Bitesize InsurTech: CoverWallet
May 11, 2017 George Hanks
CoverWallet is a digital broker, focused on SME insurance in the USA. The company was founded in 2015 by two MIT alumni and aims to simplify the SME customer journey. In 2016, the company raised $9.5m (in seed and Series A rounds), launched its product and grew from 15 to 50 employees.
What problem are they solving?
This is a startup founded to solve a problem experienced by its founder. Inaki Berenguer, one of the founders and a serial entrepreneur, needed to provide his certificate of insurance to close a deal on a previous business. Getting this certificate was a pain, and relied on his agent who happened not to be at work that day.
CoverWallet provides an online platform to sell insurance and acts as a repository for an SME’s insurance policies.
What is the proposition?
Despite being a tech business, CoverWallet assigns each customer a human ‘personal advisor’, who can be reached by phone and online chat. This is an interesting contrast to Next Insurance, who we covered last week, who are taking a more purist “online only” approach.
The online platform consists of three sections:
- Education: Business owners can find out what insurance they require. For example, when we pretended to be a medical equipment manufacturer in New York making $1.5m a year with 25 employees, they recommended general liability, commercial property, umbrella and workers compensation insurance. (Arguably we should have been declined with those trading numbers…)
- Quote and buy: The differentiator here is that the process can be completed in under 60 seconds. This video shows the process in action.
- Policy management: CoverWallet users can upload all their insurance policies onto the system and manage them in one place. This, they claim, differentiates their platform from others.
CoverWallet have partnered with a number of carriers including Liberty Mutual and Travelers.
The Oxbow Partners view
CoverWallet are one of several startups who have launched, or are in the process of launching, SME online propositions in the USA in the last 18 months. Others include Embroker, BizInsure (the US cousin of Australian BizCover), Simply Business and Next Insurance, not to mention some corporate offerings like Berkshire Hathaway’s BiBerk.
It will be interesting to see how each of these businesses tries to drive growth over the next year. At the very high level, it will be fascinating to see if the winners are those who have a huge marketing budget, or whether product differentiation will be the key.
We could argue both sides of the argument – the successful insurance aggregators (price comparison websites such as Confused.com, Money Supermarket, Go Compare and Compare The Market) in the UK were those who had huge marketing budgets; on the other hand a company like Simply Business arguably survived the shakeout amongst SME online brokers of the late 2000s by having a better product than the competition.
Either way, a point of note is that Union Square Ventures have invested in Coverwallet. We know USV because one of their founders, Fred Wilson, writes an excellent blog here and is a (genuine) thought leader in the tech world. According to Wikipedia, USV have had a $1bn exit every year since 2011. It’s fair to say that online broking is going to see major investment and significant change in the US in the next 5 years.