I am excited to announce that together with Rashmi Melgiri, I am starting a new company, CoverWallet. An online insurance company optimized for today’s busy business owner. We started working together full time 4 months ago and recently incorporated. I’ll need another post to write about the 90hrs of class time required to become an licensed insurance agent.
Why insurance? a personal pain point
1. Personal pain point
The best way to come up with a business idea is to solve a personal pain point, especially one others have too. In my case, there are 2 things I hated in my previous companies: managing finances/taxes, and managing my insurance (i.e., buying it, understanding it, using it). I still remember that when Pixable was going to be acquired, the due diligence required getting “D&O” insurance. Of course I didn’t know what it was, but more frustrating, I didn’t know how to get it. We contacted a brick & mortar broker who made us fill (with pen and paper), scan and fax multiple questionnaires. The process took 2 weeks, delayed the diligence, and more importantly, focused our attention to something that should have been solved in less than an hour. The whole thing was inefficient and frustrating despite being an expensive product.
I was shocked that buying insurance was so behind the times.
2. Huge market ready to be disrupted
At the beginning of 2015, I read a report saying that insurance for small businesses (i.e., commercial property, general liability for companies like restaurants) is a $100B/year market in the US. How is it possible that such a big market is still using workflows from the 90s when other professional services that are apparently more complicated have already moved online?
Since then, I have interviewed dozens of people, from business owners to insurance experts. Some people tell me that this could be a huge opportunity, worth trying for the next few years of my life. Some other told me that insurance is still a high touch model and people want a face-to-face interaction with a broker. But if this was the only concern, then it is easy to overcome with an online model that feels as high touch as the offline (in addition to more efficient, automated, and simple). Ten years ago a lot of people said that online banking, online legal, online accounting, online HR, online medicine or even online private wealth management would not work. They were wrong. The efficiencies you build with online models automating time consuming offline workflows can be transferred to customers in the form of better customer service and convenience. And commercial insurance is the last (and huge) frontier to be changed. That’s where CoverWallet comes in.
At Coverwallet we’re high-tech, but we’re high-touch too. You can talk to us as much or as little as you want. We just want to help you get what you need at the right price, and give you the reassurance that you got the right coverage for your business. Our agents will be there for you going forward, when you need to modify policies, file a claim, etc. Everything insurance for your business in one place.
3. Important protection for a business
Some time ago I thought insurance was a rip off, but after learning more, I now know how important it is.
Life is full of surprises: some good, some bad. Bad things happen to businesses: a fire, a lawsuit from an employee, a tornado, an accident involving a customer or an employee, a defective product, a cyberhack, etc. Some insurance types are mandated by the state (e.g., workers comp) or by contracts. Businesses will often buy those policies to comply, but not invest in the other types of insurance that they really need to protect themselves. Once at Pixable, we had a lawsuit and we were fortunate enough to have coverage for legal costs and settlements through our insurance policies (it was dozens of thousands of dollars). The lawsuit was a surprise and thank goodness we had thought ahead and had a policy that protected us from huge expenses.
Knowing the type of risk your business is exposed to and what type of insurance coverage you need is the first step. CoverWallet will make that education process easy and intuitive for business owners, and then get them covered at affordable rates.
Why with Rashmi? a trustworthy, practical, smart, and hard-working friend
After two startups in my backpack, I know how brutally hard startups are. In the past, I was lucky to have cofounders I trusted and were as committed as I was. As cofounders, I want to work with people I could spend many hours with, enjoy the highs with and get support from during the lows. Rashmi is definitely that person. She is one of the smartest people I know, a good friend and I can trust her. But in addition, she is a hard worker, she is curious, and she is very practical. When reinventing a traditional industry such as insurance, and relying on multiple players and partners, common sense and practicality are paramount. She has great people skills, and can also have a take-no-prisoner attitude when needed. Finally, she is an excellent leader, and is the person that I always thought would be a great cofounder for my next startup.
Our vision is clear. We want to simplify the way small businesses buy and manage their insurance. Stay tuned.