This Week in Coverager (5/29/2020)

Shefi, Avi & Nick discussed more insurtechs being absorbed by their parent companies as lack of patience plays out. What does it take for an insurtech to get traction and scale? What are the resources required? What are the time expectations? We also discussed a new pet insurance entry and Avi’s hypothesis that pet owners are responsible people and non-pet owners may not be (joking reference…watch the video). We finished off with a discussion about smart home technology providers and the trend for companies looking to port their products into the insurance space.

Watch here:

 

Companies Discussed:
Coin
John Hancock
Pacific Life
Geico
Root
Berkshire Hathaway
Boost
State National
Bingo
Figo
Nationwide
Nest
Ring
Amazon
Google

Transcript

Nick
And we're back. This Week in Coverager...in this pandemic, all these weeks and days are sort of blending into one another I think this is the week of February 24th??? How'd I do?

Avi
pretty close.

Shefi
Nobody cares.

Nobody knows everybody, or though blending in. So this is the show where we look at the topics that were published in the Coverager or newsletter and give it a little more, put some put some meat on that bone, so to speak. So, of course, early Friday morning, Avi, Shefi. Good morning.

Good morning. Good morning, everybody.

Avi
Good Morning.

Shefi
I'm gonna kick it over to Shefi and we'll go into the first topic This Week in Coverager.

All right. So, to add in a sense, bad news, I want to talk about Coin and I want to talk about SafetyNet. So for as a refresher Coin is conscience and investment platform that John Hancock launched, it was back in March 2019. And the idea was that people can choose areas that they care about better healthcare and modern cities. And they can start with 50 bucks basically to create a profile in which they then invest that money and John Hancock or Coin would collect a 0.75 percentage, on their balance. So, you know, sounds great in theory, except what we're seeing is that there were a lot of people, there were a lot of bodies that's part of the Coin to begin with. And then we we tracked these companies all the time, and we started to see the CEO I said, and then we started to see a lot less people kind of when we're looking at LinkedIn COMM And I reached out to them. Seven days later they respond with basically it just no longer makes sense to operate Coin as a separate unit. So they're rolling it into John Hancock and FYI...more to come. So I, get that I understand that if you actually look at their social media activity, there's no activity whatsoever for the past few months. So it's just a matter of we want to figure out the whole notion is we want to figure out direct to consumer, but they're not willing to invest in direct to consumer as they should have in terms of just allocating the right marketing budget experience. That's my sense. I kind of called it out a few months after because around September of the year of one Coin launched Pacific Life announced the closure of Swell, and it was the same exact platform, right and investment platform, direct to consumer, and they were basically going into how they couldn't get scale. So first of all, scale takes time. It takes effort, it takes a lot of creative. And either way, what happens here is two companies that said that, we had enough that we just need to see what's why not what's going to happen with Coin because they didn't make up they mentioned that consumers aren't impacted they although they don't have the same speel that nobody's heard. Fine. Okay. So Second company is a kind of a brand I would say more than a company by itself but SafetyNet by CUNA Mutual they operated in the space of income protection. So for instance, one product they had was Renters SafetyNet. And it was about protecting landlords, when tenants don't pay, and they decided to not accept any policyholders as of as it was late last year. It's not COVID related. I've been told that loud and clear. So this was a business decision. They couldn't they just didn't merit to continue with the brand. I did see that CUNA Mutual also have other SafetyNet brand, another plan called Cookie Jar. And the idea was for employers to round up or to put the same kind of investment as employees do so it's a saving plans, but it's B to B to C, and it's not clear where if they are continuing with that. So You know, my takeaway is that it's so easy to put a product out there for some of these kind of established carriers they carry on...SafetyNet was, you know, for a good four or five years, a little bit more than that. So there's definitely a hefty sum associated with these projects. And then they make a decision one way or the other for us from our end, that's, you know, I don't know how you how to get to the to the bottom line, but clearly, these didn't work for all of these entities.

