The Unfortunate Economics of Small Business InsuranceThe idea for Talage came nearly five years ago when our CEO, Adam Kiefer, was working as the Western Sales Manager for Workers’ Comp insurance provider, EMPLOYERS (who we love and work with to this day). It was there on the front line of Workers’ Comp that he noticed a trend that made him uncomfortable - across the nation, small businesses couldn’t get the attention they deserved.
The tricky thing? These agents and carriers weren’t bad people, negligent workers, or any bit malicious. But, the simple economics of working with small businesses made it a challenge to give them a high priority. Think about it from a business perspective - the commission on a small business’ insurance policy is so limited (often under $100) that spending hours, days or sometimes weeks to gather quotes and then subsequently service the business just didn’t make it worth it. So small businesses would often be provided just a single quote or simply ignored. It was a lose-lose situation for all parties involved.
How Can We Help?The following year, Adam brought the problem to his talented lifelong friend, Matt Donovan, to help craft a solution. They met and discussed it constantly, pitching each other business plans and filling countless wastepaper bins with balled-up plans that weren’t quite right. They toiled to get the solution and the structure just right - something that would put the power back in the hands of America’s small business owners. They came to realize that underwriting wasn’t really the problem, it was distribution and the ability to compare actual quotes in real time. They developed the business idea for Talage and took it on the road.
Turning the Dream Into RealityThe first carrier to get on board was EMPLOYERS - they believed in the plan and the experience that Adam and Matt brought to the table. They knew this solution could not only help small businesses, but help to empower agents and give agents the tools to help their small business clients. Then the Talage team expanded by bringing Zachary Draper on board to build the website you see today that allows businesses to buy insurance online. The magic in Talage’s sauce comes in the form of directly connecting to carriers’ underwriting systems via API (application programming interface- think of it as a translator between two computer programs that allows them to communicate without human intervention). That being said, carriers generally did not have APIs in place yet, but you’ll find in the insurance industry that sometimes the idea has to take action way before the technology arrives. This made Zachary’s job a little more challenging than he expected - but also a lot more fun!
It’s Working!In 2016, Talage rolled out the first version of the online interface you use today and we sold our first policy to Security, Etc. - a 2nd generation family-owned company, which has been helping homes and businesses of the greater San Francisco Bay Area with their security technology for the past 30 years.
The second policy sold shortly thereafter. Then another. Then another. We were quickly finding out that small businesses really did want an online solution that made it easy for them to shop for insurance, compare real quotes, and then even bind a policy immediately. Sure, maybe not rocket science that businesses love saving time and money, but we were excited to see that what we built was actually working and actually helping small businesses.
Why had nobody thought of this before? Timing is everything. It’s not that nobody had ever thought of it, it was that never before did the alignment of carrier technology, agents’ interests, and business buying preferences match up so well. And, again, sometimes in the insurance industry (which is hundreds of years old) there isn’t a lot of pressure to innovate unless the industry is really being hurt or threatened. Heck, this industry’s core DNA is all about avoiding risk - and innovation is risky. Unfortunately, the ones being hurt in the current environment were small businesses.
We’re grateful to have been able to partner with the powerhouses in the business insurance industry to help them lead the change. What’s great is our innovation doesn’t threaten anybody’s livelihood - it enables the rare win-win-win scenario for carriers, agents, and small businesses alike.
The Saga ContinuesSo where does Talage, and commercial insurance, go from here? We’ll try to keep it spoiler free, but the short answer is that we are continuing on our mission to make its easier for businesses to buy insurance. Small business is the heartbeat of this country, and it’s in all of our interests to make sure small business keeps moving forward and growing.
We’re partnering with the greatest insurance companies on the planet and we’re finding new ways everyday to reach small businesses where they are. There are really exciting things happening in the fields of data analytics that will allow us to better understand and even predict how small businesses operate. This will allow for smoother application processes and more accurate pricing.
We’re proud of trimming the insurance buying process from days or weeks to less than 10 minutes (on average), but we aren’t done yet. What if we could accurately understand your business using public data and the only thing on the application was just your address? The insurance buying process could be trimmed to under a minute.
And this isn’t something we’re keeping for ourselves. We believe everyone should be able to buy insurance this way, so we believe more people need to be able to offer it this way. Look for exciting announcements in the coming months about how Talage is bridging the gap for small businesses, no matter where you are and no matter who you buy insurance from. The insurance buying experience is going to look a lot different in the next few years, but it’s going to be a lot better- for everyone.