Many people assume that the growing “gig economy” presents few barriers to entry for workers who want to, say, start driving for Uber, or shopping for the grocery delivery service Instacart.
That’s true in some cases, but many independent contractors—everyone from field service technicians to software consultants—must meet a surprising number of requirements before they can begin a new assignment. For example, it’s common for companies that contract with freelancers to require them to carry a minimum level of general and professional liability insurance, says Chad Nitschke, co-founder and CEO of Bunker, a San Francisco startup with a significant presence in Wisconsin. Bunker is trying to help independent workers get that insurance.
“It’s kind of a de facto standard if they’re working for any Fortune 1000 company,” he says. “If it’s a large company, there’s typically going to be some level of insurance requirements that are involved.”
Bunker’s technology is designed to help workers shop for and purchase insurance policies while they’re in the process of negotiating temporary employment contracts. Bunker’s software is also used by staffing agencies and businesses that sell software for tracking consultants and other contract employees; the startup’s tools help these business users ensure they’re complying with insurance requirements, Nitschke says.
Starting in late 2016, Bunker partnered with Chubb (NYSE: [[ticker:CB]]), a large insurer based in Switzerland, to build a usage-based general and professional liability insurance policy. The product, which Nitschke says has been purchased by independent contractors in 43 U.S. states, allows workers to buy policies that are more flexible and shorter in duration than many of the alternatives. For example, a freelance graphic designer could use Bunker and Chubb’s tools to select a six-month insurance policy and pay for it on a month-to-month basis; that type of policy gives the worker more freedom than some of the products sold by other insurers, Nitschke says.
Bunker is both a licensed insurance broker and a technology company. Contractors can buy insurance from Chubb and other carriers listed on Bunker’s marketplace, and when that happens Bunker receives a fee from the insurer.
Chubb, which has 31,000 employees worldwide and last year posted net income of $3.9 billion on revenues of $32.2 billion, is now also an investor in Bunker.
Nitschke says Bunker raised more than $2 million from Chubb, though he declined to provide the exact amount of funding. Bunker has now raised more than $10 million in outside financing since launching in 2015, he says. The company’s previous backers include American Family Ventures, the investment arm of Madison, WI-based American Family Insurance.
American Family Ventures, Chubb, and Hiscox, a New York-based insurer that has also invested in Bunker, each have an ownership stake in Bunker of less than 10 percent, Nitschke says. That would mean Bunker’s latest funding round, from Chubb, valued Bunker at $20 million or more.
The market Bunker is targeting with its software is large, and growing. According to a 2015 report from the Government Accountability Office, contractors, temporary employees, and other so-called “contingent” workers accounted for 40.4 percent of employed workers in 2010, up from 35.3 percent in 2006.
Nitschke says he spent more than a dozen years working in the insurance industry, including stints as a vice president at Travelers Insurance and CUNA Mutual Group.
He says he decided to launch Bunker, along with co-founders Dan Feidt and Steve Giddens, after observing that independent contractors and small businesses often struggled to find affordable insurance, and the process tended to be “very paperwork-intensive.’’
“Today, the two parties—the freelancer and the company [he she contracts with]—are connected through a network of emails and phone calls and PDF documents” when it
