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BizCover Disrupts Insurance by Commoditising it

Michael Gottlieb
BizCover founder featured in AFR and BRW.

BizCover founder Michael Gottlieb was featured in Australian Financial Review and BRW. Click here to read the BRW article.

Self-proclaimed insurance industry disrupter BizCover is trying to claw market share from incumbents by letting newcomers to the insurance sector, such as Coles and Woolworths, brand its price comparison website as their own.

Founder Michael Gottlieb said BizCover is in negotiations with a number of big companies.

Any deal would allow these new players to use BizCover’s website to sell insurance products underwritten by AIG, Allianz, QBE and Vero.

Now in its eighth year, BizCover, which employs 27 staff in Australia and New Zealand, boasts 25,000 live policies, generating approximately $20 million in annualised revenue.

It has the permission of four of the nation’s major insurance houses to sell their products.

BizCover targets the small to medium enterprise segment and claims to have “broken the mould” by making commercial insurance a more commoditised product.

It’s a live experiment in whether labour-intensive professional services firms can develop a highly scalable, repeatable and profitable peripheral offering, commonly seen as the Holy Grail of professional services firms.

Traditionally sold through brokers, commercial insurance is ­historically a high-touch, person­alised service.

Convenience, competitive pricing

But Mr ­Gottlieb believes that is all changing. A new generation of con­sumers is turning to aggregator sites such as iSelect for health insurance and Wotif in travel for convenience and competitive pricing.

Mr Gottlieb expects BizCover sales to grow by 50 per cent in the 2014-15 financial year.

Not everyone is convinced about the wisdom of treating commercial insurance as a commodity.

Big insurer Insurance Australia Group feels buying and selling insurance from an aggregator website is risky. “Price comparison sites don’t provide customers with all the information they need to make an informed decision,” IAG spokesman Paul Marriage said.

“These sites cannot take into account all of a customer’s indiv­idual circumstances and the dif­ferent benefits and features of individual policies,” he said.

Mark Everingham, a consultant specialising in life insurance and income protection, has been involved in more than one legal action in which income protection was voided through a client’s errant miscalculation.

“Clients need their individual circumstances assessed and underwritten – these online models don’t do that discovery process all the time, that’s dangerous,” he said.

But Mr Gottlieb sees online ­commercial insurance aggregators as a natural next step.

Personal insurance products

He pointed to Britain where, he claimed, “a huge amount” of personal insurance products are ­consumed through aggregators. Mr Gottlieb and business partner Gavin Donner are not new­comers to the insurance game.

The pair built up – and still run – the successful insurance brokerage Mega Capital. However, last year in August they sold a majority stake to Steadfast Group.

The problem they faced, having created a successful advisory ­business, was twofold: it was labour intensive and hard to scale, plus it was vulnerable to the loss of a ­single big client.

“We built up a nice high-value client base . . . the question was how do we grow a business outside of our advisory shop?” Mr Gottlieb said.

The concept they came up with was BizCover, which they own outright.

BizCover provides general advice and assistance through the insurance buy and claims process. But it has the added advantage of convenience and the ability to compare prices.

The business is profitable and takes a standard brokerage ­commission on all insurance ­products sold.

Technology investment and marketing costs outstrip wages.

Mr Gottlieb said “any major technology expense moving forward will only be associated with the introduction of new ­products and thus will directly benefit future profitability as and when those products come online”.

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