Starting nearly a decade ago, Bruce Lucas built Heritage Insurance Holdings Inc. from the ground up, with an eye toward making it a super-regional carrier of property and casualty insurance. He accomplished that, and then some, growing Heritage (NYSE: HRTG) into a nearly $600 million publicly traded company, with a payroll of more than 600 employees, that does business in 15 states.
Now Lucas, 49, is ready to do it all again.
After retiring from Heritage in late 2020 and giving way to longtime right-hand man Ernie Garateix, Lucas remained involved in the Tampa-based company as a consultant while he pondered his next move. That turned out to be Slide, an insurtech startup that, without selling a single policy, has leapt out of the gate with $100 million in seed capital — $25 million of which has come from Tampa-based Gries Investment Funds.
“I think [investors] see the vision that I have,” Lucas says, adding that Slide’s Series A funding round was oversubscribed. “A heavy tech platform that’s making underwriting and claim decisions in real time vs. the traditional experience of underwriting and claims decisions that are being made by people over long periods of time. Insurance is an industry that is ripe for disruption on every level.”
Others have had similar thoughts: local insurance heavyweights have already jumped into insurtech, with Tampa-based HCI Group launching TypTap in 2016 and St. Petersburg’s UPC Insurance debuting Skyway.com earlier this year. And St. Pete-based Neptune Flood, run by former banker Trevor Burgess, is a leading tech-based platform for how consumers search for and buy flood insurance.
So how will Lucas catch up to, and surpass, the leaders of the pack?
DATA MINE MOTHERLODE
“Something that we're doing at Slide that is revolutionary,” he says, “is that we are coming up with an estimated cost per rooftop for every unique risk and trying to set our prices to fit that unique policyholder who wants our services. And I think we can do that in a way that is not possible when you're doing it the old-fashioned way with human underwriters.”
‘Technology impacts every aspect of your life, whether you’re cognizant of it or not. But for consumers who are buying homeowners’ insurance, the technology revolution has yet to happen.’ Bruce Lucas, co-founder and CEO of Slide Insurance
Slide, Lucas says, will deal in residential property insurance to start, though it will also offer policies for homeowners’ associations, a potentially lucrative niche. It will operate in five states to start with, but — thanks to a strategic partnership with Heritage, which participated in the Series A round — it has total insured value (TIV) datasets for millions of properties across 16 states.
Lucas plans to exploit that data to the fullest, creating advanced algorithms that Slide’s artificial intelligence engine can mine and process in seconds.
“The real power is in the dataset,” he says. “Big data has statistical credibility. Nobody has credible artificial intelligence without big datasets — it's impossible. You hear buzz terms like AI thrown around all the time in this industry, but yet the results in a lot of instances have been extremely poor.”
The challenge, Lucas says, lies in changing consumers’ perceptions of, and interactions with, the insurance industry. That’s why Slide will continue to rely on a network of independent agents.
“I believe strongly in the independent agent model,” he says. “They’re great at producing business, they service the policy for the company and they answer a lot of frontline questions, so we don’t have to deal with them. They simplify our operations and I feel like we simplify theirs.”
VOTE OF CONFIDENCE
Lucas’s vision and business plan for Slide, as well as his track record with Heritage, have won the enthusiastic backing of Bob Gries, president and CEO of Gries Investment Funds. He’s known and done business with Lucas for many years, but unfortunately did not invest in Heritage at the time it was being launched. He says he’s not going to make that mistake again.
“Bruce is a very capable, bright, knowledgeable guy,” Gries says. “He has the skillset to be both an entrepreneur as well as to, ultimately, lead a public company. For a lot of those reasons, I was interested in being part of what he’s doing.”
The $25 million stake Gries Investment Funds has taken in Slide represents one of the firm’s larger investments in a single company, and a significant portion of that sum has come from Gries himself. He says the firm wasn’t looking to invest in an insurtech venture, per se, but rather it was the presence of Lucas that won its strong support. And it helps that Slide is entering a market decidedly in its infancy, with plenty of runway to facilitate growth.
“Bruce structured this very favorably for investors,” Gries says, “and obviously there’s some crazy value out there. If we get even a fraction of that, we’ll be happy.”
He adds, “Bruce has done a number of things to help accelerate growth, beyond just saying, ‘I’m going to go into a crowded space and be disruptive.’ As entrepreneurs, we all tend to overstate our ability to go out and generate revenue. It’s often more challenging than we think, and so it takes more than just a good idea. It takes putting in certain infrastructure that gives you a chance to accelerate that growth. And I think that what [Lucas has] done here and with Heritage is indicative of that.”
FUTURE IS NOW
Lucas believes the time is nigh for insurers to fully embrace the technological shifts that have transformed other industries. The greater accuracy that comes with AI and machine learning is a boon for consumers — particularly in Florida, where rates have been surging because of spurious lawsuits — but also makes it easier for insurers to identify good and bad risks.
“Technology impacts every aspect of your life,” Lucas says, “whether you’re cognizant of it or not. But for consumers who are buying homeowners’ insurance, the technology revolution has yet to happen. [Slide] is about taking a 100-year-old industry and turning it upside down and making it into something new, modern, convenient and, I think, more profitable.”
Gries, for one, is fully onboard with Slide’s embrace of Big Data-driven technology — even if he might not completely understand the underpinnings of insurtech.
“The way that everything is moving at such a rapid pace, it’s hard to recognize things from just five years ago,” he says. “The first time somebody mentioned Bitcoin to me, I said it was the dumbest thing I’ve ever heard of. I still don’t know how it will turn out, but it’s clearly here to stay.”
He adds, “The fact that the younger generation — like my daughter, who’s 23 and almost refuses to use cash — can exist for months on end with no money in their pocket is beyond me. But that's the world we're moving into very rapidly. We won't even recognize the world we're living in now in another 10 years.”
In addition to seed capital — which, in addition to Heritage and Gries, came from venture capital firm TampaBay Ventures — Slide has been building out its human capital. The executive leadership team is “in place,” Lucas says, and 15 employees have been hired.
A key member of Slide’s senior staff is co-founder and Chief Scientific Advisor Hassan Sawaf, a data scientist who’s worked for Amazon Web Services, Facebook and eBay. In a news release, Sawaf praised Slide’s “unmatched mix of deep insurance domain knowledge, historical data and world-leading artificial intelligence, machine learning and applied science.”
Lucas adds, “I wanted to have the best and brightest … and Hassan jumped in with both feet.”