BI Innovation Coming Soon: Low-Limit Policies from Insurtech Thimble
See a need and then fill it. That’s the secret of most successful businesses — and that was the driving motivator of insurtech Thimble, which is currently working on coverage for small business customers during business interruptions.
Jay Bregman, co-founder of the New York City-based company, is accustomed to filling gaps in the marketplace, having transformed a company that started with a singular focus on serving the needs of a narrow market — drone operators — into one serving the liability insurance needs of small businesses.
Now focused on business interruptions and the problems of small business owners during pandemic lockdowns, the new policy on the drawing board could be a first line of defense for shuttered businesses, to tide them over until they get help from the government, Bregman said in an interview with Carrier Management. He explained that the BI policy, like the drone cover and liability offerings that preceded it, would deliver low-limit insurance through a simple application process.
Keeping it simple is key to the insurtech’s success, he suggested.
From Drones to Small Business
As a drone pilot himself, Bregman started the company when he realized that the people who hired drones — such as the CNNs of the world and big real estate brokers — wanted to see pilots covered by aviation insurance on top of normal business insurance because such liability is excluded from general liability policies.
These drone operators were forced to go to aviation brokers, to try to buy annual policies for a job that might last a day, he said.
“As a result, we created the world’s first episodic, admitted liability insurance filing and got it approved in all 50 states.”
Operating as a managing general agent, Thimble’s aviation liability or drone capacity is provided by Global Aerospace Inc.
“People can buy the drone coverage straight from their iPhone at the job site and then immediately show it to their client. It has been really popular.”
Bregman and his co-founder, Eugene Hertz, saw a need and they filled it — and the product was a success. The company was launched in 2016 as Verifly and was renamed as Thimble in 2019.
And that success begat new ideas and more successes.
Bregman explained by saying that “a lot of these drone pilots were not actually full-time drone pilots. They were photographers; they were contractors; they were real estate brokers. And so, they asked us if we could do different kinds of insurance,” Bregman said. Thimble created a new version of a general liability policy for small businesses, creating on-demand cover with a duration of an hour to a year — with Markel enlisted to provide the capacity.
“We’ve been gradually increasing the number and the breadth of small businesses and the types of small businesses that we sell to,” said Bregman. The company’s small-business customers include workers such as carpenters, freelancers, handymen, hair and beauty professionals, landscapers, personal trainers, photographers and pet sitters. More than 200 professions are covered.
Thimble started with one particular type of insurance to address one very defined problem, “and we’ve built a good business on top of that. Now we’re insuring hundreds of different types of businesses, lots of different lines of business, with all the complexities that that entails,” noted Bregman.
Thimble’s website reveals that 75% of its customers never had business insurance before Thimble. Additionally, 40% of new customers in 2020 formed their business in 2020, Bregman said. The company is filling a need.
“Our secret sauce is we’re selling these policies on all kinds of different time frames. We can afford to charge a little bit more for the same amount of time, but the customer is very willing to pay it because of the convenience and the lower overall cost of ownership of the policy on an asset that’s assessed,” he continued.
“Basically, with just three questions, we can provide a policy that includes all of the things that our customers [need], and that’s why they love it. They love it because it’s simple.”
The simplicity of the three questions — What ZIP code are you in? What do you do? How long do you want the policy for? — is the big difference between Thimble and traditional insurers, which can require answers to 20 to 50 questions before they’ll provide a policy, he explained.
Thimble also has developed a policy with a duration of one month, which can be extended monthly, depending on customer needs. “It has the best features of annual policies in that it’s continuous. If you want to keep working with it, you don’t have to worry about it. But you can do cool things, such as pausing the coverage,” which Bregman said has been especially handy during the COVID-19 lockdowns.
“This coverage looks a lot more like a Netflix interface, where it’s very easy to get going. You answer just three questions to play. You can modify it. If you want to add things to the policy, that’s no problem. It all can be done instantly on the app or on the web,” he said.
