Clearcover's 'Legacy' Approach Is Great Model for Flyover Success

Clearcover is the future of Flyover Country -- at least a reflection of a big part of it.

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The Chicago-based company has exploited the sweet spot of the economy of the future in our region, combining the best parts of an all-digital business model that is more common to Silicon Valley

with home-grown entrepreneurial verve and the "legacy" know-how that's endemic to the heartland, in a fast-growing enterprise now disrupting an industry that has been continually disrupted for a quarter-century or more.

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Clearcover provides car insurance online to consumers who dwell online and wouldn't know a local insurance agent's office if the guy camped in their living room. A Wisconsin resident and owner of two degrees from the University of Wisconsin, Kyle Nakatsuji started the venture-capital operation at insurer American Family in Madison.

"We were spending a lot of our time looking at insurance and the technology landscape and figuring out what to invest in," Nakatsuji told me. "So I decided to start one of my own" with American Family's blessing.

His approach was to go one better than notable online outfits such as Esurance by designing the whole process of shopping for and purchasing insurance to occur seamlessly and completely within the context of e-commerce.

"We built technology that allows us to streamline quoting and the sale process based on data we can acquire," Nakatsuji explained. "It's also based on how we formulate questions. And we selected marketing partners who are relevant to people, as opposed to buying Super Bowl ads."

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At the same time, Clearcover built its claims process to be digital to a level unparalleled in the industry: 96 percent of claims are handled completely virtually. "Consumers get settlements faster," Nakatsuji said, "and it's less expensive for us."

But why not design all of these great e-commerce capabilities in Boston, New York, San Francisco or Seattle? The key -- besides Nakatsuji's Midwestern roots and appreciation for the digital chops of his fellow residents -- lay in the fact that much of the traditional insurance industry essentially grew up and still resides in Chicagoland.

"We had a choice where to locate" Clearcover, Nakatsuji emphasized. "We went through an analysis and tried to find the best overlap between a market where we could find world-class tech talent, great insurance talent and where we could raise a lot of capital.

"It boiled down to Chicago and the coasts, and Chicago won on better access to all the insurance talent from Allstate, State Farm, Kemper, Aon and other insurance companies here. Not to mention that elsewhere in the Midwest are great insurance companies such as Progressive and Nationwide, in Ohio."

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Now, after about four years in business, Clearcover employs about 150 people in downtown Chicago and recently committed to open a second, "virtual" location in downtown Detroit, which eventually could provide up to 300 jobs.

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In building on its success based on tapping into the strengths of an industry that is native to Flyover Country, Clearcover provides a great model for startups in other legacy businesses such as agriculture and food processing, metal manufacturing, water technologies, transportation and logistics .... and on and on.

May they be paying attention.

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