EP2: A discussion on global insurtech with Joao Cardosa, CEO of Lovys (Europe)
There is lots of publicity for American and UK based insurtech startups, but what about on the European continent? In this episode, I spoke with Joao Cardosa, founder and CEO of Lovys, A French-based writer of bundled insurance with big aspirations.
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Nick: [00:00:00] [00:00:00] And we're back!
[00:00:01] For the Coverager podcast. I have Joao Cardoa De Jesus. Joao is the founder and CEO of Lovys. Lovys is the first 100% digital, all-in-one, and flexible insurance provider in France. One single interface, one single monthly subscription for all of your insurance needs. Simple, transparent, personal.
[00:00:25] Joao: [00:00:25] Thank you. Thank you for the invitation. It's a pleasure talking with you.
[00:00:28] Nick: [00:00:28] Let's put you right into the hot seat and start peppering you with some questions. What, what immediately strikes me is France. So, for the audience sake, let's give a little bit of background. can you describe the French market for personal insurance?
[00:00:43] Joao: [00:00:43] Yeah. The French market is a very exciting market. First of all, it's a market with a very high penetration of insurance products. If we're comparing with other product and with other countries, for instance, in car insurance, 86% of the people own a policy versus the average the hour up that the 60% , [00:01:00] but interestingly, customers are not necessarily well protected.
[00:01:04] They have, on average four policies . There tends to be overprotection in some cases, under protection in others. And lastly is some insights that we've been gathering with users is that there are a lot of pain points. So 44% of the French complain about the complexity of finding one's offers. 80 % say that they don't have enough time to basically make sure that they are well protected.
[00:01:30]60%. They claim that to fear the paper or what do we call it? Emmy's received procedures. So it's, it's definitely a very exciting moment to be in France and embarking on these journey of improving and trying to give a something different to the insurance markets.
[00:01:48] Nick: [00:01:48] Yeah. Is it true that European buyers are much more comfortable, buying and negotiating and transacting insurance online?
[00:01:59] Joao: [00:01:59] I would [00:02:00] say that, actually users in general, they are a ready to use online experience, be it for food delivery, be it for mobility, be it for buying insurance. As long as we provide them a good quality platform, a good experience. I think that's, fundamentally the need. If you see there are platforms selling insurance all the way from US to India.
[00:02:26] And it all works, as long as we provide them the wow factor and the good experience.
[00:02:32] Nick: [00:02:32] Yeah, one of your, most common, value propositions that I've seen on LinkedIn and on your website is the all-in-one bundle solution. What is that and why does the market need
[00:02:44] Joao: [00:02:44] that?
[00:02:45] Let's start from customer insight and, and let's put the product for a second on the side.
[00:02:51] If we think about all the customer is looking for insurance so looking to his life in general, it's very interesting because in [00:03:00] the 90s the internet we have a lack of choice and now, we had exactly the opposite problem. We went, we, our overwhelmed with choice, we want simplification. We want to have convenience.
[00:03:12] And that's, that's the, the, the trusting element these days is that choice is no longer the problem. What to choose became the problem, and, and, and do, what do we find a intersting when you look from that perspective? And if we give, if we put it now insurance a little bit on the side, let's think for instance, Uber. They offer cars, vans, bikes, scooters. Do we say that they'd been off that. No. Basically our view is that they are offering a solution for mobility. And what we think at Lovys is that above all, we need to give a solution for protection. Protection is the pain point, from the user standpoint. It's not actually home insurance or car insurance.
[00:03:54] So the way we see it, is that unless we really think on the category as a whole. We [00:04:00] will be always very limiting ourselves and not really be sufficiently, in novelty from a customer standpoint...from the experience standpoint. And that's what we, what we see is that, that the problem from a user was not all MORE car insurance was actually, we needed to come up with a way to revamp re-imagine the category, and that's exactly what we are doing at Lovys.
[00:04:23] Nick: [00:04:23] Yup. and to be clear, if someone doesn't have a home or someone doesn't have a car, you will still sell them the, the, the home renters or, or car insurance that they need.
[00:04:35] Joao: [00:04:35] Exactly. So the idea is to really offer, provide the users will be the one place where are they can protect themselves and according to them, it's not really to impose, packets for throughout the site.
[00:04:49] This is, you're all in one solution for protection or whatever your needs are, whatever your circumstances are. That's very interesting your point, because actually [00:05:00] providing a category to the user, basically by definition means that we need to really think about personalization. We really need to think about, following the user rather than to say, okay, this is your, you have to have a car insurance because it's compulsory.
