Plans are good, but culture can make a company great.
David McFarland is the co-founder and CEO of Coterie Insurance, a US-based insurance entity focused on making risk transfer efficient for the small commercial P&C insurance space. Coterie uses industry-leading tech, deep insurance expertise, and product innovation to embed insurance into their partners’ existing products and workflows, leveraging data from multiple sources to turn small commercial accounts from an unprofitable obligation to a profitable opportunity. Immediately prior to founding Coterie Insurance, David was Chief Actuary and Head of Insurance Product & Pricing at Clearcover, a personal auto insurtech in Chicago.
Before we dig in, our readers would like to get to know you a bit more. Can you tell us a bit about your “backstory”? What led you to this particular career path?
Most people associate “actuaries” with slightly awkward, calculator wielding, insurance nerds. I think that’s mostly right; I probably own about 10 calculators. Even so, I didn’t get started like most actuaries.
I was a history major in college until nearly my junior year. I had a complex life outside of school, so I attempted to keep college simple. Eventually, even for history majors, they make you take a math class. I attempted to take the most innocuous-sounding math class I could: Formal Logic. Turns out, this was a class in abstract logical proofs with a dropout rate of more than 50 percent. I loved every minute of it. I’m not joking when I say I would do it for fun. After about the third class, I asked the professor, “What do I need to do to do this stuff for the rest of my life?” He said, “Become a lawyer or a mathematician.” Easy choice: I went to the registrar’s office the next day and changed my major.
After hearing the requisite “Are you sure?” about 37 times, they eventually approved the idea and asked which track I wanted to pursue within mathematics. I replied, “Whichever one helps me graduate faster.” And just like that, I landed in the “actuarial track” and was forced to take roughly 21–24 hours each semester in order to graduate on time (with the exception of summer — I only took 18 hours in the summer).
One day, another student asked me, “Are you studying for the actuarial exams?” I did not know what that word “actuarial” meant yet, but without hesitation, I replied, “Absolutely, I am” and with that, I started the process to become an actuary.
Actuarial science helped me really understand the insurance space in a deep way. It also led me to some amazing opportunities, eventually leading me to help with some of the first embedded insurance programs and role as the chief actuary and founding team of Clearcover. My background, and the tireless studying for years and years, was a solid preparation for the hard work that would be required to start and grow Coterie Insurance.
Can you tell our readers what it is about the work you’re doing that’s disruptive?
We’re building and fostering a world-class team to bring speed, simplicity, and service to commercial insurance, especially as it relates to small and micro-businesses, which are historically underserved by the insurance sector.
There are two parts to this: the team and the execution (bringing speed, simplicity, and service to commercial insurance). As far as the team goes, we believe that this is the foundation for the change we want to see. The culture and process create sustainable success. We’re believers in that model and we invest in our culture accordingly. And we’re doing this in the commercial space by truly owning the insurance product as well as the tech product so that we can control the experience of the customer. We’re meeting people wherever insurance is relevant to them. If they want to go to an agent, we help the agent, if they want to get coverage through their accounting tools, we’re there. We are 100% partnership-focused and want to empower our partners to be the heroes for their customers.
Can you share a story about the funniest mistake you made when you were first starting? Can you tell us what lesson you learned from that?
There is a clear winner here. It’s painful, but also hilarious. When I was considering what to name Coterie, I was looking at all kinds of things, including websites. Well, I really liked the name Coterie because a coterie is a group of people with similar interests. This reflects what we are as a company AND what we insure. We’re a coterie that insures coteries (small businesses). Thought that was cool.
I also thought it was cool that the website coterie.com wasn’t being used. So, I reached out to the website owner and they said they would start the bidding at something in the 5-digits. I, being an idiot, thought “no way!” and passed, thinking that nobody else would even consider the name Coterie, so I had plenty of time.
Well, turns out that a diaper company bought that domain. This makes things awkward when attempting to get pitch meetings. Not only do people not know how to pronounce the name of your firm but they’re trying to figure out why insurance and diapers go together.
Lesson learned: 10,000 dollars is not a lot for the right domain. My mistake was a great example of being penny wise but pound foolish.
We all need a little help along the journey. Who have been some of your mentors? Can you share a story about how they made an impact?
I’m fortunate to have a few mentors but one who immediately comes to mind is James (using a fake name to keep things confidential). James is simultaneously one of the most tactful and brutally honest people you’ll ever meet. He has this ability to ask the most penetrating questions to really highlight that you don’t have a clue about what you’re doing. This forces you to be honest with yourself and shore up the areas which you’re lacking. I absolutely love having people like James in my life. It can be easy to fool yourself, so you need friends who are going to keep you honest.
James has been through the hard times himself. Many years ago, he left his job leading a top-four consulting firm to start an insurance benchmarking business, borrowing the idea from the banking space. It didn’t go well. No one bought his product. He was maxed out on debt. He had a wife and four kids to support, and, to top it all off, he found out that he had cancer. To quote James, “I didn’t know which would happen first, die or go bankrupt.”
