Startup Bites: Meet the Young Chefs [Part 6]

Startup Bites CoverGo

We’re excited to continue our series, “Startup Bites: Meet the Young Chefs”, where Co-Founder Sven Roehl sits down with founders of startups to chat about their exciting solutions and how they’re on track to make big waves in the insurance world.  

In today’s blog, Sven sat down with CoverGo, the winner of our Startup Pitch Specials: China event. The Hong Kong-based startup is the proud provider of a configurable no-code platform that allows insurers to build any type of insurance product within days. Founded in 2016, their 30+ enterprise clients across 3 continents come mainly from the insurance industry, including P&C, life, and health. CoverGo’s solution makes it possible for insurance to be 100% digital, allowing insurers to be agile and stay relevant in the changing global market.  

Check out what we learned about CoverGo below! 

We also interviewed CoverGo in our April 2021 Food for Thought live session — here’s a highlight from the event!

Their Incredible Journey So Far 

Over 4 years ago, Tomas and his business partner moved to Hong Kong with no local connections. They spent 3 years developing insurance APIs instead of going to market immediately. Since then, they have grown the CoverGo team to 40+ people and have signed clients from around the world, including the U.S. and Canada. Even as we spoke to Tomas and Julien, we could see the many awards and trophies CoverGo has won in the background — very exciting! 

Their Biggest Challenge?  

Enterprise sales in one of the most traditional industries!  

Tech startups often face the challenge of building trust with corporate giants and gaining support from traditional companies. The first client is always the hardest one to onboard, but since then, CoverGo has grown exponentially into other parts of the world and is working with clients that are excited to welcome the innovative software solution.

So, How Does CoverGo Help Insurers? 

CoverGo understands the industry’s pain points: legacy systems, tons of paperwork, and manual processes. While it is clear that insurers want to improve this, they do not know where to start. CoverGo specializes in helping insurers, MGAs, and banks make insurance 100% digital in order for them to better serve their customers, which in turn helps insurers reduce costs and increase revenue.  

Here are the 4 ways CoverGo helps insurers:

  • Build and launch products faster 
  • Enable omni-channel distribution
  • Improve policy, admin, and claims management 
  • Integration to any system and can operate on top of existing legacy systems 

While competitors take months to develop new products, CoverGo achieves this for their clients in just weeks! 

Our Favorite Things About CoverGo’s Solution 

1. CoverGo recognizes that off-the-shelf solutions are too generic to cater to insurer’s individual requirements, and so they tailor their solution specifically to each client’s needs

2. With 500+ APIs, the startup can quickly help insurers to scale the solution to add phase 2, 3, etc. 

3. Users can use drag and drop product components in the visual product builder to build and launch their new insurance products in hours with APIs auto-generated — no code required! 

Bonus: How CoverGo Adds Value to the IT Department 

CoverGo is not looking to replace in-house IT departments. In fact, IT teams can take CoverGo’s system and can enhance it, build on top, and even use CoverGo’s APIs to build new applications. This allows insurers to retain the power internally instead of relying on third parties to manage the software for them and empowers users to focus more on value-added tasks.. 

After witnessing CoverGo’s solution in action, we can see why the judges voted for this innovative startup as the winner of our Startup Pitch Specials: China! We wish CoverGo all the best as they continue to grow internationally and looking forward to welcoming the team back for future events! 

Startup Bites: Meet the Young Chefs (Part 2)

We’re excited to continue our series, “Startup Bites: Meet the Young Chefs”, where Co-Founder Sven Roehl sits down with founders of InsurTech startups to chat about their exciting solutions and how they’re on track to make big waves in the insurance world.  

In today’s blog, Sven sat down with Laura McKay, Co-Founder of PolicyMe. Read the full interview below! 

Experience the full interview — check out the recording above!

Hi Laura, thank you for joining us today! Our audience would love to hear a little bit about yourself, your history, and in a nutshell, an overview about your startup and when you found it. 

I started my journey in life insurance back at the University of Waterloo, where I studied Actuarial Science, but instead I went into Management Consulting. After school, I joined Oliver Wyman, which is a management consulting firm, to work on strategic initiatives, operational efficiency initiatives, and even regulatory initiatives. It went well; I spent a lot of my time with insurance companies, exploring the strategy side. I noticed there was progress being made in the insurance space, but it was very, very slow.  

