This Week in Coverager (8/14/2020)

This week Shefi, Avi and Nick discuss:
– Coverager exclusives on Hugo Insurance, PolicyGenius (creating unique touchpoints), and Trupo
– Kin Insurance fundraise
– Customer acquisition costs tactics

Watch here:

 

 

Transcript

Nick
We're live! This Week in Coverager for the week of, today is Friday, August 14, early Friday morning, we're having our coffee. This is the show where we discuss the topics or articles that were in Coverager that were the were the most popular or gathered the most attention or had the most conversation. As usual, I have my two co hosts Shefi and Avi. Good morning.

Shefi
Good morning. Hello, everybody.

Nick
And so Shefi I'll kick it over to you. Week of august 14. What was what was hot this week?

Shefi
My birthday! but...

Nick
25????

Shefi
More like no...I'm 39!

Nick
Wow. Yeah. wouldn't have guessed. Congratulations.

Shefi
Thank you. I feel the same. But, yeah, so birthday celebration aside. We had two exclusives this week. Hugo insurance and PolicyGenius. So I'll start with Hugo insurance because that's something we've been checking constantly because it's a little bit of a history there. It's a startup from Santa Monica. So far, kind of a small team. So very early stage. They launched a product about last year around a time of last year. And then for a while there, that product went down and they were not accepting any new customers. So it was nice to check the website and see a landing page and I was able to get a quote in Chicago, I want to say yeah, Illinois, Chicago. It appears like they change underwriters, but that's not really the the main story, the main story is that this is a pay as you go liability insurance product. So targeting the I would say the lower income customer feels a lot like they're playing in the space of Just Auto insurance, which was a guest on our podcast. Yeah. So one to watch. It's not much to share yet right? This is really early stage but congratulations on the on the formal launch. The other I think top story was PolicyGenius. We basically did a tidbit via the email because what we've seen they they've launched an app about two or three months ago. And part of that app is the ability to create a will. So we've been talking a lot about insurance under the influence, Avi talks a lot about like backdoor selling of insurance. So every, you want to create useability and you can't do that around insurance or you can try and you're going to fail. But if you're taking transactional activities that are close to the insurance base like creating a will then you may be able to offer insurance, some, there's there's a bit of a an issue with what I just said before. Because at the time when you are creating a will, it typically means you have assets, it also means that you may already have insurance. But the whole idea of creating a mobile app for PolicyGenius and offering more services is just gives you a sense of their strategy.

Avi
I think it's interesting with PolicyGenius. Because if you look at life insurance, kind of once you sell the product, really there is no usability, you buy it, you forget about it, there is no reason for PolicyGenius to talk to the customer. But they've now kind of put more focus, I would say, around car and home insurance. And when you do that, you have to make sure that every year or every six months, if the customer wants to compare, again, quotes, they come to you. And if you look at Gabby and Jerry in the space, and they have mobile apps, and you need to create that touch point, because again, you don't want to lose the customer. So I think that's part of the reason why they now launched an app. Still have a way to go. I think the app is nice, but I wouldn't say it's the most amazing app that's out there. But time you know, good move. The will, you know, I'm not so excited about the the will part because really, I mean, if you're in the will business and you want to do that great, but if this is kind of like a, like a lead-gen, I wouldn't think so. But as a value add added service, definitely I can see people that just bought life insurance. Hey, let's think of a will so that makes sense. But I don't see it as a way for them to get more leads for life insurance in that matter.

Shefi
And we need to acknowledge all the others that are having a similar strategy, right? We have Fabric that offers the ability to create a will as a value added service. So Fabric is a Brooklyn based life insurance startup. We I think we mentioned them that they have an affinity partnership with Guardian life. There is also Tomorrow and Tomorrow kind of does the reverse. First you go and here's an app to create a will and if you want you can buy life insurance and pet insurance through us right. So, as I said, I said this before Insurtechs are competing with Insurtechs, and this is what it looks like. So, execution will, we will be watching what PolicyGenius will be doing next.

