CoverWallet is an online insurtech platform for small commercial policies. Launched in September 2015 by two friends from MIT, Inaki Berenguer and Rashmi Melgiri, the company is employing data, design, and technology with the intent to revolutionize the small commercial insurance space.
The company initially began by selling its commercial insurance offerings directly to small business consumers, and while its core platform is direct to consumers, the company has also begun to expand its offerings and partnerships in interesting ways. Recently, it announced a partnership with The Hanover, as well as the release of an application programming interface (“API”) allowing other websites to offer an interface to CoverWallet’s platform.
A data scientist and engineer by training, CoverWallet Co-Founder, Dr. Berenguer, who was born in Spain, has lived in New York for over a decade and holds both a Ph.D. from Cambridge University and an MBA from MIT. In fact, it was at MIT where Dr. Berenguer met his friend and co-founder Rashmi Melgiri, beginning CoverWallet’s story.
While Dr. Berenguer brings the data and technology experience, he also brings the experience of having started and exited two other technology-focused companies before founding CoverWallet. This expansive view of technology can be seen in the fact that CoverWallet has decided to share its technology via tailored partnerships and the release of its new API.
In order to get an idea of this new emerging player in the small commercial sphere, Agency Checklists got in touch with Dr. Berenguer, to learn more about the company and what it can offer insurance professionals here.
Dr. Berenguer. Thank you for taking to time to discuss CoverWallet and what it is doing in the small commercial insurance area with us.
It is my pleasure. I enjoy telling people about CoverWallet.
What is CoverWallet in a nutshell and what does it aim to do?
CoverWallet is reinventing insurance for businesses, and we do that by combining data, design, and technology. More specifically, we mean general liability, property, workers compensation, professional liability, and the other policies that any of the 30 million small businesses in the U.S. need for commercial insurance coverage.
How did CoverWallet get its start?
Rashmi Melgiri and I started the company in 2015, less than three years ago. When we first met and started discussing starting a business, I told her that in my previous two companies, as a business owner, I had to buy insurance–general liability, and property, etc.–because when you sign a lease to rent an office, usually the lease requires you to have insurance in place. When they told me I needed to buy insurance, I thought I could go to a website and buy insurance by entering information like the address, number of employees, the square footage, revenues, and the like, get a quote, and pay with my credit card in the same way that you can buy any other thing today on the internet–on Amazon or any other website.
I was told, however, that did not exist, and that instead, I had to go to a traditional insurance agent and go through a very long, manual process that could take two or three days. Even more surprising was the fact they did not even accept credit card payments and everything had to be done via bank account transfers.
So, I said, “Well, I do not know anything about insurance, but this experience is time-consuming and very analog, and I know it can be reinvented with what I know about technology, data science, user experience, and digital marketing.” Based on that experience, we started the company in 2015.
How long did it take from the time you and your co-founder had the idea of CoverWallet to bring it to market?
It took us about a year to get licensed as a company because, as you know, this is a highly regulated industry.
The officers of the company need to be licensed and once the officers are licensed then the company can apply for the license, but only in the state where the company is based, and then once you are licensed in that state, you can apply for the license in all other states.
So that process took us a few months until about the summer of 2016. It was about two years ago when we launched. Since then, we have been growing very, very rapidly. We now have about 140 employees and have raised $35 million in funding from traditional tech investors like Union Square Ventures, Index Ventures, and Foundation Capital. These are the same investors that invested in the early days of Facebook, Twitter, DropBox, Skype, Netflix, and Uber. We have also raised a little bit of funding from insurance companies like Zurich, which we just announced about a month ago.
How big is your company right now?
We have approximately 140 employees, which includes 30 licensed agents.
Are you able to say how much insurance you are writing now?
We currently do not share that information, but you can get an idea given the number of employees. The majority of our customers are micro-businesses such as small restaurants, contracting companies, small accounting firms, small architecture firms, barber shops, nail salons.
