Case Study: Covenant Underwriters

Posted on 27th April 2021

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From manual to automation through digital transformation

Based in Texas, Covenant Underwriters specializes in e-commerce insurance programs. The insurance company is laser-focused on its primary niche of limited-service motels and hotels, but is also exploring other underserved, niche markets within its product portfolio. As a specialist with 25 years as a broker in the industry, Covenant’s expertise and knowledge in its insurance segment is unparalleled.

From paper to digital platform

Covenant Underwriters originally launched to address the unique challenges of the limited-service hotel/motel market. Currently, the market has failed to identify and rate for specific risks in hotelier operations, through its use of ISO standardized forms and ratings. These quickly amount to numerous standalone policies, all requiring stacks of paper in the form of Acord applications, supplemental applications and scanned signatures.

Recognizing the frustrations that insurance brokers encounter daily in the outdated and challenging surplus lines market, Covenant Underwriters set out to build an approach that eliminates excess paperwork and unnecessary middlemen. It has years of industry know-how, decades of accumulated frustration, and a resolution to change, but needed a guiding light to pull the broker out of the doldrums of paper and into the digital future. Covenant wanted to build a platform that would not only handle core administration functionality, but would also allow rapid integration with third-party data providers and toolsets, without the long paper trail.

Liberating brokers with digital

In keeping with its vision of unleashing broker potential, Covenant selected INSTANDA to help build a cutting-edge, entirely configurable policy management system.

We were sold the moment we saw the copy and paste functionality,” commented Daniel Murray, partner at Covenant. “The knowledge that we could copy a package and adjust the application questions, rating engine, and documents with a few employees, none of which were previously IT professionals, as quickly as we desired brought an unbelievable comfort to the decision to go with INSTANDA.”

Harnessing INSTANDA’s technology, Covenant was able to customize a single policy administration platform rated to the exact risk, with very little input required from brokers through a quick and user-friendly online application. While most applications ask the broker to fill in answers for questions such as a hotel’s distance to the coast or roof condition, Covenant was able to pull from online data points through APIs in just seconds, after being given just an address. Brokers are also relieved of the hassle associated with agency billing. INSTANDA’s platform allows Covenant to directly bill policy holders, leading to automated ACH transactions. This creates a more efficient, predictable cash flow for Covenant, the insured, brokers, and carriers.

Efficient insurance ensures effective gains

INSTANDA was able to complete an on-time, on-budget implementation of the new Covenant platform in just seven months. Covenant efforts were only partially focused on the INSTANDA project during this time, as resources were also deployed to develop rates, procure licenses, negotiate with carriers, and market products.

Automating processes has enabled Covenant to grow rapidly without increasing its overheads, enabling the broker to achieve ROI for the project within the first 6 months of operating. It is expected that Covenant’s brokers will see a 400% return / increase in revenue once they have been fully trained on the platform, due to greater efficiencies across the company.

We were able to provide brokers with significant time and personnel savings, as well as the tools needed to outpace competition through electronic applications, immediate disqualification of ineligible risks, and immediate price indication,” said Daniel Murray. “We’re finding that account managers will run a quick check on our price before beginning the hassle of submitting applications elsewhere. Upon binding, custom policies and declaration pages are delivered instantly, with payment scheduled and collected through ACH resulting in electronic audit trails for speed and ease of premium accounting, broker and carrier remittance, and painless renewals.”

Covenant actively ensures that its treaty stipulations with reinsurance partners are monitored in real-time. In addition, guardrails have been built into the software which remove the risk of human error when applying binding moratoriums or capacity constraints. By providing data accessible through business intelligence and visualization software, reporting options and dashboard configurations are endless. Real-time insights and intelligence at the fingertips of the business enables Covenant to diversity its portfolio by adjusting eligibility and pricing for all risk characteristics, as well as cherry pick risks on individual submissions, selecting accounts the rest of the market has overpriced with its broad assumptions.

A future with endless possibilities

Covenant expects to continue to achieve massive efficiencies through continued automation and replication. The brilliance of INSTANDA’s model is that every bit of work that goes in to creating on the platform has the potential to pay off exponentially.

We see INSTANDA as our iPhone, and the insurtech community as a rapidly expanding app store,” said Wes Murray, partner at Covenant. “We use proprietary databases and technology, third-party data and service providers, electronic signature software, and even outside rating engines for some products, all of which we integrate with to keep our brokers’ journey as simplified as possible. We will constantly update, swap out, and improve our data and processes through access to a marketplace teeming with disruptive technology.”

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