upset with, you know, whether the terms that they have or the price that they pay. We can always look for competing. We have 100 % hit ratio with options we provide. This is especially true for very challenging, difficult businesses.

18:19It can happen because the business had a big acclaim, and now all of a sudden, it's much more complicated to get competitive prices. Sometimes the line of business is really challenging. For example, companies who do crypto or cannabis-related through the supply chain, the value chain of cannabis today is still relatively challenging to get good coverage. We have 100 % ratio. We've never seen an account where we couldn't have competitive options presented in front of them. I love it. Sivan Aram, founder, CEO of Flow, found on the web at flowspecialty.com. Sivan, thank you for joining us. Thank you for having me.

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