Nick
So this could be this could be an area where think FinTech and Insurtech there's going to be potentially a lot of overlap. Because, you know, woe was the company, the life insurance company that doesn't at least keep up with these other companies that are creating these touchpoints. Avi, even if they're meaningless, even if they're not necessarily profitable, I think it will differentiate those companies that do create touch points versus those that don't. And so, but I think there's a FinTech play here because this is getting into the financial planning area where, 1. It's really complicated. So you got wills, you have life insurance. Probably there's issues with trusts. I mean, to me, wills and trusts kind of go together. Now we're talking legal. So there's legal tech, as well. This is like a Venn diagram of some complicated areas. And as you guys were sort of describing this, I kept thinking to myself, I wouldn't want to be responsible for having to manage that for my family. So might, to me might be another, you know, kind of a point in the bucket of financial advisors. You know, I think they'll, they'll, there'll be a necessity for them to help guide through this stuff. But now the tech is here to help do a whole bunch of stuff seamlessly.

Shefi
Yeah. And to build on that it's better that tactic than going the route of afterlife planning. So all these leave a message for your loved ones or let me just give you a place to store your important documents. I mean, these things should be free and you can do it free, maybe not the coolest tool on the block, but better something that's transactional or needed. And as we said this for somebody like PolicyGenius, this is a piece in the bucket, right? So if they've got A-Z stuff going on, or they're exploring estate planning, which they are in terms of creating content, and obviously this app, they're going to tweak it and learn and improve so I, it's positive.

Avi
Yeah, you wonder what will be their next products because, you know, they don't need to add more. And you talked about FinTech Nick. Like a FinTech company could actually say hey, we know you have assets because we know how much money you have in the bank. Do you have a will and they could actually segment by customers that are worthwhile, like really going after versus people that you know, may have debt I mean, I wish I could give my debt to someone that'd be great. But that's the you know, the beauty of FinTech and but you wonder what other products PolicyGenius will go after. I think it's interesting. Like if you look at them, you know, verse the Zebra, the Zebra doesn't have an app, of course, because again, you look at the touch points, you wonder if the Zebra is working on something similar, because there is value to have that app and get that notification, hey, it's time for renewal. Let's compare before you, by mistake go somewhere else. But the space is getting very interesting. And I mean, PolicyGenius I've been saying it for a while that they took it the hard way and they, you know, are really pushing forwards. But I feel like they're putting now more emphasis on the home in car insurance, which you know, obviously are more popular in general because you don't have to wait a specific person to reach a You know event in his life to qualify. So that is going to put a lot of pressure on the other companies and it would be interesting to see how that moves forward.

Nick
Yeah, it's it's interesting after last week's episode where Assaf was talking about the debundling. I

Shefi
Assaf some Hippo so everybody knows

Nick
Assaf from Hippo talked about his views that there's going to be a massive debundling. But I just think the debundling is just a repackaging of bundling. So in his view, he's digging deep, very, very deep a deep well for homeowners and kind of bundling a whole bunch into that well. And I just think on the life side, life and FinTech, we're just always sort of married together. You know, and I just think there's going to be a lot of bundling, like you said, Shefi, the afterlife stuff. A lot of these more simple transactional things that, you know, things that you store should be free. Right? Like, that's probably a really good loss leader or lead gen for a lot of these companies. And I think I just don't see any way around it. I think any any life company that's sort of listening to this, you really have to up your touchpoint game. And I think I think they become very vulnerable, unless their end goal is to become a partner with some other FinTech company, you know, to be to be the life entity for someone else. But, you know, my preference would be to sort of control that control that relationship versus being a commodity, but you know, I think there's different ways.