[00:05:14] Boom. Here is your product. No, we really, it's, it's very interesting because it's forcing us to really start with the user in mind and thinking through what are their needs and providing that ease of mind in the fuse. Yeah,
[00:05:29] Nick: [00:05:29] yeah. and bundle solution means it's probably less expensive to buy the two policies together than to buy them separately.
[00:05:40] Joao: [00:05:40] It's, interesting. that by default, giving an all in one solution enables us to do that. Nevertheless, I would say that we need to think, to, to make a question here about the price element. . If we think about, I mean from vacuum [00:06:00] cleaners to sparkling water, they are companies that are out there charging their products for our premium.
[00:06:05] Why not in insurance? Why do we need to be thinking of all the time, "Oh, we have to be the cheapest", "we need to go down in price". And our view is actually. Yes, we need to be competitive, but we don't need to be the cheapest rather the opposite, the main point here is that we need to be, really novel on the experience of the user...have a good price , yes, we need to have a price that in a way stimulates the user to have these all protection needs fulfilled with Lovys, but by all means, , our goal is not to be the cheapest. Rather the opposite, we, what we see is that there's room to create a good quality product and differentiated product.
[00:06:50] And , if we compare with other assumptions out there, we should be able as well to charge a premium for that.
[00:06:57] Nick: [00:06:57] Okay. And will this, [00:07:00] will the all-in-one be on a single policy, or is it a, is that the multiple policies that get sort of get mailed together? You know, how, how do you, how do you separate out the coverage, exposure, premium and how you end up, streamlining the experience for the customer?
[00:07:20] Joao: [00:07:20] That's a very good question. So let's think about. So insurance has its own building blocks. So we think about the coverage, the single coverage that we group into a policy and that policy and so on, so forth. The interesting element here is that, and what do we understand these that yes, we need be able to provide, if we are able, from a risk standpoint, group it as much as possible, then we have a hatch from an underwriting perspective because there are behavioral changes. So if/ when a client, for instance, if we see that he has a car and then motorbike, so of course you cannot be driving both at the same time. So you [00:08:00] have and from, an underwriting standpoint and from a risk understanding standpoint. So for us there are two elements there. One element there is to make sure that those, writing insights, those insights that lead to a better understanding of risk. that we look towards the whole perspective.
[00:08:20] Then there is a second dimension that is, okay, how do you go about and how do you price those elements and how do you put them from a legal standpoint, how do you group them from a legal standpoint, so they're, those two roles that we need to reconcile. And, and so, definitely from an underwriting standpoint, that's much easier. then afterwards, from a legal standpoint, how do we group them as products, but so at the moment, most of that, from a strictly legal standpoint, it's standard products but we are looking at, so that those benefits, that we can pass on those benefits that we see on the behavioral changes that [00:09:00] goes with the customer putting different policies with Lovys.
[00:09:04] Nick: [00:09:04] What has been the reaction? when you, you know, I would say from, from start to now, when you do approach, you know, any, stakolders, carriers, reinsurers would have been the reaction to them to the product that you're developing.
[00:09:20] Joao: [00:09:20] It's an interesting, in the beginning their reaction was very simple like, you are mad!
[00:09:24]The, customer feedback, the feedback in the market is like, you guys are being way too ambitious. That's if it's let alone difficult to start a new product that you guys need to go and come up with all these visions to the market. Ah, it's just too much. That was basically the feedback that we have.
[00:09:45] Yeah. Luckily, given my background in comparison websites, we did all we could, basically be more agile and all be basically, have a good policy management system that will enable us to do that. [00:10:00] Now, jumping to where we are today, so three years on the road, we have basically four products live. We are bringing another one live next month it will be pet insurance.
[00:10:11] So we have smartphone, car, home, and we are also doing a health that these live for partnerships and, and , now if you look to the data. The conclusion is obvious is that what we are proposing to the client resonates with them and particularly resonates with it with a younger audience. So if we, when we looked to our client's database today, 85% of our users are 45 years old or younger.
[00:10:42] And interestingly. The, the range that we have more users is on the 25 to 45...45% of our users are on that, in that ranch.
[00:10:55] Nick: [00:10:55] That's a incredibly impressive. Can you rewind [00:11:00] back? Where'd the idea come from, how did the team get assembled?
[00:11:05] Joao: [00:11:05] It's very interesting the idea actually, came, when we decided, I mean, so, it's very interesting, but, ah.
