High level & evolving collection of thoughts on insurance businesses from someone trying to make sense of the space 👇
Opportunity has been massive:
$2T opportunity
49 of the Fortune 500 companies are insurers.
Avg age of incumbents is 98
NPS is low
75% of people start their insurance process online. 25% finish online. 50% don't finish partially b/c products aren't very good.
$2T opportunity
49 of the Fortune 500 companies are insurers.
Avg age of incumbents is 98
NPS is low
75% of people start their insurance process online. 25% finish online. 50% don't finish partially b/c products aren't very good.
Insurance is a miserable customer experience.
Internet hasn't disintermediated it, even web 1.0 quality.
And yet internet has disintermediated brokers elsewhere (e.g. travel)
New generation of people buying insurance expect the quality consumer experiences they're used to.
Internet hasn't disintermediated it, even web 1.0 quality.
And yet internet has disintermediated brokers elsewhere (e.g. travel)
New generation of people buying insurance expect the quality consumer experiences they're used to.
Average incumbent age is 98 years.
Insurance is ~30% more expensive than it should be b/c
1/ legacy systems have high cost of operations
2/ pay to acquire customers in ineffective ways.
Big opportunity for insurance companies to pass savings to consumers by fixing these two.
Insurance is ~30% more expensive than it should be b/c
1/ legacy systems have high cost of operations
2/ pay to acquire customers in ineffective ways.
Big opportunity for insurance companies to pass savings to consumers by fixing these two.
Why hasn't there been many unicorns?
A lot of “sustaining” innovations – entrepreneurs building products and services for insurance providers rather than becoming providers themselves.
Like healthcare, not owning enough outcomes:
A lot of “sustaining” innovations – entrepreneurs building products and services for insurance providers rather than becoming providers themselves.
Like healthcare, not owning enough outcomes:
Consumers want the right coverage when it matters for the lowest cost possible
"Insurance is sold, not bought" reminds us that products have been designed more for distribution force than the consumer.
Explain why insurance policies are dominated by onerous terms.
"Insurance is sold, not bought" reminds us that products have been designed more for distribution force than the consumer.
Explain why insurance policies are dominated by onerous terms.
Diff btw underwriting & rating:
Underwriting is essentially a yes/no decision of whether or not to insure the risk.
If the answer is affirmative, I will underwrite this risk, then you rate the risk, which is looking at the risk and figure out what price to charge.
Underwriting is essentially a yes/no decision of whether or not to insure the risk.
If the answer is affirmative, I will underwrite this risk, then you rate the risk, which is looking at the risk and figure out what price to charge.
Why now is the time:
- Consumers expect better
- Low NPS
- Better founders are getting into it
How can founders build meaningful companies:
- Build brand
- Have a hack to acquire users
- Capture unique data (e.g. GPS, camera)
- Consumers expect better
- Low NPS
- Better founders are getting into it
How can founders build meaningful companies:
- Build brand
- Have a hack to acquire users
- Capture unique data (e.g. GPS, camera)
On going direct:
If GEICO was able to leverage TV over the last 15 yrs, an entrepreneur can do same with today's tech
By going direct w/ a low-cost approach, GEICO created room to experiment w/ new origination funnels, higher loss rates, lower prices, & different risk segments
If GEICO was able to leverage TV over the last 15 yrs, an entrepreneur can do same with today's tech
By going direct w/ a low-cost approach, GEICO created room to experiment w/ new origination funnels, higher loss rates, lower prices, & different risk segments
Concepts to consider:
Experiment with the atomic unit of insurance.
Credit card, for example, was a new form factor (on-demand, flexible) that greatly expanded credit provision
What could this be for insurance? (micro insurance? pay by day/mile?)
Experiment with the atomic unit of insurance.
Credit card, for example, was a new form factor (on-demand, flexible) that greatly expanded credit provision
What could this be for insurance? (micro insurance? pay by day/mile?)
innovative models:
1/ P2P Insurance — can lower prices , cutting out middlemen…sort of like p2p lending
2/ Renting an existing insurance companies balance sheet by coming a MGA thus improving underwriting
1/ P2P Insurance — can lower prices , cutting out middlemen…sort of like p2p lending
2/ Renting an existing insurance companies balance sheet by coming a MGA thus improving underwriting
Insurance 1.1 improve existing workflows or create new ones
Insurance - 2.0 reimagining some aspect of insurance as we know it
Insurance 3.0 risk management in the age of commercial space travel, human genetic modification, and general AI.
- from insurancethoughtleadership.com/tag/distributi…
Insurance - 2.0 reimagining some aspect of insurance as we know it
Insurance 3.0 risk management in the age of commercial space travel, human genetic modification, and general AI.
- from insurancethoughtleadership.com/tag/distributi…
I invested in Cover allows you to take photos of stuff that you want to insure & then they'll help find the right coverage for you.
They're effectively a marketplace for risk working with over 30 different carrier partners & also building insurance products internally.
They're effectively a marketplace for risk working with over 30 different carrier partners & also building insurance products internally.
Also we invested in parametric company in Mexico.
In parametric insurance, policies do not indemnify against actual claims but rather pay out based on triggers linked to objective data points. (e.g Earthquakes).
Like a true prediction market
In parametric insurance, policies do not indemnify against actual claims but rather pay out based on triggers linked to objective data points. (e.g Earthquakes).
Like a true prediction market
/FIN
curious to hear your mental models of the space.
curious to hear your mental models of the space.