Shefi
So I, the decoupling or debundling, I can see that because what we're trying to do, what modern insurers are trying to do is target a specific segment and you're, you're really narrowing it starts with an each niche product, right? Yeah, but the conflicting trend I think is embedding insurance into a product that's not necessarily insurance. So on one hand we want to offer pay as you go liability insurance product and if you want you know full coverage, they redirect you to Safe Auto in the case of Hugo insurance, right, something very small, very specific for a very particular target audience. On the other hand, and this really depends on the product. What we're seeing is a cyber security software being offered with cyber insurance, or auto being sold with auto insurance. So you have to look at it in terms of you know, PolicyGenius speaking home and auto is because there's a lot of shopping going around. It really is a matter of the convenience and the confidence so convenience, how easy it is to actually buy a product and then the confidence that you're getting a good price. In terms of whether you should be bundling, or debundling, or coupling or whatever it is, but lots of things are happening, it's really hard to generalize. So I think to a soft point, I understand what why he was saying comment and we see that happening a lot with a lot of Insurtech that are going after a specific segment. But then when I'm when I take a step back, and I and I move outside of insurance, how I see how it's not necessarily about bundling insurance products, but it's about bundling insurance with a non insurance offer.

Avi
Yeah. And Apple, by the way, is going to go big time and bundling according to reports, they're gonna bring the Apple Music, Apple news, Apple TV, all together kind of you know, because some are performing better than the others. And I always thought that, you know, Progressive talks a lot about like how bundling is great and you know, America people kind of like the bundle but but it really depends. I guess I The demographic and the product. So there's a lot to consider. I personally think Yeah.

Shefi
Right. That's that's the that's the market of Robinson's.

Avi
Yeah. But so it really depends. But yeah, I mean, you need to kind of like, watch out how they may bundle a service in the sun is certainly the product, they still believe, you know, most people do want to compare products. So that's why I think companies like Gabby, Jerry PolicyGenius, the Zebra, they're in a good place. But yeah, I mean, at the end of the day, it's who is able to kind of make it known to that customer that this is the place to get your answers. And it's very hard with insurance because you know, PolicyGenius is putting ads out there for car and home insurance, and they may get the customer and they will compare but they have a cheaper insurance currently, so they're not going to win the business. So it's a very challenging business model, but It really depends. And I actually think Assaf in a way is bundling with the coverage that he's taking with, you know, that's what I mean. Yeah, in a way. Yeah. He's he has his own kind of Yeah.

Nick
He's He's, he's bundling in his in his very slim vertical, which is, you know what, what he would need to do to sort of extract the most amount of value from that vertical.

Avi
So, you know, the deadliest bundle in history. Do you know what that was?

Shefi
I know why that's Yeah, Coca Cola and McDonald's.

Avi
No, the dead was bundled the bundle that killed an industry.

Nick
What's that?

Avi
Remember the flashlight apps used to have on the iPhone?

Nick
Yes.

Avi
So then Apple launch where you could just like, you know, turn on the light of the camera. So you don't need the flashlight app anymore. So no more flashlights. Oh, okay. Yes, yes. So they bought Yeah, they bundled that in. That was that was the end of the flashlight apps. They were very popular. I remember I used to download and just press it and you know, I had a flashlight, but now you could just do it on your phone. So yeah, that was a big deal.

Nick
Remember when Microsoft bundled Internet Explorer into Windows?

Avi
Was it separate?

Nick
separate? Yes. Then they bundled it and they got that was the whole genesis of the antitrust lawsuit.

Avi
Oh, okay. And that's, I think why still a lot of people use Internet Explorer, they just get it installed with the window then they never, you know, changed a chrome or something else. So that's like a smart, smart move. A lot of people don't care. They'll just take whatever is out there.

Shefi
That's true.

