Insurance is a must-have for any business, whether it be a startup or a well-established company. Some types of insurance are required by law. Others, well they help ensure that your business is safe.
In fact, according to Business Insurance USA, 56% of startups fail within the first four years due to circumstances that could have been avoided if the companies had had insurance.
If you employ even one person, then by law, you need to have Worker’s Compensation Insurance. Other types of insurance required by startups include
- General Liability Insurance
- Property Insurance
- Product Liability Insurance
- Commercial Property Insurance
- Home-Based Business Insurance
- Directors’ and Officers’ Insurance
- Life Insurance
- Business Income Insurance and
- Unemployment Insurance
This is nowhere near a complete list of the types of insurance you might need for your new business.
Typically, you would need to log onto a website, compare different types of insurance policies, see which one will suit your best; then find an insurance agent to discuss the whole deal with. A hugely cumbersome process and an expensive one too.
If you are interested in learning more about what kinds of insurance would work for a startup, a good website to visit is Business Insurance USA.
This is a government agency that helps small businesses set up and also gives counseling on how to protect your business.
Another one that gives good insights into the insurance world is “The Business Owner’s Playbook” (from The Hartford Financial Services Group, a 207-year-old US-based investment, and insurance company, considered one of the most ethical companies in the world).
The challenge that a lot of startups face is that traditional insurance companies simply say no to such small ventures. If a startup does manage to get insurance, it is not tailored to their needs.
And getting multiple types of insurance to cover all that you need can end up being way too expensive. Sadly, less than 10% of the small business market is covered by the insurance companies.
InsurTechstartups are now beginning to plug a lot of the gaps left by the more traditional companies. “insurance” is basically a new sub-industry of the insurance sector that emerged around 2011 when entrepreneurs realized there was a lot that could be done to make insurance much more customer friendly.
One example of how startups are making a difference in the industry is Next Insurance, which offers customized insurance solutions to their customers.
Rather than offer general insurance products (such as those mentioned above), these companies tailor their offerings as required by the profession.
The startup began its offerings by targeting physical trainers specifically. Rather than selling regular startup level insurance, this company sells insurance according to a profession.
Currently, this company can offer fitness insurance online (personal, yoga, dance and golf instructors), in-home schools and daycare centers, photographers, and contractors (such as carpenters, electricians, handymen, etc.).
This company, like many other InsurTechstartups, has used technology to make life much easier. Next Insurance offers an online platform where customers can get really straightforward, cost-effective insurance for their specific business needs and they don’t need to wait for it.
The company has been so successful that giants like American Express, Munich Re, Markel, and Nationwide have invested in this startup.
The InsurTech sub-industry is now changing the way the insurance industry works as customers are looking for more customized and easier solutions for their insurance needs.
While some of the old giants struggle with the more nimble new insurance startups, others are updating their offerings to adapt to the fast-changing environment.