James ended up leaning into the data. He listened to his customers, found out what they wanted, pivoted accordingly, and started selling. At the same time, he beat his cancer. His firm continued to grow and was eventually acquired after becoming somewhat of a “household” name in the insurance space.
James told me that story when I was considering launching a startup. His point was that these things are hard, and we can’t delude ourselves into thinking that everything is going to be swell. Doing anything great is difficult but, succeed or fail, it helps us grow.
In today’s parlance, being disruptive is usually a positive adjective. But is disrupting always good? When do we say the converse, that a system or structure has ‘withstood the test of time’? Can you articulate to our readers when disrupting an industry is positive, and when disrupting an industry is ‘not so positive’? Can you share some examples of what you mean?
There is probably a happy balance between “disrupt everything” and “leave well enough alone” but I can’t say where and when, definitively, to strike that balance. Disruption is a result, not a catalyst. As innovative as we disruptive entrepreneurs think we are, we’re more or less just bringing innovation into new spaces. The true disruptors are the ones like Babbage, Turing, Faraday, and Maxwell. Scientists who gave us the ability to start applying technology in novel ways.
Disruption is a little like farming. There is a time and place to start sowing. If the soil is right and you have seed that fits the climate then you’ll see something come out of it. However, there are times when disruption just won’t take. You’re either too early or you’re coming on the heels of a big change and the space isn’t ready for shift. How many forward-thinking entrepreneurs have we met that have attempted something truly “disruptive” only to have the market reject it but then accept that very idea five years later.
Regarding when disrupting an industry is positive: I think the market will tell us. I would love to prescribe a more forward-looking indicator. I do think you can feel change. That may sound odd, especially from an actuary, but there is a reason why we have idioms like “change is in the air.”
Similarly, the market tells us when disrupting an industry is negative. I don’t necessarily think that it has to do exclusively with the industry, but more so with the culture of the disruption.
The American and French revolutions are great examples of positive and negative disruption. Disruption was going to happen. The time was right. We had all these new ideas about freedom, personal liberty, justice, etc. However, the American revolution was one that led to benefit the populace because there was an underlying culture of integrity, even with the ethical failings of those leaders. The French revolution, on the other hand, was a disaster. The leaders were led by vengeance and anger, ultimately resulting in them destroying themselves and no real benefit to the people.
Rounding it out, I guess it depends on why we are disrupting. Are we attempting to make things better for the customer, or are we doing it to stick it to the stodgy legacy players? Change can result from either, but I think we see more benefit when we’re focused on doing what’s best for the people rather than just showing somebody up. Succinctly, selfless disruption > selfish disruption.
Can you share 3 of the best words of advice you’ve gotten along your journey? Please give a story or example for each.
Execution > Ideation. A company with great execution and a bad idea is better than a company with bad execution and a great idea. An obvious example is Starbucks. Coffee shops are not a great idea, what Starbucks did was execute well. Same with insurance. We’re bringing some neat stuff to the space, but we must execute.
Culture > Strategy: I see this at the micro and macro level. As individuals, what counts is what’s inside, not how much we plan. So many people get carried away with building a study schedule, or figuring out how they will break apart their year to achieve a certain goal. The reality is that what is on the inside will have more of an impact on success than your plans. Mike Tyson put it best when he said, “Everyone has a plan until they get punched in the face.” We all know that the best-laid plans go awry. When they do, and they will, who you are inside steps up. What’s true for the individual, is true for the team. Plans are good, but culture can make a company great.
“Everyone wants big muscles, nobody wants to lift heavy weights”. This one inspires me every time I hear it. Doing hard things is hard. If you want to make an impact on the world then you better be prepared to do the work of swinging a giant hammer. Extraordinary efforts are just that, “extra ordinary”. To assume that you can get the result without the work is delusion.
We are sure you aren’t done. How are you going to shake things up next?
We’ve got a fun roadmap ahead of us for how we’re changing things in commercial insurance. I can’t give away too much, but we’re trying to turn how insurance is done on its head — rethinking the way we use data and making it stupidly easy for people to get rid of the risk they don’t want in a way that works for them.
Can you please give us your favorite “Life Lesson Quote”? Can you share how that was relevant to you in your life?
One of my favorite quotes is from Dune (and I imagine everyone will be saying this when the movie comes out): “Fear is the mind killer.” When I was a kid, I was timid. I over-thought a lot and saw how fear controlled certain family members (and myself). There came a point where I got tired of the fear and I didn’t want it to control me anymore. So I stopped. It wasn’t overnight. But I remember thinking how I can’t let fear control my life anymore. I’m not perfect at this, I still have fear. I still get into circumstances where I wonder if I will be able to do what I need to do. Fortunately, if we just keep going we often see that we can do the hard things, despite what our mind says.
You are a person of great influence. If you could inspire a movement that would bring the most amount of good to the most amount of people, what would that be? You never know what your idea can trigger. 🙂
Helping single digit small businesses thrive and sustain, especially confronting the challenges of the post-pandemic world.
How can our readers follow you online?
This was very inspiring. Thank you so much for joining us!