AXIS seeks to close the insurance gap for home-based businesses

It seems that more budding entrepreneurs have followed the lure of starting a home-based business, so much so that it’s estimated that half of the 30 million small businesses in the United States are home-based.

AXIS Insurance has identified these diverse business owners as an inexperienced and underserved market that often relies on home insurance to cover business risks. Additionally, the insurance industry had yet to adapt to the dynamics of home-based businesses.

“The insurance industry collectively labels small businesses as a singular group, and we offer them the same product, the same service and relatively the same prices.” Jill Bryant, head of specialty retail at AXIS Insurance, told Insurance Journal. “But here you have this micro consumer with incomes typically below $1 million, working from home.

“There is a gap. These are generally purchasers of personal lines insurance. They don’t have a lot of experience buying commercial insurance; they don’t realize that the responsibility lies with them; and they are price sensitive. They don’t know what type of insurance they should have.

AXIS commissioned a survey of 1,000 home-based business owners and found that 91% know they need insurance coverage, but 44% either don’t have coverage or don’t know what liabilities are covered by the insurance they have.

“That’s why we’ve created a whole new product that doesn’t rely on the tenets of the political language created by [the Insurance Services Office] in the 1970s for small businesses,” Bryant said. “These owners need unique coverage because what they do is different, and we can align coverage for a bespoke insurance product.”

The survey revealed that 24% of respondents work in e-commerce and home crafts and 16% in professional services/consulting. Other home-based business owners reported working in construction, computer services and catering.

However, the coverage of a typical home insurance policy or general liability insurance policy may not cover risks associated with advice or product liability, for example.

Bryant said home business owners don’t understand the difference between general liability and professional liability. AXIS Insurance combined the two products where necessary to match the risks.

“We wanted to create an environment of simplicity and transparency,” Bryant said. “They don’t have to be insurance experts. That’s what we do, and we can figure out what they need and build it by understanding the basics of their business, who they want to serve, and being very transparent in our product about what they have a coverage and what they don’t have.”

Bryant said the home-based business trend started before the pandemic, but was likely accelerated by the pandemic and what became known as the Great Resignation. She said a shift has begun as millennials seek alternative ways of working.

“What we found out from the survey is that it’s more of a cultural shift — a societal shift rather than an economic shift,” Bryant said. “People are very passionate about what they do. They really enjoy being their own boss, controlling their work-life balance.

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