The Power Of THREE: Inside Berkshire Hathaway’s New SMB InsurTech Platform

When people joke about boring professions and industries, one can bet that insurance will almost always be one of the top targets of such humor. That’s a bit unfair, of course, given how vital insurance is to making the economy run, but that’s just how life goes.

That said, insurance is going through some exciting times — well, exciting in terms of the standards of insurance. Digital technology and new ways of doing things are changing the industry, a truth that came about during a recent PYMNTS discussion between Karen Webster and Dave Stanard, chief small business (SMB) advocate for a Berkshire Hathaway company called THREE Insurance.

Bundled Insurance

The “three” of THREE Insurance refers to the simplicity at the heart of the company’s concept: The policies, designed for smaller businesses, run three pages. Those policies are bundled, and 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, and without the need to go to a broker or agent for help to navigate insurance complexities.

The Berkshire name helps THREE get through the door, and gives confidence to 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 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 about 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.”

SMB Insurance Trends

One can bet on one thing, though: Small businesses are increasingly in need of protections against hacking and other forms of cyberattacks. That’s why THREE Insurance offers this in its bundle, along with assistance in legal and other fees that crop up in the wake of those attacks, as well as services that can help a business owner better understand the scope of an attack so that recovery can proceed more efficiently.

“We have services that help you diagnose if something has occurred,” he told Webster.

Stanard noted that, in general, businesses buy insurance for two reasons: to keep up with compliance (including for specific types of contracts and jobs) and to enable growth (such as into new areas) — and for the protection needed so that those growth efforts aren’t thrown off track by a lack of insurance.

“The second [reason] is the kind of thing THREE is really right for,” he said, “for businesses that are really looking to protect their growth, and not spend a lot of time doing it.”

THREE is a newbie in a changing market, thanks to digital technology and other factors, especially when it comes to small businesses, as PYMNTS has regularly documented. As is often the case with technological innovation, business workers increasingly want the same convenience in their professional lives as they do in their personal lives. The opportunity for a digital revolution in the SMB insurance market, then, is massive — though this revolution won’t necessarily follow the same path as consumer insurance, largely due to the complexities of underwriting a small business compared to an individual.

As Standard told Webster, the general trend in offering insurance to SMBs is to bring them closer to such services, and embed such offers into business software. One can bet that this trend will gain even more steam in the coming decade, and lead to more innovation and attempts at disruption.


New PYMNTS Report: Preventing Financial Crimes Playbook – July 2020 

Call it the great tug-of-war. Fraudsters are teaming up to form elaborate rings that work in sync to launch account takeovers. Chris Tremont, EVP at Radius Bank, tells PYMNTS that financial institutions (FIs) can beat such highly organized fraudsters at their own game. In the July 2020 Preventing Financial Crimes Playbook, Tremont lays out how.