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A small business owner sits down after a long day to buy workers compensation coverage online. It’s 11:00 p.m. on a Tuesday, or maybe it’s a Sunday evening. Either way, it isn’t within normal business hours when she finally finds time to get the task crossed off her to-do list.

Executive Summary

Pie Insurance is meeting small business owners on their own time, with workers compensation insurance quotes available online when agents aren’t—in some cases providing access to affordable comp coverage for the first time and making the process easy to understand. CEO John Swigart explains why small commercial is a perfect target for InsurTechs.

She’s accustomed to shopping online for household items, clothing and car insurance, so she expects her workers comp purchase to be a straightforward online transaction. While the lack of a digital insurance experience may be the norm for some, Gen Xers and millennials are expected to own 60 percent of small businesses by 2020 (according to estimates by Morgan Stanley and BCG estimates published in 2016).

When this demographic searches for business insurance quotes, they will turn to the Internet or other digital applications rather than the antiquated processes offered by traditional insurance companies.

Therefore, it’s not surprising that InsurTechs are increasingly becoming a premier choice for small business owners looking for the same quick and efficient customer interactions that have become the norm in other industries. Willis Towers Watson has reported that up to 25 percent of total small business insurance premiums will be digitally underwritten, as members of these generations prefer digital purchases and self-service over face-to-face and telephone interactions. This preference for digital underscores an immense growth opportunity in the small commercial market, where no single insurer has more than 4 percent market share, according to Accenture (“Winning the Hearts and Minds of Small Business Insurance Buyers,” 2018).

Incumbent insurance tends to have an edge when it comes to more complex lines of insurance, but technology and the desire for better customer experience make small commercial the single best target for InsurTech growth.

Secrets of Success

Pie Insurance is on a mission to make workers compensation less expensive, simpler and more transparent—easy as pie. Founded in 2017 as an MGA, Pie operates with the backing of Sirius Group in nine states. The company attributes its rapid success to these factors:

  • Meeting small business owners where they are—online at home or on the go.
  • Dropping the jargon and the buzzwords, with coverage explanations written in clear, simple language.
  • Recognizing that no business is too small.
  • Lowering premiums by using analytics and a segmented pricing model specific to size and type of business.
  • Flexible billing.

As we’ve learned at Pie Insurance, InsurTechs must look at strengths and weaknesses in the industry as well as consumer behavior to fully understand how to better serve a new generation of small businesses. Here are three frustrations small businesses encounter and how a superior insurance experience can be built to address their concerns:

Frustration 1: Insurance Purchasing Is Constrained to Regular Business Hours

Business moves quickly, and small businesses are no stranger to this rapid pace where every minute is either interrupted or planned. The traditional operations of insurers and agents have become a pain point for business owners who are used to online pricing and buying experiences.

This expectation opens an incredible opportunity for Pie and other InsurTechs because our digital businesses allow insurance quotes to be delivered over the weekend or late into the night when insurers and agents aren’t available. Here, small business owners get quotes and buy workers comp insurance on their own time. Pie Insurance meets small business owners where they are—online at home or on the go—75 percent through mobile, 67 percent outside business hours and 80 percent on social.

Frustration 2: Lack of Transparency About Insurance

New small business owners are not magically commercial insurance experts overnight. The traditional process of purchasing insurance is littered with buzzwords and diverse package options that can be confusing and overwhelming. This experience is similar to the apprehension felt when there are too many options or obscure ingredients on a restaurant menu.

To improve the experience for purchasers, insurers need to offer jargon-free workers comp and make it clear and comprehensible to small business owners what their coverage is, what the protection affords them, and how their insurance benefits them and their employees. A main focus of Pie is to provide business owners with clear and simple language in a straightforward online application so that they can receive easy-to-understand quotes within minutes.

Frustration 3: Higher Prices Due to More General Pricing Models

Historically, SMBs have been underserved in the insurance market. Our data indicates that 80 percent of small businesses are overcharged by up to 30 percent. In some cases, insurers overlook small businesses (those with 500 or fewer employees) and deny them the option of receiving workers comp coverage because they’re considered too small and imply a correspondingly small commission for agents.

Recently, a client of ours working in construction for 26 years with a $75,000 payroll was nonrenewed because of its size. Situations like this reveal traditional types of pricing models as inefficient and opaque. However, this market segment provides significant opportunities for InsurTechs that aren’t beholden to the agent-carrier sales model. Businesses with fewer than 20 workers account for an incredible 89 percent of all small businesses, according to the United States Census Bureau (Annual Survey of Entrepreneurs (ASE)—Company Summary: 2016 Tables by Sector, Gender, Ethnicity, Race, Veteran Status, and Employment Size of Firm).

Did You Know?

By 2020, 60% of small businesses in the United States will be owned by millennials and Gen Xers.

Industry research suggests that up to 25% of total small business insurance premiums could be digitally underwritten by 2020.


The solution to these problems begins with a custom, segmented pricing model for small businesses. The use of predictive analytics allows us to gain further insights into workers comp-specific claims and premiums for better algorithmic pricing in niche market segments such as construction, plumbing or retail. Our model enables us to confidently and quickly offer a high volume of these policies that other insurers won’t. Now, small business owners have access to insurance quotes that are specific to their business size and type with fair pricing.

Flexibility in billing is also important. Customers should be able to pay as they go using credit cards rather than the annual upfront fee, which is typically done by check. Something as simple as accessible billing speaks volumes to a small business that appreciates an insurer’s mindfulness of potential cash flow issues that can arise.

Building our business model around these main customer frustrations has helped Pie establish a strong inbound customer base in the nine states in which we operate. We strive to help small businesses by meeting them on their own terms, facilitated by advanced analytics, with front-end and back-end technology to help us achieve this goal.

Workers comp is the first commercial line to see InsurTechs disrupting the agent-carrier model, but it certainly won’t be the last.