This Week in Coverager (8/21/2020)

This week, Shefi, Avi & Nick discuss:
– Mercedes & Toyota announcing the offering of insurance for their car buyers. Is this a bundling of products that could be more attractive than an auto/homeowner bundle?
– the use of free wills in the life insurance space as Aon New Zealand announces their complimentary offer. What does this mean for other companies in the space, especially those not offering free services?
– Assurant and Liberty Mutual join the getting-ever-crowded renter’s insurance space.

Listen here:

 

Transcript

Nick
We're live! We're back! This Week in Coverager...This is the podcast where Shefi, Avi and myself and sometimes the guests come on and we talk about the hot topics of the week. So as usual, I'm in podcasting headquarters in Naples, Florida. I have gotten a haircut because I am going to have my first face to face business meeting since February so I want to look you know, put lipstick on a pig basically, as usual, my co hosts in New York City, Shefi and Avi. Good morning.

Shefi
Good morning.

Avi
Good morning.

Nick
Good morning. So this is the podcast where we discuss the hot topics Shefi for the week of August 20/21st. This is the 20th so the week ending August 21 What were the hot topics of this week?

Shefi
Okay, so we'll start with carmakers, Toyota and Mercedes had interesting announcements. Basically what we're seeing is car manufacturers being the ultimate distributor of usage based or telematics insurance products. And this is kind of, you know, we're still in the early stages of what that's going to look like. So to recap, Toyota made an announcement with Amazon Web Services. And the idea is, how do we get more out of the data that's coming out of connected vehicles, and part of that long list of benefits and features is telematics insurance. The other you know, Mercedes Benz, which is probably the flashier of the two was basically in Germany. First of all, let's make sure we get the geographic geography right. But they had a telematics product, still have a telematics product with a German insurer at the backscene. So I always remember ABI likes to say insurance is going to the back door, backstages They are looking to basically offer their telematics product as first you test it. And if you if you like what you're seeing, then you can buy. So they're just basically tweaking, usage based insurance. But the whole idea is, is that they already have the distribution. Somebody already bought a car, the user interface is very easy, because they have all the information about the car buyer. So the you know, we like to talk about flow, the flow is very simple. So why not, you know, at the right time, at the right place, why not give it a try? So something to consider. I know last episode, we talked a little bit about trends that are in conflict with one another. And I see this as the non bundling of insurance, right? We always have, like Progressive will be here talking about their Robinson strategy, or they're going to get the home and the auto and that's a segment the other segment is I'm going to get insurance from Mercedes and wait till it comes to New York.

Avi
Yeah,

Shefi
That's my 1st story.

Avi
It's an interesting point that I want to go back to a few years ago MetLife with a partnership with Hyundai, and I'm gonna, you know, basically read a part of a quote from the MetLife, VP/Head of MetLife group & auto. Basically, they gave a price that's included in the lease. So insurance included with the lease, and they're saying is, it's a competitive price because when you look at insurance costs and the cost of vehicle ownership, purchasing this coverage separately would actually cost a lot more. There is a lot of marketing and advertising in the insurance industry. It's one of the most marketed industries across the board. This program is offered through a Hyundai so we're not offering marketing to promote this program, Hyundai is leveraging their existing marketing program to sell cars and get consumers in the door. That marketing savings gets passed to a consumer. So you know the customer acquisition cost for Mercedes is zero, they send a notification through their app. Most car owners with newer models, they have the app, because you can unlock your car and find it and all that stuff. So I doubt there's any cost related to that, and it's interesting, because there aren't that many car brands in the world, if you think about it, there aren't that many. It's like 16/17/18 in the US something like that. And the ultimate question is, well, car makers work with one insurer to kind of leverage that like, price and say, look, you're going to be exclusive, but you've got to give us a good deal. Or will they try to say, here's the data, you could bid because maybe, you know, the car company says, You know, I like this Mercedes car owner, but he lives in a place with, you know, a lot of break ins or a lot of trees and they fall and they, you know, so that is the question, but, you know, it's it raises kind of the question what is going to happen to standalone telematics companies, companies like Cambridge Mobile Telematics and Trumotion and you know, Root that is now doing things in the space. Will they have a place to come in between the car maker and the insurer? Or will the insurance say, look, I have my car maker, I have my telematics order, they have the technology, no need for a dongle, no need for a smartphone, a special lab, let's work together. And obviously, for car makers, you know, aside from the money that they could make from distributing insurance, maybe they're looking at it as a way to lure customers and say, Look, we know the car is a little expensive. Let's make it more affordable when it comes to insurance. And that's a big selling point, for a lot of consumers to know that you really get the right coverage at the right price.

