It will pay to watch how the insurance industry undergoes innovation and disruption in the coming decade, thanks in part to digital tech, faster disbursements and even more focus on policies crafted for small and medium-sized businesses.
The latest evidence in favor of that point comes from Aon. News broke this week (Jan. 7) that the professional services firm has completed its acquisition of CoverWallet, a digital insurance platform that caters to SMBs. CoverWallet will be a part of Aon’s New Ventures Group, which is an arm of Aon that focuses on expanding the company’s reach.
The move helps Aon gain access to the $200 billion digital insurance market, and also gives it the ability to use CoverWallet’s platform to create client-forward initiatives to help with the company’s overall growth strategy. CoverWallet, which was founded in 2015, has over 300 employees in all of its departments, which include engineering, digital marketing, data science, business intelligence, design and operations. The company has three offices in New York State and one in Spain.
The rise of so-called InsurTech stands as one of the most promising trends of the new decade.
Digital technology and new ways of doing things are changing the industry, a truth that came up during a recent discussion between PYMNTS’ Karen Webster and Dave Stanard, chief small business (SMB) advocate for a Berkshire Hathaway company called THREE Insurance.
The “three” of THREE Insurance refers to the simplicity at the heart of the company’s concept: The policies, designed for smaller businesses, are just three pages long. The bundled policies include business liability, business interruption and cyberattack protections. The idea, Stanard told Webster, is to provide a one-stop shop for small businesses in need of insurance, without the need to go to a broker or agent for help navigating insurance complexities.
The Berkshire name helps THREE get through the door, inspiring confidence in potential clients, he said. However, that’s not all Berkshire does for THREE, which launched in May and now offers services in 10 states, with the rest of the country anticipated to follow over the next 12 to 18 months.
“Berkshire, as a group, has been [in] the insurance space for a very long time,” he said. “We benefit from having the expertise to draw upon, to redesign the policy from scratch in a way that no one has ever done before.”
One of the big themes of the digital economy is to cut out middlemen and bring consumers closer to retailers and service providers, which is one of the ideals of THREE. Another big theme is to unbundle products and services – think streaming TV channels, for instance, versus buying an entire cable package.
Yet, in many instances, bundling makes sense with small business insurance, Stanard told PYMNTS. He used the example of a newspaper – a bundled product itself that contains arts, news, sports and other information – to illustrate the point.
“People have a good understanding of what genre of news they are interested in,” he said. “For small businesses, it’s very hard to look at the landscape of insurance products out there. I’m not sure a lot of small businesses have the ability to identify products [and] identify their needs.”
That’s hardly all that’s happening in the insurance field.
Insurance purchasing and management platform Huckleberry recently raised $18 million in a Series A funding round led by Tribe Capital, with participation from Amaranthine, Crosslink Capital and Uncork Capital. Huckleberry offers a digital insurance platform for SMBs that is 100 percent paperless. Small business owners can get a price quote in less than five minutes for coverage for workers’ compensation, general liability and more.
The new funds will be used to expand Huckleberry’s insurance products across sectors like personal care, auto repair, restaurants and more. The money will also help the company scale its engineering, data science and marketing efforts.
“Huckleberry was born due to the painful process I encountered when purchasing business insurance at a prior startup,” said Bryan O’Connell, founder and CEO of Huckleberry. “Having worked at an insurance carrier, I knew that it was possible to build a platform that eliminates tedious offline paperwork and puts the small business owner first.”
There is still much ground to gain when it comes to better insurance policies and offerings, especially for SMBs. But things are clearly on the path to change.