At Oliver Wyman, I met my Co-Founder, Andrew Ostro, and we decided to take a stab at this problem ourselves. Life insurance is archaic in the way that we distribute products, how long it takes to get an approval, and the settlements of a life insurance policy. There is probably a quicker, more efficient way to serve customers, and that was how we decided to start PolicyMe. We started in March of 2018, just the two of us with our jobs, and immediately came into contact with Cookhouse Labs. You were very supportive of us in those early days, helping us with office space, making an introduction to various Canadian life insurance companies, and helping us brainstorm the future of this company. We were able to do a soft launch in September of 2018 and a more formal launch by the end of the year, and have really seen a lot of traction since then.  

It feels like not long ago, and now you’re already two years into the market. I was an entrepreneur a long time ago and I know there are quite a few sleepless nights before really making a final decision. What motivated you to quit your job and go ahead with PolicyMe?  

We started talking about the idea non-stop in December, working on it on the side. At some point, I realized that I needed to either pursue this full-time, or I needed to let it go. I am very passionate about the idea, but there was no way I could pull this off while having a separate career at Oliver Wyman. We looked at the Canadian market and didn’t see a ton of competition or innovation in this market specifically, and it just felt like the perfect place to start a company. I had a lot of support from mentors and even colleagues at Oliver Wyman, and that was the final bit of encouragement that I needed to take this on.  

 So now, a little over 2 years later, what are the biggest challenges that you faced while growing your business?  

We initially set up the business as a brokerage, which was by far the quickest way to launch the company and allowed us to get started and sell life insurance policies. What that meant is that we relied on insurance companies to help with the customer’s journey, because right now we work with insurance companies to get our applicants underwritten through them. We rely on their processes to get to an approval, and we’re held to their constraints around what applications and processes they’d like to use. What surprised us was how few enabled a smooth seamless journey starting with, believe it or not, e-signatures. In an era of COVID, it’s crazy that you wouldn’t be able to have that. In 2018, I remember calling every Canadian life insurance company that I could possibly contract with as a life insurance advisor and it was slim pickings to find insurance companies that would allow something as simple as e-signatures. Other processes and improvements like non-face-to-face sales had a lot of constraints around them, such as requiring clients to verify their IDs by sending a copy via mail.  

It took a while to get down to a list of partners who we thought would meet our demands of the online digital application process that we really wanted for our clients, but it was worth it. Since then, we’ve become pretty good partners with all these insurance companies, and they have been interested in our journey. They keep close connections with us and, in some cases, even make exceptions for us as a digital company, knowing that our clients aren’t the typical clients that are meeting their advisor face-to-face. 

As you mentioned, we met at Cookhouse Labs a little over 2 years ago and I remember it well. How did the collaboration between Cookhouse Labs and PolicyMe add value to your business? 

First and foremost, it was an entryway into meeting a lot of parties within the Canadian insurance industry. We were introduced to senior leaders at MGAs and other insurance companies. We also got to participate in some interesting workshops with people that we deal with every day, like a workshop with underwriters to talk about the future of underwriting. It was interesting to get their point of view on how far we could push the envelope, where some of the constraints are, and why those constraints exist. It was very beneficial for us early on to have those sounding boards for some of our ideas to tell us how feasible they would be! 

I’m glad we could contribute to your business, which seems to be very successful right now! If we look back on your journey, what highlights and moments of success stand out to you? Do you have moments where you say “Wow!” — where you immediately wanted to go and open a bottle of champagne? 
 
There’s so many to recount! I think the first highlight was the day we launched. We sold our first policy seamlessly without having to talk to someone; they filled out all the information online and got through it. I remember we were at Cookhouse Labs and my husband came by with a champagne bottle. It was just one policy, but it proved to us that everything functioned well on the first day that we launched, which was great. 

Since then, there’s been a tremendous number of wins. At this point, we have 190 5-star reviews, but even hitting that hundredth 5-star review was so exciting. It just shocked me that strangers felt so fondly about their experience working with us that they were willing to take a few moments to write us a review. And finally, when in January of this year we raised our seed-round, because sales is a lot of work, certainly a lot of work for my Co-Founder Andrew. It just proved to us that there was interest in this space and that there were a lot of opportunities to work with investors in the future. 

Speaking of the future, where do you see your business in the next 2-3 years? 

We are very focused on growing our presence in the Canadian market. We are in the process of doubling down on branding and becoming a household name for life insurance in the Canadian market. Another focus is products — we really want to take control of the end-to-end customer journey.  We’re trying to get accelerated underwriting experiences for our customers so that, if they qualify, they don’t need to go through an excessive wait time and then an underwriting cycle. I would love to get to a place where we can give decisions after they answer a few eligibility questions. After that, we’ll focus on launching new products that our customers ask about all the time, such as critical illness. We’re excited to expand the number of products that we can offer our clients! 

