As the number of birthday candles and wrinkles increase every year, we tell ourselves that with age comes experience and with experience comes wisdom. But sometimes all that age and wisdom can be accompanied by a reluctance to adapt to changes. One industry that is often accused of failing to keep up with the times: insurance.
Securing an insurance policy that covers your needs is one of the most important items for businesses at all stages, but it’s also one of the most arduous.
You can go online to order your coffee machine, find your staff, and spread the word to future customers; but making sure you’re covered appropriately and at a fair rate often requires filling out paperwork, waiting weeks for a response, and spending hours following up on the phone.
That’s where CoverWallet comes in. Co-founders Rashmi Melgiri and Inaki Berenguer were looking for an industry that could benefit from moving online when they landed on insurance. Neither had worked in the industry before: both have MBAs from MIT, and Rashmi’s background is in consulting and advertising.
But being the outsiders brought certain benefits. First, they could work with multiple insurance carriers to cover as many types of business insurance as possible. Second, instead of standing for the slow-rolling attitude of the established insurance carriers, they offered the instant gratification of on-demand online companies.
They also recognized that startups have different needs from established businesses, which lead them to create an offshoot tailored to new businesses, called CoverStartups. And they’ve moved into offering their services to insurance agencies, through CoverWallet for Agents.
Calling in to the WGN Studios, Rashmi explained what CoverWallet is doing for different types of businesses, and how they work with carriers to make purchasing insurance better for everyone involved.
Covering the basics (and beyond)
Scott: I would love to know, from you, what CoverWallet is.
Rashmi: CoverWallet is an online platform for small business owners to get insurance. We’re talking about things like general liability insurance that covers a coffee shop owner if someone falls on a spill. We’re talking about errors and omissions insurance — also known as professional liability — that would protect an accountant against a lawsuit that said you made an error on my taxes and I owe a lot more than you originally told me.
What people don’t necessarily know about the business insurance industry is that before CoverWallet, 99.9 percent of all the insurance that was bought for small businesses was done through the local neighborhood channel. Bigger carriers didn’t sell directly online.
As a small business owner, maybe you were delivered online results from Travelers or Liberty Mutual, etc., but they would then direct you to your local neighborhood agent. So if you were a small business owner — who on the consumer side is using Netflix and Spotify, and on the business side is using QuickBooks or Justworks — you had no online option when it came to understanding, buying, and then managing your business insurance.
CoverWallet is exactly that. It’s an online platform where small business owners can give us some information and get quotes that are viable. They can say, let me compare these three different offers from the three different carriers across multiple lines of coverage that I need, and buy it. It’s all online, without speaking to someone if they don’t want you — and they can call our experts to understand the coverage a bit better and answer whatever questions they might have.
That’s really the core of CoverWallet. Since that original business model, we’ve done a couple of other things as well. We’ve allowed existing neighborhood agents to tap into the platform. We’ve repurposed all that tech that makes it super easy for the small business owner and made it available to the neighborhood agent so that when someone walks into their shop or calls them, they can go to CoverWallet for Agents and make use of the same tools to service their own customers.
We’ve also expanded internationally, so the same small business that are in the U.S. that we service through our online platform we also service in Europe, and we’ve been doing a trial run in Australia.
We’ve also started to specialize in startups, which is really where the idea was born: as entrepreneurs and business owners ourselves, who are used to doing everything online, we wanted to service other startup founders who want an online, seamless way to do insurance, so we launched CoverWallet for startups. It’s very similar to the original platform, but has special attention paid to the unique issues that startups and particularly venture-backed companies can face.
Scott: Why do growth companies in particular need a separate set of coverage?
Rashmi: A lot of startup companies don’t fit neatly into an underwriting box, so you need someone who comes from that industry who can understand and correspond with the carriers. Our advisors are very good at explaining to a carrier what selection of codes particular startups might fit under, how we can do this.
The one thing that you’ll see startups need more often than your mainstream small business is directors and officers insurance. Particularly when you’re venture-backed, that VC firm will want you to have directors and officers insurance, and it can get very expensive if you don’t have someone to advocate for you. That’s really where we provide a lot of support and value to founders.
Scott: Were you in insurance — or did you just see an opportunity and jump on it?
Rashmi: Neither my co-founder nor I are from the insurance industry. We saw an opportunity as experience-oriented entrepreneurs feeling like there was room to improve this experience for small business owners. Having gone through it before, you say it’s gotta be better than this.
It wasn’t as simple as just slapping up a website! There was no existing API infrastructure among the carriers. We were up against the mentality among many carriers that the online customer was a bad customer. Major insurance companies were saying these are folks that couldn’t get insurance through their neighborhood agents and now they’re working in the shadows of the internet trying to get a quote.
It was the belief that it has to be better, but also the belief that we might be able to actually push this change, through technology, and showing results, and showing that our loss ratios are good; that the customer isn’t a bad customer, it’s simply where the market is going.
Scott: What are the components to this that enabled you to do what a lot of these larger carriers couldn’t?
Rashmi: For starters, you have your typical crossing-the-chasm issue. They’ve relied on this network of neighborhood agents, and it would be very difficult for some of these carriers to go online without threatening that.
From an economic standpoint, it’s definitely the exception to find a carrier that can give you all the different coverage, so you’re in need of an aggregator. CoverWallet will work with all the different providers and bring them together to service that customer. Is it worth it to you to go after this customer when you can only do the professional liability piece of it?
The third piece of this is the DNA of the company. What carriers are very good at is underwriting and pain points. That’s their specialty: it is not around marketing to the average consumer, particularly in business. They were marketing to agents to get them to use this carrier versus that carrier. Even when they do have a customer-facing relationship, even if it’s just on billing, it’s still paper-based, and many of them will not accept credit cards. They haven’t really made the shift towards customer centricity.
Different skills, same page
Scott: When you’re working with people who have different expertise from you, how do you make sure everyone internally knows this is what we do, this is who we are, and we’re going to stay on this point?
Rashmi: The guiding principle is customer centricity, and there are a number of metrics that we judge ourselves against, that we say present a flawless customer experience. That can get ruined by anything up the chain: by manual underwriting from a carrier who reaches out to a customer and asks a bunch of questions instead of working through CoverWallet and our system. When you’re dealing with that very last mile, you have to be accountable for everything upstream, because it’ll affect that end customer experience.
We have weekly calls with a lot of our partners highlighting these issues. We look at individual accounts and we say, why did they take a week to get back to this person with a quote? We’ll trace that down and try to fix it, or work with the carrier so it doesn’t happen again.
That’s the way we approach it: we stay focused on customer-facing metrics, but are accountable for anything that might impact that metric.