[00:11:15] I did basically, I started off in InsureTech with the comparison websites, in Brazil in 2011. So I've been, it's almost scary. I'd be now in Insurtech for the last nine years, like from the moment that no one spoke about Insurtech. So in Brazil we did a comparison website and then in the midst of the crisis, we were also confronted with, how do you acquire customers without spending money. We found a way...we did the first large B2B2C platform when no one was talking about partnerships in B2B2C and then,
[00:11:45] Nick: [00:11:45] and that was, that was still in Brazil?
[00:11:47] Joao: [00:11:47] That was still in Brazil. That was in 2016 and then it was when there was this all hype and boom about Insurtech, and it was hilarious because at the time I was actually in San [00:12:00] Francisco and we would show to the investors, our traction, then the numbers, the numbers are really exciting and everyone will look and say, "guys, what you are doing is amazing. It's like incredible...your KPIs, your, your unit economics, but you guys are in Brazil...for God's sake, get out of there" and after we located off more than with other investors and everyone, the declining for the simple reason that it was in Brazil at the, at the moment though Brazilian is now in fashion again, but at the time was nothing at all. We just said, okay, gosh, we are, let's come to this realization that we need to move abroad.
[00:12:33] And then we decided, okay, let's, we just felt as a team that we just felt, okay. We have an insight and experience in insurance. We have been doing comparison websites, partnerships. So we felt, okay, if we go to Europe, if we leverage on everything we, we have learned, that we have seen what can be really disruptive or what shall we do?
[00:12:55] What, what is the market? So it's very interesting people who asked me, so why did you go to [00:13:00] France, give you, like, I remember going for the, and this was very interesting, the first time that I went to a VC in France that the VC. Ask me for anything. We went there. In the end, they were like, so do you have a French girlfriend?
[00:13:12] And I said, no. So, Oh, so you had a girlfriend, you move here and then you break up? No, we've moved to here because it seemed to us as the best market. So it's, we literally, decided on the market...we decided on the concept and the realization of the concept was because we felt that. the way people were looking at insurance was product driven.
[00:13:37] Was like, okay, home insurance is bad, whatever. We are improving home insurance. Oh, the car insurance. It sucks. Let's do a better car insurance. And what we felt was like, okay, yes, we can take that product driven approach. We give a step back that's not really disruptive. What we felt was like, but that's not the problem. The [00:14:00] problem is that we need really to think from a category standpoint, and so when we felt, when we ask ourselves the question, okay, from a category standpoint, what makes sense? If we look at protection as a whole, insurance as a whole, then it becomes obvious that it needs to be a single monthly subscription.
[00:14:20] It needs to be flexible, it needs to, and then the whole concept. It was obvious to us, and it was just, then the question was different was like, how shall we execute upon it? Which one should be what y'all would be the go to market and so on and so forth. Yeah.
[00:14:35] Nick: [00:14:35] So for those in the audience that may be having an urge to do a startup, how long did it take you get that conception to something that would had traction.
[00:14:50] Joao: [00:14:50] I mean, I would say that probably insurance is one of the most painful.
[00:14:54] Nick: [00:14:54] can you, can you explain why, why that
[00:14:56] Joao: [00:14:56] is?
[00:14:58] Is? So I would, I [00:15:00] would start, for instance, with my, my first startup in insurance when I moved to Brazil. So at the time, ah, I was living in London. I worked in the investment banking for six years. I saw that opportunity in the market.
[00:15:12] Basically, the opportunity I saw at the time in 2011 was no one in Brazil was buying insurance online and we felt, so basically the whole market in Brazil at the time was 70% traditional brokers and 30% bancassurance. So we decided, okay, let's go there and tried to build these. It took us, I would say...two years until we had a panel. It was really painful because we booked insurance companies. No one wants to partner with us. And the fundamental problem in insurance is that these are huge chicken and egg problem. Is that, do you go to the insurance carrier and say okay, I want to create this product. And then they thought, okay, to create that product for us, it will cost us one million.
[00:15:54] Yeah. and therefore they, you have to guarantee that you have a minimum you can, you can deliver on a medium [00:16:00] volume. So they say, okay. how much money do you have to spend on marketing so that we can, understand that we'll be able to deliver on that minimum volume. and so you go to the VCs and the VC says, Oh, but are you haven't a carrier yet?
[00:16:14] And the situation just goes like crazy.
