My plans for nomadinsurance.com

About 8 months ago I mentioned I purchased nomadinsurance.com at an auction for about $8000 usd.

My thoughts on buying it at the time were that as the world becomes more decentralized onto the internet, more people will be moving abroad and identify as nomads. We already have seen a large movement of people moving outside of San Fran, New York, etc to places like Montana, Texas, Utah and other cheaper cost of living areas. I feel the next stage for these people is realizing they can move anywhere in the world into beautiful cities at a fraction of the cost. During the pandemic as well with everyone going remote, this hyper accelerated this trend. Other thoughts I had is that for expatinsurance.com, the term expats is slowly becoming harder to market to the younger generations, older clientele will gladly call themselves expats, but more and more we are seeing people identify as nomads. This might not seem like a big change, but for SEO we are trying to capitalize on these self identifying terms to build a strong brand for these market segments.

After about 6 months of brainstorming and planning, we are ready to move forward with a project for the domain.

Nomadinsurance.com Idea

After a lot of consideration, I decided to branch off the nomadinsurance brand as a new company with some new co-owners. This was a tough decision as splintering your focus into a new project while the old one is still scaling is generally viewed as a dumb move. However, there are many things that I would do differently if I were to rescale a company, and I want to take those learnings with the new company. One of the main changes I am doing is brining on some cofounders this time to help share the load of management, and more importantly bring in their expertise into the project.

Team:

Justin Barsketis - CEO - Obviously we have myself, I am going to act as the CEO and help try to get this project off the ground. I have experience running two brokerages in the past, and have the insurance contacts to get us started quickly.

Michael Rapp - CTO - Michael is a staff engineer in California with many years of experience in corporate development in React, our target language. He is going to help take over the tech side of things with me so I wont have to code as much and focus on getting traction for the company.

Brett Lamar - Sales Director - Brett is one of my brokers at expatinsurance.com and has proven himself to be one of the best agents i've trained. He is an ex-marine with two succesfull exits from previous ventures and has an insane work ethic needed to scale up our sales.

Vision:

We are going to launch nomadinsurance.com as a brokerage with more personally branded products geared towards long term nomads. We want to cater towards the more serious nomads living across the world, the ones that set up legal residences in countries, that are the nomad CEO's that have found their freedom around the world and want a quality and reliable insurance strategy to protect themselves worldwide.

There are a few options out there, but I feel these companies are partnering with insurers and targetting more of the nomads just starting out on their journey. I especially feel reliable coverage is lacking in Latin America where we have a lot of expertise.

Current Market Issues

Travel Insurance Issues

The main issue I see in the nomad market is a hyper focus on selling low cost travel plans.  Travel insurance as a replacement for health insurance is not a good long term strategy. Travel insurance is cheaper meaning its easier to sell, but that's because it is not comprehensive coverage. If you are living abroad long term, you need a long term strategy and long term plan.

Most travel plans out there are cheap, because when you are facing those million dollar claims, they will fight tooth and nail to approve it. One of the hardest things is that underwriting is done at the time of claim instead of application, meaning they put the proof of burden on a client that a condition is not preexisting. This is difficult for nomads that are abroad a while as they dont keep good track of their medical records, meaning these claims can drag on for months with little results while they hunt down the correct documents.

Another issues is that these travel companies are not guaranteed renewable meaning if your near the end of a policy, they can stop coverage midway through a claim. This also means that if you develop a medical condition, next time you renew the travel plan, it is now a preexisting condition, meaning the plan is worthless long term. Lastly most importantly is that they are not meant to be primary care, most travel insurers will try to evacuate you outside of their responsiblity to your home country where you most likely dont have coverage, and have limited benefits for things like outpatient cancer treatments and other longer term treatment plans that happen when you face chronic conditions.

Financial Strength and Carrier Reputation

In Latin america I have also seen a trend to use carriers that are not AM rated and are starting to develop a bad reputation in Mexico at hospitals, getting blacklisted from using their services. For example, we just saw a large nomad company partner with a non AM rated carrier that is starting to get blacklisted at hospitals in key regions like Playa del carmen, Mexico City, San Miguel, and Puerto Vallarta. Many nomads wont ever even have a claim, but its important to us that clients have access to any of the top hospitals in a region to ensure they get great care. This carrier is making big moves in Latin America but for us, we have slowed down production drastically with them in recent years due to issues with portfolio stability and we feel would not be good long term partner in Mexico until their provider relationships improve / they get AM Rated.