Nick
Yeah. So it's, bundling and unbundling and then re bundling. So instead of bundling on the insurance side, it's a different vertical and it completely makes sense. This is the similar to the Hippo model, right where they're uber-focused on the homeowner. You can have a car manufacturer that's uber-ffocused on the car, and everything that goes around the car, the maintenance, the insurance, the financing, they can control that whole vertical. And it completely makes sense. And Avi, this is a more I think more in the direction that you've been sort of espousing week after week, which is this is an abstraction of insurance. It's what's a what's a better bundle...auto with homeowners, or auto insurance with homeowners insurance or your auto with your auto insurance, and you know, you don't have to think about your auto insurance. And

Avi
That is a great question. Yeah, you know, that is the ultimate question and I'm sure Progressive is thinking about that because if you're a BMW owner and BMW is telling you look, you get tailored coverage based on the technologies in the car, or you can go with Progressive that just wants to bundle home & auto because, you know, they find that you'll stay longer. Now the car owner is thinking, do I want this? Or do I want that you're talking about first notice of loss. Volvo has that in their app now. That's convenience if we have a claim I immediately you know, do that through the app that Progressive has. So it's going to be a difficult question

Nick
You can get your car fixed quicker.

Avi
Yeah.

Nick
The any maintenance issues that could cause some sort of vehicular accident can be caught ahead of time. I remember listening to the CEO Metromile discuss how you know that was something that they discovered later on after they created their telematics platform was like, Hey, you know, we have touch points here. We can tell them about oil changes and stuff like that, or, you know, the brakes or going things of that nature. There is a lot more The auto manufacturer bundling with the within, you know, an auto insurer or their own, they're the insurance company but offering auto insurance, there's a lot that they could offer there to potentially drive down loss costs and make that piece of it very affordable and which makes the whole ownership of an auto more economical.

Avi
And by the way the connected car think it's real, and it's across all brands, you don't have to be Mercedes, you look at Volkswagen, which you know, is not considered a premium car. If you look at their price point. You look at Hyundai, you look at Toyota. Everybody is experimenting, because it's a data play. It's convenience. It's really about what you offer to the customer and you know, convenience...we talked a lot drives innovation, so everybody's going to go into the space. The question is will they choose one insurer, more insurance, I think, you know, at the end of the day, it depends on what they can get, but it's a big deal and they have a lot of power because they can get to the customer at any time with no cost at all.

Nick
Shefi would they, would these auto manufacturers become their own insurers? Auto isn't exactly known for having like super rich margins. Insurance might actually be a better overall business than auto itself. So I To me, it wouldn't be shocking if you know Mercedes decides we'll take the primary risk and then we'll reinsure we'll have a stop loss on ourselves with you know, one, one of our German reinsurers

Shefi
oA they just collaborate with somebody like AXA. So I don't know that. They think that being an insurance company is the sexiest thing in the world, nor is it necessary and don't forget, it's somebody that is coming in from the stance of Mercedes or Toyota, they seem to have more power, talking with insurance companies and they have the capability to get to a product that they cannot offer and determine the right service model, what happens in claims? What is the pricing if they if they, you know, supported with data? So once you've heard why take on all the, you know, the hundred steps of actually becoming a licensed regulated insurer

Avi
and the negative aspect Don't forget the negative aspect. Yeah, you did.

Nick
Yeah, that's what's what's Tesla doing?

Shefi
We don't know. Well, for now, whatever they're doing, they're doing it with State National. So once we and we know we get a little bit of a better sense with the filing, but but Tesla is also unique in the sense that if you look at Tesla's founder, I mean, he's like a genius crazy man. And I don't think he's one that everybody says let's let's take a page out of Tesla's rulebook. So one of the the math behind that company is also driven by loans that the government send and not everything is organic, right? So I, you know, I respect what they're doing. And I pay attention, of course, but I don't think it's everybody's model. So we will look at what Tesla's is doing. But it's not necessarily to say that Toyota is going to be copying that model. So MGA's work. Insurance companies can be solid partners. They also there's a lot of expertise found in insurance companies. So I think the marriage of the two is something that could be fruitful.

Nick
Bundling & unbundling...

