Newly launched construction focused insurtech MGA Shepherd is out in the market working with Guy Carpenter to secure capacity to write a book of middle market-focused excess business with the platform having already hired a pair of seasoned market specialists in Chubb’s Stephen Buonpane and The Hartford’s Constantine Hadjipateras to support its build out.
Shepherd was launched at the beginning of this year by CEO Justin Levine after securing support from startup accelerator Y Combinator, and the platform is now in the process of bringing capacity on board so it can start underwriting business.
Shepherd CEO Levine has a background that combines both insurance and technology. He has previously served as the enterprise risk manager for Hunter Roberts Construction Group, while he also launched and led a network-based vendor management platform for the construction industry called TradeTapp which was subsequently acquired by Autodesk Construction Solutions.
Alongside Levine are fellow co-founders Buonpane who serves as chief insurance officer and chief technology officer Mohamed El Mahallawy.
Buonpane joined Shepherd in April having spent the previous 12 years at Chubb and its predecessor company Ace, latterly as an executive vice president and leader of its construction industry practice.
As well as Chubb, Buonpane has worked for UK Trade & Investment as well as AIG.
El Mahallawy, formerly a senior software engineer at Airbnb, joined Shepherd in January and is leading the platform’s product development.
Further strengthening the team is Hadjipateras who joined the company earlier this month as head of underwriting. Hadjipateras made the move to Shepherd in July after just six months at The Hartford where he had served as an executive underwriter. He had previously spent close-to nine years at Chubb.
Explosion of data
Talking to The Insurer, Levine said Shepherd’s launch has coincided with what he described as an “explosion of data” about contractors in the construction industry, factors that influence projects being delivered on time as well as construction financials. At the same time, pricing in its specialist insurance market has soared.
The availability of more construction contractor data follows significant changes that have taken place in the industry in recent years, notably the increased use of emerging technological solutions to support the sector.
“Construction tech has really changed over the last five to 10 years,” said Levine. Some $5bn of venture capital funding has made its way into the construction tech sector since 2015, according to Levine.
“The really big bi-product of that is there’s now a tremendous amount of information and data about how different contractors behave. None of this data is being leveraged in underwriting in any meaningful way.”
Combining construction data and underwriting
Historically, construction underwriters have relied on legacy data and information provided by the contractors on the investments they have made.
But Levine said Shepherd has seen an opportunity “to combine construction tech data with underwriting”.
Shepherd has partnered with various construction tech platforms in order to garner data on contractors when they look to buy insurance which will then be used to model the risk.
“Construction is a tough business, but right now, and specifically in some of the middle market spaces we are focusing on, there’s a tonne of disruption and we think Shepherd can take advantage,” said Levine.
Rising cost of coverage
Aside from the tech boom in the sector, Shepherd’s launch has come at a time when pricing in the construction market continues to rise, especially in the excess layers that Levine and his colleagues are targeting.
As Levine noted, excess casualty towers have become increasingly difficult to fill as carriers have pulled back capacity while rates have risen substantially. As reported by The Insurer this week, a new study from Arthur J Gallagher has highlighted how construction insurance capacity is increasingly restricted with clients hit with double-digit rate rises on many business lines.
Shepherd offers SaaS broking tools
While looking to secure capacity for its MGA operation, Shepherd is also developing software as a service, or SaaS, tools for brokers. The first of these, which is currently at the soft-launch stage, is a submission development tool specifically for construction brokers and their clients.
This inaugural tool, which is free, is focused on data collection and client management for brokers and includes collaborative elements that reduces administrative back-and-forth. It is similar to a construction-industry Indio, the smart form technology platform that streamlines insurance application and renewal processes.