Exciting time ahead of you! You mentioned your business currently involves collaborating with insurance companies. On a personal level, how has your experience been with this collaboration? 

 To be honest, it depends on the insurance company. One thing that I’ve always struggled with in the life insurance space is just how many people are involved in getting an application from ‘created’ to ‘settled’. We’re pretty convinced an application goes through around 16 different pairs of hands before it gets approved. And I’m talking about a very healthy individual — it takes that many pairs of hands. If you think about it that way, we’re dealing with improving the process with 16 different people. That’s been our biggest challenge in working with insurance companies: they’ve become very solid in terms of how they work and how they structure themselves. There’s no one overseeing the end-to-end customer journey to see if there’s improvements that can be made along the whole process. As we come in and suggest changes, there are a lot of different people that we need to get buy-in from to make a single change.  

I think that that should be one of the biggest goals of this industry in the future. Do there need to be 16 different pairs of hands to approve and settle the application of a 30-year-old buying a $500,000 term life insurance policy? Is there a way we can really streamline that process for them? Because every time you introduce a new pair of hands, that hand-off can take 2-3 days. If you have 16 transition points, 2-3 days quickly turns into a very long time to settle this. So, if a customer could skip through those processes, it would be helpful to them. 

There’s definitely a lot of room for improvement in the insurance industry. Based on your experience, where do you think the industry is headed in the next 5 years? 

There’s a good amount of focus on underwriting recently, probably prompted by the current pandemic and the limitations we had for several months. I think that was the fire that we all needed to rethink whether all these requirements are necessary and whether there’s a way that we could get comfortable with a little less information from the applicant. Looking at other markets, especially the U.S. market, they have been able to get more comfortable with accelerated underwriting than what we’ve seen in the Canadian market. I think it’s time we push the envelope to see if there’s a way we can get there.  

I think another direction is to get a focus lens on the process, versus just the broker focus lens. You can even see the way some of the health questions are asked — they’re very confusing and probably written by a legal and compliance team. I think it’s worthwhile to look at the customer journey from a consumer perspective. A move to digital brokerages and digital channels is inevitable and we’ve seen it happen in every other financial services vertical. It’s typically how millennials like to do business; they’re focused on self-service. If it’s not a priority for insurance companies today, it really should be. Focusing on good customer experience could lead to their market share going up quite a bit. 

Customer experience is key, and we do our part by using a human-centric approach at Cookhouse Labs. We’re starting to see improvement and there’s definitely a lot more work that needs to be done, but we’re very happy to have organizations like PolicyMe supporting the Canadian industry and achieving this goal! Laura, thank you very much for sharing insights on your organization with us today. We wish you all the best! 

Thank you, it’s great that we’ve stayed connected even though we’ve moved out of the Lab space. It’s been just wonderful to continue to participate in your events! 
 

Startup Bites: Meet the Young Chefs (Part 1)

We’re excited to launch our series, “Startup Bites: Meet the Young Chefs”, where Co-Founder Sven Roehl sits down with founders of InsurTech startups to chat about their exciting solutions and how they’re on track to make big waves in the insurance world.

In today’s blog, Sven sat down with Trevor Gary, Founder of Micruity. Read the full interview below!

Experience the full interview — check out the recording above!

Trevor, thank you for joining us today! It’s been a while since we meet at Cookhouse Labs. You had reached out to us because you were thinking about quitting your job and starting your own business. We said, ‘Let’s see what how we can support you,’ and here you are a couple years later, running a successful company! We’re very interested in hearing more about your business, so let’s start with a quick introduction about yourself and your startup.

Thank you for having me! I remember that very, very clearly — it’s ingrained in my brain.

About me; I worked at Deloitte before I started Micruity. Myself, I’m an active person. I love snowboarding and running. I’m a big fan of manga and Japanese animation and I have 2 sisters that are my good friends.

About Micruity; At Micruity’s core, it’s a data-clearing house that can easily be easily spun up on different environments, different cloud platforms. It can take information in several different forms and standards. Currently, we focus on the U.S. 401K market — that’s a $6 trillion market — and on enabling lifetime income products to exists in that market, so annuities. We connect the key three stakeholders that would be associated with that transaction: a life insurer, a fund manager and a 401K record-keeper. We enable them to communicate regardless of their standard and form. A life-insurer may want to communicate via an API, and a record-keeper may want to communicate using the ACORD standard through an SFTP connection. These two can still communicate with each other because Micruity is sitting in the middle, translating the information and sending and receiving it in whichever form a stakeholder wants it to. We are essentially their data conduit.