Avi
I think the bottom line is you said it's very easy to build a product...to get to the scale...there's a lot of resources, a lot of creativity. And I think it's very hard for established companies, because, you're kind of saying to John Hancock, Well, listen, you need to invest a lot of money to grow this just like Acorn and Stash, but that's not their main business. So when they see that there going to put in more than they will get back...it's very hard for an established company to say, let's do this because they already have a business. They're already in business. They're profitable. They're doing well. And for them, this is kind of like, let's see what we can do. And, you know, this brings me also back to LINK by Prudential, same concept...they've built their direct to consumer initiative. But then they figured out that it's expensive to get eyeballs and to be on Google ads. So it's easy to build. And, and you know what, it's not hard to get scale. It just requires resources. And a lot of these companies, they just don't understand. I feel like the unit economics that it takes because for someone that's been in business 100 years and knows their business model, and for every dollar they spend, they get 20 cents back. It's very hard to come and say well spend $1 and you'll maybe get 70 cents back...very hard to justify that. And this is something that everybody has been criticizing, you know, startups growth. A lot of them are losing money. Uber is still losing money...a lot of money. Lyft is still losing a lot of money. But that's where it's hard to find a balance.

Shefi
So wouldn't I think Geico is the one that kind of stands out to me. And, you know...direct to consumer.... been around for 100 years or so, you know, very, very long time. But was always like you know, small insurer until they had the big wallet, which was Berkshire Hathaway. And, you know, Geico spends in excess of a billion dollars a year and I think in insurance, direct to consumer, it takes the I think it takes that sort of effort. Because it is a product, that autos a little bit different because you have to buy it so you know, they're really positioning themselves in that mandatory coverage. I think it makes it even worse for life and others that are not mandatory. Shefi, as you said, it's going to require a ton of effort. Five years might not be enough.

But this is such a great analogy, right? Because if you look at Geico, and you look at their side businesses, which is BiBerk, exchange, reinsurance, you don't see that kind of investment. So are they going to be following the route of these companies or these insurers that I've just mentioned, because they're putting a brand out there. They've focused on the development of technology, the product, however questionable, however, technology you need within insurance to make a sale. And then when it comes to marketing, nothing compares to what Geico is spending on its main business. And you look at and let's talk for a second about BiBerk. Right, because they launched this initiative. It's direct to consumer for small business. If you look at their LinkedIn ads, a lot of it is centered on either commercial truck or workers compensation. And, you know, just yesterday, we learned of the work comp, MGA, Pie Insurance that amounted to $127 million in raiseing. Now it comprises of a Series B. And then $100M of just capital commitment to acquire carriers. But you get a sense of when this is the only...when you do something and it's the only thing you do. There is probably a commitment that you don't see in cases where Avi said, okay, we have our main business and this is a side business.

Avi
Geico is a great example, and they do it for auto the most because you know, as you said, Nick, it's a mandatory product. You have to get it. And it's not as complicated as commercial insurance when they could say "15 minutes could save you 15% or more". Different lines of business, and they go really hard. You know, I bet they wish that their acquisition costs were lower, but for them, it's a strategy. They bleed a little bit and they get their competition to bleed out because they can't play that game... their competitors, they can put over a billion dollars a year in advertising. And just yesterday, we confirmed story another Coverager exclusive, if you will...Root Insurance had this initiative called Miles. It was an app that tracks people's mileage. And in return, they get free roadside assistance, I believe, like once a year, up to $99, or something like that. And the idea is what I think the idea is was for Root, of course, the data play, but kind of like maybe like a very low customer acquisition tool where people will download the app. And in case they need roadside assistance, they could get one for free. So they shut that down. The app still is live but no more free roadside assistance. Either they didn't see enough of a conversion from people that redeemed the roadside assistance to becoming Root policyholders because that is the end goal. Or they figured you know what, it's not worth it. Like, let's do something else we saw, you know?

Shefi
They're no longer desperate to bring customers in the door and whatever way possible.

Avi
Yeah.

Shefi
And you have to reach a certain amount of customers in order for word of mouth and your referral programs to take effect. I think they're beyond that point so to speak, they're ones that you want to watch even more closely now that you know that they have a good amount of policyholders and they, they, have experience in the space now that more like just just being a player for a bit. They're not they're not new. You won't call them that anymore.

