In all honesty this post is shear speculation. I haven’t spoken with anyone regarding today’s topic. I haven’t “asked around” for any super-secret insider information. As someone interested in the leveraging of new technologies to improve the workers’ comp experience, I’m just stating an opinion based on observation and common sense. That opinion is this: We are going to want to keep an eye on Cake. It could be a game changer for agents, brokers and carriers.

Cake, for those of you who do not know, is an app-based program that allows employers to apply and be approved for workers’ compensation insurance in about 5 minutes. The coverage is active at the start of the very next day.

Cake was developed by Pinnacol Assurance, the state fund agency turned quasi-public authority that writes much of the comp coverage in the state of Colorado. In a release published on this site a couple weeks ago, Pinnacol said that “Cake Insure has been recognized nationally for completely reimagining and reinventing purchasing workers’ compensation insurance.”

The release continued by saying, “Cake Insure launched on Oct. 10, 2017, issuing policies to small businesses in Colorado with industry-disrupting technology that enables businesses to easily purchase a workers’ comp policy in three to five minutes. Traditional carriers take several days and even up to a few weeks to complete this process…… It has been recognized nationally with awards such as IDG’s “Digital Edge 50,” Celent’s Model Insurer” and Strategy Meets Action’s “Innovation in Action.” It was also the subject of a recent case study by the international consulting firm Forrester Research and was recently named as a finalist for Colorado Technology Association’s APEX Project of the Year.

The Cake platform uses algorithms and artificial intelligence to conduct 90% of the underwriting process. By the end of its first quarter of operation, it had exceeded projected revenue by 500%. It has also gained impressive net promoter scores for an insurance provider. In short; Cake is a technology driven game changer for the industry. Small businesses and young entrepreneurs will be drawn to this platform for both its ease of access and simplicity of process. 

Cake is not the only insurance platform of this type. Pie Insurance offers “2-minute workers’ comp quotes” currently for 9 states. Lemonade (really, who is naming this stuff?) is an online seller of Renters and Home Insurance, offering policy quotes in about 90 seconds. Pie is the product of a series of investment firms and an executive from Esurance. What is unique about Cake is it was developed by a single carrier to support the objectives of that carrier.

Which brings us to the conjecture and speculation part of this dispatch. Cake, which remains a subsidiary of Pinnacol Assurance, sells workers’ comp policies for Pinnacol to Colorado employers. Only Colorado employers. It is not available outside the state at this time.

The world of the “state funds” has been in a tremendous amount of flux for over a decade. Once confined to just their specific jurisdictions, many have now either gone competitive by writing comp in other states or have at least positioned themselves for that possibility. Maine’s MEMIC is probably the trend setter of this phenomenon, with West Virginia’s Brickstreet Insurance also heavily moving into the competitive multi-state arena (full disclosure, MEMIC and Brickstreet are both highly valued clients of Brickstreet is actually taking up the ability to write multi-line coverage, through a combined partnership with Motorists Insurance. Other once traditional funds, like Arizona’s Copperpoint, Oklahoma’s CompSource, and Maryland’s Chesapeake Employers (formerly IWIF) have made moves to enable this multi-state competitive strategy in the future. 

So, the question would be for Cake; in a world where former state funds are venturing out of their traditional locales in order to compete on a multi-state level, why would one of those entities invest heavily in a ground breaking, game changing technology only to limit it to one state?

My speculative answer, of course, is they didn’t. 

I don’t believe that the Cake Insure application was intended to be a single state solution. I make the supposition that Pinnacol has perhaps developed a unique tool that has the ability to serve as an entry point into multi-state underwriting. I believe Pinnacol could leverage Cake to go competitive across the nation, and that is something that should get the industry’s attention. 

The move, if it does in fact come, will take time. The licensing/approvals for writing in new states is a complicated process – far beyond my limited comprehension of the procedure. But should they choose, the vehicle they’ve developed represents the future in selling comp policies. Until others develop similar applications, gaining market share for Pinnacol could be, well, a piece of Cake. 

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