Rick Maloy Jr.
Maloy Risk Services/InsureHiTech
TITLE: President
EDUCATION: Wake Forest University, B.A., history
FIRST JOB: Selling auto and home insurance
RESIDENCE: New York City
THUMBNAIL SKETCH: A fifth-generation insurance broker, Mr. Maloy launched InsureHiTech in 1999 to develop a technology platform for streamlining insurance companies’ workload. In April, he spun out the retail division of his company, which sells property and casualty insurance to technology firms, under the name Maloy Risk Services, while turning InsureHiTech into an insurance wholesaler. Both are located in Plainsboro’s Forrestal Village.
Your family has been in the general insurance business for decades. Why did you start specializing in technology firms?
There are now about 24,000 retail insurance brokers in the United States. How do you differentiate yourself? Because insurance companies only want to work with brokers that give them large volumes, we decided in the late ’80s that it made sense to be a specialist. You’ve gained not only a reputation for working with a type of customer, but from the underwriting perspective, you have an understanding and knowledge base within a certain industry group. It just didn’t make any sense to be a generalist anymore we wanted to go after clients that were fast-moving, growth-oriented, and they don’t want to spend a lot of time educating an insurance broker on what their business is about.
In 2000, you had 55 employees working in 14 cities, and today you’re down to 13 employees in Plainsboro. What changed?
We raised money from J.P. Morgan in two rounds of financing in both 2000 and 2001. We went from five employees to 50 employees in a couple of years. We hit 2001, and we were overextended. We would make a lot of money when our tech companies went public the product line would go from a $10,000 to $50,000 product line, to a million dollar product line. But in 2001, what stopped? IPOs. All the emerging technologies businesses, all the companies we were dealing with, all went out of business. We basically shut down everything that was not core to the company.
How are you building back the business?
Now we started our development again and we’re profitable again. And now we’re doing that same model, but we’re doing it in a more controlled fashion: It’s build the revenue, then place the bodies, not place the bodies and hope the revenue comes.
Was getting into the insurance wholesale business under InsureHiTech part of the retrenchment plan?
We basically created (InsureHiTech) because we were using four different wholesale brokers to place business. We realized we had enough volume to be our own wholesaler. It just streamlined and brought it all in-house.
Are there ways small businesses can save money on insurance?
The thing that most small businesses don’t understand is there are self-funding options available to them other than the six state plans. If you’re a company under 50 employees, and you go to an insurance broker, he’ll go to the four or five markets that operate right now in New Jersey Aetna or whoever and they’ll offer these six plan choices. And there’s no variation in design. So you’re stuck. There are self-funding options available that get you out of those state plans. That’s really designed for companies between 25 to 50 employees they are the best candidates to get savings.