Shefi
Bundling and unbundling. But speaking of bundling, there is a company called the Bubble from San Francisco and I think it's the first company that is looking to bundle home insurance and life insurance very much emerging, emerging mode, still a company of one I believe, but just interesting in this whole conversation of do we bundle, do we unbundle? Do we target the because again, I think we've said this insurance Insurtech has about 1000 ways to sell insurance. So the question is who are you selling to? What are you Selling? How are you selling for the most part of the product is the product?

Nick
Yeah, I thought auto was a good a good potential bundle point for life insurance. Life just like I think naturally lends itself to bundling. Just a terrible transaction right? Who came out this week? They were going to do a medical free program??

Shefi
Well, there's so many of them there's no Erie

Avi
Erie. Yeah,

Nick
yeah. So it's, it's, that's a big part of it. And I think you know,

Shefi
what's Okay, I know what you're thinking about. Yes, it was Erie, because Erie was basically positioning it for agents selling auto insurance to upsell life insurance.

Nick
So I think there's a natural piece there because there's, you know, there's a physical harm element of auto. I don't know the regulatory aspects of that, but you know, life (insurance) is just such a such a terrible transactional thing. And I think a lot of life insurers would be wary of offering significantly large limits without a medical exam. And I think bundling it makes a lot of sense because you, you'll actually know quite a bit about the person that you're insuring, especially their driving record. That's got to be helpful??

Avi
I think life insurance companies need all the help they can get to distribute their product and bundling, I mean, they'll bundle if they could bundle when you buy a pet, they'll do that. They'll do wherever they can, where they can put their product. They're going to try because it is such a difficult product and it's a hard transaction as he said, it's it's difficult.

Nick
Yeah, yeah.

Shefi
yLife insurance for an individual and their pets.

Nick
Yeah, I have a pitbull and ou know, I can't get them insured on my homeowner's so I'm going to get I'm going to go non standard and can you sell me some life insurance while we're at it? So we're going to be seeing some really interesting stuff like I think like just tip of the iceberg on how we're going to re-bundle this stuff. I I just keep going back to Avi's point, I just think that's next 10 years you're going to see like a very heavy abstraction of insurance just trying to like hide it. You know, make it part of a different transaction, you get it, but you don't realize what's going on in the background, you're just comfortable knowing that you're getting it. I it'll probably cause a lot of issues when claims don't get paid. But I think we're, I think there's going to be a heavy push for that.

Avi
Yeah, and a lot of lose a lot of losers and just a few winners because there's no room for everyone. So yeah.

Nick
What's the next story Shefi?

Shefi
Okay, so just a repeat from last week because insurance is a me too industry and when one carrier does something the other rushes to do it as well. But speaking of life insurance very quickly Aon in New Zealand is also offering complimentary will service to their life insurance policyholders. And my comment on that we understand the origin of why they're doing it, you want to introduce a usability element to insurance, we talked a lot about the five elements of insurance and what that looks like the differences between users and customers, just keep in mind, nobody is updating their will that frequently and if they do isn't that's kind of a red flag. So, you know,

Avi
unless they have like, really like dumb kids and they get upset. It's like, you're not getting anything and every week they change the will because they know in some families, it's a thing. Oh, I'm gonna take you out of the will and

Shefi
it's well in our family. It isn't. So maybe I should not be speaking from experience.

Nick
Imagine the Kardashians?? What do you do you need to change the will every week after every episode.

Shefi
Oh, that's true..a lot of coming in coming in and coming out. Yeah,

Avi
I use the free service or they just go to the lawyer.

Shefi
They'll go to the lawyer. But it's we understand No, we we understand that and in all seriousness, it's nice for them to be able to say, hey, do this do this as well or he or something for a perk is always nice to get obviously don't forget to market it. Because just because you announced a perk doesn't mean that people are going to pick it up on the first time. So there is an element of communication and marketing. But do it and move on because it's not going to get you the...It's not enough.

Nick
The marketing would be interesting.

Avi
How are we not really

Nick
Are they going to go direct they're gonna do like TV, like how, you know, it's so

Shefi
out there. Tell you what we're seeing, what we're seeing is basically the the folks in the digital will space, those that are standalone, either they're part of a firm that's bigger and does a lot more things and the legal tax base, or it's a standalone company backed by VC, and they're trying to figure out their customer acquisition strategy, because, again, just offering a will for whatever price point there's a lot of price points by the way, it's free. And then there is, you know, a subscription costs. But that to me is always kind of, Okay, we have no standard. Who's using what so it's tricky. It's very early on, in terms of marketing, it's just a matter of reminding people that you have this tool and when you say use this tool, maybe you get some data out of it. I don't know how much but it does bring you closer than a customer. Sure. That's you have to get closer to the customer.

