Look for a solution to your own problem. Start a company. That’s the formula that CoverWallet Co-Founder and Chief Executive Officer Inaki Berenguer has used three times since leaving the world of academia with a Ph.D. in engineering to become a technology entrepreneur. His latest startup, which he describes as a “tech company reinventing insurance for small businesses [by] combining data, design and technology,” grew out of an unexpected challenge he encountered when he started the first company, Pixable, developer of an app for managing and sharing photos on social media.

“I was told that I needed to buy general liability and property insurance. I thought that I could go to a website and buy it very quickly because I didn’t want to spend so much time with it. Instead, I had to go to a traditional broker and complete the paper application, and it took me one week,” he recalled. “Wow. We have to change this,” he thought. “I’m going to build a beautiful and easy-to-use technology product that solves my problem, and hope that there are thousands of other people that experience the same problem,” he said. “Then I want to tell them via marketing that I have solved this for them.”

Berenguer shared these recollections in response to a question about how he validated the idea for other small business owners who wanted to be able to use an online platform to understand, buy and manage insurance—the three-part mission of CoverWallet—during an interview with Carrier Management at CoverWallet’s New York office in early November. Asking potential customers what they want is not the answer, he contends.

“I think that is the best way to start any company. It’s solving a personal problem, because if you solve it for you, then you know what your pain points are versus solving the problem for other people. Then you are not 100 percent sure whether that is what they care about.”

“So, the first hypothesis is ‘let’s do the product for me.’ Then after you build that, you launch and you start learning how other people use the product. What are their frustrations [in] using it,” he said. “Maybe you solved many of their problems but you created new ones,” he said, stressing the importance of measuring customer feedback by watching them interact with the product to make adjustments to optimize the experience.

“We record all the customer sessions. We know when people drop. We’re very data-driven. So, if you have used our platform, I can probably go and see all the actions. If you give me the email that you entered, I can probably see everything that you did from whether you were on a computer or a telephone, to where you were located, what time of the day, how much you spent in each page.”

Berenguer continued: “I always say that the best way to learn what people want is not by asking them, because people are very bad at telling you what they want.” The entrepreneur, who sold his social photo aggregator for $26.5 million in 2009, supported his statement this way: “If you asked any person, ‘If you had an extra hour a day, what would you do? Would you exercise? Would you read a book? Or would you be on Facebook?’ I guarantee you that nobody’s going to tell you that they will spend an hour a day on Facebook. [But] the reality is that most people don’t exercise or read. If you could measure that instead of just asking people, that is going to be much better.”

“Internet businesses have the advantage that you put something in the hands of customers and you measure how they use it and whether they use it or not. And then you learn based on data.”

Agents Not Dead

Berenguer, who presents a photo of a paper-cluttered agent’s office during a presentation about CoverWallet and uses adjectives like “frustrating” and “nontransparent” to describe the “analog” and “time-consuming” process he and co-founder Rashmi Melgiri are seeking to upend, said he’s still a believer in the need for humans to be involved in the process of selling insurance. In fact, he has the customer experience data to prove it.

“We have seen that when people talk to us, the probability of keeping that customer…is significantly higher than the ones that we never talk to,” he said, emphasizing that the CoverWallet platform is not just high-tech; it is also high-touch. As a buyer or shopper inputs information, the photo and contact information for a personal adviser pops up on every screen. “That element of advice or reassurance for the customer is very valuable,” he noted.

“That’s why insurance agents are not going to go away. What is going to go away are all the basic tasks that they do very manually that create costs for them but don’t add value to the customer. Actually, it reduces value because doing everything manually takes minutes and doing that with software is real-time,” he said, snapping his fingers.

In fact, the latest iteration of the direct-to-consumer platform that Berenguer and Melgiri started up plays right into that idea. In early December 2018, the InsurTech launched CoverWallet for Agents (https://agents.coverwallet.com/). The new platform brings independent agents into the quoting and binding process that CoverWallet.com accomplished previously with a combination of technology and about 70 licensed advisers directly employed on staff.

