26/04/2019 Insurance Innovation


Rather than cede or forgo a large number of small business customers to a rapidly-expanding field of digital competitors, in nine months, Pinnacol Assurance disrupted its industry (and itself) by developing and launching Cake Insure, that offers the fastest, way to buy a workers’ compensation insurance policy in the country.

Innovation presentation

Pinnacol Assurance developed and launched a new company, Cake Insure, that offers the fastest, easiest way to buy a workers’ compensation insurance policy in the country. In the process, Pinnacol and Cake demonstrated the power of a unique approach to disruptive innovation.

Pinnacol Assurance founded Cake to completely reimagine the experience of purchasing workers' compensation insurance for small businesses. They learned that small business owners have little time and appetite for managing insurance and they expect to buy their business insurance quickly and easily online—similar to how they purchase home and auto insurance. But that simply wasn’t the reality for business insurance. The industry’s approach was structured for larger organizations, often taking at least 3-5 days. The current approach also meant lots of new insurance jargon and getting insurance agents, underwriters, and account representatives involved. Small businesses have different needs and competitors were learning this. This mean speed-to-market was especially important for Pinnacol in this scenario.

In less than nine months after the project officially kicked off, Cake introduced a new digital platform, making it possible to get a quote and buy a policy in five minutes or less entirely online, while avoiding the jargony, insurance-y experience served up by most traditional carriers. The Cake experience was simple and smart, and clients raved. Cake took off and their current NPS score hovers in the 70s, well exceeding the average (42%) for the insurance industry.

Uniqueness of the project

The problem is that large companies, especially insurance companies, are not designed to move quickly. Traditional innovation teams and their counterparts in the business tend to be overburdened and unable to focus effectively on a single, fast-moving initiative. And organizational norms around collaborative decision-making create obstacles to quick action—what feels to innovators like a tyranny of consensus. Collectively, these barriers to rapid innovation are daunting.

Pinnacol tried a new approach to overcome the barriers of rapid, transformative innovation with Cake. It created and funded a separate innovation lab, with its own dedicated staff that would be empowered to reinvent how insurance policies are sold and serviced. Besides conducting research and development activities, the lab would incubate its own inventions by acting as an in-house managing general agent on behalf of Pinnacol, allowing Cake to disrupt the parent company’s core business model.

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