Nick
Yeah. Okay, so what

Shefi
This week was a lot about The Life Insurance space. Yes, that was one of the exciting stories. My, my favorite cool startup for this for this week was lively, which was something that Avi picked. It's a Canadian startup. And what it does is it offers a platform for freelancers. And I know it's really tricky to to target freelancers right now. But they're basically helping with invoicing and payments. And once their payment has been made you the startup has the capability to set aside a contribution. And together with many Manulife this will eventually accumulate into a full benefit package. Now it will take time for that benefit to accumulate. But it reminded me of the of the startups that are in the consumer facing roles in which they help people with spare change. And you can't even buy life insurance and we see that you know, overseas and in the US as well. So I think that that is that, but for very small businesses. So the idea is really clever, do you,

Avi
the idea is clever is getting people to kind of think about two challenging things at once and try to solve for that. So obviously, there's many invoicing software's out there for freelancers, but say, look, whenever you get paid, you could set aside a portion of that, that goes towards your health insurance and dental coverage and all that pay time off. That's a clever idea. The problem is with freelancers, it's a very unstable segment, like you have the really good freelancers that have been freelancing since 1995, where people thought they were crazy, like how is it that you don't have a nine to five job versus people that are trying to freelance you know, on the side trying to get it going. And it's hard to think long term as a freelancer because you're saying well, if I won't have much money, I'd rather have money for my car than for my health insurance. That's That's how a lot of people think like I'd rather have money to pay my rent than to have money for my health insurance. So it's always kind of like a something to think about later. And you look at the truth. I mean, you have to mention Trupo, which, you know, kind of it was a mission for them to target freelancers, with benefits, and the company morphed over the years, they started off as like, kind of like a community where you come together, and the freelancers for freelancers. And if you break your leg, then you'll get money. And then it changed to like traditional benefits. And nothing was special anymore. And that it changed again. And now it's a coming soon page. And this was founded by one of the founders of the freelancers union. So she had the network, you know, she had like an audience. But it I guess, I mean, it didn't generate enough interest because obviously it's not working so far it's not working. So, again, it's like, people talk about freelancers. But there are so much that is going into that space like you really say, Is this a professional Freelancer that has been doing it for years and is doing it successfully? Or is it someone that's unstable? And I can't talk to them about anything right now. So it's a challenging market. It's an underserved market for sure. For sure, sorry. But yeah, it's it's really it's hard to segment that kind of group.

Nick
So we're not we're now starting to see it is I think it is under servers now starting to see a lot more activity from startups trying to you know, service them so Thimble. Next, in a way does that, Vouch as well? And to me, Avi, I think kinda

Shefi
Coverwallet. That was a news After technology startups.

Nick
Yeah. And I think I think there's something to that, right. Like I think it almost by necessity requires a technological solution. Because the the premiums are too small and too volatile. And so you can't have a lot of overhead and still continue to serve them. So it does require, you know, quite a bit of digital solution in order to try to, to try to solve that, and probably a lot of bundling too.

Avi
Yeah, I agree. I mean, if you really want to target freelancers, like first figure out who is you know, that person that you want to target, and then try to bring as many services as possible to try to make their lives easier and make it really more affordable. And you know what, I mean, a lot of it especially now, you look it's just, you know, devastating help, you know, people lost their jobs and especially, you know, photographers, no weddings, yeah, contracts. It's crazy stuff. And I mean, I I say good for the startups that are targeting, you know, these individuals, I think it's important. But I wonder if there is maybe a way where you can offer some more stability to, you know, a very unstable segment. And if you can figure that out, like I would even say, like, look like the way with lively is, you have to have 12 months of your premium set aside to qualify, like, why can't you offer them a different model, like kind of like a pay as you go or something, make it easier for them to obtain that coverage? And you know, what, if they fall behind on their payments a little bit? What's the big deal, you know, foot the bill for them, they'll pay you back, try to create that kind of connection. I think it's really important that it goes a long way or obviously, you know, you take a risk, but it's a very risky demographic to begin with. So you have to keep that in mind.

Nick
Did you? Did you get a chance to listen to my Next Insurance podcast?

Avi
I did. I did.

