Workers’ Compensation Insurtech Pie Insurance Starts Selling in 4 States

Digital agency Pie Insurance said it is ready to start selling its workers’ compensation policies in four states this month, with a goal of operating in as many as 20 states by the end of 2018.

The startup that claims most small firms overpay for workers’ compensation will start selling in Illinois, Georgia, Tennessee and Arizona this month. That’s more states than Pie co-founder and CEO John Swigart originally thought would be possible, according to an e-mail he sent to “Pie watchers” with the news.

“This was an audacious goal we set when we established the company in May 2017: stand up an entire insurance operation in less than 12 months. We did it and I couldn’t be more proud of the team,” Swigart wrote. “We had expected to only be selling in one state at launch; however, we have four states with regulatory approval…and will be selling our first policies [in] each of those states during March.”

Swigart believes Pie will be expanding rapidly, having already submitted four additional filings to state regulators for approval and having other filings in the pipeline. Pie predicts it will hit 60-70 percent of the market by expanding to 15 to 20 states.

Last October Pie closed a $4.3 million seed round of funding. Investors include Sirius Group, a global specialty insurer and reinsurer; Moxley Holdings, an early stage venture capital firm for data-enabled businesses; and Elefund, an early stage venture firm with seed investments in fintech businesses.

In the states where it has been approved, Pie will operate as a full-stack managing general agency with backing from Sirius Group.

Pie has said it also plans to sell through large agency partners, and Swigart said that there is “strong interest in the partner channel.”

Insurtech Pie Insurance Eyes Slice of Workers’ Comp Market with $4.3M Funding and Pricing Tool

The insurtech will write firms with premium up to $25,000 but its “sweet spot” starting out is businesses with premiums of $5,000 and below, according to Swigart, who said one of the biggest opportunities for Pie is low risk, start-up offices. In addition, Pie’s website invites business from construction, restaurants, healthcare and retail.

The pitch from Pie includes the claim, based on research from its partner Valen Analytics, that a majority of business owners are overcharged for workers’ compensation. The company offers small businesses a Pie Price Predictor Tool that tells them about what they should be paying for coverage versus the market average. Valen Analytics powers the tool, which customers can use at no charge.

The pricing tool is the first step in Pie’s larger plan to make buying the coverage “as easy as pie.”

Longer term, Pie hopes to quote and bind insurance policies based on data from the predictor tool.

Swigart, CEO, was part of the executive team that led Esurance from a start-up to a $1.3 billion in premium online agency that was sold to Allstate for $1 billion in 2011. Swigart has been joined by Brian Buvinghaus, systems architect, also from Esurance; Kevin Philpott, previously at GEICO; and Marcia Benshoof, previously with Pinnacol Assurance.

Pie has added new investors and advisers, including Judd and Susan Shoval, founders of small business workers compensation insurer Guard Insurance (now part of Berkshire Hathaway).

Pie’s insurance backer Sirius is owned by the Singapore-based division of China Minsheng Investment Corp. Ltd., run by private investors, which bought it from Bermuda-based financial services holding company White Mountains Insurance Group in 2016 for $2.6 billion.