[00:16:16] Nick: [00:16:16] It's a, it's a chicken and egg problem, right? It's, it's, it's hard to, it's hard to get one aspect moving without nailing the other down. And it's hard to nail the other down without nailing the first one down. And, it's, that's probably one of the biggest issues with trying to develop a minimum viable product in insurance is that you have, you can't just, you can't just create one minimum.
[00:16:40] You need a few things in place, and those things can't get in place until other things are in place.
[00:16:45] Joao: [00:16:45] Exactly. And the problem is that I would say that there's no bootstrapping either, like everything costs a lot. So until you sell your first policy, then the investment to acquire is massive. Yeah, so in Brazil, I would say [00:17:00] that we were able too basically break that chicken and egg because the market there is dominated by four players, and we understood that we need to go to the other way.
[00:17:10] So there were all the particular American players at one end, the European players, that one that we increase market share and they couldn't. Basically access that they saw as an opportunity to, to assess the market from a different perspective. And that's how we break it. Yeah. When, when we went to France, we played in a way, the game similarly, but, but at the time, the, the biggest advatnadge that I had was that I have a very big network in insurance by then.
[00:17:35] So when we decided, okay, we'll do these in France. I basically went to my friends and say, guys, you have to help me on these ones. So luckily before we even had the company, which we had already a couple of insurance partners that were already working with us to create , smart phone insurance to create home insurance and that speed up the whole process.
[00:17:56] Nick: [00:17:56] How do you attract and acquire customers?
[00:18:00] [00:17:59] Joao: [00:17:59] So three different ways. So, and I would say that those few different ways is organic, direct and partnerships. So on the direct way, I mean, there's just so much, let's face it, there's just so much you can do. So you go the typical channels, Google, affiliation, press websites.
[00:18:16] On the second one, partnerships. We see that as a big opportunity, particularly, what are we are doing in terms of branded partnerships and, and firstly, what do we see that the, that is, probably the biggest opportunity in France right now is to build a brand is to really, we have at the moment, and that amazes us when, as we see this curve growing, 40% of our traffic of ourselves come over from organic traffic.
[00:18:42] So the trusting elements and that is sort of consistently the age that we see. as our client with device. So what do we see is that if you are from a younger generation, different brands, so if we go look to the, the traditional big brands in France, be it , AXA, [00:19:00] Zurich, Allianz, at the same tonality, then do you have a second big group of insurance carriers in France that are the so called, mutuals, both of them tend to have a similar, positioning as far as branding. When we moved from a brand standpoint, and what do I see here is that as we go to market and we, basically project these new brands that makes you enjoy, laugh to the maximum that you are protected. So you are free from a different standpoint. So not going through creating the fear, but going through a feeling of empowerment.
[00:19:38] That's quite a new, positioning and this position associated with, there's new tools. There is a way, different way to look at protection. We see that that resonates with users and we can see that in our attraction as well. Yup.
[00:19:51] Nick: [00:19:51] Who is, who is the target buyer?
[00:19:54] Joao: [00:19:54] It's, it's, so as I mentioned before, so at the moment, 45% of the users [00:20:00] are really in 25 and 45 years old.
[00:20:02] So at the moment we have, we see that the, the, the audience, they have to, we have the highest conversion rate so not only sell more, but highest conversion is that one so and then it's interesting that we, if a higher conversion for women than for men, and then we have 52% women, 48% men, a significant higher conversion on women. So we see that these young professionals, and that's the, the, the audience that works better for us. But what we imagine is that these are fundamentally the early adopters. We imagine that through all the time. we'll see an increase in the other, audiences as well. Okay.
[00:20:43]Nick: [00:20:43] How do you plan on positioning Lovys to try to attract someone in their forties or 50s, maybe not digital native, maybe a little bit less uncomfortable? is it, would you, do you think it'd be too expensive to try to attract that audience?
[00:21:00] [00:21:00] Joao: [00:21:00] Yeah, it's a, it's a great question. The way we see that is that, when we discussed that as a team, the way we see is that.
[00:21:10] The best way to do that is to create the wow...is to make sure that that the young professional that is trying us for the first time that he says, WOW, this is amazing. If we get that guy saying, this is amazing, I'm sure that he's going to tell his parents, hey stop using your...gIve a try to Lovys.