Yeah, I just think there's it's just really, the customer acquisition costs in insurance are just expensive. And I think it's very easy to give up. It's easy to start & try and then it's easy to give up. And I think this kind of ties into what we talked about last week is I think you see a lot of these startups ultimately working with agents. Because it is...it's a more interesting model, right? Because you only pay for the acquisition cost when someone actually buys the coverage instead of continuously and constantly paying with and you know, I just the marketing's harder. So I remember, there's a research article on the internet. With about Geico, it's now several years old, so I don't know if the numbers have changed. But this analyst's estimate was that it costs Geico about $250 to acquire a customer and the lifetime value of that customer on average is about 1500 dollars. And so once with that with those kinds of economics, it was very easy for Berkshire Hathaway to tell Geico leadership just back up the truck, just, you know, whatever our risk appetite is, go all out, to do that because we have to maximize this particular opportunity. And they have the benefit as well as they don't have to buy reinsurance. Again, your

Avi
You know, we did some research on this from a different angle, and we looked at it from a retailer's angle. So, you know, if you're Amazon, and let's ignore Amazon Prime for a second you know, what you sell in Christmas of 2019 has no meaning to what you may sell in Christmas of 2020. So every year they start with a blank sheet and they say, last year, we did a million dollars, this year, we need to do at least a million dollars or more to you know, to grow. So, I doubt that that you know, the $250 is still relevant in 2020 or 2019. So what we did we looked at from 2003. I believe that was like their big year where they started to spend a lot of money, I believe was over $200 million in advertising. And then we said, let's look at their policy growth, like their net policy growth. If they started the year with a million, and they ended the year with a 1,000,00 *.1 , so they've increased their policies by 100,000. They could have sold 150, but 50,000 people cancelled, you know, so we looked at it that way. And when you look at it that way, I remember the number for 2019 I believe. So Geico spent 138% of their new revenue to acquire I believe 500,500 25,000 new policies. Now it's for them, it's still great because they don't look at it from a retailer's perspective. They look at it from a historical revenue, they get premiums that they sold, you know, renewing from 2012 to 2015 2016. You know, but to your point, when you're a new company, and you can't rely on this historical revenue, you can't put 138% of your, you know, it's too much. But for them, it's nothing. And I believe if you look at their measures, still, they spend around in total 6% of their revenue, something like that, on marketing, which is great. I mean, that's, that's less than what Amazon spends way less than what Macy's spends, which is incredible. But but this is the beauty of insurance. Like once you get to that point where you have that existing policy base, you have a lot of power to do a lot of things, and people will forgive you, you'll be good. And eventually, I believe their lifetime value is, you know, very good because they're a known brand and all that. But it's very interesting how the dynamics have changed because you still see what Geico over the years, how they're, you know, spent as a percentage of how much new revenue is actually going up. .

Shefi
I remember when they used to issue press releases their milestones...reaching 15 million policyholders and then 16 million policyholders. And they stopped. So either it's it's taking them longer to get to the 17 million or...

It's just gonna change it to the McDonald's slogan millions & millions served.

Avi
Yeah. I had McDonald's this week.

Shefi
You know, it, they're just such an interesting use case. And and, you know, I think it says a lot just about these companies that want to go direct, and just how challenging it is, and and you know, it really, philosophically you can really debate whether insurance is venture worthy, in the same way that tech is venture worthy, and I think the Avi's point, I think it'd becomes venture worthy if you have a very long time horizon, and you can allow that traction to take place and...it's a renewal business, that's the economics around the renewal. Yes, of course you want to have underwriting profit, of course, yes, you can you can invest the float, although the, you know, the profitability of investing the float these days...not so good. But yes, you'll have that opportunity, but Avi's point, State Farm is where they are today, because they have 100 years of renewals.

Avi
Yeah

Nick
Under their belt, right?

Avi
In a very different landscape. It was a very different landscape of I'll tell ya...you know, 20 years ago, when you had to call your agent and say, Hey, buddy, I'm canceling. Not many had the guts to do that. Who wants to get into a conversation like that? You know, you you don't want that. But today when it's more online, you buy online, you can cancel online or you go to Lemonade and then canceled on behalf of you. You're you know, it's there's no more guilt.

