PIA Members Tim Clements and Ross Henry
Weigh In
on Louisiana Comp Blog Discussion About Pie Insurance
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.