Nick
Yeah. So that was interesting, right. So that they did sort of what you just described, so, you know, when they brought in their, you know, their their, it wasn't...a content director. They basically decided, Okay, they were going to have an ad spend. They pulled that back and they basically then went to their freelancers and paid their freelancers.

Avi
That was great. Great.

Nick
The marketing ad right?

Avi
You know what I can tell you, I almost, I almost had a tear really, when I saw these things. I'm very emotional guy. I don't know if you know, but it really is nice to see like, it's so simple. It's so cliche, but it works. Because America, especially in America, like we'd love to see these stories. We're a small business and I think there was the florist lady like with the flowers. She did something very nice. It sends such a big message and they did a webinar and that's how you that's how you build a brand. That's how you build a community. But like a real community, and it's really great that they do things like that. And I really believe every everyone needs to look at freelancers and say, I mean, how can we go the extra mile for them because again, they, you know, it's just you don't know what's going to happen tomorrow. But it's really

Nick
the community, the Shefi, the community aspects, so interesting in something like that, because take a take a freelancer that's a photographer, who's you know, the majority, the bulk of their income, let's say comes from wedding style events that they do. COVID comes, those things disappear. So here you have this company that is insuring them for those types of things. But they're a startup that and they're insuring a bunch of other freelancers. Like there's there's more they can do right with connecting them to potentially other opportunities, or even as a tech startup Perhaps I don't want to say skill training, but you know, maybe Hey, we can help you get, we can help you figure out other ways to generate revenue besides just doing weddings, you know, there's a lot of creative things that you can do. And that's to me like that gets to the heart of the community part is it's, it becomes bigger than yourself becomes bigger than the company itself. And there's a some, there's an authenticity to that, that is an intangible asset. And it buys you a lot of goodwill.

Avi
You know, it's, I want to add to that point, like if you just you brought an idea, you look at thumbtack, which is a marketplace to hire, you know, freelancers, and they make a lot of money. So when someone like you says, Okay, I'm getting married, I want to find photographers, then they send out your request to full time ographers in your area and they buy the lead, they buy your information to be able to give you quotes. If insurance companies were smart, most of them are not. Then someone like Hiscox would come and say to someone like Allstate. Hey, listen, I have a bunch of freelancers, you have a bunch of policyholders let's kind of create a marketplace together, where if people are getting married, we'd be more than happy to match them with people in our, you know, a customer base, and you don't charge for it, you're making good service for everybody. Why not? People appreciate that. You can you can take on thumbtack, you can probably do it better than them. And you you'll need to see these things. And I think it's really good. Especially now, you want to look at these initiatives. But yeah, that's that's a really good point.

Shefi
And you have to remember that these I think this was brought up by Next when we were when they were talking about segments but these companies whether it's a freelancer or a small business or micro business, Or we have a lot of the same risk when it comes to maybe media coverage when it comes to legal when it comes to advice that we need. So it's not just about leading and business opportunities. It's also about what can you go beyond in terms of the risk protection element to help with advice, and getting good insurance advice is actually harder to find, especially for freelancers because the traditional agent doesn't think it's worth his time to spend giving advice. So

Nick
I'm a big fan. I think from a startup perspective, startups are so difficult and expensive, right? That I really like the community based approach to that. It beyond just like find something that you love, but you know, perhaps someone that's listening has been maybe toying around with the idea of wanting to do something. I really like the community based approach. approach where you start with the community, build the community, but provide provide the inexpensive a common services to those communities like advice and things like that pointing people to the right idea and helping people helping the community itself. Give them a forum so they can ask questions and get answers. And then from there, finding affinity products and other things to kind of weave those into the community to really begin to enhance it. Some something like that. I'm a fan of that. I think it's very inexpensive. It just takes effort and caring to be able to do that.

Avi
So yeah, once once you've built a good community, it's very hard to move you but it's really it's very difficult. Yeah,

Nick
yeah. screwed up. Any other news?

Shefi
What else what else?