Nick
Shefi if I'm if it's technologically based, right, like you said digital. And on the other end, there's not a lot of human intervention so you know that free will can be done fairly effectively without necessarily human being, so there's AI or some software that's walking you through that, then there's very little overhead in doing that. And now you have a lead gen system that you can say, well, you just did your will, you know, how about paying for your funeral costs? How about, you know, you know, do you have a two year old that's going to go to college? And like, it can open up a lot of other avenues so I can see it as good lead gen. I, I would I would just be concerned about how much is it going to cost you to do that initial marketing to generate those leads and what's the lifetime value as they as they work through the the funnel?

Avi
You know, that's an interesting point, Nick, and I have to bring up tomorrow, Tomorrow ideas, so they allow you to create a will, and the two years ago, over two years ago when they raised 4.2 million. One of the investors was saying Tomorrow brings an incredibly fluid customer first user experience, the traditional way, wills and trusts are created, we see these major steps in protecting a family as just the beginning of how Tomorrow can bring financial security to every household. Now, the problem is, and we talked about this several times. When you have a will, when you need to create a will, you already have something that you need to kind of secure. So most of the people and you know, Aon is an example how they said like we're going to give well to people with life insurance, the group benefits, they already have life insurance, they don't have the will, that's the missing part. So most of the customers that are writing a will, they have already life insurance. Now the question is, what else can you offer them? Like what are the other steps and this is where it becomes challenging because you have to go back to the usability aspect. And it's kind of it's frustrating for both the company trying to market and you know, in a way for the user, you know, Tomorrow can start sending Okay, well, you didn't need to do this and you need to do that and I don't I already have all this in place. So now you wait and you wait with the right offers, so maybe they offer pet insurance, but well, my dog is seven. I'm done with that. I don't think you could build a kind of like lead gen from will and tomorrow is I don't think tomorrow is going anywhere. I think they're kind of stuck. And the problem why they're stuck because now comes Fabric. And you know, also does it for free. And now comes Aon with the whole group benefits. So Tomorrow, yeah, it bothered you and Tomorrow loses their main advantage and don't forget, they need to market their solution, which costs a lot of money. You know, you have lead gen companies out there in the auto space that tell you I can't compete for the top spot on Google because Progressive can pay $100 per click. I can't do it because I need to sell the lead I I can't make that hundred dollars back. So I think it's not a good idea to lead with wills. Of course, you could see some success I don't think tomorrow is seeing in that case, and I mean, unless they're running very lean, but it's very difficult because you reach a customer that has already kind of got to a point where he has some of the services that you're trying to sell them.

Nick
And Shefi I think this is leading right into topic number three, it's, as we discussed before we went live this is a differentiation problem. And it is probably the single biggest problem with insurtechs is that it becomes in this in this particular industry, it's extremely it's so easy to copy and do me too. Like there's there's nothing Lemonade is doing that anyone else can't do and are doing. Avi you just met mentioned tomorrow and then you know, with Fabric coming along. Like there's there's there's that issue like it, it's it doesn't take long to commoditize something when it comes out like you. The reason you can see like a Geico and a progressive in the lead and growing their lead is the amount of effort they put in marketing. And so just sort of tells me that customer acquisition is just going to be still be incredibly difficult going forward.

Avi
But But you know what,

Shefi
Let me just chime in here because I think the point that I want to make is that we're constantly on our toes. And the reason why we're constantly on our toes even though some of the strategies are so easy to figure out and then it comes to tactics which are harder to execute. But the reality is, is that even Tomorrow idea I can make a move that puts it in a different place. And I was I don't remember exactly what I was doing yesterday, but I was, but PolicyGenius was in my head because PolicyGenius when they started, you know, we kind of group them...I don't know, at least I did with Health IQ. I don't know if you did the same, but I thought they were going head to head on the life insurance base. Now PolicyGenius in my mind is going head to head is getting closer to where the Zebra is playing, actually they kind of surpass where the Zebra is playing. So it's interesting to see, and, you know, comment if you disagree, but it's interesting to see how people have changed their competitive landscape. And to me that signals growth a lot of times because while we won't have necessarily the metrics in terms of how many customers they have, you know, what is working, of course, what are their bottom line is, we you know, if there is a healthy growth in which we could say, You know why they're in a better place, and there were and, you know, this one is moving into a different direction. I think that to me is a strategy at play, and it's one that's worth watching.

