What is an entrepreneur?
The exact characteristics that comprise an individual with the ability to bring new ideas to the marketplace and foster their success may be difficult to define. But it’s not much of a stretch to recognize that Richard Kerr, chairman and CEO of the electronic insurance exchange MarketScout, CEO of Bermuda-based Monster Insurance Co., co-founder and chairman of MarketScout Wholesale (MSW), and founder of the Entrepreneurial Insurance Symposium and the Entrepreneurial Insurance Alliance has significant expertise in turning ideas into reality. In short, he is an entrepreneur.
In a podcast interview with Insurance Journal‘s Stephanie Jones, Kerr shares his thoughts about innovation and entrepreneurship, as well as his vision of future trends in the distribution of property/casualty insurance products.
Insurance Journal: What are some of the skill sets that are common among successful entrepreneurs?
Richard Kerr: I think it’s a very difficult thing to identify, what is exactly the perfect skill set to become a successful entrepreneur, because they come in all different shapes and sizes, and from all different economic backgrounds. And we thought a lot about that. Certainly, the folks that we had involved in the symposium, and that are involved in the Entrepreneurial Alliance would love to discover what that model is, because if we could, it would be even better than being able to identify who the best producers are going to be.
These entrepreneurs have not only the eye of the tiger, but they have an intellectual capability that enables them to effectuate a plan. I’m not trying to avoid your question, but there really isn’t an identifiable skill set that you can say, well, they grew up struggling and poor, or they grew up and went to an Ivy League school, because you just don’t ever know.
I do think that a lot of the experiences that they go through in the early stages of their careers help build them into an entrepreneur.
Now, one thing that we do know is that — to draw a football analogy — you have to have good fundamental blocking and tackling skills to become a successful entrepreneur. Just because you have a good idea doesn’t mean you can bring it to fruition.
So if anything, we would say good fundamental technical skill sets enable someone who has the entrepreneurial passion to bring it forward and make it a reality.
IJ: What strategies would help entrepreneurs navigate now, in a difficult economy?
Kerr: In this particular economy, it actually creates more opportunity rather than less. Because when things change, it creates opportunities for entrepreneurs. People that are innovative or entrepreneurial just want the markets to be moving, for things to be happening. A stagnant economy or a stagnant marketplace is not good for an innovator.
With things like they are today and with how they have been in our economic world over the past seven, eight, nine years, it has been a catalyst for new creative ideas. So this economy is good for entrepreneurs and it gives them an opportunity to move forward and capture new ideas and present new concepts, because tough times create entrepreneurs.
IJ: What are some of the pitfalls entrepreneurs face and how can they be avoided?
Kerr: I think some entrepreneurs become a legend in their own mind, and they drink too much of their own Kool Aid in the early going, and they’re not realistic about what they really need to do.
We all have to realize that every idea is not the best idea. Some ideas can be too early, some can be too late, and some can just be bad. So to be successful, sometimes the best thing you can do is walk away from an idea that you have a lot of your own passion, time and energy in. Every idea is not going to be a good one. …
A good innovator or a good entrepreneur needs to realize that maybe two out of 10 of their ideas should be taken to market, and the other eight are either too early, too late, or just simply not a good idea.
IJ: What about companies — how can they foster an entrepreneurial environment within their organizations?
Kerr: That largely comes from the top down. And that’s one of the biggest challenges that traditionally we’ve had in the insurance sector. It’s getting better, but if you look back 10, 15, 20 years ago, the insurance agency was the last place to be entrepreneurial. We’ve done things the same way, and still continue to do the same things the same way largely in distribution.
Technology has played a huge role in enabling insurance companies and intermediaries to process paper and secure applications, and get quotes out into the marketplace. But if you look at the distribution mechanism, the way that we distribute insurance, it hasn’t changed very much in the last 50 years. And in fact, if you look at the age-old institutions, such as Lloyd’s of London and London companies, it’s pretty much the same way today as it was 100 years ago.
So everyone’s looking at these ideas, and they’re continuing to foster and implement new concepts, but it’s not that dynamic. It is getting better, and I believe we’ll see a lot more entrepreneurial and innovative ideas, particularly in the distribution sector, over the course of the next four or five years.