Behind every great idea is a moment where you say, “Okay, I’m going to do it, I’m going to start my own business”. What was that moment for you and how did you come up with the idea?

I came up with the idea while I was still at Deloitte. I saw that we were closing pension plans, so individuals no longer had access to that lifetime income which was provided by their past-employer. Huge companies were closing these plans because they were worried about people outliving their projections and the companies being on the hook for that liability, but what they were doing was transferring that risk over to unsophisticated investors. I also saw that, while we were closing these pension plans, we were able to sell that liability to life insurers who had a big appetite for that group annuity type business, and we’re talking billions of dollars in transactions. I thought, “Okay, we need to somehow fill this gap and to make lifetime income more accessible to the mid-market individual, and Micruity is the way to do it”.

Back then, I didn’t know exactly what it would look like, but I thought we somehow need to enable these transactions to happen much more seamlessly. The purchase of annuities needs to be much easier. And so, the eureka moment was really associated with Cookhouse Labs. I reached out and you responded. You said, “Yeah, come on in, let’s talk about it”. I remember clear as day the conversation, and Cookhouse Labs was really supportive. You told me that if I chose to leave Deloitte and start Micruity, you would help me out with office space and get it up and running. And so, I did and that big moment was December 2017. I’m actually quite attached to Cookhouse Labs!

That’s great to hear! It’s been a while since December 2017, so tell us, what challenges did you face growing Micruity?

The biggest challenge is when startups enter a market, they’re creating a new solution to an existing problem and saying, “I can do this better than you’re doing it today”. Micruity is a bit different because annuities don’t really exist in defined contribution plans. It’s an idea, it’s been out there, but people haven’t figured how to do it. And so, the difficulty of that is the problem statement is not as tangible to many investors. We when we come to market, when we go to raise capital, we must find very strategic investors that really understand what we’re doing. In the traditional 1 minute, 2 minute, 5 minute pitch context, we don’t have much of a chance because there really is a deep background story that needs to be understood to explain how massive of an opportunity putting annuities into 401K plans really is. I would say that has been the biggest challenge for us, on the communication side. One of the largest obstacles we face is how do we communicate the value proposition of Micruity when it comes to raising money to build a capital-intensive infrastructure that the Micruity platform is.

It sounds like a solid challenge you have to overcome there, but it also sounds like you’re making a big impact. So you’re all working in the U.S. right now, only, not in Canada?

Only the U.S. right now, however we are still a Canadian firm. We own our U.S. subsidiary, but our tech development is in Toronto and will continue to stay there.

Are you planning at any time to provide the same service in Canada?

We are. For us, it would be really easy to just change the data storage to Canada and then we have the Micruity platform become a full Canadian version in its own environment. What we’re still trying to figure out is where Micruity will fit in the Canadian market. We know BlackRock has a new product with a lifetime income component that they have presented to Canadian defined contribution plan sponsors; is there a similar opportunity to do what we’re doing in Canada in the defined contribution plan space, or is the opportunity in Canada more on the retail side? Is the opportunity to create that infrastructure to make annuities more accessible on your mobile/local advisor platforms? This is just to get an easier way to start building a lifetime income over time, rather than a hundred thousand dollar annuity when you retire, which is not accessible to all your mid-market individuals.

Along your journey, I know you spent quite some time in the Lab with us. How did collaborating with Cookhouse Labs add value to your journey?

You ran a sprint towards the end of 2017 that involved collaborating with some insurance companies and consultants. The reason I was gung-ho to be a part of it was, as an entrepreneur, I’m so close to the problem. I live with the problem, I’m married to it, it sleeps with me every night. My solution would be narrowly focused.

What the Cookhouse Labs sprint enabled for us was this: let’s just create a 10,000-foot problem statement and then work with a group to see what solution we come up with. If that solution resembles at all what we’re doing at Micruity, that’s a traction point and you’re on the right track. If it doesn’t, that’s a pivot point. Being a part of that session gave us a little bit more confidence as a very, very early stage company and confirmed that we were on the right track. Bringing together folks with different expertise and having them come up with a similar solution was very valuable.

We’re happy to hear that! Looking back on your journey, what highlights and moments of success stand out to you?