[00:21:31] And so. We see here, I think the real opportunity, it's creating the wow effect. Is really looking at insurance as not something that you need to buy because it's compulsory. But something that you can create a wow around the experience, not only on the onboarding, but at everything. And, and, and that's the, the thing that makes us wake up in the morning and doing, working until very late hours. Are we really as a brand standing out. So if we [00:22:00] were mentioning, Uber before, so if you probably remember that you jumped in the car and what everyone remembers was, Oh, is the air conditioning good? Is the volume good? And it's like how do you create that experience to be memorable.
[00:22:14] And that's the question that we make ourselves at Lovys every single day. He's how can we make Lovys and every touchpoint to be memorable. Yup.
[00:22:24]Nick: [00:22:24] Your revenue model? How does lovey earn a
[00:22:27] Joao: [00:22:27] profit?
[00:22:29] So we, we, the way we see that, these, that for every product that we create, so the customer, let's be clear on when things are customer pays us And then we have different underwriters for different products and different coverages. So of course, the way we make money, is on the delta between what we pay for underwriting and what the customer pays us. And the reason why I'm actually being a little bit open here is because they are different ways of creating that Delta different depending on the [00:23:00] markets calling commission, call it fees, for as the way we see it.
[00:23:03] Is that in the hand. It's all part of the same. So what do we see is that whatever we call it, it doesn't matter. The important thing is that our remuneration is really the Delta between whatever the client pays us and whatever we have as an expense from an underwriting standpoint.
[00:23:21]Nick: [00:23:21] Do you have plans to go into other markets, other countries?
[00:23:26] Joao: [00:23:26] I mean, we are, I would say, and we were ambitious, not only from a product standpoint, a concept standpoint. But, from a geographic and where we see Lovys where I would say that as a team, we're very, very ambitious. and from day 1, one of the things that we wanted to make sure is that the company was set up and is set up to be at least European.
[00:23:49] So we have at the moment, the team in four different locations. And the reason why is that at every single thing that we create, we ask ourselves the question, if we want to serve [00:24:00] Europe, where is the best location, to have these departments, for example. Now I am doing actually these interview out of Lisbon because we have just created our customer care in Lisbon, Why Lisbon? Because it's the best location in Europe, then that enables us to have now been servicing France, but tomorrow we can service Spain or Italy or UK out of here. And every single time that's, that's the way we see things that we need to prepare the organization to be able to do that.
[00:24:28] But. Then you say, okay, and right now when will you be doing that? My wife to look at that things that we need to deserve it. We need to prove that as a team we can do it, and therefore that's the way we reconcile being very ambitious and very driven, but also to stay focused at today. Yeah.
[00:24:49] Nick: [00:24:49] It probably doesn't hurt being in Lisbon, that's you're from Brazil, so yeah, you speak Portuguese.
[00:24:55] I'm assuming.
[00:24:56] Joao: [00:24:56] Actually. It's very interesting. I'm actually born and raised [00:25:00] in Portugal and we, similar to France. I went to Brazil because we saw the opportunity there. Oh, okay. , I mean, when you're back home. Exactly. I'm back home from that standpoint. I would have, I think Portugal and, as one big challenge is that like Sweden, we are very small country, so, and I think one of the problems of the Portuguese startups and the Portuguese entrepreneurs that they've thought so far, very small. I think we have just 10 million inhabitants. So for a market like insurance, you need to think big. So that's why I went to Brazil and that's why I now we are, we started in France selling is so as a market at the moment, we are just selling in France because of that, because we need big markets.
[00:25:45] Nick: [00:25:45] Do you have any plans to expand the number of lines of insurance business?
[00:25:50] Joao: [00:25:50] So at the moment, we are basically trying to cover property and casualty ASAP. but, yes. the way we see it is that [00:26:00] we need to be as complete as we can be from a customer standpoint. So our promise is, with Lovys, you have an all in one solution.
[00:26:10] It's simply as that. And that need, is not the only in property and casualty. That need goes into health, goes into life. So for us then it's just a matter how fast can we go and how fast can we have something and making sure that we are still being extremely, but tough on ourselves on the quality that we are delivering to the customer.
[00:26:34] Yeah. I
[00:26:35] Nick: [00:26:35] will have all of your contact information, including, you know, your direct LinkedIn and connections to Lovys homepage in the show notes. Joao thank you so much for spending a few minutes in the
[00:26:48] Joao: [00:26:48] hot seat. Thank you very much, Nick it has been a pleasure speaking with you.
[00:26:53] Nick: [00:26:53] My pleasure is mine. Thank you.
[00:26:55] Joao: [00:26:55] Thank you.