Lara Dulaney remembers – a long time ago, in a galaxy far, far away – an era when “I had to wait for my bank statements to come” via snail mail. Today, the Senior VP of Finance and HR at Music Audience Exchange (MAX), the tech company that powers brand and music partnerships, is not only a long-time user of digital banking and human resources platforms, but an early convert to insurtech, the intersection of insurance and technology.
For a surprising 95% of small businesses, however, their version of insurance remains in those dark ages. Reasons are myriad. On the insurers’ side, the incentive hasn’t been there: historically, the needs of SMB – as small and medium-sized businesses are known in the industry – are complex and time-consuming to assess, yet such outfits typically pay lower premiums. The client side of the equation also hasn’t been ideal: getting insurance at all – let alone wading through options without access to a legacy broker who can help guide business owners – can feel confusing and intimidating.
But times are changing. The risks and needs of small businesses are increasing in the wake of environmental shifts like climate change, pandemic-related developments and cyber hazards. Also, profit potential is growing at a rate that outpaces the rest of the insurance industry. Premiums paid today by the approximately 30 million SMBs in the U.S. amount to around $100 billion annually. The global total? Close to four times that figure.
A new breed of online insurer is jumping into the breach. At the head of the class? CoverWallet, which leading global professional services firm Aon acquired in early 2020 to help the firm accelerate the growth of digital solutions and utilize innovative technology to serve tens of millions of smaller clients. Digital client solutions extend Aon’s reach into new market areas that require a different value proposition and delivery model than customers served by its core business.
Roberto Pinto, President of Digital Client Solutions at Aon, notes that CoverWallet is a key piece of the “unprecedented opportunity to manage Aon’s small commercial portfolio for growth, serve existing parts of our business that would benefit from a digital solution and reach across our global footprint and network to address emerging client need.”
Advantages for clients are undeniable. Instead of taking days or weeks to assess a company’s needs – a process which typically had companies filling out multi-page forms for each potential insurer and agents sometimes taking weeks to get back to applicants – customers simply visit the CoverWallet website, type in their business’ type, location and number of employees, and instantaneously receive recommendations for the types of insurance that most suit their needs, information about similar companies’ buying choices, and price comparisons. The entire transaction – including buying the product itself – is completed in real time.
“Customers can do this in fifteen minutes on a Sunday and they’ll have a policy,” says Diego de Haro, Chief Customer Officer at CoverWallet, “We’re really focused on innovating better and faster on behalf of clients by leveraging technology, leading insurance and risk solutions and an end-to-end digital operating model.”
Once a company is on board, they’re also paired with a dedicated consultant (during the purchasing phase, live help is available as well), making sure the relationship remains seamless. “We’re not just high-tech, we’re also high touch,” is how de Haro puts it, and he points to a lack of understanding about digital insurance needs as being the prime issues holding new adopters back – and leading to CoverWallet’s focus on this element of the experience.
For clients like Dulaney, the upsides are also more idiosyncratic. Among her favorite features is her insurance portal – the “wallet” part of the company. “When COIs” – certificates of insurance – “come back in, I have access to all of them there as opposed to having to scour through emails.” The ease with which COIs are generated is also helpful. It’s a “point and click scenario and add a few words, as opposed to a Word doc I have to upload and update”, she says. Because Dulaney can need upwards of ten COIs a week, sometimes at short notice, the increased speed has been invaluable.
De Haro notes that the future of insurtech is in perfecting two things: making sure the right clients know about the right products, and providing new types of insurance that cater to SMBs needs in the current business climate – a situation he calls “the new better.” Because so many companies increased their online presence during the pandemic, for example, “They’re depending on online distribution channels and that creates a large new risk for them.” Now they need cyber insurance, which addresses everything from data breaches to phishing liability. A new product that CW is evaluating launching is “website downtime risk insurance,” which de Haro explains is for businesses who distribute their product or service via a web platform. “They’re exposed to making money if the website works. But what if it goes down? You stop making money. We are working on a product that protects them in that scenario.” Both cyber and downtime insurance can be added à la carte to a client’s existing coverage, as well as many other solutions that Aon brings to market for its clients.
Dulaney stresses the need for SMBs to make the switch to insurtech sooner rather than later. “From my perspective, it’s innovate or die. If you don’t grow with technology, the world is leaving you behind.”