This last few years has really highlighted the need for AM rated carriers in the IPMI markets (international private market insurance) as a large carrier went bankrupt and left many clients in tough positions.

For years financial institutions had low interest rates, great returns on capital, and relatively low inflation rates. All of this is great for insurers that need to predict cost years in advanced, especially considering most of these insurers made their big money with life insurance sales. This has changed drastically with the high inflation rates, and also the pandemic causing higher claim rates. There is also a growing trend of people skeptical of the future of US capital markets, which will greatly affect insurers long term if they cannot get the returns they used to get on their capital.

The insurers at first were not too affected by these changes as inflation is slow to take affect, but I am starting to see cracks form in these smaller insurers strategies as they try to adapt to the new environment.

One major way they are being affected, is that many smaller insurers offset their risk to another reinsurer in the market such as lloyds of london. When these inflation risk started to be realized, the smaller insurers had their reinsurance premiums jump drastically, or outright the reinsurers said they do not want to hold this risk. From what I have seen, many of the smaller insurers had to do some shady things to restructure their portfolios into new companies or portfolios, many times leaving clients that were high risk behind in unhealthy portfolios that are now seeing extremely high premiums jumps to try to shake them out. In these new portfolios as well, these smaller insurers are juggling the clients and plans trying to find stable premium rates. When inflation is roaring, and premiums are increasing at noticable rates, this causes healthy clients to leave, and unhealthy clients to stay causing adverse selection, further making the situation worse.

When we do have access to the neutral third party report AM reports, we can quickly identify what risk we have in our portfolio and in extreme cases move the portfolio to a new carrier before things get too bad. This is not as big of a concern in more mature markets like Europe for us, for Latin America that is more of the wild west, we do this.

Minimal Customer Support

The last trend I have seen from many competitors on the market is offsetting the responsibility of helping clients to the insurers or third party TPA's. This isnt always the worst strategy, but when the insurers are dealing with thousands of clients on a daily basis, the client's needs are not really being addressed appropriately. The insurers have conflicts of interest in handling claims for clients, but also more importantly, these insurers have way too many clients to give any individual too much care unless they put up a riot to get the minor issues resolved. Many issues can result from filing claims internationally where there are no standards in place to work with these global carriers. Most of the insurers solve this by using strong MGA networks like ourselves to handle this client support, in return for higher than normal commissions in our market.

If you check out our ratings for our other agency expatinsurance.com, you can see we really value this client advocate relationship seriously. We help act as a middle man between the hospitals, insurers, and yourself to help mediate resolutions. We many times will work directly with doctors to help coordinate GOP's and work closely with Mexican hospitals to ensure any disputes they have with insurers are getting resolved. Also lastly we have open and personal communication channels that are easy to get hold of us like whatsApp or a phone call. When clients are in an emergency or have claim issues, they just want to make sure they have a client advocate, aka their broker, there to help represent them.

I understand why these companies take this strategy so they can grow at all cost until they can afford a more substantial support team, but it comes at the cost of client satisfcation, leaving many wanting more from their agents.

Our Providers and Plans

Obviously the first thing we want to do is launch some insurance plans. We did think about doing a truly global plan, but we have found that certian providers provide a much better client experience in certain parts of the world and I think we should capitalize on that if we are going for the higher end / longer term nomads. If these clients are going to be with us 10+ years like our other agency, we want to make sure they have a really good client experience.

To start, we are going to just launch with our Nomad West plan, for people residing mostly in the western hemisphere like Latin America.

Nomad West - Latin America

BMI was an obvious choice for us in Latin America, they have over a billion of revenue in this market, and are one of the most veteren insurers in the market with over 50 years of experience. We have a great relationship with management and just launched a new plan with them this year that should be competitive with many of these lower cost insurers.

I wont get into the benefits of the plans, but you can find information on our website once launched.

Nomad East - Europe, Asia etc

In Europe we havent finalized what we are going to use for our carrier yet, we are leaning towards using April insurance, as they have a really smooth claims process, but they are difficult to work with on portfolio management issues so we are unsure as of now. We are also considering using VUMI as they are launching a new modular global plan that could do well, but as they are not AM rated we are still unsure if we should go this route.

