This week we launched our first Product Hustlecover. This product is specifically designed to protect the income of the contingent workforce. The contingent workforce is comprised of entrepreneurs, dreamers, gig workers, business owners, influencers, uber drivers, air bnb hosts etc. Check out our website for all the details.
Check out www.hustlecover.com
We started Coverhero after having a number of terrible insurance experiences (another story for another time!). Our vision was to transform and BUILD THE KIND OF INSURANCE that is relevant for our generation and simple to understand.
This is actually a lot harder than we thought!
Let's breakdown how insurance works. Think of insurance as a supply chain. It starts with reinsurers like MunichRre, HannoverRe, SwissRe etc. (There are ton of these around the world with a lot of capital and funds, I am talking companies with billions and trillions of dollars that are protecting the world from disasters and catastrophes). They insure the insurance companies. There are so many different categories of insurance and each insurer specialises in different categories.
The insurance companies then design insurance products for customers. There are insurance categories for nearly every type of product, venture or activity you can think of. Most insurers specialise in a particular category. Traditional categories include, Property, Casualty, Life, Health and Commercial. Don’t get me started on the sub-categories of Commercial or Specialty insurance which can be as complex as insuring body parts, weddings, lottery winners and even alien abductions!
Despite its immense coverage, the industry was not built on modern technology like facebook, uber, airbnb etc; and was certainly not designed for personalised insurance, with an accompanying “great customer experience”. However, with the rise of the internet and digital innovation, the industry is going through a huge change.
You see, baby boomers have been running the insurance industry so the majority of the tech is like them, super old. This is not a moment to say #okboomer :) or do, if you want. The industry is completely aware of its challenges and recognises that it needs to change. Making any change is like trying to turn the Titanic! It doesn’t happen quickly (if at all). For us as a startup we don’t have those challenges because we are on jet skis . We can turn whichever way we want, very quickly.
Developing an insurance product is a complex process. One of the key steps is working out the insurance premium (or how much it will cost) too expensive, no one will buy it. Too cheap? it will sell like Havaianas, but the company will lose money. A bunch of nerds called actuaries, are heavily involved in the design and pricing process. They’ll look at the product’s design; its intended market and competitive alternatives; how it will be sold; how it will be administered and the applicable laws. Using vast amounts of data and analysis they will work out the size of the product pool, the demographics of its market and the cost of funding for the insurance pool (metrics like pricing of the product, loss ratios, expense ratios etc.) all of these things are important metrics for a product to work.
When you buy an insurance product you would not believe how many people have been involved in its design, development and distribution. There are underwriters who will look at a product and assess the risk of the product to determine if it can be insured or not, based on many rules and while working closely with actuaries.
When something bad happens (an insurance event) and you need to lodge a claim, it does not go to the insurance company or the broker who sold the policy to you. It goes to a separate agency responsible for assessing the claim, checking for fraud and collecting evidence of the event. Finally, if the insurance event is in line with the long document that you have in your email, otherwise known as the PDS or Product Disclosure Statement, the claim can be paid out. Only then do you get your claim paid. One thing to note is that the people who process claims are not involved in product design phase. Their job is to follow the rules of the Product Disclosure statement and pay out claims. This can take weeks if not months.
We know this process sucks and needs to change. We are on it!
In Australia the regulators of financial services (which includes insurance) are ASIC and APRA. They are the gatekeepers to the industry and determine what can and cannot be done by financial institutions, in accordance with the law. There are many things that must be done and there are lots of things that cannot be done due to licensing, compliance and governance structures set by the regulators. Let’s not hate on the regulators though. They’re there for a good reason, to protect the customers, to create fair process and to ensure that the businesses and customers win all the time.
What were we thinking? Did we actually think that we could just come in as entrepreneurs and give it a crack inside this super complex jungle of insurance to bring it to the modern day? Yes we did! The reality was a lot harder and humbling. It took many months, hundreds of conversations and relentless effort and perseverance to get to this position. As hard as it may be, we are committed to our purpose! If not us then who? If not now, when? We believe in our purpose to our core, we are committed to creating the future of insurance. We have partnered with some of the most amazing insurance companies that share the same vision as us and have partnered with us to create a better world to really protect the things we love.
When we started designing products, one of the first things that we thought about was, if we could start insurance from scratch today, how would we do it? What would we create? What does the customer experience look like, what does the actually insurance product look like. What about the risk models? does it work? could we make it better? could we predict better loss ratios? and affordable premiums? There are a million and a half challenges across the value chain that needs updating “evolutionising” and “revolutionising”. But we can’t do it all at once. We had to decide on a starting point and create a plan on realising our vision
Our philosophy is to create holistic wellbeing for our generation. We need to create more than just financial services. We want to build a platform that can understand an individual’s lifestyle choices and support in a holistic way to give balance across mental, physical and financial well being.
These are our top three priorities:
This is just the beginning and there is a long journey ahead of us to realise our vision, we know that it is going to take a lot of perseverance, hard work and dedication to bring the vision to fruition.
We invite you to join our community to be part of this journey and create the world that we want to live together!