The success of insurtech is no accident

Read more: Pie Insurance expands into two new countries

Insurance Business spoke with Dax Craig (pictured), co-founder and President of Pie Insurance, to explore the company’s growth and how it has fared in the face of the pandemic. We also ask Craig about his thoughts on the insurtech front.

You have established several businesses in the areas of insurance and technology. How did you come up with the idea for Pie Insurance?

Prior to founding Pie Insurance in 2017, I was the founder and CEO of Valen Analytics, a provider of data and analytics for carriers and casualty. At the time, I was getting really frustrated because our insurance carrier customers weren’t buying and using Valen’s predictive analytics as much as they wanted. Instead of fighting an uphill battle to convince these carriers to use our solutions correctly, I had the idea to create my own insurance company that would integrate data and analytics into its core.

Marketing is in my blood so starting an insurance company from scratch was inspiring and exciting. In 2016 I teamed up with John Swigart, co-founder of Pie and an Esurance veteran, and we became very involved in building Pie.

From the beginning, Pie was designed to serve small businesses. We saw a gap in the insurance market that left small businesses overlooked and overcharged by insurance companies, often up to 30 percent. We knew we could do well with small business owners and had the pricing algorithms and data needed to support our mission of empowering small businesses to succeed by making insurance affordable and easy as pie.

Pie is a company I have always wanted to create. In more than five years, we have experienced incredible growth. This is a testament to the need we fill in small business owners’ need for accurate pricing and easy-to-find insurance. To date, our employee benefits are available to small business owners in 38 states and Washington D.C. Additionally, we’ve raised over $300 million in revenue, employed over 400 team members (we call them Pie-oneers), and raised over $300 million in revenue. million a year.

What challenges do you think the insurtech sector is currently facing?

First of all, it is important to acknowledge that building an insurtech company is complex and difficult. Pie has entered an industry that has been around for over 600 years so building loyalty and market share for long-term success is not something that happens overnight.

With that said, recently we have seen insurtechs being challenged in the public markets, which has raised doubts among the viability of insurtechs. For me, it’s because many of these early insurtechs, we call them Insurtech 1.0, are focused on growing quickly and building early technology insurance companies. This strategy came about because of the good financial resources and good interest rate that should drive a sustainable insurance company.

At the end of the day, we are an insurance company and we need to provide insurance business metrics such as loss ratio, customer acquisition cost, and retention rates to ensure we can have long-term profitability.

I believe we will continue to see a shift in thinking about insurtech as the next wave of Insurtech 2.0 companies like Pie continue to show how we use technology to drive sustainable and profitable growth. .

Where do you see growth opportunities for Pie Insurance? What do you hope Pie Insurance will look like in five years?

In five years and beyond, I expect Pie to become a household name. We truly believe in our work and our goal is to be the first choice for small businesses when it comes to purchasing insurance. Looking at how far Pie has come, and how much we’ve achieved in just five years, the opportunities ahead of us are huge.

In the short term, what we offer to our first-time employees remains a priority as we continue to gain market share and use our low prices to save US small business owners up to 30 percent on their results. We are also exploring other business opportunities and hope to announce our next line soon.

Another key area of ​​growth that we will be working on is our approach to becoming a full-service carrier. Until now, we have been operating as an MGA, but from the beginning our approach has been to improve the entire experience of our customers – from reviews to referrals. Our first step was to acquire our first carrier last year, Pie Casualty Insurance Company, and we hope to begin writing policies for our insurance companies soon.

We also look forward to continuing to expand our distribution and continue to meet our small business owners where they are – either directly, through a trusted insurance agent, or through their payment providers. This year alone we have launched integrations with three leading marketing platforms, Bold Penguin, Tarmika and Talage, and have created flexible pay-as-you-go offerings.

Pie has been growing for a short time and we look forward to continuing to grow and provide value to our small business customers and the agents that serve them.

What are the biggest gaps in insurance that you have created Pie Insurance to fill?

As I said, small businesses have been overcharged and underserved for years by insurance companies. This is why we built Pie. Most reputable commercial insurance companies rely on a time-consuming process where underwriters purchase each policy. This complex approach means that incumbent insurers ignore small businesses entirely or often lump them in with other large businesses and charge them more than they need to pay for the work they do.

Instead of pricing individually as traditional insurers do, Pie uses advanced technology to price multiple policies on a larger scale. As a result, Pie is able to provide automated decisions on 73 percent of class codes, freeing up our writers to spend more of their time analyzing complex cases. This means we can support more regulation, and quickly deliver value to small businesses.

Pie’s first customer, the owner of a small concrete placement business, is a great example of the gap we fill. This customer came to Pie for a quote because, despite having no claim, he was dropped by his previous insurance when they decided he would not benefit from service plans that cost less than $10,000 a year. Thanks to Pie’s pricing technology, Pie was able to offer him a policy that was 30 percent cheaper than his previous insurance and four years later, he has had no action and has been steadily growing his business with Pie.

Although lines of insurance, such as home or auto, have benefited over the years from data-driven pricing and artificial intelligence technologies, the small business market still has significant opportunities for disruption. Pie is leading the way and filling a critical gap in commercial insurance to benefit the backbone of America’s economy – small businesses.