Observations on Trov’s D2C/UK Exit

Last week, Trov announced it’s pulling away from the UK market in reference to its D2C business.

Here’s what you should keep in mind about Trov:

  • It was founded in 2012 with the mission of “transforming the ways that people benefit from all they own and treasure.” And has since pivoted at least twice.
  • It secured over $99m in funding from lead investors Munich Re and Anthemis Group; among others. In fact, Munich Re’s Digital Partners “was designed specifically with companies like Trov in mind.”
  • It featured 2 of the 5 elements of modern insurance; offering fair and flexible coverage with a somewhat convenient purchase (more on that below).

To state the obvious, there was no product-market-fit for this kind of value proposition. And when there was a fit, the market was simply too small and the product – simply too complicated.

We’ve also recently covered the grand finale of Back Me Up – a Trov competitor in the UK and a product of Ageas. So is history repeating itself? Well, no, because it’s not history till it’s over and it isn’t over till select insurance startups stop pushing for on-demand, short term policies unless it’s by nature (e.g. travel insurance).

 

The Takeaways

1. Convenience drives innovation – offer convenience and move beyond 

Convenience is a combination of frictionless (mostly in reference to digital offerings) and easy/instant set of decisions (this piece is often overlooked) – together, this combo generates continuous confidence to push a consumer along his/her shopping journey. Trov was frictionless. But on-demand insurance is another alert-slash-reminder to turn insurance on and off again.

 

2. Don’t change consumer behavior (or the product – unless you must)

Mike Fitzgerald once tweeted “Trov and Lemonade r changing the product of insurance.”  Partially true. Trov changed the product to something less familiar to the average consumer while Lemonade offers renters insurance just as familiar to the average consumer as the one offered by Assurant.

With little to no online feedback generated re. Trov, it’s hard to estimate which product Trov insured the most, but it’s clear its offering fell between a warranty product and a renters insurance products, and any real differentiation was irrelevant and unsustainable. In other words, insurance isn’t broken, and insurtech is either a battle of price or a battle of the minds; when forced to choose – choose the former, because it’s speedier.

 

3. Face the music: If you think of insurance, you work in insurance – don’t attempt to delight consumers 

You can’t excite or engage around insurance. Trov was a pioneer in single item, micro-duration policies but its efforts were met with the kind of excitement that can be boiled down to 26 ratings on the (US) App store; suggesting Trov’s D2C business in the US is heading in the same direction. Keyword: suggesting. As a side note – rumor has it that Lemonade initially spent $160k on LinkedIn ads to target insurance professionals; after all, the insurance pros of XL Innovate are the ones that falsely believe that Lemonade is “the world’s first peer-to-peer insurance carrier”, and plenty of insurance pros (myself included) were the ones to give Lemonade a shot in its early days.

 

4. Focus on users; not customers 

Finally, no doubt that Trov was well aware of the unit economics of their business model when they entered Australia, UK and the US. However, with good enough traction (in this case – probably unprofitable), the business would have been able to generate new revenue sources – a la Amazon’s A-Z strategy. This may explain why back in August 2016, Trov hired Neil Sands, an ex-Salesforce executive who was responsible for the expansion of Trov’s non-insurance partner eco-system. To learn more about our users v. customers mindset – click here.