Startup Uprising: How to Insure Millennial Entrepreneurs

Ever dream of quitting your day job to start your own business? You’re in good company with one in five millennials.

A survey conducted by Buzz Marketing Group and the Young Entrepreneur Council also found that 33% of Generation Y has already started a side business—and Deloitte reports that a whopping 70% would reject a traditional job in favor of working independently.

Considering one-quarter of startups fail in their first year—and by year four, only a little over half survive, according to Statistic Brain—that’s a whole lot of fledgling commercial clients in need of a helping hand.

Although Rich Weingart, partner at Sweet & Baker Insurance Brokers in San Francisco, says “it’s definitely a loss leader” to write small startups, the payoff can be well worth the wait—if you play your cards right with their millennial leaders.

“They’re the heartbeat of America,” Weingart says. “These companies scale with us. It’s exactly where we want to be.”

Where to Look

In some ways, prospecting for young commercial lines clients involves familiar, time-tested strategies. “Networking is the biggest part of prospecting, whether it’s networking with the end consumer or with referral sources in parallel industries,” says Justin Litaker, vice president of Litaker Insurance, a generalist agency in Charlotte, North Carolina with 13 employees that writes business for startups in the construction, real estate in hospitality industries.

Litaker cites examples such as local attorneys, CPAs and banks that might refer a client to you after helping them secure a loan for their new business. “Assuming you’re pairing up with strong service providers, it really does a great service to the end client as well,” he says.

Consider Strickler Insurance in Lebanon, Pennsylvania, which specializes in brewery and distillery insurance and maintains deep personal connections to the brewing community. The owner of the agency also owns a brewery, and agent Kyle Rheiner is a craft beer fan who brews in his spare time.

Living and breathing the space has helped the agency develop relationships with “the architects who draw the plans for the breweries, the contractors who build the breweries and the liquor lawyers who handle their paperwork,” Rheiner says. “We’ve created this big referral system.”

At Founder Shield, an independent agency that focuses exclusively on serving the venture-backed startup community, all three agency founders previously worked in the startup space. In addition to capitalizing on the firm’s New York City location to seek out young entrepreneurs in co-working spaces and lunch and learns, prospecting efforts rely largely on the founders’ robust contact book from their prior experience.

“We were all very involved in the community to begin with, and we knew all these companies needed insurance because we knew all their investors required insurance,” explains Carl Niedbala, co-founder and COO. “We had a lot of warm intros just through venture funds we had worked with in the past.”

San Francisco-based Woodruff-Sawyer, which focuses primarily on tech and life-science startups and has locations up and down the West Coast, takes a similar approach to prospecting. “You have to find who the vested stakeholders are in these types of accounts, and inevitably, the vested stakeholders are the venture capital shops that are the ‘adults in the room,’” says Dan Berry, vice president.

“You have to be engaged in the community,” agrees Weingart, whose agency focuses primarily on tech, biotech and financial services startups and encourages its 50-some employees to get involved in local organizations. Weingart, for example, recently participated in an elevator pitch roundtable event in which entrepreneurs pitched their ideas to a panel of venture capitalists.

But beyond networking, the key to a millennial’s heart, as usual, lies on the web. Litaker Insurance finds startup business through review sites like Google Reviews and Angie’s List. Founder Shield is big on content marketing, and Sweet & Baker dominates Google search results for “Bay Area insurance brokers,”
Weingart says.

Rheiner, who runs the URL, gets “a ton of leads” from people searching “brewery insurance” and “distillery insurance.”

“I use a lot of different social media platforms to keep my name high on the search list,” Rheiner explains. “If I see a brewery out there on Twitter or popping up on Facebook or LinkedIn, I reach out immediately.”

Digital Demands

The Google impulse persists once you get young commercial clients in the door, too. “They don’t necessarily need to see me,” Rheiner says. “You can call me, you can text me, you can email me, you can FaceTime me, you can Skype me. Wherever your phone is, I’m local to that. I don’t have to be there, but if they need me, they can literally reach me in a minute.”

Founder Shield built and maintains an online platform that consolidates underwriting information so clients can obtain quotes across a wide range of coverage classes. On the back end, staff can automatically export all the necessary documentation for underwriting purposes. The agency plans to make the platform available to other agents and brokers soon.

“It’s part streamlining, part making sure the experience was the best possible,” Niedbala explains. “That technology is definitely a retention tool, because when you have someone’s underwriting information in a database, it can be repopulated the next year and all they need to do is update a couple fields or tweak a few things. The other option is you sit down for an hour together or send over a PDF, and sometimes people just say, ‘I don’t have time to do that.’”

