Insurance as a platform, not just a product

In the ever-evolving landscape of construction risk management, the introduction of Shepherd’s AI-powered Compliance software earlier this month marked a significant milestone for the industry and for our company. Insurance companies in construction provide coverage, not software. They underwrite annually, and evaluate risks based on past performance and macro trends. That’s how it’s been done for decades. But exponential rises in claim severity have forced major price increases across most liability lines in recent years, and it’s clear that the current approach is not sustainable for insurers or customers.

That’s why we’re pioneering a different approach at Shepherd. While underwriting insurance products is at the core of what we do, we’re also developing software to help our clients eliminate preventable losses that are plaguing our industry. Shepherd Compliance, developed by our in-house engineering team, focuses on the critical risk management strategy of contractual risk-transfer. We designed this tool to streamline vendor certificate of insurance (COI) reviews as well as the variable endorsement language found within policies.

*Shepherd AI Compliance stands out with its three core features: * 1. Utilizing artificial intelligence (AI) to meticulously extract data from certificates of insurance (COIs) and endorsements 2. Automating compliance reviews tailored to specific project-based requirements or master service agreements (MSAs) 3. Seamlessly integrating with project management systems like Procore to optimize outreach and workflow.

The best part? It's completely free for all our policyholders. When clients succeed, we succeed.

The Journey to Shepherd Compliance

A decade ago I made the unorthodox pivot from civil engineering to enterprise risk management. Despite leaving engineering out in the field, I found it difficult to turn off the problem-solving nature of how I worked. Becoming a risk manager acquainted me with a new set of pain points including the laborious processes of subcontractor prequalification which included insurance certificate and policy review.

I spent the next 5 years building TradeTapp, a prequalification platform that focused on subcontractor financial assessment, and I frequently encountered requests from clients for an expanded insurance review. At the time, technology hadn’t quite caught up to the challenge and the only viable option seemed to be a large-scale services arm, which would be difficult to staff and even harder to scale. However, recent advancements in OCR (Optical Character Recognition) and AI have revolutionized this field, offering new possibilities that were once out of reach. At Shepherd, our clients continue to suffer from the same inefficiencies that I experienced 10 years ago, and whenever we asked them about their most frustrating workflows the COI process came up over and over again.

At Shepherd, we recognized the need for a solution that not only addressed these challenges but also integrated effortlessly with existing project management tools, and eventually, ERP systems. We began developing Shepherd Compliance towards the end of 2023, partnering with a select group of contractor clients who helped us shape the product into what it is today.

Harnessing the Power of AI for Insurance

The application of AI in insurance offers a vast and largely untapped potential. A recent Wall Street Journal article echoed this sentiment, highlighting the burgeoning role of AI in transforming traditionally ‘boring’ sectors like insurance into hotbeds of innovation. With Shepherd Compliance, we're leveraging AI in two critical areas:

• COI analysis: Our platform can read ACORD 25 certificates, extracting essential details such as coverages, effective dates, limits, and insurers. This enables us to cross-reference against customizable requirements and even check the AM Best ratings of the carriers, ensuring compliance and identifying any coverage gaps or issues.

• Endorsement detection: For many contractors, collecting certificates is just the start. Verifying the forms contained within the listed coverages is crucial. Shepherd Compliance automatically determines if the necessary endorsements such as additional insured, waiver of subrogation, primary and noncontributory, or more are part of a subcontractor’s insurance package, checking for compliance with ISO standards or custom manuscript forms.

Integration with Procore

Our collaboration with Procore is a testament to our commitment to integrating cutting-edge technology with existing project management tools. Over 30% of Shepherd policyholders use Procore as their primary project management platform, with even more using it in a partial capacity. This partnership allows for a two-way sync of project and vendor data, ensuring that project teams can continue operating within the Procore platform while risk management teams benefit from the capabilities of Shepherd Compliance. We are continuously working to deepen this integration, aiming to bring even more streamlined solutions to our clients.

More Than Free: Why Utilizing Shepherd Compliance Reduces Our Premium

At Shepherd, we believe in playing an active role in our clients' risk management strategies. Given the tight margins on which contractors operate, it's unjustifiable to expect contractors to invest in technology that benefits parties beyond their balance sheet.

This philosophy underpins our decision to offer Shepherd Compliance for free to our policyholders and why we offer credits to customers leveraging the tool for improved risk transfer. It’s a tangible expression of our commitment to improving risk strategy, and a cornerstone in our mission to redefine the role of an insurance provider.

Looking Ahead: Shepherd's Vision for the Future

While our move to offer a free, state-of-the-art solution might ruffle some feathers among existing providers in the space who charge for these services, our focus remains unwaveringly on enhancing the industry and elevating the standards of partnership for our clients.

The enthusiasm with which Shepherd Compliance has been received validates our approach. With new funding and our commitment to continuous innovation, Shepherd is poised to redefine the commercial construction insurance landscape, marrying exceptional coverage with world-class software solutions.

We’re just getting started, and the road ahead is filled with exciting possibilities. Join us on this journey as we continue to break new ground, reshaping the way the construction industry perceives and interacts with insurance.