By Meghan Hall
It takes numerous different contracting professionals to successfully deliver any given commercial real estate project, and the insurance qualifications typically vary by project and contractor. The result, according to Omri Stern, chief executive officer and founder of Jones, has been that many contractors and vendors, although qualified, have been unable to operate within the commercial real estate industry. These pain points prompted Stern to create Jones, a platform geared toward automating and de-risking Certificate of Insurance management, particularly for independent contractors.
Please tell The Registry about your experience working within the liability insurance and commercial real estate sectors. What pain points were you seeing within the industry that prompted you to create Jones?
Prior to Jones, I worked in enterprise sales for a B2B SaaS company selling energy management solutions to real estate owner and operators. We hustled for months to close enterprise deals, and when it finally came to drafting the contract we faced onerous insurance requirements that varied widely by building owner. Without fail, each insurance clause made it extremely difficult to onboard customers seamlessly, which meant we always got started on the wrong foot after three weeks of painful back-and-forth with our customer’s legal team.
Feeling the pain, this problem seemed worth tackling or at least poking around further in what appeared to be an industry ripe for change. So, I left my job, enrolled in business school and began searching for a co-founder to join me in exploring the space. Tapping in to my MBA network, I contacted every alumni I could find in real estate to investigate how they handle the insurance headache when hiring vendors. I was curious how owners and managers transferred risk to those within the broad spectrum of service providers such as janitorial services, movers, HVAC technicians, remodelers, etc. Sure enough, I discovered that insurance is consistently a nightmare for real estate companies because an average building deals with 30 vendors per month, each of which it needs to match the proper Certificate of Insurance (COI) to the variable insurance requirements. The process is highly manual and static, using spreadsheets and cluttered inboxes that simply created a huge amount of frustration for anyone involved: property managers, tenants and vendors who all touch the procurement process. Additionally, one out of four vendors do not meet the requirements, meaning they can’t access the market, and the property side is left with a constrained supply of vendors.
It appeared that insurance was a barrier for vendors to access the commercial building market. While you may be a highly qualified vendor with terrific service capabilities, if you do not comply with insurance then you’ll be turned away at the door. It felt like the process was completely broken, where the onerous insurance headache added unnecessary cost to the transaction and created an environment of distrust between vendors and their real estate customers from the get go.
With technology becoming so prevalent within the industry, why do you think that these issues had not been addressed before?
It appears we are only seeing the beginning of technology adoption in the industry, so it makes sense that these issues had not been addressed, especially since the pain points effectively straddled two overlapping industries with often conflicting interests: insurance and real estate.
Do you believe that technology has enabled “pay as you go” insurance policies? Do you think this is the future of insurance for small contractors in the industry? Why or why not?
I believe that the real estate industry is undergoing a dramatic shift to focus on improving the tenant experience as a leading driver of profitability and growth. Technology is providing tenants and property managers with convenient tools to improve practically every touch point, from space discovery to leasing to moving to maintenance, and other areas in the value chain. The usage of such tools creates a data exhaust that helps owners and managers to better understand each action in the building, producing information that is relevant for intersecting verticals such as building services, insurance, financial services, payments, and others.
Pay-as-you-go insurance is certainly enabled by technology in so far as the distribution and underwriting mechanisms benefit from it, however, the underlying value is effectively better data that is harvested from technology deployed in the building, not the other way around. In other words, pay-as-you-go insurance is only as valuable as the technology infrastructure that is in place because without it, we would know next to nothing about exposures in the building.
Furthermore, the pay-as-you-go aspect is not the be-all-end-all of insurance, but when used properly it is simply a more flexible risk transfer tool for circumstances when a vendor needs additional coverage to complete a job. Not all vendors and contractors are lacking coverage, therefore this tool can be used at the point of need. Furthermore, at some point the annual policy terms covering the traditional 12-month term will be best suited for businesses who do not have significant time gaps in their services.
Jones has been deployed in over 100 properties since October 2018; on which properties has Jones had the most impact? Why?
Jones has helped owner and operators and third-party managers to increase compliance rates from an average of 37 percent to 96 percent by deploying our Software-as-a-Service solution in over 170 properties in cities such as New York, Boston, San Francisco and Portland. Our property teams have also successfully cut the turnaround time to reach a compliant Certificate of Insurance from 12 days to 2 days. We have had the most positive impact in commercial office and retail buildings, and we plan to bridge out to industrial properties shortly, so stay tuned! Given that office and retail typically see a high density of vendors coming in and out, that’s where our platform has had the most impact. We are branching out to industrial as we’ve learned that managing tenant insurance certificates is a significant pain point as well, and we’re super excited to help our customers solve this problem by deploying software technology that will help teams dramatically increase their productivity and unlock valuable property management resources.
Why is it important that technology is introduced that can help contracting professionals mitigate risk in the industry?
Technology is important in so far as it can help contracting professionals, vendors and service providers to gain access to commercial real estate job opportunities that would otherwise be cost-prohibitive due to expensive, inflexible insurance coverage and inefficient compliance workflows. By tearing down the compliance barrier, technology enables professionals to better compete, reducing the transaction cost for the supply side of the market, and providing more transparency and choice for the demand side. As technology continues to support platforms like Jones, I see the facility management industry consolidating around players that can successfully aggregate and leverage data to cost-effectively deliver tailored services to tenants and managers at scale.
Does Jones have any intention of expanding its platform to allow for other types of insurance moving forward? Why or why not?
Our intention is to layer on insurance, financial and marketplace services that will continue to unlock the supply-side access to the market and improve the demand-side experience.
Is there anything that you would like to add that The Registry did not mention?
I would like to recognize our investors, partners and customers that are thinking big about the industry making it possible for companies such as Jones to thrive.