The Future of Insurance – Aaron Steffey, Co-CEO & Co-Founder, Propeller Bonds

The Future of Insurance

Aaron Steffey is from Philadelphia, Pennsylvania and is the Co-Founder and Co-CEO for Propeller Bonds—a company with a goal to simplify, automate, and distribute surety bonds more efficiently for agents and carriers. In his role, he is responsible for the company’s strategy, fundraising, and growth efforts. Steffey began his career as a managing partner for his family’s Indianapolis-based insurance firm, Steffey Insurance Agency, and holds an MBA from Villanova University.

Highlights from the Show

• Aaron started his career as an agent, and they did not do a lot of Surety Bond work, but had a need every now and then
• Propeller aims to make transacting Surety as simple and efficient as possible so the business doesn’t walk out the door to go to another agent or a direct, web-based solution
  • Propeller launched in 2020 to automate what they saw as 'transactional' Surety, meaning quick turn bonds, taking a minute to get a Bond
  • As the technology progressed, they were able to move up-market to automate pieces of the process while involving a person in the underwriting
  • They white label it for agents and brokers to be customer-facing or used internally
    • Most are still transacted by the agent today
  • They have 20 carriers on their panel across all kinds of class codes and areas
• From 20 agents on their MVP in March/April 2020, they have over 2,600 on the platform today
• They were originally only going to release in the states that accepted electronic signatures and notary seals, but COVID meant every state suddenly was an option, so Propeller was able to expand nationally given the flexibility of their platform
  • Economic activity needing Bond was happening in pockets of the country, like Florida and Texas, but the Bond was being serviced in areas that were more locked down, like NYC
• One barrier for agents writing Bond is how expensive it is for carriers to appoint them, so Propeller allows agents to get access to Bond through Propeller even if they only write one policy
• Surety is a three party agreement, with the agent, carrier and oblige, so there are a lot of needs to solve for, which Propeller made a point of trying to do rather than only solving for one or two parts of that
• Looking ahead, the train has left the station for electronic acceptance, but there are some parties looking at Blockchain as a way to start verifying that a Bond is in place
• He also sees Embedded being a good fit for Bond
• It's been hard for carriers to solve the issues in Bond because even the biggest Bond carrier's book is small relative to everything else they do, but every carrier has an appetite, so they can't solve the entire market need
  • That's why Propeller realized they couldn't just have one carrier backing them, but needed a panel to cover the breadth of appetite needs of the market

This episode is brought to you by The Future of Insurance Volume III. The Collaborators, part of 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 Hyperbeat Music, available to stream or download on Spotify, Apple Music, and Amazon Music and more.