What people really love about the policy is they’re not committing more than a month at a time because they don’t know what could happen with their businesses beyond that time frame, he said.
“We’ve built a very good business on this product, and we’re just getting started.”
The company recently rolled out a product that includes general liability, professional liability, inland marine and also care, custody and control, which can be purchased as an annual policy by businesses of between one and 10 employees.
For example, this type of policy could be good for pressure window washers, who need general liability cover as well as cover for care, custody and control, which pays a claim if the window they’re working on breaks. In addition, Thimble provides business equipment protection in case of damage or theft.
“Pressure washers actually have been doing great during COVID. If anything, people want more windows washed than they ever did,” he affirmed.
Products in the Pipeline
And what’s in the pipeline for Thimble? Bregman said he is developing a low-limit business interruption policy for small companies because a lot of customers approached Thimble with worries that their businesses might be shut down again. He currently is working with the Lloyd’s market’s innovation accelerator, Lloyd’s Lab, as well as the New York Department of Financial Services to develop the product.
‘When you start breaking down the time increments and the limits to very low, discrete amounts, you can do very interesting things — things that people have never thought about before.’
Once again, the product looks at using time, which Bregman described as the “biggest vector that matters.”
“When you start breaking down the time increments and the limits to very low amounts, very discrete amounts, you can do very interesting things — things that people have never thought about before,” he said.
“There are so many different things that can happen differently if you can pay someone quickly and parametrically,” Bregman said. “And so we asked, ‘How do we get rid of the claims process?’ Well, it’s very simple. We’ll sell very low limits. Instead of selling them $1 million dollars or $2 million worth of business interruption limits, we’ll sell $1,000 to $5,000.”
In this case, it would be an annual policy. “So, you pay the premium — the premium is based on what type of business you are, where you are and how likely it is that your business could be shut down. It would cover any second wave of COVID and any other pathogen.”
The policy would pay out the entire coverage amount as soon as there is a government shutdown in the nominated coverage area, “which is an objectively verifiable trigger event,” he said.
“If you bought a $1,000 policy and paid your premium on it, you’ll get $1,000. If you bought a $5,000 policy, we’ll pay you $5,000 and we’ll pay you a couple of days after the shutdown happens.”
While he described the policy as a gap filler to tide businesses over until they get help from the government, he also said that capacity levels could be increased once capacity providers are identified.
Bregman said Lloyd’s is intrigued by the idea, “and we’re working with them to link us up with the right capacity.”
Thimble also is working with the New York regulator, which has initiated a program to fast-track COVID-19 solutions developed by insurers and other financial institutions. “We submitted one of the first applications for this program. They’re very engaged and want to launch this in New York as quickly as possible.”
Bregman’s theory is that this new policy could be a true differentiator for Thimble in the marketplace. Also in Thimble’s product pipeline are business insurance coverages such as liability, property and workers’ compensation, which are tentatively planned for release in 2021.
When asked if the insurtech is an insurance industry disrupter, Bregman affirmed that Thimble is absolutely a market disruptor. “From a customer perspective, what we’re doing is incredibly disruptive. Why? Because customers go to [other insurers] where they’re asked 45 or 50 questions and they give up. They come to us and they get three questions. They get their insurance, they go and get a job with that insurance, and then they write a great review.”
He said that the company’s net promoter score (NPS) is 82, which is on par with companies like Apple, while “the average NPS for an insurance broker in America is 17.”
Thimble’s string of business successes in turn has attracted investors, such as IAC, the media and Internet holding company that includes consumer brands such as Vimeo, Dotdash and Angie’s List. IAC led a $22 million funding round for Thimble in October 2019 along with existing investors AXA Venture Partners, Open Ocean and Slow Ventures. Thimble has raised a total of $28.9 million in funding over three rounds, starting in 2016.
Note: This article first was published on Jan. 8 by Insurance Journal’s sister publication, Carrier Management. The article has been updated with new developments for the company.