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Is there a major opportunity in microbusiness?


Ted Devine used to be president of Aon Risk Services. But he recently became CEO of Insureon, an online insurance provider for small businesses. He recently spoke with Senior Editor Mark A. Hofmann about the insurance needs of microbusinesses, and how his experiences at Aon play into his new role.

Q: What are the special insurance needs of microbusinesses?

A: Microbusinesses typically struggle to procure insurance due to traditional agents' reluctance to spend time on accounts with low commission potential. As a result, very small businesses eventually find their way to local small commercial or personal lines agencies, often referred by family and friends. But local agencies lack the expertise and markets to find adequate and appropriate coverage quickly. As a result, it can take one to two weeks for a traditional agent to secure insurance and pricing or coverage may not be line with the business' underlying risk profile


Microbusinesses require insurance for the same reasons as larger businesses: They need to protect their property, employees and firm from liability. However, there are also serious differences between insurance of microbusinesses and that of larger companies.

First, small businesses have proportionally more liability exposure per dollar of coverage. That's often driven by contract requirements.

Second, premium levels are so small, there can be no waste; the process has to be 100% efficient to minimize customer acquisition, underwriting and other variable costs.

And third, while the insurance decision is important for global companies it's absolutely critical for this segment. We talk to hundreds of clients everyday who are starting or growing companies. Without insurance, they cannot achieve their dream of building their own business or protecting their family's livelihood.

Q: How will your experience at Aon apply to working with microbusinesses?

A: My primary focus at Aon was driving growth by finding ways to serve clients better than any other firm. Insureon is also a growth company. New business grew by 100% last year. My job at Insureon is to create an Aon-like environment where our team grows our firm by serving very small businesses better than anyone else.

The second is technology. At Aon, a big focus of my time was using technology and data to better help our clients. I led the team that created the Aon Global Risk Insight Platform--GRIP. In our first 100 days at Insureon, we built our own version of GRIP. It gives us 100% transparency into the every prospect and client, in real time, from the second they hit the web to the minute they bind their policy. It's very cool.

The third is execution. While I love strategy, the reason we were able to improve the performance at Aon was execution. At Insureon, we need to win every client and win everyday. If we do this we will be successful.

Q: What is the future of the microbusiness insurance sector?

A: We expect dramatic growth for microbusiness. There are 40 million US companies with fewer than 10 employees and this is expected to grow to 52 million by 2019. We have 20,000 clients and are adding 1,000 clients a month. The segment will also continue to move more and more online. Agents will not go away but customers are very comfortable using technology to purchase insurance. We have over 70,000 hits to our website each month and this continues to grow. Our growth will continue as long as we provide microbusinesses with superior technology, flawless execution and expert guidance.,P.