Nick
I saw that Kin. Did a fundraise. So I think we're Given in in Lemonade did their first quarterly report. So given that our conversation with Hippo last week I can is another one I put it in digital digital based homeowner companies focus predominantly in the Florida market, MGA model but now has raised money and formed a reciprocal type of insurance model. And once I saw that I was just sort of like Lemonade should have done that. It would have been it would have been a lot easier and more inexpensive for them to do that and want to fit their model well, but we're starting to see like all of these different models and approaches, you know, kin going to Florida, Lemonade with their model Hippo, really focusing in on the homeowners and trying to bring in a lot of technological and other elements specific for the homeowner. We talks about brands with bundling auto and homeowners, lots of different models, I think they're, I think they'll all survive. I think they'll all thrive. That's what's really interesting about this space.

Avi
I think about Kin. And apparently there's no correlation, especially in Insurtech with funding and demand. But if you go look at their traffic numbers, there's not much to look at. So I wonder how they're selling. I wonder if it's kind of like they have a list of customers that they got somehow and because they have licensed agents that get on the phone and call so I wonder what's behind it. And you know, it's an interesting topic, because today, I mean, this week, we listened to I listened to Lemonade q2 earnings call. And there was some interesting things there and one of the interesting thing was When Daniel Schreiber said, we pay for our customer acquisition upfront, we pay it once, when we acquire the customer, that's it. We don't have to pay commissions and renewals and, and all that. So it's really interesting that you look at there's always two sides to the coin. But and then on the other hand, you look at companies that do rely on agents and they'll know that every year when there's a renewal, they'll have to pay but of course, you then go into retention rates, which apparently with agents, retention rates are better. So so you have to consider that. But it really is like, if you ask me, like what's my ultimate conclusion of this? And this is from my army days. So in the army, they tell you, the first thing they teach you is to respect time. You have to be on time, no matter what doesn't matter if you have one shoe on your foot or you have no shirt Or you didn't shave, you have to be on time. Because once you're on time, then you'll have the opportunity to fix whatever it is that needs to be fixed. So move fast, move fast, spend a lot of money doesn't matter move fast. And I think that's what is good about Lemonade and Root. They move fast. Of course, they lose a lot of money, but they move fast. So I wonder, what's the situation with Kin? Are they going to get to a point where they'll say, look how fast we move? Look what we've accomplished. They need to get to that point, they shouldn't worry so much about losing money right now. But but that to me is like the only interesting thing I would say, looking at Ken over the years because they've changed models, they they didn't start and they are where they are now. exactly the same. So it's definitely an interesting company.

Nick
Any any opinion Shefi

Shefi
now it's, it's really what Avi says there's not much to see right now. Not not much it is out in the open for us to actually comment. You know, I think companies that come to mind as openly although openly has a different target segment, not necessarily just a catastrophe prone customers, they they're targeting the high net worth, but insurtechs competing with Insurtech. So obviously Hippo is in this space. Lemonade is in the space of home insurance, although not a focus. And, and now, Kin, I think that, you know, I was raising an eyebrow when one of the founders said that they found a way to eliminate agents commission. And I think well, that's, that's like part of the story. The other part is you have to pay for customer acquisition somehow. So if you don't pay two agents year over year to Daniel Schreiber's obvious point, who are you paying it to? You're paying it to Google, you're paying it to display ads, Facebook, etc. So a lot remains time and don't forget the time.

Avi
The time that it takes you to a question Customer when you rely on agents is longer and time is money because you still have to pay the developer you have to pay yourself a salary. So though you have to look at the big picture.