Who are the insurance carriers CoverWallet presently partners with?
They are listed on our website and include Starr, Hamilton, which now is AIG, Liberty Mutual, CNA, Guard that is part of Berkshire Hathaway, AmTrust, Chubb, Hiscox, Progressive, Blackboard, Travelers, Employers, Atlas, and Markel.
What do you attribute CoverWallet’s rapid growth to?
We are giving customers what they want. The best way to start a company is to try to find what customers want and offer that to them. What we have seen with small businesses is that they are trying to do as much as possible on the internet. Not only insurance, but even their accounting, their payroll, and everything else. In 2018, we have started doing everything on the internet, so why not to offer insurance as well?
In addition to offering small business customers what they want, you are also starting to enter into partnerships with insurers, like The Hanover. Could you tell us about that aspect of CoverWallet?
We spoke with The Hanover a while ago and showed them a demo of how easy it is for a small business owner to come to our site, enter a bit of information about themselves, get a quote, pay with a credit card, and have a copy of their policy; everything in as little as five minutes. In response, they said, “Wow, this is pretty interesting.”[pullquote]The good thing about the technology platform we have is that it is very customizable. It is a little bit like a LEGO platform from which we can take different pieces of what we have built and create a different version of it for a partnership that we might be exploring.[/pullquote]
The Hanover said why not take the platform that you have built, and we could brand something for The Hanover, so other agents that use our platform or customers that need our product can have a much simpler, faster, more convenient experience.
Our vision is to simplify the life of the customer. That is why we decided to take our platform and adapt for The Hanover. It is under the domain of The Hanover, but it is powered by CoverWallet.
Do you plan to offer that to other companies or was this just a one-off opportunity for The Hanover?
Potentially. We also launched something similar with Zurich in Europe, and today it is only in Spain, but we are exploring, as we speak, partnerships in two countries that hopefully will launch soon. We also are talking to some other companies here in the U.S. that are interested in seeing how this could be implemented and powered by CoverWallet.
Have you done anything with your API for any brokers or agents for any particular programs?
There are a lot of agents reaching out to us. We have the API, which is one thing that is available but to build the final solution you have to customize it a little bit. We are also discussing whether to partner with the agency itself or with the agency management systems that those agents use.
We are also talking to other types of potential partners including payroll providers, accounting firms, commercial real estate solutions, anyone that has access to small businesses that might want to take part in what we are offering.
So does the API basically, provide portals on various existing websites to channel everything back to CoverWallet?
Not exactly. Let me give you an example to highlight the difference between a referral and an API.
Let’s say you are a small business and that you go to the website of the Chamber of Commerce for Massachusetts. On the website, it has something that says, “if you are interested in this insurance, we have partnered with CoverWallet, which is a company that makes it extremely easy for you to buy insurance. Click here and go to CoverWallet.” So, if you click there, the customer is then sent to our website. That is not a bad experience, but that customer leaves the website of the Chamber of Commerce to visit ours.
If you use an API what you can do is offer the experience of CoverWallet on the same website. So, if you are a payroll provider using the API, the customer would not need to be redirected to CoverWallet, the customer would stay on the same platform that they use for payroll services, have all the information about their policies, their certificates, their payments, like the insurance, on that portal.
Where do you see the company going in the next couple of years?
In the next couple of years, we want to continue riding the paradigm shift of the mainstream, which is seeing commercial insurance becoming more and more online. As the market moves along, we want to grow with the market. Commercial insurance for small businesses is a $100 billion market. We think that more and more of that market is going to move online, and we want to continue being positioned as the leader in the category that is online commercial insurance.
How does CoverWallet deal with the issue that some people are not interested in buying a commercial insurance policy online because it can be complicated and business specific?
