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Coming of age in the mid-1990s, bouncing from minimum-wage paycheck to paycheck with zero in savings, I could barely afford car insurance. I had no business owning that zippy Honda Civic my grandfather sold me for a dollar, but I adored it. Any health insurance I could get was inextricably tied to a “real job,” which I wouldn’t land for a few more years.
Looking back, I wonder what my 20-something self would’ve done with an easy, affordable option to purchase supplemental employment insurance to protect myself against a financial crisis. SafetyNet is a new startup that offers just that—an insurance tool to cushion periods of unemployment due to job loss or disability.
Nationally, more than 6.5 million Americans are unemployed, according to the U.S. Department of Labor Bureau of Labor Statistics. And more than half of all Americans (57 percent) have $1,000 or less in their savings accounts, according to a 2017 GOBankingRates survey.
“We’re finding our product resonates among people who don’t feel a lot of job security,” says SafetyNet Director Mark Greene.
Here’s how the product works: Choose from four plans ranging from $5 to $30 per month and receive a lump sum cash payment from $1,500 to $9,000. Coverage exclusions, according to the company’s website, are “narrow and clear—no surprises at claim time.”
Greene says the company interviewed 7,000 people across the country and across the financial spectrum. “People aren’t playing fast and loose with their jobs. These are planners, people who care,” he says.
SafetyNet isn’t your typical cash-strapped, early-stage company. It’s actually a spinoff of CUNA Mutual Group, the Madison-based insurance provider. Despite the substantial venture capital CUNA laid out for SafetyNet, the company operates like a startup, employing fail-fast strategies in product development and positioning itself as a social innovation that aims to disrupt the insurance industry.
Typical industry loss ratios—the difference between premiums paid and claims settled—are 30 to 50 percent, says Greene. He adds that SafetyNet’s loss ratio is 70 percent and calls it a “guidepost” that the company intends to maintain. Other disruptive business practices SafetyNet touts are a shorter waiting period to file a claim and fewer exclusions.
“Consumers don’t use terms like ‘waiting periods’ and ‘terms and conditions,’ ” says Greene. “If we’re going to do this right, we have to do it sustainably, efficiently and with great transparency.”
Another way SafetyNet distinguishes itself from competitors is that it relies on advertising and marketing instead of a sales force to drive business, which Greene says is “growing exponentially” in just one year of operation in Wisconsin and Iowa. Expansion plans are imminent.
As part of CUNA Mutual Group’s Innovation Lab, SafetyNet’s staff of 15 full-time employees—including actuaries, data analysts, attorneys and customer service reps—are busy perfecting the insurance product and developing solutions to other financial hardships involving savings, credit and income volatility.
“We’re not trying to make more insurance products,” says Greene. “We’re trying to move the needle on the problems.”
Greene is on a mission. A current pilot in the Air National Guard and chair of the city of Madison’s Economic Development Committee, his passion for economics grew in law school at the University of Wisconsin–Madison. “I was attracted to the way money moves and the role it plays in people’s lives,” he says.
Greene came to SafetyNet after four years as an investment adviser with Merrill Lynch. He noted that the 2013 Race to Equity Report—which revealed massive racial disparities in Dane County—identified a client base that lacked diversity and representation.
“I felt there was something more I could do,” he says.
Brennan Nardi is communications director at Madison Community Foundation and a former editor of Madison Magazine. Reach her at firstname.lastname@example.org.