Nick
Yes, I agree. So the so for those that are listening, reciprocal model is kind of a, a different form of the mutual model where the policyholders actually own the company, own the insurance company, so there's a direct relationship. So the pitch for the reciprocal is that, hey, we're all in this together. And because you're in it, and because you own the insurance company, you're much more likely to be more risk conscious. And it will attract those that have done mitigative preventative type of additions to their properties. Because they know they're lower risk. And so they want they want like a magnet. They want they want to attract Other lower risk, property owners kind of pool their money together knowing that our pool is a lower risk pool than other pools that you might find. And I think Ken is predominantly in Florida so it makes a big deal. So the the, I'm thinking likely, from a reciprocal standpoint, the type of homeowners that they want to attract, or those with fairly modern homes that are in the newer building codes, probably like ibhs fortified status. So there are elements of the structure that it's just like, you know, it is built to withstand some pretty significant weather. And you get, you get really good premium rates. It's a FM Global model, you know, they they, everybody wants to be part of FM Global because they have the cheapest rates, can can sort of offer something similar to that and I think Ken's message going forward. We'll be, you know, the United States has a lot of catastrophic areas. And those will be areas that will be very difficult for Hippo or Lemonade to get into, you know, you can't go in that you cannot go into catastrophic areas as the cheapest price, you will get your you will get your hat handed to you. So it's it's a, they're coming in from a different angle, but if they can make it in Florida, they can make it anywhere. Right if the Florida element works, it'll work all over the place. And I think I think the the standard bearer for this is pure, pure is a reciprocal. And you know, they they got bought out by Tokyo marine for a really, really big price. So if you can do it, right. These are those are very loyal customers and so sure that they might have to pay more to get them up front. But similar to what Daniel Schreiber said at Lemonade, we just got to get them once, then they're going to be loyal because they're going to be part owner of this thing I, I kind of liked that model a little bit. Yeah, I mean cacs a little bit more upfront, but not long term lifetime value, you should be able to stretch that out and I think interests are aligned between the you know, the structure of the company and the policyholders.

Avi
So, okay, yeah, yeah,

Nick
I would like to add one more thing that one little tidbit that I was when I was digging in through Lemonade's quarterly report was their three year reinsurance contract, which was in excess of loss reinsurance contract, got renewed, and is now a quotashare reinsurance contract. Very subtle, but I think very important. You know, I think it gives more credence as well that there Very, very, very that capital light structure makes them very reliant on reinsurance. And I think that's a damper. I think that will limit their upper end growth. And again, this is not like me squashing on Lemonade. It's the valuation, the valuation just doesn't make any sense. They're very reliant on reinsurance to sort of make this happen. The proportional element means that they're sharing their entire business with reinsurers and they can't survive without them. So as they get more and more into homeowners, to me, that's the KPI I'll be I'll be looking at two KPIs from them, the dollar amount per customer that they're able to extract and how much reinsurance if they they pure, went through. Every annual report with pure Ross Buchmueller talked about how much less premium over time they were paying to reinsurers. That's the sign The successful company when you can take on more risk. If you can't take on more risk, you're relying on them. They control your destiny.

Avi
You know, what I thought was interesting about Lemonade. And we've seen and self talked about it as well the increase in home sales over the past month with a pandemic. And they didn't mention that and I mean, to me, I don't think they really try to market their home insurance product as much as they do the renter's. But that was interesting because a lot of you know, the new homebuyers are kind of like new homebuyers. They move on from renters from urban places they went on to buy So that to me is a sign that they're not really interested in that market because they really want the products where they can automate as much as possible and renters and pet is exactly that. But you know, the valuation, we always know the valuation is ridiculous, not just in insurance. across any other industry, but, you know, it's kind of like an investor's game. And there's always the winners. And yeah, the question is, will it stay will Won't I mean, it's it's hard to predict these things. So,

Shefi
the most we can do his benchmark, which is what we're doing right now benchmarking a certain model against something similar. It's not always apples to apples. But if you can take something positive from pure model, or you can take something positive about their separate or separate coal exchange, or obviously, from from, you know, you take what you like, you take what you like, from the acquisition game of FinTech, you take what you like from the acquisition game of legal tech or entering, like, giving usability in a product that's not meant to use, right, and then you try to make something that's better, more sustainable and more relevant to the times right.