Shefi
Avi it's it's, uh, "Are you sure you want to cancel?" Like somehow that button?

Avi
Remember these conversations? Yeah, like is that going to, I mean, I remember going to the gym one time to cancel. And I felt like so guilty. And I didn't cancel it even though he went only like twice a year. So I remember working when I was in working at FedEx, they had this a unit that their entire job was to make sure customers did not cancel. So they would call the call center, a customer wants to cancel, you would transfer that customer to that unit. And they had a way, they put their best salespeople there. And they gave them the best deals and said, look, we're gonna take your rates down and this you don't see that online again, as you say, like, you cancel or it's and that's the beauty of Amazon. People say, oh, why do people buy from Amazon the prices are not as great you know, but it's because of that free shipping/free returns and the whole you know, making people feel less guilty if they want, buy or return

Shefi
Completely and not have I'm now merging your our Amazon conversation with our insurance conversation. So you want to know the State Farm story, get this book, The Farmer from Merna This is the history of State Farm. It's like, this is the book and it's, oh man, I wish I should resell mine try to get that $851, but it it does tell you it was a completely different time. And, you know, in the other end, I think I discussed this like a week ago or two weeks ago, which is if you goof up at Amazon, right, you goof up a sale. It's very easy for Amazon to say I just keep it right like here's your money back very easy. You know, here's here's your $50 you goof up in insurance...bad outcomes...you could house could burn down...you could write be writing a check for $250,000. Just a completely different model and the dynamics around what you know customer demand, the supply and demand of it. In at Amazon, they're, they're acting like brokers in the supply and demand is I want something and I'm connecting you with someone who's willing to sell it. In an insurance it's, I want to make sure I'm protected but they're in that population, there are people who have nefarious motives, sinister motives, and so and then you have the supply side, it's just like, well, I don't want them as customers. It's really difficult for them to ferret that out while also selling to the other group. Dynamics are not really good. It's just I think it'll always be really expensive to acquire customer's

Avi
Not unless you make people feel guilty.

Shefi
Or you're and auto manufacturer and you add insurance.

Yeah, we so the end around, right you remove, you abstract insurance from, from the sales equation, you embed it into another product, you just get it, you buy something, you get the insurance, that is potentially disruptive model.

Avi
But you still need to have a good, good price. And we saw this with Tesla, and I bet you were going to see this with Rivion. And whenever they launched their insurance, if it's not going to be a good price, the customer is going to say, I don't care if it's Tesla, I don't care if it's Rivion n i don't care if it's Apple insurance is insurance. So you need to at least come at a good price for people to buy and hopefully with the data that these companies have and some insurer is going to be okay, that's what I believe in your technology. I'll give you really good rates and customers will benefit from that because if you're paying more money for a car, that should be better, safety wise, then you should pay less than insurance technically we'll see if that model works out but but you still need a good price but the acquisition costs are significantly lower.

Nick
Yeah. I'm Shefi do you have a discoteque going on in your, in your apartment?

Shefi
I'm not sure.

I know you're in Brooklyn so there's probably like two construction trucks and police outside with their lights flashing but it is like a strobe light is going on. Okay, so what is what is topic number two for This Week in Coverager?

Avi
I think topic number two in terms of clicks, the story of Boost and State National and BINGO. A new pet insurance brand. So pet insurance has been trending recently and I have pet insurance. Nick, do you own a pet? Do you have a pet?

Nick
Not anymore?