CoverWallet.com has grown to serve “tens of thousands” of delighted customers in two years, with more than 90 percent of those who have supplied a rating of the company giving positive reviews. And according to Berenguer, agents wanted in on the same simple and efficient way to access small business insurance quotes from multiple carriers—for coverages ranging from simple BOPs to more complicated directors and officers liability—and to ultimately bind policies “in real time.”

“Many agents came to us [asking], ‘Can I use this?'” he said, pointing out that a footer at the bottom of the existing CoverWallet.com direct-to-customer site includes a “Partner With Us” link through which interested potential partners could submit ideas about working with CoverWallet. “This was not for other agencies,” he said, envisioning that partner requests would come from carriers and providers of noninsurance services to small business. “But agents were completing this before we even had the [CoverWallet for Agents] product,” he said, scrolling through emails CoverWallet received with messages like, “We are a new startup insurance brokerage…looking for additional markets and would like to be appointed as one of your producers. Please advise on the procedure.”

Any of the half-million agents in 40,000 U.S. agencies can now sign up for a login and a password for CoverWallet for Agents as long as they are licensed, they sign an agreement with CoverWallet, and they have $1 million in E&O coverage. Once onboarded, the agents essentially act as subproducers of CoverWallet and get access to all the carriers that CoverWallet has on the platform, including the likes of Chubb, Starr, CNA, Travelers, Liberty Mutual and Hiscox, among others.

“They can get multiple quotes from one quick application, buy [coverage] online, full end-to-end experience, no cost for them, access to top carriers…Very simple,” said Berenguer, noting that if an agent sells a policy, CoverWallet gives him or her the majority of a highly competitive commission amount.

Taking CoverWallet for a Test Drive

“Everything in the insurance industry is full of PDFs, real paper documents going back and forth via email. It takes time to download, to upload them to another place, key in the information. [Here], all that is done digitally…We use software and machine learning to replace what humans do and then we put the humans [in the position] to only provide advice instead of doing things that don’t add value,” Berenguer said, summing up the concept that’s driven CoverWallet’s success to date.

“Very easily, you have a high-level picture” of the different types of policies available for this business and how much they might cost. “It doesn’t mean that is your price, but you know what other restaurants on your street are paying, so then you can decide whether to buy that policy or not.”

Going on to check off the GL coverage for free quotes prompted some more questions, many with prefilled answers, generating actual carrier quotes just over one minute later. Then, he selected a carrier and limits, answering a question about how he wanted to pay—in full or in monthly payments from a credit card—and the system returned a policy, certificate of insurance and proof of payment.

“It’s not like in the traditional insurance world, when you give the information to the broker, and the broker will send it to the carrier, and then maybe in three days you get the quote. This happens at the end of the process,” he said

The particular example presented the hypothetical shopper with three packages—described as silver, gold and platinum—all from just one carrier, Starr. The precious metal distinctions come from CoverWallet, giving a shorthand way of highlighting the tradeoffs between the most expensive high-limits products and cheaper products offering less coverage. According to Berenguer, other locations and classes would typically generate choices from two or three carriers, but probably not more than that.

While CoverWallet has relationships with at least a dozen carriers, “we don’t want to be a price comparison site of 10 different quotes for 10 different carriers because there are so many nuances” of what each one includes in terms of coverage. While the package summaries include some details of what’s included or excluded, “it’s all a little bit overwhelming,” he said, noting that working with solid “A”-rated carriers puts CoverWallet in the position to help customers. “As long as they trust that these carriers provide good coverage, we hope that the customers buy from us,” he said.

Berenguer pointed out that a photo of the face of one of CoverWallet’s advisers along with his phone number appeared next to the package summaries, giving the customer an often-needed human to help guide the decision between even a more manageable set of choices. Clicking on the name of a coverage or a carrier at various parts of the education, quote or buy process provides more online help as well. For coverage, easy-to-understand narratives answer the questions, “What does it cover?” and “When do you have to have it?” (with slightly different answers for different carriers). For each carrier, customers will see answers to questions like, “Is Hiscox for my business?” and “How does Travelers compare?”—with two or three sentence summary answers.

Carriers Jump on Board

CoverWallet for Agents isn’t the only customized offshoot of the original CoverWallet.com site, Berenguer confirmed, noting that when Zurich started thinking about creating a direct-to-consumer platform, the commercial lines giant turned to CoverWallet. Launched in February 2018, the co-branded platform is “ZurichEmpresas.es Powered by CoverWallet.”