Avi
And the Hiscox had actually a nice partnership this week. The first in the UK. That's what they said. they've partnered with an accounting software that's owned by NatWest were acquired in 2018, for 50 something million. So you know, in the software, they kind of figure out your financial data, your individual requirements, and they present you with a quote, which in the small business space, I say, watch out because consumers are not as willing to compare because it's not like auto insurance where I mean, let's see 20 options, business insurance, you can be lucky to have one quote, and one company willing to, I mean, we would have paid a lot of money to get our media coverage. But we ended up finding a nice company. So but but yeah, so that's, that was an interesting move. And whichever you said, like look at FinTech. Look at that, look at the acquisition. The future is integrated. Unless you're a lone ranger, then it's not correct.

Shefi
Yeah, again, it's a it's a prime. So people say always, one of the things that I disagree with his people say start with the customer. And I think it doesn't work in insurance. And I know not many people share my, my opinion. But the reason the reason my stances start with the product is just there's just different dynamics. And if this is a product that people tend to shop and Progressive mentioned this in their earnings call, people are shopping more and more. But the question is, are there options? So even with Hiscox, you know, Next Insurance soon to be maybe pie in the world calm space, hard to compare hard, hard to see that apples to apples. So if you offer a product that in their mind is fair, they're not going to go to a aggregator calm and look for a quote. So understand the product that you're starting with. And then you can, you know, figure out distribution when you figure out distribution like PolicyGenius, did, they figure it out distribution, they can build on that. If you don't have distribution, then you can't really take your time to focus on other things. And I think it's really important to make sure that the priority that you have the right time priorities in place, right?

Avi
And that's I think, what haven life did, they've kind of they have distribution figured out. And they are working on products, they're launching different products to help them differentiate. And then that's the thing, like when you have distribution, you worry about the product. When you know, you, that's where it is. But when you don't have distribution, you know, you could try to make it through the product, but it becomes very challenging.

Nick
I think product development insurance is really interesting. We should we should, at the right moment, I think when the right news article comes up, we should probably spend some more time because it's a delicate balancing act right. Shefi like, I agree with you. I don't I don't I'm not sure you start with the customer. And I don't know if there's another industry where you would think that way because what does the customer want?

Shefi
You know what Isn't that great? We had a conversation I think it was last week Me and Avi and another Insurtech, super well funded Insurtech, the unicorn status of Insurtech. And he was mentioning how this is a really expensive subscription product and the customer doesn't want to hear from us. And Avi and I said, you know, God bless them. Let's move on. You don't have to change. I mean, there are not a lot of positives working in the insurance industry. Take what you can get, and work on the challenge. Don't create a challenge if there isn't one.

Nick
as a as a product developer, myself, I spend, I feel like I'm on a tightrope, right? I spent a lot of time bouncing back and forth between Hey with the with the customer like this, and then what are the implications of that? And I'm bouncing, because I can't, I can't always give the customer what they want. Because what the customer wants is, they don't want to buy my thing to begin with. But If a claim happens, they want me to pay the full amount. So how, how do I give them value? And that sort of transaction, that really delicate balancing that you have to do to try to, to, to manage that. And so I think about it all the time. probably much more than that, that's healthy, then what's healthy to do that? So we should we should do a whole series, I think on that because I don't think people understand that you can't start with the customer first because they don't want what you have to sell. You have to kind of nail down certain things and kind of build off of it and, and be very careful how you touch them

Shefi
Accurate.

Avi
Amen.

Shefi
Yeah, that's a good takeaway.

Nick
Friday, August 14, as as as usual, we're we're always a little bit unsure about whether we have like a full show, but I think we could always talk for two hours no matter of the week. So, as usual Shefi, Avi, awesome conversation. Thank you.

Shefi
Thanks, Nick. Bye everybody.

Nick
Bye everyone. Have a great weekend.

Transcribed by https://otter.ai