Avi
So I have a pet. I mean is a dog technically I wouldn't call him a dog is eight pounds, Hvanese? He doesn't do much, but he has pet insurance. We have a pet plan. And I can tell you Shefi, did a report and the title was pleasant insurance. Pet insurance is the best insurance in the world, really. But I'll tell you why. I mean, from my perspective, at least, we had two claims, and they were paid. And every time I was so amazed, I was like, why are they paying this? They said they don't have to pay for this specific claim. And my dog doesn't complain. You know, he doesn't tell me all this Vet sucks. Or why is he out of network or you know, I'm not feeling well. I take him money shuts up, is fine. And you're always surprised the premiums are not very high. It's not something that you do a lot like I hate my health insurance. I hate it. And I'm sure many others hate their health insurance as well. It's such a different experience. And I feel you know, I don't know the unit economics behind pet insurance I don't know if it's a profitable line of business. But it's such a great way to build on for bigger things. Because if you look at the people that own pets today, a lot of millennials, and they always say like, if you own a pet, then you're a person that you know, you're willing to care for someone else. You're probably not such an a-hole. You know, that's that's what I think. Another not that I'm saying that Shefi is not a good person that you're not a good person...but well, but but but you know, that's

Shefi
trending Twitter.

Avi
Oh, that that is

Shefi
anything but what it means is that with insurance, there's a lot of opportunity of, of just a carrier perceived as being positive, more than like usually claims is a very negative and with pet insurance...It's always a surprise. Oh, gosh, we got this was a surprise vet bill and here's a surprise check from the insurance company it seems like it's there's less of expecting something like, like what we're seeing with auto and home. So lots of positive reviews, very simple to kind of build, everybody's looking at the same data for underwriting and there's enough data to say, who's doing what so I don't really buy the whole claim that this pet insurance is proprietary and there's IP around it.

Avi
No, no, not at all...It's like..

Shefi
All the all the user interfaces that were looked at that, same kind of data that's being asked, spit back, you know how you do pricing is a different story. Lots of brands and yet when you look at the amount of carriers whoever controls, right, Nationwide is a really strong player, of course Trupanion is a strong player. Figo had a hiccup with their previous underwriter and other switching underwriter and you can see that regardless of Figo's technology people will talk about its claims are being denied, they will call them out, call them out on Twitter, call them out on Instagram, back to Avi's point. You cannot ignore pricing you cannot ignore honoring claims, or just being, communicating clearly, what you're offering, when you're offering, there's definitely a trend of entering into the whole wellness space covering visits to the vet, maybe twice a year or whatnot.

Avi
Yeah, so yeah, this I think so, you know, I just did a some, you know, to look at because it really talks about how big the market is. But the market is big at a very specific time because if you have a pet that six years old, the price is high. You could pay like over $100 a month and that to me is like that's a lot of money, we pay $30 now it's $40 so we I feel it's like okay, manageable and it's a good price. But if you get a pet that's older and a lot of people do get pets from shelters, and they may not know the exact age or they don't know if there was a pre existing condition, so the price is high, so if you are targeting this space, you want to target you know, those that go in very early. A lot of people buy from you know, stores my wife bought from a store we didn't adopt I know a lot of people say it's a bad thing to do. But you know, it is what it is. But yeah, but But yeah, he was in a cage, he was on sale, but Petco has, I don't know if you knew that but they have a comparison website for pet insurance. And Petco is obviously a great brand because they know when people just got a new pet because you know, there's maybe different foods and you buy the wee wee pads for the you know, the potty training and all that stuff. So they have that connection and you know, customers flowing in. So it's a very big market. But you need to find them at the right time. I don't...the wellness to me is like, you pay for what you get. So basically what they're telling you pay for this and this is what you're going to get that's not going to come You know, it's like a cover it you're actually paying for this either up to the vet or you pay us and there is a new trend of like vets where they say, pay us a monthly fee, and you get everything you know, covered. So like x rays and dental and things like that. But again, you pay for that it's not insurance. If your dog has you know, cancer, then it's probably going to be it's probably not going to become the goal or the coverage. It's just

Shefi
Yeah.

It reminds me of like dental insurance. I think dental insurance is not really insurance in the typical fashion. It's more like Cash Flow smoothing, right? Like the, the amount of coverage that you can possibly squeeze out a dental is not great. Same with like vision, you're gonna, you know, you're gonna, you're basically getting reimbursed for some of your costs, and you're spreading some of your costs out over time. So from the pet insurers perspective, it's not catastrophic, right? Like they can really control the claim situation because they're not going to have, you know, a million claims all at the same time, like you will in other lines of insurance. And so, that is one area where they, you know, you can screw up and really not that big a deal, you know, more as like an auto or homeowners.

