So far, 2020 isn’t shaping up the way anyone has planned. But for 3-year-old insurtech startup Next Insurance, this was the year it was going to drop some serious cash on a good ad agency, invest in a rebrand and then introduce itself to the country through its first national television campaign.
But then Covid-19 happened, and Next’s clients became the very people who’ve been hit hardest by the pandemic.
Early in the crisis, the company made some changes to support its clients. At the beginning of April, Next lowered premiums for general liability, professional liability and commercial auto insurance customers by 25%. Later, it extended the automatic discount through May.
And as for that big TV campaign, the company decided to switch gears. Rather than working with a big-name agency on a flashy spot and new logo, Next dedicated those funds to supporting small-business owners in need. The company identified around 50 construction workers, bakers, photographers, builders, artists and creators who were out of work or struggling to make ends meet—and then hired them.
The resulting campaign, “Built by Business,” isn’t much like the company originally planned, but it tells a powerful story that’s applicable to brands across industries. When the crisis hit, Next helped mitigate the pandemic’s effects for small businesses, and that built authenticity into its brand purpose. For startups, capitalizing on the ability to make quick changes and choosing authentic ways of responding to unexpected hurdles can give challenger brands a competitive advantage over the bigger players.
Redirecting funds is a “fantastic and really important way to live their mission,” said Joanne McKinney, CEO of brand consultancy Burns Group. “Those are the things that people are recognizing and valuing right now in the marketplace.” McKinney added that how brands respond to the crisis will dictate how brand perceptions transform now.
Disruption in the insurtech industry
Next Insurance occupies a space in the insurtech world that Thomas Mason, an analyst at S&P Global, describes as “the most potentially disruptive.”
That’s because the brand sells insurance to small-business owners through a fully digital platform. The company is underwriting its own policies—the same way Lemonade is selling its own product to insure homeowners and renters, or the way Oscar or Bright Health work in the health insurance space.
“They’re competing head on with the Geicos and the Allstates of the world,” Mason said, adding industry titans like Berkshire Hathaway, biBERK and AIG have mimicked the startups with their own initiatives.
Although Next might be in an industry that’s ripe for disruption, there’s no real leader in the current landscape for small-business insurance, Mason said. He estimated that Next had captured around 0.05% of the U.S. market in the three years since its founding. “They were also growing very fast,” he said, though “it’s tough to say what kind of impact Covid-19 has had on that growth.”
As far as the online model goes, trends look to be in Next’s favor. Between 2018 and 2019, the percentage of small-business owners who purchased insurance online jumped from 14% to 23%, according to a survey by S&P Global. Part of that likely has to do with the fact that there are more millennials and Gen Zers who own their own businesses each year—there’s a much higher percentage of those younger generations buying insurance online compared with Gen Xers and baby boomers, based on the survey results.
In some ways, as a startup with some of the groundwork having already been laid, Next was in good position to handle a crisis like a pandemic. “One of the fantastic things about startups is that they’re really good at pivots,” McKinney said. “They have less equity in places that are at risk when they make changes.”
From brand refresh to ‘Built by Business’
When Spencer Hansen joined Next Insurance as executive creative director from Spotify in February, the novel coronavirus hadn’t yet made its way around the world. Very quickly, his role at the company shifted from building an introductory national ad campaign to shaping the brand’s response to the pandemic. “Small business was getting hit so hard,” Hansen said. “We ended up diverting production budget and instead of having it done in Hollywood, we just put it into the hands of the small-business owners.”
To do that, Next started reaching out to small businesses—both clients of Next, and those that weren’t. Hansen’s team looked for small businesses that were struggling as a result of this unexpected loss of income. They connected with people all over the country—a power washer in Montana, a construction worker in Pennsylvania, a yoga instructor in Michigan, a handywoman in Austin, Texas, a tattoo artist in Venice Beach, Calif., and a dry cleaner in Tracy, Calif. The variety of work is something that inspired Hansen. “Small businesses are as varied and diverse as musical genres,” he said.
“We realized that this wasn’t a moment for us to spend that money with big businesses and talk about ourselves,” said Melanie Chase, Next’s CMO. “It was really a moment to live our brand promise by putting the money back into the hands of small-business owners.”
The faces of Main Street America
In Houston, Mark Linen started his own cake-in-a-jar business, Brotha Bakes, in November 2019. He banked on local events to showcase his cakes, which feature punny names combining the flavors with the names of prominent Black celebrities and artists.
But after all those events were canceled due to Covid-19, “I had to change my plan,” Linen said. “I couldn’t get out there and put my product out there.”
Linen’s sales slowed to a trickle after that. But then, an acquaintance asked whether he’d be willing to work with an insurance company on an advertisement they were doing. He hadn’t heard of Next Insurance at that point, but he was in the market for some coverage and later signed a policy. “They contacted me about doing some cakes that we can give to one of the hospitals around here,” Linen said. “And I definitely wanted to do that.”
It took Linen about a week of full-time work (with the help of his sons) to bake the 220 cakes that Next Insurance ordered. Linen had his wife and boys help get the photos and video footage that Next asked for, since they were still quarantining due to Covid-19.
Working on that order with his kids for the week gave him a glimpse of what his business could look like in the future, he said. “It was just that freedom and just kind of seeing like, wow, this is really what I want to do,” Linen said. “This is my dream right here.”
Hyatt Stengle is a 31-year-old handywoman in Austin, Texas, whose business Hyatt’s Helping Hands will celebrate its third anniversary this August.
“It was really steady over the past year,” Stengle said, but the pandemic cut her work down to roughly a fourth of what it had been previously. Next hired Stengle to build a set of planter boxes in the shape of the company’s name. “I just got an email, actually, just asking if I was interested in working with Next on a project,” Stengle said. “I didn’t really know what they were talking about. I just said yes,” she added, laughing. The planter boxes turned out so well that Next wants them at one of its offices.
In Pennsylvania, the pandemic created a more tense environment for many small-business owners. Christopher Burns, a construction worker and builder, has been out of work since mid-March when the government shut down his projects. “It went from everything to zero, immediately,” he said.
Since he’s also certified to operate heavy machinery, Next hired him to drive out to an amusement park in New Jersey called Diggerland—where children get the opportunity to operate heavy machinery—and dig the company’s name into the dirt with an enormous excavator.
Next hired a drone operator to help film the project. The finished product was around 25 feet by 50-70 feet, Burns said, so it was really impossible to capture otherwise. “It was pretty cool,” he said. “It got me out of the house for the first time in six weeks.”
And in a moment when brands are being lambasted for failing to follow through on the values they claim to hold, Next Insurance’s tagline has become the entire concept for its first national ad campaign.
“We stand for small business,” Chase said. “Our mission to help entrepreneurs thrive—we want that DNA to come through in everything that we do.”