That is a good point. And that is why we say that we are high tech, but also high touch. We are building a lot of do-it-yourself tools so business owners can come to us, and they can enter the information themselves, and get a quote. However, the reality is, that most of those customers, when they get a quote, they give us a call–and we encourage that – so that they can discuss the specific coverages to make sure that they are buying what they need. Our licensed agents assist those customers when they have to make the final decision on whether to buy one option or another option.[pullquote]…that is why we say that we are high tech, but also high touch…the reality is, that most of those customers, when they get a quote, they give us a call–and we encourage that – so that they can discuss the specific coverages to make sure that they are buying what they need[/pullquote]
However, it is also interesting because there is another portion of policies that are more plain vanilla, right? Like, customers that need a very basic BOP, that is, general liability and property. What they need is usually pretty standardized. For those, it is good that they have the reassurance when they have a telephone conversation with our agents that they are about to buy exactly what they need. However, this is more like reassuring the customer that they are making a good decision.
We are high tech and high touch. This is another trend that has happened with the internet during the last ten years. If you remember back in the ’90s, everybody was buying something on the internet. Usually, it was cheaper than in store, but it was very bad customer services and very bad servicing. In the last ten years, there have been more and more online companies that have significantly better customer service than the equivalent offline offering. Right? And we are riding that wave as well, where online businesses can be high tech but also high touch.
You mentioned CoverWallet’s relationship with Zurich Insurance. Can you speak a little bit about the relationship?
They are a minority investor. As I mentioned, we also launched our platform internationally in Europe with Zurich earlier this year, and now businesses in Spain can purchase their insurance online.
We also have traditional VC tech investors like Union Square Ventures, Index Ventures, and Foundation Capital.
In addition to Zurich, C.V. Starr, whose chairman is Hank Greenberg who used to be the chairman and CEO of AIG, and Two Sigma, which has invested in Hamilton, which is now part of AIG, are also investors. Those companies with an insurance role are minority investors.
Can you tell us about the benefits for those companies or entities that put the CoverWallet API on their websites?
Usually these businesses, they are trusted advisors to their customers. It is not that uncommon that someone says to them, “I have to make a decision about buying insurance, do you recommend anyone?” Right? So, they endorse CoverWallet as an easy, fast, convenient, and quick solution to buy insurance at an affordable price. That is the way we think about these type of partnerships. They can refer businesses to us because they want to be a trusted advisor to their customers.
A good example are co-working spaces. They do not necessarily want to make money out of helping their tenants get insurance. What they wanted is to recommend good solutions to their customers because they want to be the trusted advisor of the companies that are members of the space. So in the same way that they recommend accounting services, they recommend health insurance, they recommend banking services, they recommend insurance providers.
Is there is any compensation that people can get by providing access to CoverWallet?
In some cases, there could be. In other cases, it is just that they want to become a trusted advisor and sometimes they do not ask for compensation.
They ask us, for example, to create personalized microsites for them branded for them and CoverWallet. This way their customers know that “Yes they are referring businesses to CoverWallet, but it is part of this family somehow.”
Do you see any role for independent agents using the CoverWallet services or API or is it just competitive?
It’s interesting because many agents, especially the smaller ones, have reached out to us during the last 18 months to ask, “Can we become, kind of, subagent or have an arrangement that we also have access to this kind of simplicity, convenience, and speed to place business through you.”
So, we have not had a lack of independent agents reaching out to us to see whether we can offer them something. If we do something with them, however, we have to make sure that we create the right servicing structure. We have to make sure that the way we do this is efficient because you also have to onboard them, you have to train them.
So, we have to create a process for onboarding and servicing them that is efficient. This is something we will evaluate internally over the next 12 months.
If any of our insurance company or insurance agencies that are reading this on our site, and think, “This is interesting,” how can we learn more about partnering with CoverWallet?
They can contact us right on CoverWallet.com. In the footer of the website, there is a link that says, “Partner With Us.”
The good thing about the technology platform we have is that it is very customizable. It is a little bit like a LEGO platform from which we can take different pieces of what we have built and create a different version of it for a partnership that we might be exploring.