Nomad Libery - US Citizens

These plans are going to be for nomads that are US citizens just starting out and may not have residency plans anywhere yet. We are going to use Geoblue for these plans. Geoblue is unique in that they cover preexisting conditions for their travel and long term plans, which is a unique selling point that help offset many of the downfalls of travel plans. Their long term plan also is super mobile, allowing citizens to live practically in any country with minimal residency requirements, even the United States up to 9 months per year.

Partner Issues

One of the biggest challenges i've had as an MGA that has trained and onboarded over 35 brokers, is that many of them fizzle out and are not in it for the long haul. This is a challenge, as to be a competitive MGA in our market, brokerages compete on insurance contracts commission rates for new agents, causing margins to be squeezed.

This means we do not take enough commission to run an agency if that broker ever decides to stop servicing their clients. As an MGA, the insurers put a lot of trust into us to maintain our clients in our structure, so this can cause a lot of issues down the road when we have to take over support from these brokers, while making a very small portion of the commission.

To help this, we did explore making the brokers pay for support when they wanted us to handle things outright, but this ended up having brokers trying to do everything themselves, or trying to hire their own support teams to manage their portfolios which ends up taking up a lot of their time and potential sales production. It also started to make weird dynamics between teams, as they were afraid to get help for fear of being charged, not want we intended.

To solve this at expatinsurance, we decided to buy out a large portion of commission percentages on our highest producing agents, and take away all support responsibilites from them in return for us keeping a higher renewal commission.

We also have them on a sliding commission schedule then incentivizes longer term, consistent production with quotas and bonuses. In addition to this, we also hired sales development representatives assigend to these senior brokers, to help manage their emails and application processes. Similar to how stock brokerages function or other similar sales structure in corporate america.

This ended up working out really well, the brokers almost 4x their new production this year that made up for the lower commission, and got a lump sum between 50-100k usd. More importanlty the clients have a much better support system as they are dealing with our support teams directly instead of the brokers. Building off of this, we want to create a platform that replicates this success for future partners.

Partner Structure

To help achieve this goal, all partners and brokers in our platform will have 4 different contracts available to them.

Referral

Starting out they will be a referral, which is very straight forward, they just generate leads for us in return for new year life and health sales.

• 15% of revenue under 10k production per month
• 30% of revenue if over 10k production

Partner

A step above a referral is a partner, this is a referral that consistently shows high production of 30k or more per month. This is also available to established corporations or brokers if they dont want to get a direct contract with us. One of the main benefits of this, is that partners can recruit their own referral networks. This will be for partners such as real estate brokerages that might have many agents working underneath them, or perhaps an immigration service that generates a large volume of sales.

• starts at 30% commission
• +10% if direct sale, or 10% override on referral sales underneath their structure
• additional 25% 1st year renewal commission, if 30k production goal is met for month
• Unlock commission on P&C lines and other revenue lines

Advisor - Licensed agents

The last stage is for licensed brokers to sign up for our platform. Agent contracts are similar to partner contracts but with additional benefits as they will be the broker of record for clients underneath their structure. Brokers that refer clients directly have the highest earning potential, getting up to 70% of revenue, but referral fees come from this revenue if a sub referral instead gave them the sale.

• up to 70% of new business sales, 25% of renewals
• additional bonuses for 80% renewal retention, +25% 1st year renewal
• Insurer incentives unlocked (all expense trips around the world)
• P&C commission lines unlocked

Sample Commission Splits

If a referral is made under a partner and agent

Referral = 30%, Partner = 10%, Advisor = 30%, Nomad = 30%

If a referral is under an agent

Referral = 30%, Advisor = 40%, Nomad = 30%

If a partner is under and agent

Partner = 40%, Advisor = 30%, Nomad = 30%

If a someone refers a client directly

Partner = 40%, Referral = 30%, Advisor = 70%, Nomad = 30%-70%

MGA Contracts

Lastly we will keep an MGA program active for brokerages that want to initiate portfolio transfers to us. We have completed a few of these before and they are lengthy year long processes where the insurer will give us rates based on the size of the portfolio and health of clients. We will negotiate commissions based on their required level of support, and production amount transferred to our structure.

This blog post is long enough, I will provide an update once all of our features are implemented. Our goal to launch is October 1st, see you then!