IJ: Insurance exchanges seem to play into that concept. What does the future looks like for insurance exchanges like MarketScout?
Kerr: We obviously believe that the exchange concept is here to stay, and it is the way of the future. So in order to grow, insurance exchanges are going to have to come up with a lot more solutions for the retail agent than they do today.
In times past, the retail agent largely was on their own … for developing operating procedures, accounting procedures, software implementation, a sales strategy, and then a market appointment. In the future, insurance exchanges such as MarketScout and others will resolve all those issues for the retail agent so they can do what they do best. And that is to sell insurance services to customers.
When they come to the exchange as a retailer, they will be able to have full access, not only to specialty non-admitted markets and programs and MGAs, but also to the admitted marketplace. As opposed to getting appointed with two or three very large admitted companies to do their main street business, and then using multiple wholesalers and MGAs, retail agents will appoint with one exchange, and it will be that exchange’s responsibility to resolve all of the market access needs that the agent has.
Furthermore, that exchange will also resolve their operating issues, their software issues, their accounting issues. If they need financing or help, or if they need expansion planning, training of producers and a multitude of other things on both the operating and financial sides of the equation. …
The exchange becomes the go-to resource for retail agents to capture not only access to the market, but to resolve operational and financial problems they have.
IJ: What was the impetus for creating the Entrepre-neurial Insurance Alliance?
Kerr: The Entrepreneurial Insurance Alliance, or the EIA as we call it, was formed predominantly because of the success of the Entrepreneurial Symposium. Over the course of the past five years, the symposium has continued to gain more and more attendees and more attention, and as a result, a lot of these entrepreneurs or these innovators have ideas they want to bring to market but they don’t have a platform to get their concept to market. For instance, they either don’t have the capital they need to get to the next level, or they don’t have an underwriting partner, or a fronting carrier, or a software provider to assist them in getting where they need to go.
So the EIA was formed to resolve those issues. And it’s more or less an incubator, where they help these folks incubate these ideas, and resolve the issues they need help with. As an example, they may need to raise $250,000 to get their concept to market. Now, raising $250,000 is infinitely more difficult than raising $200 million, because nobody wants to take the time and effort to deal with such a small venue. That’s what the EIA does.
The best way to look at the EIA is it’s an incubator, and it’s populated by companies with differing skill sets, strategically selected, that can provide a big brother incubating approach to these upstart, fledgling entrepreneurial companies. Again, they may need underwriting support for their product, they may need fronting support or reinsurance, or a specific aid with software or back room technology. And the companies that are in the alliance can do that, because it ranges from folks such as AWAC [Allied World Assurance Co.] and Ironshore, and Chartis and Lexington, all the way to Microsoft, Vertifore and investment counselors such as StoneRidge and Dowling Hales. …
And I’m excited about it, because already we’re seeing the alliance support some of these new innovators and get their concepts to market, whereas before they just flamed out because they couldn’t find the right path. Maybe the person was an exceptional underwriter and was bringing a new MGA to market. But they just needed a little bit of money and a little guidance from operational and financial aspects to get them there.
IJ: How does someone who has a great idea get support from the EIA? Do they apply?
Kerr: They do apply. Simply, the URL is www.insuranceentrepreneurs.com. … It will describe what the EIA does and there’s an application. It says “Apply for Support,” and then you profile what particular items that you need. And then it’s remitted to the voting members of the EIA. And those that have an interest respond. …
Maybe they come in and they say “I have a great new product, I just need some help developing a software online rating system.” Then those companies, maybe some such as Microsoft or Vertifore would respond. If they need an underwriting facility, perhaps Ironshore or Chartis would respond.
IJ: What final advice would you give to someone who thinks they have a great idea for a new business venture?
Kerr: The advice I would say is that while it is extremely difficult to organize yourself and get the capital together, to give it a try.
This is the very environment in which you should move forward. It’s tough economic times. The market’s tough, we’re in a very prolonged soft market. However, we’re coming out of that soft market cycle, and sooner or later the economy is going to get better. Now is the time to move in and follow your dream to try and create something meaningful. And most times it will work for you and it will be successful.
Even if it doesn’t, it’s going to make you a better person, and you’ll be a more valuable employee or partner to someone in the future. But my advice is, go for it, give it a shot.