State-of-the-Art Business Insurance for Contractors: An Update on Bunker

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As a rule, one would not put together “state-of-the-art” and “insurance” in a single statement — but every rule has an exception. We began reporting on Bunker in January 2017 within the context our contingent workforce and services coverage area. (See: Bunker: A New Platform Innovates Business Insurance for Self-Employed/Gig Workers and Contractor Insurance Innovator Bunker Raises $6M in Series A Round.) In this post, we provide an update to our earlier coverage, based on our recent discussion with Chad Nitschke, CEO and co-founder of Bunker.

What Is Bunker?

Bunker is a platform-based business that provides commercial insurance products (policies) to independent contractors and micro-businesses and also helps companies determine the appropriate coverage to require of these small contract suppliers of services. In the evolving world of work and services, where there is an increasing tilt toward the use of contract workers and small, agile service providers, Bunker provides an innovative solution to a number of problems that have inhibited valuable engagements between those businesses and the contractors:

  • For independent contractors, just finding and purchasing coverage, required by an enterprise client business, has been a difficult and time-consuming activity. They need to be able to easily and cost-effectively obtain coverage tailored to their professional activities or risk losing business.
  • For businesses, the insurance requirements used for contracting with large service providers are not suited for engagements with independent contractors. They need to be able to set appropriate coverage requirements or forego talent and services that they need.

Bunker solves these problems by making it quick and easy for contractors to obtain suitable insurance products/coverage (e.g., usage-based policies with coverage that is tailored to the work a contractor does).  In addition, using its proprietary data and analytics, Bunker also enables businesses to establish appropriate coverage requirements for the contractors they wish to engage.

Bunker Update

We last reported on Bunker at the time of its commercial launch out of beta and its $6 million Series A Round in May 2017. Recently, we had a chance to talk with Bunker CEO Chad Nitschke to get a progress report on the company, now about six months in. Here’s what we learned.

Bunker continues to grow its multisided platform business working with two groups:

  • What it refers to as Customers — independent contractors and small businesses needing to purchase insurance
  • What it refers to as Members — work intermediation service/solution providers (i.e., staffing companies, MSPs, agents of record, IC and on-demand platforms) using the Bunker platform to manage insurance requirement compliance in the service of their enterprise clients, which Bunker typically does not directly work with today

What could be considered a third group connected with platform are innovative insurance carriers, which partner with Bunker and act as policy underwriters.

Nitschke told us that the platform model is getting strong traction and is growing across a whole set of dimensions (e.g., policies issue, conversions, Customers and Members). Though more specific growth numbers we discussed cannot be disclosed, we can say that growth is impressive and growth in Q4 will significantly outpace business plan expectations.

With respect to Customers and Members, Nitschke also offered the following information:

  • Customers (contractors) can go direct to the Bunker website or can be relayed there by the Members. The Customer engagement model is a hybrid of self-service and hands-on services, but self-service is key to achieving low transaction costs, convenience and speed. Self-service Customers can purchase the policy they need in as little as two minutes — a far cry from the days it may take to track down and buy from a traditional broker. In addition, contractors that visit the website have been converting to Customers at 3X the conversion rate of standard insurance distribution channels.
  • Members (intermediaries) have been coming on board at a good clip. Eight Members have been on-boarded since June, with several more in the pipeline. Each Member can represent hundreds, thousands and, in some cases, tens of thousands of independent professionals and small businesses that are required to carry insurance to comply with contracts. Members serve not only as workforce intermediaries but effectively as insurance intermediaries, as well — and they are looking for tighter integration with Bunker into their solutions and services.

Progress in 2017

Nitschke also briefed us on a number of other key milestones/achievements in 2017. These included important products and services:

  • “Usage-based” general and professional liability insurance product in October. This is a self-service purchase policy, which contractors can have issued in minutes. Unlike traditional policies, this product can be priced by:
    • Coverage limit
    • Term (ranging from three to 16 months)
    • Coverage for single project, single client or multiple clients

Contactor Customers can effectively tailor their policy to what they actually need — easily, quickly and economically — and avoid the hassle, time and cost of purchasing a policy that is more than what they need. The product is available in 40 states today and encompasses 57 eligible contractor types (ranging from court reporters to IT services).

  • “Insurance Assessment Tool” and information service, based on Bunker’s proprietary business insurance requirements data set, which allows Members to help their client companies establish requirements for independent policies limits and coverage that are appropriate for independent contractors and small providers (versus larger suppliers). This is often a sticking point for Members’ clients and prospects. Members and their clients can both benefit.
  • “Monitor” service that keeps track of the status of Customer policies in real time and sends an alert to the Member’s Bunker account any time there is a change in coverage and it falls below the minimum level of required insurance for that engagement. This service allows a Member to expand its role (and value-add) in limiting a client’s risk associated with the contractors the client engages.

In addition, to these new products and services, Nitschke mentioned a number of other 2017 milestones/achievements:

  • Redesigning and “consumerizing” the website/point-of purchase UI/UX.
  • Opening a new office in Madison, Wisconsin, in addition to the San Francisco office, and team expansion that will continue into next year
  • Bringing several new leading insurance carrier partners to the platform

What’s Up for 2018

Nitschke provided us with a high-level peek at Bunker’s focus in 2018, which encompassed continuing to:

  • Grow both Customer and Member bases
  • Add new business insurance products and increasing eligible contractor types
  • Build out the technology-based platform (including upgrades from SaaS to PaaS to enable more integration)

With respect to this last point, Nitschke noted that Members were eager to integrate through APIs and imbed Bunker in their own solutions to provide a seamless customer experience for their clients and contractors.

Conclusion

Why should contingent workforce and services procurement practitioners take an interest in what may appear to them as just an ancillary retail service for contractors that need insurance way upstream in the supply chain?

We expect that, going forward, enterprises will increasingly turn to independent workers and micro-suppliers engaged under SOW contracts. And to handle this influx of numerous and varied individual and micro-supplier contract engagements, organizations will need to establish new practices, processes and tools which, frankly, don’t exist today. (See our recent posts on this topic here and here).

Contingent workforce and services sourcing and engagement processes are still bifurcated and oriented to either temp staffing or SOW engagements with established-scale suppliers. But filling the gap in the middle is not a simple cut-paste-edit operation. It will require new thinking that will not only account for the unique requirements of the independent worker/micro-suppliers use case(s) but will also recognize the significant role of current and next-generation digitalization across the end-to-end sourcing and engagement process.

That means thinking about how "the freelance economy," "on-demand work," platform-based sources of contract workers and services, intermediaries that vet and manage “talent pools,” and digitally-enabled services providers all come together in connected, real-time, information-dense service networks or ecosystems that function with high agility and velocity. In effect, that means focusing not just on suppliers, but on optimized, comprehensive service ecosystems, the outputs of which depend upon the interaction of all of the ecosystem components.

It is in this context that we understand the importance of Bunker as an innovative, digital platform-based provider of commercial insurance products and services that benefit both contractors and enterprises by reducing friction and sub-optimization in the sourcing/engagement process. We look forward to following its continuing development as a component in emerging ecosystems.

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