Avi
So here's what I'll tell you first, Nick to your point. Lemonade, you said you could copy but Lemonade did do something. And that your debate yesterday on Twitter is proof to that because people care about Lemonade, for the good or for the bad doesn't matter people care. No one cares about Tomorrow. No one knows who Tomorrow is maybe just a few investors and a few users. I don't think it's that easy to change a strategy and all of a sudden an offer. And you know, you look at the business world in general, there are two types to sell a product. There's a way to sell a product on price, or there's a way to sell a product on being a better product. Mercedes can say we have a better product and we charge a premium for it. Warby Parker came in and said we're not saying we have better glasses, but we say the cost a third of the price, and it was successful and they made it work. It's much easier to lead with price and that's what Tomorrow is doing. Tomorrow is saying it's free. And Fabric is saying it's free as well. And they're getting these people and we talked about this and Facebook did this and Google did this. And Amazon in a way did this as well. And free and value kind of I feel they go together and Apple is expensive but the value that they provide with the ecosystem and what you can do with your phone and Apple CarPlay and all that so it's worth it. I don't think it's that easy and insurance to change and you know, even PolicyGenius that you're right Shefi, they went to the beginning and they were compared to Health IQ. And while Health IQ is now going towards Medicare, because there's a lot of money there and you know, seniors that are nice enough to answer the phone, PolicyGenius is not doing Medicare, they went to home & auto where the Zebra is but the Zebra is taking a different approach because the Zebra believes that the future is seamless and technology and no need for many agents and PolicyGenius is recruiting agents. They need agents, it is over the phone, it's not you know 100% online, but they you know, it's kind of like a different strategy but PolicyGenius has a lot of tools now that they could play with Tomorrow doesn't and you look at how much money does tomorrow have in the bank and even if they do get another round of funding, can they now compete with established players? It's not easy and don't forget PolicyGenius is still I bet you're losing money. I bet you they're still losing money as so many others. Look at Casper they're talking about raising more money you know, with a different blank check company and all that. It's very difficult. You're selling a product that's you know, not in consumers mind and and the ones that did make a change either they made the change in our minds like Lemonade that they made you think that they're better but they're not. But they made people think that they are or companies that really launched more products and were successful and attracting arrangement. You know, PolicyGenius they're smart because they know people like to compare insurance. That's the smartest thing that they did. While Ladder, Ethos and Bestow they're fighting to say Pick me! Pick me! Pick me! What's the difference? Pick Me! You know, and that's the number one thing, but it's very difficult for every company and even PolicyGenius everyone is struggling. So it's I don't think it's that easy to come and say, oh, let's offer a new product.

Nick
Well, I think, I think that Shefi's point, I think there's a nuanced difference between changing and staying on your toes. Shefi I think, I think where you're going with this is staying on your toes means you, you may need to pivot a little bit here or there and just continuously stay fresh in the mind somehow, you know, I think, you know, did Lemonade really offer a better product? No, but they were they were controversial. Yeah, a use that to their advantage. So they were like, they were on their toes. I think I think that matters. You know, I don't think Lemonade needs to sweat you know, they wouldn't need to transition to something dramatically different. They just need to Stay on their toes. And you know that somehow you have to at least look differentiated. If you haven't if you're not,

Avi
and that's what that's what they did. And you know what? You don't hear Professor Dan Arielly as much anymore. And it's interesting because in the beginning, if you remember, he led like a lot of the kind of Lemonade communication efforts. You don't hear that anymore. I think they understand. They're in a different ballgame now and people are watching. And I could tell you, I bought Pie Insurance from Lemonade. I thought the process wasn't great. So I buy it. They approved me. Then I get an email saying, oh, by the way, you need to take your dog to the vet. And I said, Okay, I have you know, the medical records they send over the medical records. Six days later, I get an email from Lemonade from the underwriter saying, you know, we will cover your pet, but here are the, you know, we won't cover this in that. I don't think where's the AI? You couldn't have an AI to scan the document, NLP that's a thing you couldn't have that immediately say, okay, we see that your dog had surgery here, we see that he's has issues here that's not covered. Where is the AI? It's the same process. It takes time. It's, you know, hours and hours and time. So again, it's a it's a mind game, but it's unlike Mercedes where they can lift you know, the hood and you see the engine and you know, it's good. Lemonade is just like any other insurance company underneath. And that's it, but, you know, that's how they differentiate with the messaging.

Nick
Well, I think that leads into topic three Shefi...

