Making the Smallest Accounts the Most Profitable

Phillip Naples joined from Atlanta, where Layr’s team was gradually returning to the office after a year at home. The company had added roughly 20 employees over video calls during COVID, people Phillip had never met in person, and he was candid that hiring someone and mailing them a $2,500 laptop without a handshake feels strange. He doesn’t expect to return to five days a week; the office is being set up more like a WeWork for Layr, with desks to plug into and meetings planned in person.

About Phillip Naples

Phillip Naples is co-founder and CEO of Layr, an AI-powered digital insurance brokerage for small businesses that also offers its technology to other brokers as a white-label platform.

Hiring Without Meeting: A Rubric

Gilad asked how a former face-to-face broker adapted to hiring over Zoom. Phillip credited his co-founder, Andrew Egenes, who built a hiring rubric for his department that Layr then extended to finance, customer success, partnerships and engineering. Every candidate goes through a consistent process, so the only variable is what the candidate brings. A quick screening call comes first, followed by six or seven personal questions about what motivates the candidate and three or four role-specific ones. If those pass, the candidate meets the department head and potential peers and is rated as an A, B or F player; Layr wants A players, can help B players grow if they want to, and doesn’t want the rest.

Phillip’s Path: From High School Broker to Layr

Phillip has worked in insurance brokering for more than two decades. He started in high school at Aon, and unlike many in the industry did not fall into insurance by accident: he studied risk management and insurance at Georgia State and did an internship with Beecher Carlson. He moved to the wholesale side in the early 2000s, working on cyber liability and technology professional liability products at a time when those products were just being developed, then to the retail side, where he saw both the challenges brokers face selling commercial insurance and the frustrations of customers buying it.

His co-founder, Andrew Egenes, was originally his client, and fired him as his broker for the usual reasons business owners do. Andrew’s background is e-commerce and marketing: when Google still gave out raw search data, he built an algorithm to find products Amazon was selling poorly and built a $20 million business around car covers. When Phillip started Layr, he knew digital distribution would be key, and Andrew had proven he could do it, so they made up.

What Layr Does

Layr is an AI-powered broker for US small businesses to secure, pay for and manage commercial property and casualty insurance. It works in three steps:

1. Emulate the broker. Technology that recommends a tailored policy structure, coverages and endorsements for the business.
2. Predict price and appetite. Layr’s technology predicts carrier pricing and appetite, without connecting to any carrier API, so a customer sees a priced proposal in seconds, with an option to pay monthly by credit card.
3. Route to the right carrier. Once the customer says yes, Layr’s system knows which insurer’s product fits each coverage (Phillip’s example: general liability to one carrier, cyber to Coalition) and sends it to those underwriters or underwriting systems, which gives carriers high hit ratios.

What used to take a small business owner weeks or months now takes minutes. Layr deploys it mainly through broker partners, and late in 2020 it released a white-label version, so a broker can both move its existing small-business clients onto it and open a digital storefront for new ones, with Layr handling servicing, onboarding, underwriting and placement. Layr was onboarding hundreds of customers at a time through brokers.

The Economics of Small Accounts

The core argument is that small accounts don’t pay for themselves for a broker. Gilad cited the common rule that agencies won’t touch an account with premium under about $10,000. Phillip said the real breakeven is higher: roughly $50,000 in annual premium nationally, about $75,000 in Atlanta, and above $125,000 in New York or San Francisco. Yet the vast majority of the 30 million small businesses spend less than $25,000 a year, which is why the market is so underserved. They have budgets and know they need insurance, but no one knows how to pick it up. Gilad added that there are about 200,000 licensed agents and 30,000 independent agencies, and that a policy of a few thousand dollars yields a commission of a couple hundred.

Layr’s answer is an almost do-it-yourself experience with licensed agents on chat or phone if wanted, and Phillip said the platform also teaches customers to do it in five minutes after hours. For brokers, he said the effect is dramatic: not 10 percent profit going to 13, but 10 going to 40, because a book of small accounts that used to be a drag becomes one of the most profitable parts of the book. That also raises the value of a small brokerage that wants to be acquired, and some acquirers use Layr as an acquisition tool, since they can pay a premium and quickly make the acquired small-business book profitable. Layr runs financial modeling with every broker it onboards, and Phillip said that with a 15-minute demo and the model, it largely sells itself.

The Insurance Rails

Phillip does not describe Layr as a disruptor but as an enabler, and he sees the company evolving into the insurance rails: the smoothest, most frictionless way to move a policy from a carrier to a customer. Today every carrier and broker has its own rails, and the intersections create the friction. Layr is on the second of three steps of laying that foundation. Once it is complete, it becomes a platform where a broker, a claims module or other applications can be added as modules on top, and the customer connects directly to the carrier.

Phillip’s view of the industry is that it is fragmented into customers, brokers who advise them, and carriers (including MGAs, MGUs and wholesalers). He thinks brokers are vital because they are the most independent party, whereas a carrier going direct makes money only by selling its own product, even if it isn’t the best fit. Insurance will stay complicated, particularly with 50 state regulators, so the broker slots in as a module that advises the customer. The specialization problem is real too: “general liability” means something different for a medical device company, a software firm and a sidewalk concrete contractor.

His partnership strategy covers carriers of every technical level. Layr can use carriers’ APIs when they have them, citing Coterie as a good API-first carrier, but can also bring to market products from the thousands of carriers with no technology, including Lloyd’s products that run on email. Phillip said there are perhaps ten big carriers with technology and about 5,000 around the world with none, and he wants to bring them all into one place.

Investors Who Did the Homework

Layr’s investors include Sandbox, Flyover and another fund that understand insurance. Phillip said they weren’t the first investors he spoke with, and weren’t the last, but they were the ones who had spent years researching the industry before their first investment, so conversations began with the problem and the solution, not why insurance is complicated. Layr raised a $5 million seed round the prior year and planned to go out for a Series A soon. The hardest part of selling to brokers is the partner vote at an independent agency: there’s usually a champion, but then four to ten other partners need convincing, and COVID made getting them in one room hard.

Phillip also made a point about defense: brokers have a target on their backs from insurtechs, direct carriers, and accounting-software companies selling insurance, and Layr lets a broker offer the same digital experience across all of its carriers.

Advice: Get Back to the Office, for the Commute

For his recommendation, Phillip said that if you can return to an office, do, and for the commute: it’s a clean line between home and work, a time to prepare or decompress. Gilad agreed, noting that after a year working in his kids’ playroom, walking out at 6:30 to dinner leaves your head too spun up. The conversation closed with memories of London, where they met twice, including the falafel place they both loved, and the “Layr of London” sign on a window in the Lloyd’s Lab.

Key Takeaways

• Layr predicts carrier pricing and appetite without APIs, so a small business gets a tailored, priced proposal in minutes and the policy is routed to the right carriers.
• A small-business policy rarely covers a broker’s cost; Phillip says breakeven is about $50,000 of premium nationally, yet most of the 30 million small businesses spend under $25,000.
• Layr’s white-label platform turns brokers’ small-business books from a drag into a profit center, in some cases taking profit margin from 10 percent to 40 percent.
• The vision is the insurance rails: a unified path from carrier to customer with broker and claims as modules on top.
• Brokers are the most independent advisers, and Layr positions itself as an enabler that protects them from direct competitors.
• Layr’s hiring rubric, a consistent process with A, B and F ratings, let it hire about 20 people remotely.
• Investors who had done years of insurance research made the first conversations about the problem and the solution.