Pie Insurance, a digitally-enabled direct distribution workers' compensation insurance business, recently launched its pricing tool at InsureTech Connect in Las Vegas. The company's initial product is an interactive “Price Predictor” that allows small and medium-sized businesses improved insight into their workers' compensation insurance premiums. In 2018, Pie will begin offering its own A.M. Best “A” rated insurance policies.
According to Pie, 65 percent of small businesses overpay relative to their empirical risk level by an average of 29 percent for workers' compensation insurance. And, the smaller the business, the more likely it is they are overpaying. Louisiana Comp Blog asked prominent local agents what they thought of this potentially disruptive technology.
“We call it the ‘buy button' because any person off of the street can click the button and instantly have insurance coverage,” Tim Clements of Clements Insurance Services said. “Allowing the average consumer to purchase their own coverage is not only a threat to the traditional agent, but it's a threat to the consumer him/herself. Knowing adequate limits that need to be carried as well as an understanding of the product is what the professional insurance agent offers; not to mention direct understanding of the risk in order to protect the carrier. These benefits, in addition to hands on personal service, cannot be provided by a computer underwriter.”
However, the “computer underwriter” impression that Clements references is exactly what Pie Insurance CEO John Swigart believes is his service's strength. “The traditional high-touch approach agents and underwriters use in commercial lines lead to high prices and a protracted customer experience,” Swigart said in an interview with Insurance Journal. “Yet, the profitability in this sector indicates that small accounts are subsidizing larger accounts at most insurance companies. By focusing exclusively on small businesses with a digitally enabled solution, Pie will solve this problem at scale.”
In particular, Swigart says that millennial customers want lightning-fast transactions, but Clements disagrees.
“I believe Mr. Swigart is failing to acknowledge that while millennials do want the capability to conduct business immediately; they also want to conduct their business correctly and will pay a little more to know that the coverage is an accurate reflection of the needs of their business,” Clements, 2014 winner of the PIA Young Insurance Professional of the Year award countered. He compared it to social media, saying that technology is an enhancement, not a replacement, for young people.
For his part, Baton Rouge-based agent and IIABL Board Member Ross Henry of Henry Insurance Service believes everything comes down to the concept of “speed to value.”
“In many cases the insurtechs and start-ups in our industry cannot offer anything better than [independent agents] can – and quite often an inferior experience – but what they can do is get it in the hands of the consumer much more quickly than we usually do,” Henry explained. “From the first moment when a prospect engages with your business, whether that's via e-mail, phone call, Facebook messenger…how quickly are you delivering value?”
If traditional agents can't or won't deliver value promptly, Henry says, that's the only space where insurtechs can conquer. “This doesn't require crazy technology,” he added. “This is just, be more responsive. Speed to value is really a cultural aspect of a business and one we need to incorporate into everything we do.”
Henry also argues that the Pie concept fails from a practical standpoint. “It is quite rare that a commercial entity which requires workers' comp coverage will not also require other lines. If this is the case, what value is there in buying one line of coverage from Pie and the rest elsewhere?” he asked.
Pie recently closed a $4.3 million seed round of funding. Investors include Sirius Group, a global specialty insurer and reinsurer; Moxley Holdings, an early stage venture capital firm for data-enabled businesses; and Elefund, an early stage venture firm with seed investments in fintech businesses.
ABOUT THE AUTHOR
Nina Luckman is the writer and editor of New Orleans-based Louisiana Comp Blog, which launched in 2014 and is sponsored by LCI Workers' Comp. She is originally from Pennsylvania but lived most of her life in Florida. Her credentials include a Bachelor's and a Master of Arts degree from Tulane University, both in the study of English Literature.
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