“If you go to Latin America, if you go to Singapore, if you go to Japan, if you go to Germany, if you go to the U.K. and you need to buy insurance, it’s as painful as in the U.S.,” Berenguer said. What if a smaller regional carrier in the U.S., with fewer resources than Zurich, wanted CoverWallet to do the heavy lifting on a similar platform?

“We’re pretty open to these conversations,” Berenguer said. “We talk to every carrier—even the ones that we don’t do business with yet or never,” he said, noting that informal meetings offer opportunities to get feedback. “What do they like? What are their concerns? What are their plans for the future?” Berenguer noted that innovative insurance companies from China have brainstormed with him in the New York office.

Back in the U.S., CoverWallet has already done a co-branded solution with The Hanover. Like CoverWallet for Agents, “Hanover Powered by CoverWallet” is a B2B platform, but in this case it’s specifically designed for the agents of the Massachusetts-based carrier to access The Hanover through CoverWallet.

In between the May 2018 Hanover launch and the broader December launch for any independent agent, CoverWallet unveiled what it said was the first API (application programming interface) for commercial insurance in June, allowing noninsurance small business service providers—such as real estate companies, financial institutions, payroll service providers, lenders and accounting software providers—to directly and easily integrate insurance services into their websites and apps.

In September, CoverWallet also launched a separate D2C initiative called CoverStartups to provide high-growth companies—from Seed and Series A to Series B and beyond—with dedicated resources to help them get the insurance coverage they need in minutes, including D&O insurance, typically required by investors, which might otherwise take weeks to secure.

“Everything is in language targeting startups, but the underlying technology platform is the same” as CoverWallet.com, Berenguer said. “You need people who are used to speaking to startups,” he added, noting that members of the special team of advisers and developers for CoverStartups know, for example, that the next Facebook might be a company without revenues—a problem for a typical D&O underwriter that isn’t a startup specialist.

Berenguer said that tech startups feel comfortable buying products from other tech startups, noting that CoverWallet generally operates in two categories of the small business market: micro freelancers and contractors, and small companies with anywhere from 20 to 200 employees. Word-of-mouth referrals and exceptional content marketing bring both sets of customers to the sites, he said, stressing the educational part of the company’s three-part mission to help small business owners understand, buy and manage insurance. (Editor’s Note: The “manage” part, or “Wallet,” allowing small businesses to consolidate and access insurance documents in one place, is free to customers who buy insurance from CoverWallet and also available for an annual fee of $99 per year to those who don’t. Dedicated concierge-like service, unlimited certificates online and notification of upcoming policy expirations are part of the “Wallet” package but few customers just buy the Wallet without buying coverage, Berenguer said.)

“Imagine that you’re opening a restaurant and you’re told that you need to buy liquor liability insurance,” Berenguer said. While typing liquor liability insurance in Google, you see a CoverWallet link emerge at the top of the page with a click on the search. “We have generated hundreds and hundreds of content pages that give the answer to what people are asking,” he said, explaining that when business owners need to buy insurance, they go online even before talking to a local broker. Maybe they don’t trust that the broker won’t sell them something they don’t need, or maybe they just need a little education about the various coverages.

Asked why carriers haven’t made the same strides that CoverWallet has on their own, even though some ventured into online sales of small business insurance more than a decade ago, Berenguer doesn’t automatically highlight his company’s expertise in design and technology, noting instead that times have changed since those initial carrier forays online.

“As time goes by, there’s more data about properties and about businesses online, and you can detect fraud much easier. Fifteen years ago, there was a little bit of adverse selection on the Internet. So, most people that used to buy online 15 years ago, during the Internet waves of the late 90s and early 2000s, were cheap people—not the type of customers that you want to attract.

Somewhere in the mid-to-late 2000s “that changed, and people started perceiving the Internet as more for convenience—simpler, better, faster, not necessarily cheaper.” In fact, a lot of very well-known online businesses charge more for that convenience, he said, pointing to Ticketmaster transaction fees. “You can buy tickets at midnight or on the weekends from your cellphone, whatever you want…It’s not cheaper because the experience is so much better, so much more delightful and easy.