The real estate and construction industries have a unique relationship with liability insurance. Since the assets that they are building, selling and managing are so expensive there is heightened importance on having insurance coverage in case of the inevitable problems that come with doing work to a property. There is so much that can go wrong that most large companies require that all of their sub-contractors have a certain level of liability.
This was one of the first things that Omri Stern learned when he did his initial research on his idea to change the way the insurance industry dealt with independent contractors. “I took a job as an Uber and Lyft driver and worked for companies like Handy to get an idea of the issues that contractors face,” he told me. “What I discovered is that there is a huge need in the insurance industry for more affordable liability insurance products. Another discovery is that most contractors only buy insurance when they have a larger organization that they are working with that require coverage.”
“We have noticed that projects on the 50th floor have a lot more risk than ones on the ground floor. This is completely overlooked by most carriers.”
“Many contractors end up not bidding for projects because annual insurance can be so expensive,” he explained. So he designed Jones to be an insurance brokerage that would issue policies for each project. Not only is this more cost-effective for most contractors it also allows for more precise underwriting. Most insurance companies only look at the risk profile of the policyholder but each project also has its own amount of risk. Omri offered an example, “We have noticed that projects on the 50th floor have a lot more risk than ones on the ground floor. This is completely overlooked by most carriers.” The granular data that Jones collects will help them use inputs like an asset’s risk profile, the property value, the team’s work experience, the ratings of trade contractor to better price the policies offered on their platform.
Jones acts as a marketplace for contractors to find carriers and an assistant in the entire coverage process. They can facilitate the claims process for the insured and help companies fill gaps in their compliance process.
This type of business model represents the trend of unbundling that is happening in almost every industry, mostly thanks to new technology. Paying for something you want often requires paying for something that you don’t use. This is as true for cable tv subscriptions as it is for insurance. But by breaking these bundles up companies like Jones are able to offer a more valuable service to the end user. As we are seeing elsewhere, giving these more precise options to the end user usually causes major shifts in consumer behavior.