Workers' comp insurtech Cerity grows into new Texas digs

In January, former insurance-carrier CIO Tracey Berg launched Cerity, an insurtech startup focused on providing easy-to-access workers’ compensation coverage for small businesses, offering online quotes in seconds and policies within minutes to protect workers and assets at an affordable price. As the company grew from only four employees in its earliest stages to 31 today, Cerity also decided to move its headquarters to Austin, Texas, to take advantage of the wealth of technology talent there.

“We’ve had the luxury and the opportunity to build a company and technology offering from scratch, about something we’re really passionate about, while intentionally fostering a startup-like culture that is flexible, nimble, creative and innovative,” says Berg, who previously served as CIO at Employers Holdings, a 100-year-old Reno, Nevada-based workers’ compensation insurance company which backs Cerity as a separate subsidiary. “We’ve been able to design and architect a technology solution that really is flexible without being bogged down by the legacy systems a traditional insurance company has to deal with.”

The desktop and mobile-friendly platform was launched to meet the evolving needs of customers, including the changing buying behaviors of small business owners with 25 employees or less, who now want to buy insurance online to protect themselves against workers’ lost wages, medical expenses for injured workers and to provide legal protection against lawsuits related to alleged workplace negligence. Cerity conducted its own independent research, which found that 75% of individuals want to purchase insurance online.

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“We felt like we want to meet them where they want to do business,” she explains, adding that many of today’s small and micro-business customers want to save time and don’t want to spend days getting a workers’ compensation policy. With its proprietary predictive pricing model with up to 100 price points to predict risk, powered by a complex algorithm, Cerity customers can quickly get customized coverage quotes by answering a few online questions. “A small business owner has a lot to balance and dealing with getting workers’ compensation insurance is probably not on the long list of things they were passionate about when they started their business.”

One of Cerity’s customers, for example, is a computer network business that needed to take work at a large firm. “Most large firms require workers’ compensation insurance, but in most cases it would take days to get,” Berg says. “This customer was able to get on our site and get that insurance right away, in just 5 minutes -- not just a quote, but the policy.”

However, with a modern, digital-first, cloud-based offering, Berg admits she needed to instill a consumer-centric mindset throughout the Cerity team, especially among those who came from the insurance world. “We had to stop talking like insurance people, using words like ‘buy,’ ‘submit’ and ‘premium audit’ that non-insurance wouldn’t understand,” she says. “We challenged ourselves to ask, ‘What would an end policyholder call that?’ and call each other out to think about who we are really helping and what they really need.”

Cerity went live in one state in January and is now available in Arizona, Illinois, Montana, Nevada, Oregon, Texas & Utah. The cloud-based offering uses AWS technologies, as well as Duck Creek’s SaaS and API capabilities, which allows Cerity to scale up, add compatibility and design architected apps built to be flexible and agile. “Technology is not a limiting factor for us,” she explains.

However, while Cerity is expanding rapidly into other states, the licenses and approvals needed in a highly-regulated industry, are usually the bottleneck for insurtechs. This is an example of one of three key challenges hindering insurtech growth, according to Berg: That is, customer-related challenges; the pace of technology adoption in the sector; and regulatory challenges with different nuances in each state. In other countries, for example, machine learning models and dynamically-updated rates would be easier. “A lot of insurtechs are digital agents, beholden to traditional insurance companies, which can only take you so far,” she says. “For us, we are an insurance company as well as an agent, so we can solve the problem end to end -- We can produce a policy but also control what questions are asked on the back end.”

For Berg, Cerity’s bold vision to offer a modern, direct-to-customer technology solution to the challenge of workers’ compensation insurance has translated into a big personal life change as well. “I just officially became an Austin resident -- I sold my house in Reno,” she says. “It’s been great, a very different environment than the corporate America I lived in. I’m loving it and enjoying it.”

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