I've been really drilling down on the insurtech industry for the past couple months here on the podcast. And it's interesting: some of the firms I've interviewed have focused on bringing insurance into the Internet era and just making it work better and smoother. Other firms have designed a new whole new type of insurance into being that just didn't exist before.
Bunker kind of does both. As our economy continues to shift towards short term projects and gigs, freelancers have been left behind. Big companies still require them to carry outdated and expensive insurance when they contract with them. Bunker has created a better type of business insurance for contract workers.
Bunker's CEO Chad Nitschke is my guest today on the Tearsheet podcast.
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The following excerpts were edited for clarity.
What is Bunker?
Bunker is a platform for small business insurance and what makes us unique is that we embed this insurance directly into the contracting process. So, we have an acute focus on the gig economy by removing insurance as a barrier.
Why do freelancers need insurance?
The most common reason is that their client requires them to. It's ultimately a contract requirement. We spent a lot of time studying this and we found that freelancers aren't solving an insurance problem -- they're solving a get to work problem and insurance is just a barrier to do that. This includes general and professional liability and all kinds of insurance required by different enterprises they work with.
A lot of organizations treat the freelancer like another big company or just another vendor they work with. We see it all the time that there are just really high limits of insurance required. Or coverages like crime insurance are required, regardless of whether or not there is exposure. Companies haven't evolved correlating the exposure of the project a freelancers is working on with the insurance they require.
What are the challenges freelancers face in getting insurance?
We don't think the insurance industry has kept up with the pace of change for the future of work. Insurance policies were created for brick and mortar businesses and not freelancers working on projects. Insurance isn't tailored for individuals.
I have a favorite story I like to share on this topic: When we were first getting starting at Bunker, we spoke to an insurance executive. He told us that he has all these 'bad' customers -- people who buy a policy for a few months, cancel it, and then come back a few months later requesting the same insurance. They're just bad customers, he told us. We thought this was really interesting because he suggested a 'bad' customer (probably a freelancer) was a person who probably just wanted insurance for a project. The problem was the insurance company didn't have a product that customer wanted, so it was kind of a product-market fit problem. The freelancer was solving for it in an inefficient way. We see this 'bad customer' as an opportunity.
Why embed insurance in the contracting piece?
We spent a lot of time testing to see what the right approach was to solve this problem. Had we not done that, we probably would have just built a standalone insurer. One of the prototypes we built had a feature that basically streamlined the process when insurance was required by contract. The feedback we heard repeatedly was that people liked this one little feature. We decided if we were going to try and solve this problem, we should focus on solving the root cause of the problem which was this contract-related insurance problem.