Shefi
Topic three, okay, so renter's insurance. What we've seen is, Assurantrenters.com I don't know exactly when it went live and went live. I tried it. I loved that it was so easy. Just talking about how easy you can compete on user interface and user experience. So nice job I can tell you for sure that at least as of Lena last year, the site looked completely different. So it had to be something that is relatively new. That was Assurant. Then we have Liberty Mutual. We know Liberty Mutual, is eyeing the renter's insurance space. They have an API they're working with, you know, they have a b2b2c strategy and they launched a brand called certainly what is a little bit disappointing is just how slowly they've been pushing the brand out. So it's only live in two states. But what we've seen is they moved away for just offering renter's insurance and now offering renter's insurance, auto insurance, and identity protection as part of the add on again. So there there is identity protection as a as an add on to renter's insurance. It's your favorite topic because he just did a report on it. But that's certainly what is a lot more interesting to me is companies that are simply operating in the space of renters and landlords And not so much from the perspective of, you know, security deposit. But there's a company called Till from DC. The whole idea is how do we make? How do we help renters pay rent on time. So it's this flexibility platform where I can say, I can't pay the on the first of the month or on the fifth, I can pay the 15th. And the landlord will work with you through that through the platform. So, you know, very interesting, very targeted for the demographic for a part of the demographic right, not all renters have that problem. Also, you have to look at renters in terms of the age group in terms of whether they're married, they have children, right. So even within this population, you can segment in different ways. But these companies, Avi was writing about a different platform that was focused on analytics for landlords. So

Avi
yeah, there's Hammock & Zeebo. Zeebo is also going to go into insurance and help landlords find right coverage for their properties. It's interesting. There in the UK, there are 2.3 million landlords apparently. So now they're saying let's start get that segment, checking account, analytics, all of that. So that's interesting. And you know, the Nick, you talked about bundling, and unbundling and like, being very targeted. You see that, but for some reason, which to me is like, it's kind of like, I'm amazed by it. You don't see insurance companies innovating in that front, they're not saying let's build a product, look at you know, a Jewelry Mutual, they did a product. Yes, they build a product. The design I said wasn't great. But the thought I don't know how the product if it works or not, but it's a great idea built kind of like a CRM, you can check prices know how much diamonds go for you shipping and all that. That is smart. And you know, it's too late for insurance companies unless they go look at acquisitions and again, you know, who could win with acquisitions, the big companies, you know, the an insurtech cannot acquire...maybe Lemonade now acquired Are companies but that's the thing. They're not doing anything. They're waiting and waiting and waiting. And it's going to be

Shefi
doing I mean, I look at High Road, look at Certainly, this is a very slow pace. I mean, what's going on? I mean, High Road you still, any customer or prospect that is going into their site, you still can only buy with today's date. I mean, do they not want customers, any new customers? I'm not sure what's going on? I mean, who shops and buys insurance...Car Insurance the same day, don't you say? I need this for September 1st or I need this for October 1st? And you're gonna make me come back on September 1 to buy the policy. They're

Avi
like they're

Shefi
Commitment! This is the thing insurtechs some of them and I think most of them I'll give them credit. There is a commitment to fight. And even though if the economy you know, all the economics and the old metrics may not play in their favor. We're fighters and I look at even look at Coverager as that I mean we hold on to what we build this by every competitor out there, right you hold on to it with you we always in combat, they do something and it's on the side and they take their time.

Avi
Yeah, because I think they're they're waiting. I think a lot of them are smarter than they're waiting for, like the big home run and the big home run will be, you know, with automakers when they go full steam ahead into insurance. You know, but the ones that are active and are doing they're kind of like, not really doing

Shefi
The crawl, walk run. How often do the two of us hear about this??

Avi
Yeah, some really do like really bad ideas. But you know, as Shefi said, like insurtechs they love the idea. They have the passion. They you know, they really offer they offer a lot of times they offer a better product, and it doesn't have to be technology. I mean, you look at Coverwallet they offer great service and it wasn't technology enabled, but they had the willingness to work with customers. And that's a good thing for consumers. But a lot of insurance companies, I think are waiting, but they're going to get a big punch in the face very soon, and it's going to be too late because then they're gonna have to pay off either to make some major acquisitions. But you know what, Nick, every company on this earth is thinking about that and Shefi talked about identity protection. Identity Protection is a product that you kind of like insurance, but not you don't have to buy it. So it's a very kind of let's generate awareness. Hey, person, someone could steal your Social Security. And you know, they're gonna do a lot of stuff in your name, but credit all that. Credit Karma that makes money from engagement. They literally make money from engagement. When people come into the platform, the app, they make money, that's that's how they make money. They said, Well, how much does this go for? $15 a month. $10 a month. $20 a month. Here we go free! Chase, credit journey, 22 million people enrolled as of last year. That's something Lifelock did not reach in 10 years of being like the most dominant player in the market, they got to a point where they had like 4.4 million customers. So Chase is offering that for free. It's basic, it's nice. So, you know, everybody is looking at offering more touch points, except for insurance companies, of course. So when you wake up, I think it's going to be too late for a lot of companies. And for those that's not they're going to have to pay a lot of money to have competitive advantage.

