Insurtechs target small businesses
Digital-first insurance providers are moving in to meet a need that they argue incumbent insurers have missed.
In today’s competitive marketplace, small businesses must compete to survive. And yet, as some small businesses begin to grow, many owners grapple with the complexities of their insurance needs.
Insurtechs have started to take notice.
“As we saw with the evolution of personal lines distribution, commercial lines are changing as well,” says Rich Suter, division president, alternative markets & alternative distribution at PolicySweet. “Small business owners want choices. The personal lines space really helped normalize buying insurance online.”
As a result, more business owners have become comfortable with — and have come to expect — the convenience of exploring and purchasing small business insurance from a desktop or mobile device.
Founded in 2019 with the backing of Great American Insurance Group (GAIG), PolicySweet is an insurtech operation supported by the resources of a large company. The carrier is part of GAIG’s Alternative Distribution initiative, which offers small business owners several products to help protect their business and employees. PolicySweet works with all kinds of small businesses, from contractors to restaurants and retail stores, specifically offering a business owners policy (BOP) and workers’ compensation policies.
Don Seibert, insurance product lead at NEXT Insurance, says insurtechs are ideal for small businesses because, despite the grand size of the small business insurance market, insurers haven’t really tailored their products to this sector. Instead, they’ve scaled up personal lines solutions that don’t necessarily suit the need or scaled-down middle-market solutions that are neither affordable nor tech-enabled enough to be efficient.
“In some ways, we really get small business because we were one,” Seibert says. “We understand the needs of a scrappy business that is trying to compete in a market that sometimes seems designed to accommodate the large.”
NEXT was founded in 2016 with a mission to help small businesses thrive by providing customized insurance policies. The company serves over 1,300 types of businesses including Amazon third-party sellers, cleaners, contractors, fitness professionals, restaurant owners, retailers and more. Small businesses can purchase coverage directly online or through a certified agent.
“There are not a lot of providers focusing solely on small businesses,” Seibert says. “At NEXT, we chose to focus our attention on a segment of the economy that has been historically underserved to deliver tailored policies entirely online.”
Indeed, small businesses are the cornerstone of the U.S. economy and are a key driver of economic growth; most net new job creation comes from this sector.
“Many workers who have lost employment due to the effects of the COVID epidemic have turned to small business creation to remake their financial lives,” Seibert says. “To create these businesses, they need insurance; this is why small business insurance represents a $140 billion market for insurers.”
As buying habits change, Great American Insurance Group, through its PolicySweet platform, also wants to be positioned to acquire market share. Eliad Laskin, marketing director, alternative distribution at PolicySweet says they are seeing disruption in almost every industry by innovative, creative challengers offering new and improved customer experiences.
“Consumers have become accustomed to trying new ways of doing business,” Laskin says. “By working with an insurtech, customers are getting a new and refreshing experience — being able to shop for and purchase business insurance in a more convenient and comfortable way.”
PolicySweet has also expanded to cover many types of home-based businesses with its new HomeHQ product.
“What really governs our entire philosophy is that we want customers to purchase insurance in the way that makes them most comfortable,” Laskin says. PolicySweet customers can quote and bind online without ever talking to an agent or do the same in real-time with a licensed agent over the phone.
“Our intention with this platform is to reduce work for the customer and deliver quotes quicker,” Suter says. “Buying the right insurance is a critical step in managing enterprise risk and a task that some business owners find daunting. InsurTechs make this important — but often overwhelming — process simpler and more efficient.”
NEXT also recently announced a strategic rebrand that will integrate small business owners from across the country into every part of the company’s business, culture and ethos. Additionally, the company will devote $4 million over the next three years to small businesses because they believe in what they do.
“In the last decade, insurtechs have leveraged emerging technologies to make data-driven decisions and provide tailored products, coverage and risk-based pricing for customers,” Seibert says. “This has made it so small business owners can receive highly personalized and cost-effective policies quickly and efficiently. This is key for entrepreneurs because, for them, time equals money.”
Maura Keller is a Minnesota-based freelance writer.
See also: