Shake up: Insurate Aims to Change Workers’ Comp Industry

At age 20, Joe McILhon was injured at work when a forklift with hardened plastic wheels ran over his left foot. Fearing for his job, he never reported the injury.

Two decades later, the Elkhorn resident is working to reinvent workers’ compensation insurance for high-hazard employers as CEO of Insurate, a venture-backed startup based in Omaha that offers its services in 20 states, primarily in the middle and southern parts of the country.

“I like to think that we’re rebuilding the workers’ compensation industry with a focus on promoting a deeper understanding of a sometimes, misunderstood industry,” he said.

McILhon, who grew up in the Des Moines area and retired two years ago as a master sergeant in the South Dakota Air National Guard, co-founded Insurate with President Scott Weller and CFO Hossein Mousavi.

Individualized Risk Focus

As a longtime insurance agent and self-proclaimed “insurance nerd,” McILhon noticed many shortcomings in the nation’s vast workers’ compensation insurance industry. 

For instance, many providers may only consider a narrow range of data points when assessing risk and pricing premiums. 

As a result, McILhon explained, industrial employers tend to be lumped together based on their industry instead of their actual risk.

“We solve this problem by complementing traditional underwriting with hundreds of additional data points on each business, without reliance on sensors, apps, wearables or computer vision,” he said.

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Insurate’s proprietary Safe Tier underwriting system “utilizes traditional and novel data sets and predictive analytics to look beyond what a company does to see how they do it.” 

Joe McILhon, CEO, Insurate. ( Photography by debra S. Kaplan)
Joe McILhon, CEO, Insurate. ( Photography by Debra S. Kaplan)

As a result, McILhon said, the company can “confidently write across all major high-hazard industries and reward safe companies with best-in-market.”

McILhon believes that up to 1.5 million companies in the U.S. are being overcharged for workers’ comp based on the type of work they do instead of their actual risk.

In Nebraska, that could include up to 4,000 companies in industries such as trucking, heavy construction, telecom, medical care, heavy manufacturing, agriculture, and oil and gas, among others.

From this group, Insurate is focused on companies with 20 or more employees and annual workers’ comp premiums of $50,000 or more.

Insurate uses predictive analytics and benchmarking to pinpoint each employer’s risk. Some of the analytical factors include frequency of incidents, the quality of a company’s safety program, industry-specific data, the types of employees making claims, state and local data and environmental issues.

“With Insurate’s analysis we are finding firms that are paying from two to six times the workers’ compensation premiums they should be paying,” McILhon said.

Replacing Stereotypes with Data

Insurate taps the resources of the Florida-based National Council on Compensation Insurance and the 51-year-old National Commission on State Workmen’s Compensation, in addition to its own proprietary data and analytics, in addressing the specific needs of customers.

A local success story can be found at La Vista-based Badlands Tank Lines, a 12-year-old crude oil trucking company that employs 400 in moving product between North Dakota and Texas.

“We found the stereotype that ‘crude oil is dangerous’ to be just that, and not based on any facts or data,” he said. “Nationally we save businesses more than $1 million dollars a day in premiums because underwriters might give weight to that one claim that happened perhaps 20 years ago.”

McILhon cited communications construction firm AmeriCrew, which deploys fiber optics and 5G wireless infrastructure, as an example of how Insurate provides savings to clients.

“Members of their crews climb as high up as 150 to 300 feet replacing 4G with 5G,” he said.

Insurate performed an analysis of AmeriCrew’s operations to identify the percentage of each crew that did the climbing, and of that group, how much time was spent above ground.

McILhon said the analysis debunked the precedent that all the crew workers be classified as climbers, revealing that only 20% ever left the ground, and of what group, most only climbed two days a month and at 150 feet or less.

According to McILhon, these findings enabled Insurate to pass along savings of over $100,000 annually.

Repairing a Broken System

McILhon, who enlisted in the National Guard at 17 and served several 9/11-related deployments, has a passion for reinventing broken systems.

In recent years, he has had his sights trained firmly on the $60 billion workers’ comp market, which he believes fails far too many employers and injured workers.

McILhon has visited 70 of Nebraska’s 93 counties, racking up more than 50,000 miles on his Ford F-150, meeting with business owners. He also has a heavy schedule of pitches to venture capital investors.

McILhon said Insurate serves more than 1,300 agencies at present and will soon operate coast-to-coast.

“Our commitment is to rebuild worker’s compensation insurance,” he said.