There’s been a lot of little wins and ups and downs along the way. So it was myself and Chris, my business partner at the start, two Canadians on this path. At one point in 2018, we said, “We need to check out the U.S. and see what’s going on there”. We went to this conference and met the Managing Director at the time of a global insurance accelerator in Des Moines, Iowa, which is the insurance capital. He said, “You should apply to our accelerator, I think our team will be interested”. At the start of 2019, we got in and we moved down to Des Moines, Iowa for a few months, the coldest four months, I think, on record. We learned a ton about the U.S. insurance industry. It really was the start to Micruity becoming what it is today, building our business case and how we become the data conduit for the 401K space. There were ten startups all in the insurance space, all really early stage like us, from all over the country. It was a big win for us, and it continues to be. A lot of those relationships continue to guide us today.

Then we joined the Franklin Templeton/EvoNexus incubator in Silicon Valley. They’re doing large acquisitions, and you can feel it when you’re on a Franklin Templeton campus. Franklin Templeton is a fund manager. We’re so used to working with insurers closely, it’s exciting getting to see the other side of the house, because our key clients are life insurers and fund managers. That was really big for us and came with a nice investment from Franklin Templeton.

Sounds like an exciting time! Startups are all about growth — where do you see your organization in the next 2-3 years?

We will be leaders in the 401K market for data-clearing associated with annuity products. It really is a winner-take all business because it doesn’t make sense to have more than one middleware. The other side of it is that we’re looking to power apps on our platform so other companies can build an app using our data-clearing house. Looking at a lot more of those conversations with startups and around what they’re looking to do once this market’s more mature; secondary markets for annuities, annuity broker house, all those things, so looking at those conversations and start powering those products as well.

There’s a lot of collaboration involved in your business. We’re very interested in knowing from your point as a startup, how has your experience been with collaborating with insurance organizations?

Everyone knows collaborating with insurance companies is a battle. No one really moves quick in insurance. On top of that, you’re never going to see a real contract if you don’t have your security and your administration down, so as a startup, you have to endure this long sales cycle. You have to be able to operate a startup with some maturity, and somehow along the way show traction through POC’s, so that you can raise the money to build the team, to build the product so you can finally sell the product. So, a lot of chicken and egg, but what happens is if you are successful in doing this, you build really strong relationships because there is this massively long sale cycle with many points of contact with many people. If you do it successfully, you now have strong relationship with that company, and you’re probably going to get a fighting chance if you’re actually solving a problem. That will help you to grow, and then it’s now on the startup to be successful. On one side, it’s a battle; the other side is that through that battle, you build a really strong relationship with the company that is then interested in seeing you succeed and has your back.

And is it better to focus on a very limited amount of organizations then, or spread out and reach out to as many organizations as possible?

My career might be in a unique place because we’re a data-clearing house, so success in our market depends on our adoption across multiple insurers. Because ours requires more of a group adoption, we are probably on the longer end of the sales cycle, so we have to reach out to as many decision makers as possible. At the same time, our ecosystem is very small, maybe 50 companies between life insurers and fund managers. Maybe 25 life insurers have the capacity for this market. Our experience is unique, maybe even different from the majority of the insurance startups.

Where do you see the industry heading in the next 5 years?

Certainly, the pandemic had triggered this massive need for digital distribution, so anyone on the digital distribution side can have a fun couple of years. Looking at the bigger picture, what’s always on the top of my mind is product commoditization. I think the idea of being connected to a brand is not really realistic anymore. I think the insurers that will thrive will be the insurers that will figure out how to leverage readily available information to expedite the closing of the sale. Whoever can figure out how to do those can be successful, in my opinion.

Trevor, it was a pleasure to connect with you and reflect on the success you’ve had since we met in 2017. Thank you for sharing your thoughts with us, and we wish you the best of luck for the future!

The Power of the Ideathon

In just 1 week, Cookhouse Labs will launch WinterHack 2020: Global Design Thinking Ideathon in partnership with InsurLab Germany and msg!

Winterhack 2020

From our experience with hosting (physical) ideathons in previous years, we’ve found that these events are a great way to get innovators’ creative juices flowing. While there are prizes and glory at stake, there are many additional cool benefits to getting involved in WinterHack 2020. Let’s check out those benefits!

1. Time crunch encourages focused innovation

Most innovation projects span several weeks, where team members meet occasionally for a few hours to discuss their ideas. In an ideathon, innovators are aware they must present a prototype within 2 days and successfully sell their idea to the judges, meaning little time must be wasted on discussion. The ideathon’s 2-day time crunch encourages innovators to timebox, allowing them to complete tasks within predetermined fixed times.

2. Hackers build holistic solutions

The solution should go beyond solving the problem; innovators must adopt a holistic approach when developing the solution. Many aspects of the business model must be considered, such as the target group, the marketing plan, and how to finance product development. The solution will be evaluated against diverse judging criteria, including ease of implementation. There are many aspects to consider but only 2 days at hand, creating an exciting challenge!

