(Image source: Cerity homepage.)
Technology has enabled the creation of new types of businesses and also made small businesses in general easier to start and manage. It is also enabling insurers to provide solutions to those new businesses. Cerity (Austin, Texas) provides a vivid case in point: the wholly owned producer subsidiary of Employers Holdings, Inc. (Reno, Nev.) sought to address a gap in service to businesses with 25 employees or less and has succeeded in launching a fully digital insurance processing platform in under 12 months, utilizing Duck Creek core systems through its OnDemand software-as-a-service (SaaS) option, and using the vendor’s Duck Creek Anywhere API capabilities to build a proprietary user experience.
“We saw an opportunity to seize the leadership position for small business owners desiring a fast, easy, and fully digital solution,” comments Tracey Berg, President of Cerity Services and EVP & Chief Innovation Officer of Employers Holdings, Inc. “Starting with no infrastructure and four employees, we designed, built, and launched a digital insurance solution that allows small business owners to purchase workers’ compensation insurance in five minutes or less.”
Berg, the former EVP and CIO of West Bend Mutual (West Bend, Wis.) got the Cerity project rolling in Q4 2017, having joined Employers early in that year. By Jan. 2018, the firm had signed a contract with Duck Creek, and since going live in Jan. 2019, the company is now open for business in Illinois, Texas, Arizona and Utah, with plans to expand nationwide. While Cerity’s systems handle all policy-related processing and customer interaction, policies are underwritten by sister company Employers Insurance Company of Nevada (Reno).
“We started from scratch, intentionally from a blank slate,” Berg comments. “From the selection of Duck Creek to the OnDemand solution choice, to the custom front end—all cloud-based—and our predictive model for accurately pricing any given customer who comes in.”
Cerity has licensed Duck Creek’s Policy and Billing systems and is leveraging the vendor’s Duck Creek Industry Content—all with the objective of assembling the needed capabilities off-premise as quickly as possible. The company uses a TPA to handle claims.
“I think we are the closest ever to an out-of-the-box implementation for Duck Creek,” Berg says. “The pace required to build a company and product offering was extremely fast, and we couldn’t have met our timeline without the jumpstart that Duck Creek’s Industry Content templates gave us.”
In addition to speed, Cerity’s cloud strategy aimed at handing over core system processing and maintenance to a trusted partner not merely to take advantage of obvious economic advantages but to free up the company’s professionals to focus on differentiating capabilities.
“We want to make sure our team is focused on the things that make a difference for our small business customers—while allowing Duck Creek to do what they’re good at,” Berg says.
Cerity was able to build its customer experience and connect it to Duck Creek’s Policy and Billing systems by using Duck Creek Anywhere as an API layer. “We’re focusing one what our customers need for their experience and able to plug into the policy and billing system as a black box handling those core insurance processes,” Berg elaborates. “Using that Anywhere layer to connects the experience to the back office systems.”
The simplicity of digital experience is critical for small business users, in part because they typically have only a layperson’s understanding of insurance, as compared to larger companies. Today, according to the U.S. Small Business Administration, there are over 29.6 million small businesses in the U.S., and 44 percent of those small businesses have never had insurance, according to a study of over 30,000 businesses conducted by Next Insurance. Cerity is able to a quick and effective transaction through its use of a proprietary predictive pricing model. The model has up to 100 price points, taking various factors into consideration. As a result, the prices quoted are highly personalized to the risk.
A Desire to Transact Digitally
“Many business owners don’t have the insurance they need, they don’t understand they need it, the find it too difficult to get,” Berg says. “A small business owner can come to Cerity and go from seeking a quote to actually having a policy within five minutes—they can get that necessity out of the way and get back to running the enterprise that they’re putting their heart and soul into.”
The quality of digital experience is also important because of changing demographics, according to Berg. “We see the gig economy as an opportunity, and we also see that as millennials become entrepreneurs and small business owners, they have a desire to transact digitally, she says. “Fifty-six percent of our users are using mobile devices, and 49 percent have been millennials.”