Meet August Pitch Company CarrierHQ, the First and Only Usage-Based Insurance for Motor Carriers

I recently met with CarrierHQ CEO Scott Prince, an Indianapolis-based company that focuses on optimizing small fleet insurance and payments and offers a much-needed solution to small carriers in the form of an online marketplace where they can get insurance, bring down premium costs, and enjoy a host of other add-on services that make running a small business easier and more profitable. Here’s a preview of the CarrierHQ story Scott will share in detail at  VisionTech Angels’ Pitch Events later this month. Enjoy!

BP: How did you learn about VisionTech Angels?
SP: I’ve lived in Indianapolis since 2007 and have been on the board of The Venture Club of Indiana and other investing groups. When we started our fundraising, I mentioned it to Oscar Moralez and he referred me to VisionTech Angels.

Ben Pidgeon

BP: Explain CarrierHQ and the problems you’re solving.
SP: Just like any industry, the commercial carrier industry is driven by two things, time and money. You have to get products to their destination as cheaply, safely, timely, and as profitably for yourself as possible. And you have to do it by insuring your tractor-trailer rigs. While challenging, the big carriers keep their insurance costs under control by negotiating contracts for thousands of trucks at a time. That’s not the case for small fleet owners. The biggest problem they have is getting and paying for insurance, which has doubled in the last few years, with some paying over $20,000 per truck. Compounding that is insurance companies want large premium down payments. With thin operating margins and weekly receivables, small operators find it hard to start a policy without adding the expense of premium financing and then find it difficult to pay the quarterly installments. Helping their cash outflows match up with weekly inflows can really strengthen their business.

Our solution is similar to ones being used in the personal vehicle space that combine in-vehicle telematics data with an insurance premium risk and rating algorithm to qualify and track active driver performance and reward those with safe driving practices. An example of this is State Farm’s Drive Safe and Save program. We’re applying that same approach to the commercial carrier industry. Earlier this year, we launched Fleet Advantage, the first and only usage-based insurance to the motor carrier industry in partnership with Aon and Crayhill Capital Management. Aon is a $40 billion, publicly traded, global professional services firm that sells a range of financial risk-mitigation products including insurance. Crayhill supplies us with a $150 million factoring facility we can turn dozens of times each year. By tracking driver performance and rewarding those who adopt safer driving habits, we can bring down insurance costs by as much as 50%. We provide actionable data into their drivers’ on-the-road behaviors so they can coach or make other changes.

BP: What are the other benefits?
SP: We’re following the consumer model there, too. With CarrierHQ, small fleet owners can go to our online portal, get a quote, purchase their insurance, manage payments, and update their policy—all in minutes versus days or weeks. This is a huge time-saver for people juggling all of the other tasks associated with running a fleet. No more time wasted with back and forths with brokers, supplying frustrating loss data and faxing. Yes, faxing is still prevalent in the industry if you can believe it. Additionally, we offer factoring, and without going into a lot of detail here, so they pay monthly for their insurance and enjoy a no money down option. It’s very similar to automatic bill pay. It’s a huge solution for small fleets that often have problems with cash flow.

Scott Prince, CarrierHQ

BP: Is insurance your only offering?
SP: No, but it is our primary focus along with payments. We offer some add-on products like Comdata OnRoad fuel and funds cards, ELDs, leasing, and business formation services, and eventually will leverage the unique data we’re collecting across the motor carrier value chain in a number of ways.

BP: Who is the ideal customer – small or large fleets?
SP: Our ideal customer is the small, privately owned commercial carrier company with a fleet of less than 20 tractors. These folks tend to be very entrepreneurial, typically have a high school education, pretty good at juggling all aspects of the business, but challenged by insurance premium costs and slow cash flow. We also meet with larger fleets and aggregators in the industry that want to consolidate contractors or convert fleets to owner-operators.

BP: What do fleet owners like about CarrierHQ?
SP: The biggest thing is the money we save them direct control of their big insurance cost. We’re effectively turning insurance from a fixed to a controlled variable cost. It can cost up to $20,000 a year to insure a Class A truck. Semi-tractors like this can gross over $200,000 a year, and it’s painful when 10 percent of that has to go to insurance. If they drive safely, they get an initially competitive rate that can go down by as much as 30 percent in-term. Instead of spending $15,000-20,000 per truck, they’re spending $8,000-12,000. Putting that kind of money back in their pocket makes them very happy and gives them the ability to add equipment to their fleet. Conversely, if they don’t drive safely, their rates increase. Either way they get access to data so they can instantly manage their drivers. Fleet owners also like the fact they can manage everything on the CarrierHQ portal on their smartphones. When you’re on the road like they are, that convenience is greatly appreciated.

BP: How big is the market?
SP: There are a million small fleet motor carriers with 20 or fewer trucks, and many have fewer than five. In terms of the usage-based, pay-as-you-go insurance market, it’s anticipated to cross $115 billion (US) by 2026. Our initial focus is a 250,000-truck market of safer driving small fleets with annual premiums of $36 billion. We’ll expand from there.

BP: Do you have competitors?
SP: No. We’re the first and only usage-based motor carrier insurance. Progressive and Great West are major players in the motor carrier market, but don’t yet have comparable products to compete with us.

BP: What is your competitive advantage?

SP: It’s definitely being first to market with a solution for a major business-killing pain point. Also, companies have to meet individual state requirements and be approved by state departments of insurance as well as meet federal regulations. Currently, we’re approved in 22 states with another 12 states pending. We’ll be in 47 states by the end of the year.

BP: There’s been tremendous disruption in the logistics and trucking industries due to COVID-19. How has it affected your business?
SP: Like everyone else, we were closely monitoring how the pandemic would impact our business. Instead of slowing down, it has boomed. While some industry sectors have slowed, ecommerce and consumer products-related hauling is active, and smaller fleets have adjusted much more quickly to the new normal. While the larger fleets have had difficulty quickly adapting to supply chain disruptions, small fleet owners are often more flexible. And CarrierHQ is right there with them, keeping them covered and supplying them with essential, competitively priced and easy to use back-office services to help them grow.

BP: What will this fundraising round be used for?
SP: Right now, we have a productive team of 13. We’ve purposefully hired people who are experienced, very good at their roles and can multi-task. As we bring on states, we’ll need to scale our team. The new funds will largely be directed toward product development, customer acquisition and marketing, and expanding our client service team.

BP: Why should VisionTech Angels invest in your company?
SP: There are two reasons. What CarrierHQ is doing should be an interesting play to anyone with experience in insurance technology, fintech or transportation; they know the pain points. And frankly, we want investors who won’t stand on the sidelines, but will share their expertise. Second, the financial return could be significant. We’re very much tech-driven and tech-enabled and while we’re solving an immediate need, insurance, the data we’re collecting opens the door to more opportunities. All of this makes CarrierHQ exciting and attractive to investors.

To learn more about CarrierHQ, visit their website. VisionTech Angels’ August Pitch Events include a live event on Tuesday, August 25 in Fort Wayne at the Pine Valley Country Club at 6 pm and a virtual pitch event on Thursday, August 27 at 6 pm. Pitch events are open to our members and accredited investors interested in joining our group. To register, check your email for an invitation or email Ben Pidgeon at bpidgeon@visiontech-partners.com.