Avi
I mean, yeah, you know, yeah. Well, some of the some of you do, I mean, you'll get to like, some of them have these annual limits of $5,000/$10,000. Some have no limits, and you could end up paying I've heard Getting like, over $30,000 a year from their pet insurance, I mean, cancer,

Nick
but I'm sure you know, really expensive.

Avi
Yeah, it's a, that's the thing. So like a lot of the claims like, you'll go, for example, if your dog ate something bad, probably you're not going to be covered because you know, it's you, you'll go to the emergency, you won't reach the deductible anyway, it's going to be the same, you know, so you'll end up paying, if you're smart, you would file a claim, even though you don't get anything just to get to the next level down. And then if you do have another claim, then at least you're not paying that deductible, but like, I'm not sophisticated enough to do that. So I don't think about that. But it's a very interesting line of business. And, you know, I obviously a lot of people have pets what I thought interesting about Bingo. So first, they have this new feature, which I think is ridiculous, where they will be able to track how you walk your dog. So when you walk your dog, they'll know here's a problem. It doesn't really work first. So now if I walk my dog and I hold the leash with one hand, and I text on my other hand, which I do all the time, so I move my phone, but I move my phone because I'm texting. But then if I don't, you know, like my wife always yells at me Oh, don't text while you walk, you know, he's, you're gonna get run over or something like that. So if I don't text, I put it in my pocket and then you would say, okay, is my dog dragging me now? How do you know if he is dragging me or not, you know, my dog is very small, but he could pull like pretty hard. And like, I'll end up you know, going a little fast or if you have a big dog, I mean, he's going to pull you and so I guess what they would say, we've noticed that your dog is pulling you. Here are some tips of you know, so I don't know about that. The fact that they only go for dogs because the whole feature of the motion tracking. I've never seen a cat go on a walk. Not on a leash at least I don't know if you have but I've never seen that. So I think it's very interesting their approach because they better be very good at acquiring customers because I doubt anyone as an employee perk, a big company is going to say, yeah, let's work with Bingo. But hey, cat owners, this is not for you. Let's bring on another provider that does cats as well. I think they'd rather go with one provider that does dogs and pets. And of course, there's a whole multipad discount, which is very popular. So if you have more than one pet, whether it's a cat or a dog, you'll get that discount. So they're missing out on that. So you know, specifically for dog walkers. But But let me take this to like a different direction. I want to talk a little bit about boost and their model, which I think is very interesting. So basically, boost is in a way they want to help companies beyond insurance, get into insurance. They want to help, you know, entrepreneurs build insurance programs. They have the license They have the technology you know to do the underwriting and all that. Now it bingo is getting money right there, they're getting money, they refer to themselves as a sub agent to boost that's what's on their website. So I'm not sure if booth is getting any money as the agency. I know state nationals getting money because they're the underwriter. But if boost is not getting any money, then that's a good relationship for bingo, you know and state national. And then in essence, boost is a technology company. They're not making any money from insurance. But if boost is getting a commission from the policies as well, then I find it to be a very challenging model. And it will need a lot of scale boost, we'll need to find a lot of small partners, like bingo because if bingo blows up and becomes very big, they might say to themselves, you know, we might as well have an agency Yeah, let us have an agency let us have a direct relationship. With the insurer and we'll make more money. So, again, I'm not sure if boost is taking any commissions, if boost is nothing getting commissions and he's only a technology company he still needs a lot of companies to you know, justify and grow and all that. But if they aren't taking a commission, they'll need a lot of small players and hopefully those small players don't grow big enough to say let's go direct

Shefi
because they're not taking a commission doesn't mean they can't take transactional fees. So they're just going to call it by a different name but it's going to be tied down to the volume to the volume that Bingo is going to produce

Avi
could be yeah...

Shefi
so I think it gets to what's the what's the value that Boost is bringing to the table in those situation and they're you know, since they have the relationship with State National, Boost could be doing all of the filings you know, a lot of the back office stuff to justify the commission. Maybe, you know? That that could be something where it's, it'd be difficult to, for the sub agent to want to make the direct connection to the carrier, because then they'd have to pick up all of that back office stuff. And it's significant. So I could potentially understand that. But I could also potentially understand the sub agent just saying, hey, that's an extra 10/15 points that we could add to our bottom line. So yeah, even though it doesn't add any value to the customer, let's grab it. Could see both ways...

