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!

Blockchain & Group Benefit Coordination: Learnings & Wrap Up

Blockchain has been one of the most talked-about technologies of 2017, with some even calling it the most revolutionary technology since the widespread use of the Internet.

How will blockchain technology affect the insurance group benefits coordination process?

Over the course of a 5-week sprint, Cookhouse Lab’s blockchain & group benefit coordination project team went on a mission to find out. Using the lab’s design-thinking methodology, the team identified key customer and business pain points within the current coordination of benefits journey, developed a future state blockchain-based process, and created a set of wireframes for the MVP. Finally, they were able to leverage resources from the project’s build partner, msg global, to build a final MVP based on their wireframes and processes. 

The proposed blockchain & group benefit coordination MVP

The team’s MVP enables policyholders, covered by multiple insurance companies, to submit an extended healthcare claim (eg, vision, physio, massage) once to their primary provider. The claim will be adjudicated by the primary provider, then passed on via a blockchain to the secondary provider, who will adjudicate the claim for the remainder of the balance. 

Technology used to build the MVP

This MVP was built with Hyperledger Fabric and hosted on Amazon Web Services (AWS). The former is a blockchain framework implementation that was originally contributed by Digital Asset and IBM. This framework allows for various components, including consensus and membership services to be plug-and-play. The latter is a secure cloud computing service which provides the necessary database storage.

How will this blockchain MVP benefit group benefit coordination?

Although the benefits of this solution are primarily customer-focused, insurers will also undoubtedly gain from this technology. Here are two of the major ways in which this MVP will improve the group benefit process:

  • Time efficiency: Policyholders would no longer need to submit claims multiple times when covered by multiple providers, which will enable policyholders to more easily receive the compensation they are entitled to.
  • Cost efficiency: Secondary insurers would benefit too. By receiving claims directly from the primary insurer, they can place more trust in the claim information, and avoid the resource cost of reaching back to the customer for further details.

What are the limitations of blockchain?

While building an MVP for blockchain in a 5-week sprint is a huge accomplishment, it is still important to be aware of its limitations. This technology is still in its infancy, which means that development protocols are still being established and roadblocks are found often. 

What’s next for blockchain technology?

While blockchain does have limitations, we can be optimistic in assuming the above issues will be rectified in due time. As the technology increases in sophistication, and as new consensus protocols are developed and implemented, blockchain will continue to become a more viable and efficient solution.

Ultimately, what it comes down to is that this technology offers a fantastic solution for transactions that take place across multiple parties. For this reason, and those detailed in the diagram below, blockchain lends itself well to solving the Coordination of Group Benefits use case.

Next steps for the Blockchain & Group Benefits Coordination MVP

Whenever a project comes to completion in Cookhouse Lab, organizations involved in the project assess the MVP internally before deciding on next steps. For this project, organizations will meet again in early 2018 to determine next steps. 

Want to get involved with blockchain?

We want to thank our participating members The Co-operators, Great West Life, Manulife and Sunlife on bringing their innovative minds together for this project! If your organization is interested in joining this group of innovators for the next steps for this project, please contact us.

But wait! This innovative fun doesn’t stop there. Cookhouse Lab is gearing up for 2018, and we’ve already planned some exciting sprints. Check them out!

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