Insurance, especially for small businesses, is a very paper-intensive and friction-filled process.
For the average small to medium-sized business (SMB), the process starts with Google after business owners realize they need insurance and don’t know where to buy it, CoverWallet CEO and Co-Founder Inaki Berenguer explained to Karen Webster in this week’s edition of the Monday Conversation.
Insurance, he noted, is a very specialized business; there are few companies that offer a breadth of products across types of coverage — most instead offer depth in one area, such as health, life, property, auto or business. Moreover, unlike ubiquitous products like auto and health insurance, where everyone knows names like Geico and BlueCross/BlueShield, the underwriters to talk to when it is time to insure a new restaurant or dry cleaner are not nearly as top of mind.
Google, of course, can get a business owner there — but finding an insurer isn’t the end of a process, it’s a beginning. Because, Berenguer explained, insurance companies often don’t work on a direct-to-consumer (DTC) basis — which means the customer is going to fill in their ZIP code and be matched with a few agents in the area that can serve as their intermediary in writing a policy.
“In the U.S. there are 40,000 independent agencies and if you ask them, it is all paper applications,” Berenguer said. “And if you are opening a business and you tell them you are opening a restaurant and need insurance they will ask you to complete an application with your address, number of employees and revenue. You will fill that out, they will scan it and turn it into a PDF and send it off. In two days, you will get a quote.”
And that, he said, is a streamlined version of the process. A company that wants more than one quote from more than one company will be filling out a lot of forms. There is no standardization among them, which means a firm that wants 10 quotes is going to be filling out 10 forms to be turned into 10 PDFs sent to 10 firms.
The process is cumbersome, unrealistic for business owners and unnecessary. And so CoverWallet is looking to replace it — to eliminate the paper, take out the PDFs and instead offer one digital platform, one set of questions and the ability to connect quickly with multiple carriers. Or, as last week’s platform launch with Zurich Insurance now makes possible, Swiss businesses can now use a variation of the CoverWallet to purchase insurance online.
A DTC Approach to Insurance — With a Twist
The key for small businesses getting insurance isn’t just finding them a policy, it’s finding a the right policy, which is why those forms are so extensive and in some cases superfluous. The agent is trying to figure out every possible combination of coverage the business needs, which creates a lot of extra work. The computer, Berenguer noted, is much better at predicting customer needs based on the data it already has.
“The digital form can respond to the information as it is going into it, so the customer isn’t seeing all the underwriting questions for every possible type of business — just the questions that are relevant to the business you are founding,” he explained.
CoverWallet does not write the insurance policy itself nor take on the actuarial risks that insurance firms specialize in. What the firm offers, however, is servicing and guidance for the customer, providing businesses with an easy way to understand, buy and manage insurance online.
CoverWallet takes payments, constructs optimal packages, answers questions about the policy on the back end and manages renewal, among other things. The company also enables consumers to serve themselves, he said, with an easily accessible online portal where customers can see all their policies, request a new policy, change their payment options and more.
“Business insurance is a specialized world that most people don’t know until they need policies — and that means they need guidance going through it,” Berenguer said.
Partnering in the Digital World
While CoverWallet was always designed as a consumer-facing product — and remains one at core to this day — it is also an avid expander and collaborator, the CEO said.
“Our core model is still DTC, but we have realized that the same thinking that solves for the consumer in the U.S. can multiply its value by launching this in other countries and using independent agents as a distribution channel,” he said.
The tens-of-thousands of independent agents that dot the landscape in the U.S., he noted, are far from in love with the paper-heavy, time-intensive process by which they are attaching their customers to policies. It’s as costly and unpleasant for them as it is for their customers, and CoverWallet becomes a resource they can tap into as they are looking to digitize their own operations. In December, the company introduced a platform called CoverWallet for Agents, which uses much of the direct-to-consumer technology.
No one wants to be the last one to be able to offer digital services, he noted, and that idea is permeating in the enterprise side of the insurance industry — the massive number of underwriters themselves who don’t want to be direct-to-consumer fully, but who are seeing that partnering with a firm like CoverWallet lets them give customers the DTC experience.
As a result of CoverWallet’s new partnership with Zurich, for example, customers in Europe looking for small business insurance will be able to buy policies from Zurich on a platform powered by CoverWallet and quickly learn about the types of coverage they need, get real-time quotes, purchase insurance and manage their policies online. There is no paperwork to exchange, and no multi-day waits, Berenguer said.
“The whole industry realizes the world is moving toward getting everything online and digital,” he said. “Food, clothes, books, mortgages, credit cards are all moving to the internet — and they know insurance has to follow sooner or later, though how long it will take exactly no one knows.”