Nick
So the it's, I mean, now on a positive note. Well, the marketplace is so competitive now. Yeah, yeah. And so you, like Shefi said, you have to be on your toes, that's moves and countermoves you know, and I think you want to be a leader. Hear I think, you know, you want to you want to focus on the product you want to I mean that just basically the whole chain of events you need to optimize that entire process and just continuously differentiate yourself. And that could be be just, you know, marketing or being controversial, but somehow, some way you need to stand out, because, you know, I mean Liberty Mutual can give away renter's insurance if they wanted to, like, you know,

Shefi
Liberty Mutual could have also offered $5 renter's insurance before Lemonade did and they didn't so doesn't that tell you that there's an issue with how again, how fast do you move? You can't be you know, you can't be smart after somebody already found a market.

Nick
Know what I'm saying? Those that if if liberty or State Farm or any of these behemoths decided one day, we want that market they can get that market because they can Significantly undercut Lemonade. But Lemonade has done a very good job of, as Avi said, the people that love them love them. And so there's a lesson there for both sides. There's a lesson that you know, for the insurtechs, including Lemonade that they were at the forefront, they stayed on their toes, and they kept they kept that differentiated edge. And there's a lesson for the Liberty Mutual of the world. It's like, why are you here? You know, look at look at what this this company did. They came in, and they stole all the buzz from you, and now they're a competitor. And you could have had that for nothing. But you were you were too, too much of a lumbering Titanic, to you know, to be able to get out of your own way and they're still lumbering, like you said, two states, they can do better. I think a soft would disagree with us, though. I think he would say they already have a big book. Don't risk the book. You know, well,

Shefi
let me tell you something. think there is no way Assaf said that when he raised his last 150 and round where he said, I'm only going after the mama Mutual's of the world, right? So I think it's just a matter of not, you know, not being arrogant and say saying, Okay, I'm going, I'm going up against progressive or Geico. We're not saying that what he is basically saying is, Hey, he's competing day in, day out.

Avi
But you know what, I don't think it's as easy to everybody live in harmony, as it used to be in the 70s 80s 90s. where, you know, your borders were kind of set by, can I get agents here? Can I open an office here? Can I have us here? Now it's online. And again, not everybody's playing by the same rules. That's the thing like as you said, Nick, someone can undercut but then someone else can come and say, This is free. Look at Google. Now with banking. They're enabling already eight banks, and they're going to do the whole front end and the data and analytics you better believe it that they're going to say to people look I mean, you could save insurance and for the bank, that's another way to make money. So at the end of the day, you have to look at the kind of the chain of command. And the chain of command, insurance is always at the end of the line. It's a very important product, but it's always at the end of the line, and there is no differentiation, there will never be differentiation when it comes to insurance itself, unless someone comes from the moon and says, I know when you're going to have an accident, like a prophet or something, but probably that's not going to happen. So but that's again,

Nick
They don't need to do that Avi, all they need to do is you can say 15% or more on your car insurance in 15 minutes

Avi
You can do that!

Shefi
The other saying it for a really long time. It's like a it's a billion dollar worth of a message. Right? So you have to say it on a repeat and well yeah,

Nick
but that's it's it's a product and we keep hammering it over its product that's really difficult to differentiate. But guess what? That's one way you can differentiate it. You get you know, you You're you know, the all hands are the with the good hands people, Nationwide is on your side dum dum dum dum dum dum dum...

Avi
yeah, people remember

Nick
Hammering it, right and all of a sudden you have a brand. And

Avi
yeah, and that's a way about Lemonade, like they were able to get like if you think about it, they were able to get into so many buildings where the building you know, recommends Oh, they're the cheapest, you know, just go with them. It's, I mean, good for them. They were very like, creative and they did a really good job at putting themselves out there. They did a really good job. The product itself is stinks because as they said, when someone moves back with their girlfriend or with their parents or has no more money, then we lose the renter because that's not a very stable market. But most again, what are you here for, like answer this before you go into innovation? Are you here for the long run, building something sustainable for the future? Probably Lemonade is not for you. But for Lemonade. They're not here for the long run. They say for decades to come. I don't buy that. I don't buy that.