3. Experience Design Thinking in action

Many ideathons do not have a guided process, but at Cookhouse Labs, we want to maximize the experience and use a methodology that fits into the 2-day timeframe. We’ve used Design Thinking in projects that range from ½ a day to 3 months, meaning we know how to tailor the method to fit any project duration. Through our workshops, participants will learn how to:

  • Empathize with the end-user to understand their needs
  • Map out the customer journey
  • Define the real problem
  • Build their prototypes
  • Test their solution on real users, and
  • Create compelling final presentations

We’ve found that following the methodology leads to better results than simply jumping into coding the solution. Our workshops are designed so that one team member can attend while the remaining members continue to develop the solution, thereby making the most of the time available.

4. Learn and build meaningful connections in the process

Mentors are subject matter experts who provide valuable industry knowledge to guide teams towards holistic solutions. Many of our teams are comprised of student hackers, and this is an incredible opportunity to learn from industry veterans and build meaningful connections that can lead to internships and career opportunities.

Mentors are in the unique position to show students how exciting the insurance industry can be! Our brilliant student teams have their own in-depth knowledge of analytics, AI models, and technology, and as a Mentor, you will see what our young talent can bring to the table.

5. A single problem will inspire many innovative solutions

WinterHack 2020 focuses on digital ecosystems in insurance, a major opportunity for the industry to innovate and adopt exciting technology. An internal team addressing this opportunity will likely develop a single solution, but by the end of the 2 days, industry experts will have access to a variety of solutions created by the teams. Often, the output is very robust, especially if team members have coding and design experience. The ideathon is an opportunity to collaborate with our teams to further develop these solutions into viable products which can potentially solve your organization’s challenges and positively impact the industry.

Don’t miss out on the opportunity to join this exciting global ideathon – click here to learn more about how you can participate in WinterHack 2020!

IoT — a Game Changer for the Insurance Industry

The insurance industry is not known for being fast-paced, revolutionary, or innovative in any way. Why would we be? Insurance products and services have changed very little, if at all. We have mastered our skills as a passive risk taker over centuries. Now we are facing the biggest disruption the industry has ever seen — the Internet of Things, or IoT.  

How can this type of technology be disruptive? 

To answer this, we must first go back and understand how the insurance industry works. Insurance was created to cover the risk of financial loss. Consider any form of insurance — Life insurance covers a loss of income, health insurance covers treatment costs, and auto insurance covers the cost of accidental damage. In order to calculate the probability of this financial loss, actuaries — the mathematicians of insurance — look into the past to predict the future. They study historic claims data, take into account many risk factors, and build models around what they have learned.  

Let’s use the example of life insurance. Life insurance is significant because a single policy can run for many decades. For 40-odd years, the risk follows a mathematical model which is based on information provided by a young policy holder who expects a payout when she or he retires. This is truly a long time to predict. In the example of auto insurance, previous data from a similar age group and location as the policy holder, along with a history of accidents in the area, are used to calculate risk.  

Why does this matter so much? Think about it this way; approximately 80% of costs borne by insurance organizations are claims disbursements. If the impact of claims is reduced by 1 to 2%, this can translate to millions of dollars saved.  

What we are highlighting here is that for centuries, evaluating risk required looking into the past. In the case of health insurance, a younger, healthier policy holder will be offered a lower premium because previous data indicates that this individual is less likely to file a claim. 

Let’s focus on the auto sector for a moment. Very little has changed in the past few decades. The layout of roads, the shape of cars, even traffic rules are relatively the same. Yes, safety features have improved, but the risk model still has decades of solid data to follow.  

What if we introduce a new and unpredictable risk factor, such as autonomous vehicles? 

There is no historical data for autonomous vehicles. Autonomous vehicles behave differently — there are never-seen-before accidents occurring, leading to new claims requests. This poses an equally unique opportunity and challenge to the insurance industry: how can our actuaries provide risk models without historic data to build around? 

We return to our aforementioned disruptor — IoT. This technology can offer real-time data that the industry has never accessed before. IoT can calculate the individual risk of the driver and use accurate behavioral data to determine the real risk at hand, allowing insurers to take new risks into consideration and charge fair premiums. Consider the COVID-19 work-from-home situation, where cars sit parked in garages for most of the week. Customers are being charged the same premiums, but if IoT data is used in programs like usage-based insurance, the insurer would know that the car is being used less often, significantly reducing the risk of a claim. Therefore, a lower premium can be charged, which the customer would no doubt appreciate in these challenging times. 

