Business Insurance Innovators

The rapid rise of Zenefits has spurned an incredible amount of buzz around the idea of commercial insurance brokerage. The company sells into human resources and centers its focus on facilitating benefits and personal coverage lines such as health and disability policies. Products such as cyber-security insurance, director and officer policies and general liability insurance offer another exciting opportunity within the commercial market. These products are geared toward corporate risk; they target buyers like chief compliance, technology or operating officers.

To get started, a business needs to buy a minimum of about five to seven types of insurance. Such policies are usually sold over the telephone and delivered as PDF documents, and the claims management processes are similarly awkward. Complicating matters even further, commercial insurance carriers are more fragmented and regional, so corporations may have to jump through hoops to acquire sufficient coverage.

Digitizing and curating the buying experience into a streamlined system is an important part of the opportunity. As with consumer product lines, players that serve as single vendors and trusted sources can be extremely valuable. A handful of companies have emerged in this space offering price comparison options and various policy management tools; these include emBroker, CoverWallet, Insureon and Next. Providers can't expect success using the same sales model to lure clients with fundamentally different expectations and buying habits.

One of the most attractive features of commercial insurance is maintenance revenue. Currently, one agent typically captures a commission upfront by making an initial sale. After the transaction is complete, however, the actual policy management remains highly competitive. Other agents attempt to become the agent of record, thus effectively stealing the business and earning a significant maintenance margin over the duration of the policy. One way to gain annuity revenue with minimal effort is to capture those customers and the associated maintenance revenue through technology.

An effective system should do the following.

• Gain SMBs in a profitable, scalable and unique way by selling new products or taking over control of existing offline policies
• Transfer acquired policies to its online system
• Make policy management sufficiently sticky to ensure that other online agents managing new and existing policies can't steal acquired business

A few interesting companies have entered this space. Each has brought its own unique and creative approach. Some acquire SMBs through SEO efforts by focusing on certain business milestones that typically trigger an insurance purchase. Others acquire and keep clients by giving away software and claims management solutions. Well-positioned players such as Zenefits, Gusto and Intuit make payroll or benefits management their foundation for expansion.