Nick
Well, I've been having conversations this whole week about the whole Mutual Insurance industry and you know like you said Avi in the way the Mutual's would grow, is you know, they decide to pick the next state over it takes a year or two you gotta you know, get our product filed. We have to find agents, which agents we're going to go to is like this lumbering bureaucratic marketing process, and I'm having like significant conversations this week about Mutual's and tell me which regional mutual...there's thousands of them. If they disappeared, would anyone even notice?

Shefi
Oh, no, no, I'll give you one Church Mutual. Okay.

Nick
I'm thinking of I'm thinking of the regional homeowner auto style

Avi
mutual of union call I will notice just because I wrote about them, and you know, they look, Nick now,

Shefi
this is a fair point.

Avi
No, no. These are great companies like really you look at you look at the people, these are really people that that actually they care. They do they care. But why do they exist? For the the Well, some of these

Nick
some of their companies have been around for 150 years. Right?

Avi
A lot of companies here are by you know, some day as they offer

Nick
a product that they can get anywhere else, sometimes for a less expensive price. They're either gone. Right? When, so someone at NAMIC has to work with these companies, they should call us, but like, they're they they are extremely vulnerable right here. Right? It is an existential moment in that like, okay, that you know, a lot of them have like hundreds of millions or billions of dollars of surplus. It's not just gonna to disappear, but them as a company could get might need to get folded up with a whole bunch of others just to get economies of scale because they don't offer anything that anyone else can't offer. For the most part. They they have to start differentiating themselves, but they sitting on assets like I just I want to pull my hair out, just thinking about they have filed products, relationships with regulators, claims teams, accounting systems, they have everything in place...and a commodity product!

Shefi
Do you think we're going to see consolidation among these companies? Because we haven't yet

Nick
have to!

Avi
Yeah, and you know what, Nick, that is the like the essence of insurance like you look at how many companies are out there that nobody knows of. Exactly and this is shows you no one cares about insurance that you'll buy from Mutual of this mutual have that I bet you if you launch tomorrow company, that's called Average Coverage. People will buy from them, okay? People don't care. And this is the biggest disadvantage of insurance because it is so easy for any other player to come in and say, well, it's insurance. Can you imagine Mercedes talking about 30% off? I don't think they ever said a percentage off in their commercials. rich person buys Mercedes. It's just It's so funny. Like when you think about it, it makes no sense. Like, why would you need to save money but but they know that's insurance. And you know, Tesla did the same thing. They realized when they did the state, national and they put the product and it was expensive. They did the sweet algorithm updates and progress. They know it's a it's a price, they know it's a commodity, and you can't win on price because guess what, the only one that can win on price is the one with the best price or the one that is believed to have the best price that's Geico saying 15% and Progressive bundle and this and that which cost you a lot of money to do and you know, that's a problem.

Nick
We're gonna leave this episode with Mad Men, the TV show is an MBA course in marketing. So there was an episode where they had already won the Jaguar account. And one of the dealership retailers wanted to do like spot radio ads. And Don Draper, you know, the creative director who's very brand conscious, you know, constantly hammering in, you know, you don't want to be the haystack like you need to, you need to differentiate yourself. Knowing that that was such a stupid idea that when the leadership of Jaguar came into the office, he overdid it and talked about how we can run spot radio ads and talk about like, big discounts. We could put coupons for Jaguars and these guys were horrified because they know the Jaguar's a gem. You don't use coupons or you know flyers to get people to come in for Jaguar! It sells itself like it is a you know, premier model. Insurance is not the same thing. But there is an opportunity to differentiate yourself. You have to pick how you want to do it and hammer it home. Hammer hammer.

Avi
Amen.

Nick
Okay.

So MBA one on one. There you go, Watch. Watch the seven seasons of Mad Men, you'll learn a lot about business. And I learned a lot about business on this episode with of course Shefi and Avi, you guys are always educating me, like keeping me on my toes Shefi

Shefi
You're our expertise.

Nick
Well, you guys are my business and marketing expertise. So I appreciate you guys. It's as usual, I love having these conversations. I hope the audience likes it as well. Have have a great Friday and a great weekend.

Shefi
Bye, everybody. Thanks for listening!

Avi
Bye

Nick
Bye Avi bye Shefi

Transcribed by https://otter.ai