Without a doubt, the insurance industry is shifting from being a passive risk taker to becoming an active risk manager. The industry has begun to offer customers valuable information that it has acquired through this real-time data analysis. Insurers now trade discounted premiums for actively reducing the risk. Insurers educate their customers on the importance of sleep and a healthy diet. All the unique data required to manage risk is collected through IoT devices, such as smartwatches. When customers follow this life-changing advice, their individual risk of financial loss is reduced. Fewer claims are filed.  

And we know fewer claims means insurers save millions in disbursement money. 

Although we have barely scratched the surface of the potential of IoT in insurance, we cannot deny that IoT is the biggest disruptor the industry has ever seen. The availability of real-time, individualized sensor data is doing more than change the risk model; it is transforming our actuaries into data scientists.  

The potential for IoT and its new business models is vast within the insurance industry. 

Who knows where it will take us next? 

To learn more about how IoT will impact the insurance industry, sign up for our free 60-minute Lunch & Learn webinar, “The Future of IoT in Insurance” on Tuesday, June 16th at 11:30 AM EST!

You can also check out our other free virtual innovation events by clicking here.

Insurance is Everyone’s Port in the Storm

Everyone's Port in the Storm

At midnight on January 1st 2020, we, the world, celebrated the start of a new decade. Little did we know that the beginning of this decade would disrupt all of our lives within the blink of an eye. Today we are experiencing one of the most impactful pandemics in recent times hitting all humankind with the force of a hurricane. In addition to its immediate impact on health outcomes, and tragically, deaths, it is clear to everyone that the outbreak is likely to have long-lasting economic and social impacts globally.

This virus completely ignores man-made geographical borders and doesn’t differentiate between rich and poor. It forces us to live a so-called ‘new normal’ with millions of people losing their jobs and others working from home, while pushing healthcare workers past the verge of exhaustion. No one really knows how we are going to live between now and the discovery of a vaccine – nor do we know how long the virus will dictate our daily lives. These days, politicians repeatedly use the phrase ‘We are in this together’. But what does this actually mean? For the very first time ‘we’ does not mean an isolated community, such as the fans of the Toronto Raptors celebrating the victory of their team (which excludes the fans of the competition). Instead, this time ‘we’ means the largest community we can imagine. ‘We’ means literally every single one of us.

The American author and political activist Helen Keller once said, “Alone, we can do so little; together, we can do so much”. What she meant by this is that a community can combine its power and has the strength to make change happen. The word ‘community’ is derived from the Latin communitas, meaning fellowship. For us at Cookhouse Labs community is a place that we hold in common, such as a physical or geographical location, as well as principles, interests, history or resources. It is a place where we take the initiative to make changes and share with each other. In times like this, where we need to practice physical distancing, the connection to a community is more important than ever before.

Insurance was born out of the idea of protecting the community. In 3000 B.C., Chinese merchants grew tired of losing their goods in shipwrecks and began to divide their goods evenly among ships, so that each boat carried a mix of cargo and not just the goods of one merchant. As a result, a shipwreck produced a slight loss for all and not one big loss for only one merchant. Over time, the idea of reducing the risk of a financial loss was developed further, and in 1966, Nicholas Barbon reacted to the great London fire by creating the first insurance company that offered insurance against natural disasters.

What started as a community initiative to protect the loss of individuals is now a regulated industry aiming to maximize profit as any other financial service provider, with the exception of mutual insurers. As a result it is no surprise that the perception of the current business model of insurers is poor amongst customers, especially the younger ones.

In days where communities all over the world are negatively impacted by COVID-19, where we are experiencing the biggest disruption since World War II in most areas of living, these communities are eager to find security and protection. We now have the chance to show our communities that we care about them. Our industry is able to provide security and protection, because this is the purpose of insurance. Insurance is more than a financial institution collecting premiums and paying out claims. Insurance is everyone’s port in the storm.

Our mission at Cookhouse Labs is to tackle the problems the industry is facing together, using a human-centered approach. We invite you to become a member and join our community of innovators on our journey to Make Insurance Better!

COVID-19 Update: During these challenging times, we at Cookhouse Labs want to play our part in supporting the community. As part of our gift to you, we have made all of our virtual events in May free of charge for members of the insurance and reinsurance community. Take a look at the events you can join here.

Become an Anticipator, not just a Survivor

Unfortunately, there are companies who aren’t prepared for the changes wrought by disease, by technology or by anything unexpected. Yet, the willingness to adapt and innovate is the key to success. Now is not the time to rest on our laurels or rely upon systems and practices that may have worked well 50 years ago, but haven’t changed since. 