Avi
Yeah, it's a very interesting model. Very interesting. And, you know, again, I think, for new companies that have no insurance program, it's a great way to kind of dip your toes into the insurance space and see how it works. But if you go really big, then they you might say, Well, you know, I can work directly with the insurer and maybe I'll be able to squeeze out more even I'll you know, because I have that power, but very interesting. model and Bingo specifically. I feel like they'll have to do very well to be able to attract just dog owners but you know, time will tell.

Shefi
So two final things about that. So State National or Markel wasn't going on for Figo. Figo is swapping underwriters to Independence Holding Company. And I do know of an anecdote that when Boost didn't worked out for a particular startup and that startup approached State National didn't turn them away. So if loose can get to a point where a state where everything that goes through State National basically going through Boost and obviously they haven't exclusive to their paper and to their underwriting and that would be a plus.

Yeah, State National is very big on the natural catastrophe front. So when Boost first came alive when they were born, I thought that would be a large part of their focus, but it looks like State Nationals, looking to diversify away from natural catastrophes into these other areas. So it's a really it's, it is an interesting model. But as you have both sort of mentioned, there's, there's still there's so many entities, so many stakeholders and all of these transactions that it's, it's almost impossible to kind of divorce yourself from the fact that someone's gonna say, hey, what is why is this other entity in this transaction, we could just eliminate them and simplify the process. So there's gonna be a lot of folks, they're gonna have to justify their value.

Timing, and that's really the key part here. I mean, who has the upper hand and at what point and how do you sustain your advantage going forward? So, you know, business dynamics is that the market changes all the time, players change all the time whether they add capabilities or they grow or whatever it is, it's really up to the players. And not just food right as well as Bingo to prove their worth throughout the relationship, not just when you're signing a contract, because how many partnerships have we announced that it's just a partnership, and then you don't know what happens. The Perfect example is home telematics, which I said I'm not going to get into. But every press release on home telematics talks about the Select criteria specific, key now, I don't know how, like 10s of people that they reach to give out a free device or leak detector. And then what happens afterwards? How long does this pilot going to take place? What kind of data can you reach if the users don't implement that device? Right? So there's all this silent treatment that comes after the press release, which makes me you know, just very bearish on the entire telematics space.

But I won't get into it.

what Yeah, but I think it's important going forward in a lot of these conversations is, I think you kind of nailed it at the top Shefi...I think it requires very long term thinking but nimbleness in the short term. But still with a commitment towards the long term, like, it takes time to get traction. I think we both you've both hammered that away, you know, especially with direct to consumer, it takes a lot of time to make sure that their eyeballs are focused on you that you can, you know, move them into the sales cycle. And then once they're in, you can sell them and then keep them for an extended period of time to allow all of the economics to properly work in your favor. I mean, I I think a lot of this is it's a five to 10 year play.

Avi
You know, I think smart home in general, and this is my thought. If you are building smart home technology, the devices and if you're doing this for smart home sake, okay like Nest and ring, and all these other big players, then you build The best product and just like any other product, you build such a great product that people want to buy because they want to feel safe or they want to feel cool or they want to, when they say hello, their lights turn on without needing to turn it on. Yeah. I feel like a lot of the b2b players that smart home players that came into insurance, or just failed b2c companies, that's what it is. They couldn't compete with the big players out there. So they're going to insurance companies to say, Hey, we have a really good idea for you, it's gonna save you a lot of money on claims gonna, you know, customer engagement here, you know, pay us and give it out to your policyholder, that's what it is. That's what it is. And I always say, if you look at it that way, you know, always say, what is the interest? What is that party's interest behind? What is going on or this offer because no one really, I always say like, no one cares about you. They care about themselves. They care about their business. And it could be a good solution. It could be that people with a water detector are going to see less claims, but don't expect a pilot to know if it's going to work for you, it could take five years to know to see, you know, the actual benefits. The same with the whole, like, walk 10,000 steps or eat healthy, you know, it takes time. It really takes time. So that's what it is always look at it if you're really committed, go for it. If you think this is some like magic thing, where all of a sudden people are going to say, oh boy, I really love my insurance company because they give me a smart home device. Or because Hippo gives you you know, this tool, you know, the pliers and hammers and stuff like that. I mean,

Nick
you know, you know Avi that there are people who are very, very loyal.

