Leveraging User Data to Transform Construction Risk Management

Welcome to another episode of The InsurTech Geek Podcast! In this exciting episode of the InsurTech Geek Podcast, our hosts James Benham and Rob Galbraith interview Peter O’Brien

How does risk play into construction management? Do brokers and underwriters have the right tools to do the job? Peter O’Brien explains how the integration of tech and insurance leads to better project management

Building from The Ground Up

The conversation starts off with James and Rob discussing Peter’s background, how he ended up in Santa Barbara, and particularly how he got involved in insurance. Peter shares his story starting with his early entrepreneurial ventures in n. event planning and owning a bar, where he learned valuable business and insurance lessons.

“I was always attracted to the building industry”

Years later, he started working for Honest Buildings, where he saw a massive opportunity to build construction management technology for the owner.. At that time, owners did not have best-in-class technology for managing their construction projects which was the pain point that they were trying to solve.

Later on, Honest Buildings was acquired by Procore, and Peter became their Head of Strategic Development. Today, Peter is the General Manager of Procore Risk Advisors.

What does Procore do and how does it benefit the insurance space?

Procore Risk Advisors works to reduce the risks associated with managaing projects across the construction industry building a project you aren’t physically close to. ,.they further expanded into quality, and safety and then they expanded incorporated the financial aspects of project management.

“Every action that happens within the Procore platform is to reduce risk in the project delivery life cycle.”

Procore, having always been a massive customer-centric business, started exploring all of their options within the fintech umbrella. They believed that they could provide added value to their customer base by building and supplying financial services, including everything from payroll to financing to lending and payment.

At this time, Procore also decided to provide insurance services, which ultimately led them to become retail brokers with in-house underwriting capabilities.

Peter comments that data is key in resonating with their users and that it’s unique to their offering. Peter then remarks that “Historically, construction has been an industry that primarily used pen and paper methods, and what Procore has done in the industry is digitize it”.

This digitization effort has unlocked a massive data asset that can be applied for better risk control from not only a holistic risk management perspective but also it can be applied into developing better risk profiles that improve underwriting.

The Role of a Broker

According to Peter, “The broker is critical in construction and the commercial insurance space.” The broker is a person highly relied upon for decision-making when it comes to risk management and insurance decisions.

Peter commented that “construction companies outsource all of their thinking to their broker”. They don’t have the internal knowledge on how to make the right decisions, so there’s a huge reliance on the broker”.

The role of the broker is to tell the best narrative in order to get the best outcome with insurance carriers that they possibly can. The competitive advantage of Procore Risk Managers against a traditional broker is that they sit adjacent to the nexus of the contractors operations.

“Brokers are running their business on Procore. That provides enough data to understand how we can represent them when developing their submissions much more effectively. So we create a narrative and they substantiate that narrative with data that helps the underwriter get much more comfortable with the risk.”

They found that on commercial construction insurance there’s a huge amount of underwriting subjectivity. According to Peter, there’s almost a 50% spread when it comes to subjectivity in either direction.

Procore’s data storage and the ability to create the most effective submissions is changing the outcomes for the underwriter community, how they get comfortable with risk and how they get preferred terms. It’s not just price, it’s coverage and how they are able to step up.

Use of Data for Submissions

Peter stated that when he thought about innovation in this space, he thought there was a lot of low hanging fruit.

Moreover, a lot of that work falls on the broker and then they hound their clients and their insured for information all the time.

Procore has been able to digitize the submission process. They’ve also been able to aggregate most of the client’s data into the submission without ever asking them for their information and then sending it to them for approval. That workflow expedites the process, so the insured feels much more comfortable with the risk, and it allows the underwriter to have more information the first time they see the risk.

“We just want to make it super easy to say “yes” to the risk and get the best outcome for our client base.”

What Lies Ahead for Brokers

The future of the broker is to empower them with the tools so they can be the best possible client advocate for their insured base.

“I think there are other industries where direct-to-consumer works better but in construction, there’s no time, no resources, and no risk managers to go out and find how to get bet policies in place so you always need this broker.”

However, the problem is that there are a lot of generalist brokers in the space. People who aren’t construction experts are trying to be experts when they are not, and they have to rely on wholesale to get a good outcome for their client base.

Procore’s focus is to build the biggest construction insurance insurity brokerage and then empower those folks so they can be the best risk advisors to their clients as possible, and to enable them through technology.

After a wonderful conversation, Peter invites the audience to follow Procore and its latest developments.