By Chris Munro

Jan 22 - (The Insurer) - Shepherd closed 2024 having “shifted” its core value proposition as it brought new products to market and tripled the amount of business it wrote, with the MGU now considering branching into new industry verticals beyond construction, CEO Justin Levine has told Program Manager.

San Francisco, California-based Shepherd launched operations in 2021 with the MGU offering a middle market construction industry-focused excess liability program written on the paper of Core Specialty and backed by a panel of reinsurers.

In 2023, Shepherd brought a trio of complementary construction-focused primary insurance products to market, with those admitted offerings written on the paper of Core Specialty’s StarStone National Insurance Company.

As Levine explained, 2024 was largely about Shepherd getting the primary products landed in the market.

The launch of Shepherd’s initial excess liability program in 2021 “was never the long-term plan”, said Levine.

“That was a wedge product for us and a way for us to provide help in a challenging excess market from a capacity perspective,” he added.

“To really deliver industry impact, we always wanted to be a primary market, and 2024 was largely about bringing that to life,” Levine noted.

Even though Shepherd launched the admitted program in 2023, Levine said it has taken time to go through the state filing process and get the green light from regulators.

Shepherd is now writing the admitted primary coverages in every state bar California and New York. In Calfornia they write on none-admitted paper.

Levine described the primary coverage’s results during the first half of last year as “bumpy”, but from July onwards the product “really picked up and took off”.

Late last year, the excess liability and suite of admitted primary protections were joined by a new offering, as Shepherd brought to market admitted excess products.

Those excess products have been designed to support the primary products.

While Levine would not share precise premium volume numbers, he said that supported by the new offerings, the MGU ended 2024 with “close to 3x growth”.

Value prop evolution

Growing its existing products and bringing new ones to market was only part of Shepherd’s focus in 2024, Levine said, with the MGU last year also unveiling additional service and support-focused client offerings.

Shepherd when the business was launched “was known as a market that was fast and a delight to work with", said Levine.

“That was our calling card – being really responsive. Shepherd is really service oriented, and speed is a great differentiator in the insurance industry. Anchoring that as a starting point was a great market strategy for us,” he said.

As Shepherd nears its fourth year of operation though, Levine said the MGU continues to offer a speedy service to clients, but that the firm’s value proposition has evolved.

“In 2024, the core value prop of Shepherd shifted from speed to product differentiation,” he said.

Shepherd Savings gains traction

Alongside the indemnity products, the MGU also began offering clients its Shepherd Savings program and various other service products.

“The combination of those two programs from a value prop perspective really became the core emphasis of what we are, while obviously the speed also remains,” said Levine.

Shepherd Savings is an underwriting credit program that rewards clients with premium discounts for using certain technology platforms such as Raken, Samsara, Procore and OpenSpace to help manage their risk.

As Levine explained, the MGU now gives clients two options when issuing a coverage proposal – a basic or Shepherd Savings package.

Not every client is eligible for the Shepherd Savings package, while some customers may decide they do not want to share their data with the MGU.

However, Levine said that over half the primary programs that Shepherd has bound to date have opted for the Savings package, Levine said.

“We feel pretty confident that it's a driving reason behind what helps us stand out to win primary business in what is a very competitive market,” he noted.

While Shepherd offers a discount to clients for signing up to the Savings package, Levine said the MGU ultimately benefits because it has seen a “significant” improvement in claims frequency and severity based on analysis of techonolgy utilisation.

“We do a monthly check in with the client and talk about the [technology platform] usage and help them understand where we see the best results, and then point them in the direction of improving that, often working hand in hand with our tech partner,” he said.

Shepherd has also been helping clients with support services, he said, and highlighted the MGU’s compliance product as a notable example. That product, Levine said, helps clients with the tracking of vendor and subcontractor certificates and endorsements, and it has found favour with the MGU’s customer base.

Expansion

Looking to the future, Levine said in 2025 Shepherd will continue to extend its reach into the construction industry, with builder’s risk and inland marine insurance offerings being considered.

Other possible areas of interest for the MGU are professional liability, pollution liability and surety.

While those are segments where Shepherd feels it can expand in construction, Levine said there is also scope for the MGU to take its suite of casualty products and start launching them in other industry verticals.

“That's going to be a 2025 initiative for us – taking excess and primary casualty into spaces like real estate, manufacturing, energy and so on.

“We view high-hazard industry as the filter for where we think Shepherd should specialise, and we want to take the same types of data-oriented and technology partnership-oriented approaches there,” said Levine.

Part of that growth will be through the addition of new staff. Shepherd ended 2023 with 20 full time employees, and the company closed 2024 with 38 staff on its books. Levine said Shepherd expects to double its headcount in 2025, with both its underwriting and technology teams set to grow.

“[We’ll be making] big investments into both sides of the house,” said Levine.

“Everything that we're trying to do from an insurance perspective has to be enabled by our platform and by our services teams,” he added.