Avi
There are right

Nick
and when you ask when you quiz them about the loyalty, it always comes down to, hey, I had this really messy claim and they fixed it.

Avi
This is a claim is so is so important. It's so important, but you know what if I get a nice welcome kit, and I have a really bad claim Then I don't get

Shefi
Yeah. Because insurance is the promise. So you don't keep that promise you didn't it doesn't matter that you send a welcome kit. And to your point. I hear all the time, you know, I'm interviewing people all the time where there was this product that was built for some other industry, you know, and they had an off site. And they said, Who else could use this? Oh, insurance, okay, we'll get into insurance. That's easy. They're messy.

Avi
It's, you know, it's funny.

Shefi
You're sitting so far away from the consumer that you can almost make them believe anything just because you think the policyholder deserves something doesn't mean that he's going to do something with it. So the question is, are they demanding it? Because again, dealing with in different consumers, I'm going to say this in every single show, in indifferent consumer isn't demanding, stop bothering with it.

Avi
You know, it's like Tesla, Tesla will come and fail. Okay, and then he will say, You know what? We're a b2b company. We're going to go to every insurance conference, we're going to go on stage and we're going to say to insurance companies, you should buy this car and give it to your policyholders because it's a better car. If you build a great product, go for it. If ring wants to go into insurance, believe me, they could sell insurance, they'll just call a partner and say hello, would you like to partner with us? We have a lot of data. We have proof that in neighborhoods without ring, there is more break as vers what people that do have a camera. They could do it. They don't need the insurance company, but that's what it is. And always

Shefi
insurance company and that's one. You're right. You have to think about what they can work with. You're not the only one. Do you know

Avi
exactly, yeah.

Nick
Do you know why Google exited insurance? Not? Not because they

Shefi
What's your take?

There's not enough margin, that the the effort the app they makes they have a monopoly on search. And it's a it's a waste of it's a waste of their capital to get into insurance.

Avi
And I'll tell you something, there's the whole concept of being neutral, which is such an underrated factor. People say, oh, Amazon is going into insurance and in India, Amazon in India went to insurance for the sake of Amazon pay not for not for insurance. They are competing at the payment front with Google and pay tm and huge competitors, that you could pay for anything, you know, using your mobile wallet. So they're adding more categories and insurance for them as another category. That's what it is neutrality if Amazon wanted to insurance, let me tell you if I had home insurance from Amazon, and they goofed it as he said, I will not buy anything from Amazon ever again. Ever. You know, imagine if Amazon was a life insurer, and this crazy story of someone dying from cancer and they didn't pay the claims. Do you know what that would do to Amazon? They don't want that. They don't want that bad publicity. They don't know. They don't need it. Exactly. Always be neutral for Google. You said like, you know, the effort. Hey, let me just charge you for empty clicks much better.

Shefi
They already get paid. They already get paid in insurance. They get the AdWords from Geico and State Farm. They already get paid.

Avi
Exactly. You can't You can't have it all. That's the thing. You can't say, oh, give me the clicks. But then let me also do the comparison just too much and it's not worth it.

Nick
So solid week is

Shefi
it was a short week.

Nick
It was a short week. Yes. So you did uncover a lot and you know, we didn't spend we didn't really get into the Pie Insurance one too much. But I'm sure that's going to come up again. And it's an ever changing industry. So And the

Avi
weather is getting nicer, right? The weather is getting nicer. So that's nice.

Nick
So, I found the music. Can you hear it?

Hear that music. That's the music's playing. It's time for us to fade out. So Avi...Shefi, thank you so much.

Avi
Thank you. Have a nice weekend. Till next week everyone stay safe.