As the great physicist Albert Einstein once said, “We cannot solve our problems with the same thinking we used when we created them.” 

When it comes to change, there are three types of insurers: 

  • Anticipators; 
  • Fast Followers; and 
  • Survivors. 

The industry is shaped like a period with anticipators at the top. They are rarer, but they are the keys to the future, because they are busy creating their own future based on the opportunities provided by technology. Next come fast followers. They recognize sound industry leadership and are nimble enough to adapt. At the bottom of the pyramid sit the survivors. They have no innovation strategy; instead, they focus on addressing the industry hot spots. They are hanging onto survival with their fingernails, hoping they can continue to find enough business without making major changes or creating a vision for the future. Which would you rather be? 

So, what does it take to become an anticipator in our industry? There are four key ingredients: 

  • Digitize. First of all, you need to make digital technology a priority so you can take advantage of the efficiencies it offers, along with the opportunity to bring new ideas to fruition quickly and easily. 
  • Top-down Support. If management is supportive and fosters a culture of innovation, the rest will follow. If innovation is seen as an add-on, rather than integral to the organization, you’ll fall behind and lose relevance, no matter the size of your company. 
  • Modern Workspace, Diverse Workforce. Your employees must be able to take advantage of technology and should bring a variety of backgrounds and talents to the table.  
  • Online Offerings. Products and services must be digital. Customers must be able to access them quickly and easily. 

It is easy to turn up your nose at such suggestions because they require an investment. Yet, as Herbert Rogenhofer, the Chief Digital Officer for Talanx in Germany, notes, “The reality is that 95 per cent of our investment goes into the digital transformation of our legacy systems; the rest (5 per cent) is available for innovation.” 

That’s where Cookhouse Labs (CHL) comes into play. At CHL, we believe in collaboration among industry players to find solutions to industry challenges. Collaboration and co-creation are the keys to future innovation success. When we work together, we learn from each other with a minimal investment of time, money and personnel. A diverse group of people can come together, devise a solution and test it with the customer within a short period of time. They can each take the results back to their organizations where the decision to enlarge upon it or not can be made.

Why not focus on multiple topics quickly by spreading your resources through collaboration? During our Season of Innovation at CHL, we’re delighted to share with you our thoughts about innovation in the insurance industry. Get in touch with us at cookhouselabs.com to learn more. 

Insurers selling cars – why not?!

Tesla, the California-based electric car manufacturer, has recently begun selling its own automobile insurance, allowing drivers in the Golden State to purchase a vehicle and insurance together as a package.

Insurance companies can choose to view this move, like most innovative ideas, either as a threat — “They’re removing potential customers from the market” – or an opportunity – “What can we learn from this bold move?”

Here at Cookhouse Labs (CHL), we see it as a wonderful opportunity for insurers to join the game by selling cars, along with insurance. Why not?

Insurance companies, as part of the financial services industry, have the capital to explore this option. Typically, insurers invest the money paid by their clients as premiums so it reaps the largest financial reward possible. However, with markets plummeting as fears of COVID-19 spread worldwide and interest rates at historic lows, it’s time to think innovatively. Why shouldn’t an insurance company create its own business as a way of maximizing its profit?

Think about it. An insurance company could purchase vehicles from the manufacturer and sell them complete with insurance coverage as a package. For the consumer, it simplifies the purchase – there’s — no need to hunt around for auto insurers and compare their rates. Coverage is simply part of the deal.

As the insurer, you can add other perks, too, such as offering a telematics tariff by monitoring driving behaviour in exchange for lower rates. For young drivers, who generally pay high premiums, you could create an enticing special package to reduce costs.

Perks selling cars

Not only is this an innovative approach to auto insurance, it is one that puts the customer first. Most drivers will be happy to forego the inconvenience of shopping around for insurance before they put their vehicle on the road. If you lock in the insurance with the product, you’ll attract new customers and make it easy to retain them – and likely for much longer than a typical one-year policy. After all, recruiting customers is the hard part; with proper attention and service, retention shouldn’t be difficult.

This is an idea new to the insurance industry, but not a radical one. The cellular communications industry jumped on this idea years ago, once they realized that consumers found it much easier to buy their mobile devices at the same place where they obtained their data/calling plans. It’s almost a given today.

At Cookhouse Labs, we view this approach as an opportunity for insurers to retain their place in the value chain while becoming more attractive to customers.

During our Season of Innovation at CHL, we’re delighted to share with you our thoughts about innovation in the insurance industry. Solutions like these are the product of collaboration among our members, and you, too, can share in the intellectual riches. Get in touch with us at cookhouselabs.com to learn more