Verifly
- Famed investor Warren Buffett has described his investment in auto insurance company Geico as one of his best investments because it's a safe bet that relies on annual contracts.
- Verifly founders Jay Bregman and Eugene Hertz are building a company that bucks Buffett's wisdom: Unlike Geico, their company provides insurance policies at hourly rates.
When serial entrepreneurs Jay Bregman and Eugene Hertz began building their job insurance provider company, Verifly, they choose to go against the grain. Where Warren Buffett has spent decades praising insurance giants like Geico for how they lock customers in, Verifly is trying to restore some flexibility to customers.
"Our company is built in the reverse way that Warren Buffett invests," Bregman told Business Insider.
Bregman is referring to Buffett's investment in the hugely successful car insurance company Geico, which Buffett has described in the past as his favorite among all of the investments he's ever made. Buffett, who first invested in Geico when he was only 20 years old, has praised the company for what he's described as its "durable, competitive advantage;" In 1951, he commended Geico for how it locks customers into annual contracts. Ultimately, in 1996, Buffett's Berkshire Hathaway firm bought up Geico and made it a wholly-owned subsidiary.
"Buffett counts Geico as one of his best investments because when you buy a car insurance policy, you commit to paying for a year," said Bregman. "They might let you finance it, but you're committed to one year, and every month you typically pay 1/12th of that policy to the company. We're doing the exact opposite of that."
Bregman's company, Verifly, is attempting to turn the traditional insurance company model on its head: policies are sold according to the amount of time you'd like to be covered, and there's no such thing as being locked into a yearly commitment. A Verifly policy can cover you for an hour, a week, or a month. Verifly's hourly coverage starts at $5, but are higher depending on the risk associated with the gig.
These flexible worker insurance policies are currently geared towards gig workers who need insurance coverage for a short-term job. Among its offerings are general liability policies for freelance photographers, dog walkers, gardeners, plumbers, construction workers, and anyone else hoping to get a temporary insurance policy on the fly.
Bregman says that Verifly, which currently offers coverage in 11 states, is only made possible through today's technology.
"Insurance is all about managing risks, so it's difficult to make a business out of calculating risks in units of time that are smaller than a year," said Bregman. "The way insurance is sold today, especially for businesses, is on paper. Literally paper. Think about the inefficiencies of attempting to sell an hourly policy through the current process. It could take weeks."
Bregman believes that offering an insurance policy at an hourly rate could be a gamechanger for the insurance industry at large.
"No big insurance company can offer this type of policy becuase it goes against their entire business model," he said. "This is a complete re-set of the way insurance companies work."