The widespread millennial expectation to get in touch with you via texting can complicate your agency’s errors & omissions processes, so “try to document everything you can,” advises Rheiner, whose agency management system integrates texts.

“That’s always interesting—the text conversations and trying to make sure to carry that over for documentation on our side—but we have to deliver service how the client wants to receive it,” Litaker agrees. “We don’t have an AMS that keeps up with that, so we have to forward it over via email and then attach. But it’s worth it if that’s what it takes to meet our clients’ expectations.”

Instant Gratification

It’s not enough to simply offer digital resources, either. You also need a spring in your step. As commercial clients, millennials are “quick moving, so with emails, their expectation may be ‘I need this now,’” Rheiner says.

“That’s the biggest delta—there’s an expectation that you’re going to respond much quicker than you ever would have in previous generations,” Berry agrees. “It’s 20 minutes later and they’re like, ‘Is everything OK? Are you there?’”

Rheiner tries to respond quickly and set expectations about when he’ll be able to process a request. “I try to be up front—‘Hey, I don’t have that answer right now, but let me get back to you by Friday.’ They appreciate that versus sitting there thinking, ‘I sent Kyle an email six hours ago—I know he read it, but he hasn’t responded.’”

Woodruff-Sawyer’s 400+ employees respond to these heightened demands with a tiered system that divides startup clients into emerging, middle-stage and large billion-dollar business.

“It’s all focused on getting in the appropriate level of service at the appropriate time and making sure you don’t lose those accounts,” Berry explains. “The last thing you want to do is invest time and resources into an early-stage company, only to lose them once they become a multibillion-dollar business because they don’t feel they’re getting exactly what they need.”

Thought Leadership

With digital prowess comes empowerment, so don’t be surprised if your millennial entrepreneur clients think they already know it all. “Some of these younger folks come into it thinking they know exactly what they need, even though they’ve never purchased an insurance policy in their life and they can’t spell ‘liability,’” Rheiner says.

In reality, Weingert says young commercial clients probably have “no idea” what they need. “They need a coach,” he says. “With an older customer or a company that’s been around for a while, they have a CFO or a controller that knows what they’re doing. In the millennial space with the newer companies, you’re helping guide them and putting in one little chess piece in at a time.”

Supplying informative content is a good place to start. “Commercial insurance is just totally a nightmare to understand,” Niedbala says. “We saw that as a big problem in the space—nobody understood what was going on. So we said, ‘OK, let’s just put a ton of resources on our website.’”

Similarly, Rheiner sends out industry-specific emails each month to all his clients and prospects in order to share information about important coverages and hot topics for brewers, such as how to properly check IDs or details about the No. 1 new IPA in the country. It’s a simple step, but millennials take notice.

But providing advice and information the old-fashioned way also goes a long a way toward making millennial commercial clients comfortable. “They want someone to come in and solve their problem,” Weingart says. “We encourage them to pass it through to us—every question they have, even if they think we can’t answer it or it’s not insurance-related. Send it to us, we’ll review it, we’ll coach you and we’ll guide you to the future.”

“Millennials smell B/S from a mile away,” Niedbala adds. “I think it’s definitely a trait of our generation—we want to deal with people who are the real deal. If you want to chase this space, make sure you actually know what you’re talking about.”

Jacquelyn Connelly is IA senior editor.

3 Reasons to Chase Millennial Entrepreneurs

Potential. As they grow, you grow. “Working with startups gives us the opportunity to address an insurance program from the ground up,” says Justin Litaker, vice president of Litaker Insurance in Charlotte, North Carolina. “We know these guys are going to grow, and we’re there to help them grow so that if something happens along the way, they’re not out of business.”

Brains. According to a new study from Nationwide, millennial small business owners are more likely than their Gen X or baby boomer counterparts to make plans for natural disasters, retirement benefits, cyberattacks and business succession.

Blame the 2008 recession. “Millennials came of age in a time when personal finances were strapped,” says Derek Ross, president of Kulchin Ross Insurance Services, LLC in Tarzana, California. “They’re extremely risk averse. They want to understand how insurance relates to their business exposures and how they can adequately protect their businesses to preserve financial security.”

Heart. Carl Niedbala, co-founder and COO at Founder Shield in New York City, takes pride in helping these entrepreneurs make their “moon shot.” “We consider ourselves to be empowering the innovation economy,” he says. “When we can prevent someone from draining their bank account on a claim that could literally kill their company and make sure they fight another day, that definitely feels really good.”

“They’re tacticians,” agrees Dan Berry, vice president of Woodruff-Sawyer & Co. headquartered in San Francisco. “They understand their business, and they’re creating something amazing.” —J.C.