Three alumni entrepreneurs shaking up the insurance industry are offering new solutions to homeowners, renters, and drivers.
- October 10, 2018
Cofounder and CEO of Hippo, Mountain View, California
The Challenge: For most homeowners, buying insurance isn’t a customer-friendly experience. It takes time working with an agent and finding answers to numerous detailed questions. Filing claims can be arduous, and agents might not keep up with clients’ life changes, potentially leaving them underinsured.
“They don’t even call you a customer; they call you a policy holder,” said Assaf Wand, cofounder and CEO of insurtech company Hippo.
“We locked ourselves in the office for two years to figure this thing out.”
The Solution: Wand wanted to use technology to streamline the customer experience, but first he needed to learn the industry. Starting in 2015, Wand used his Booth training to break down insurance regulations and compliance into their smallest parts in order to understand how to build Hippo’s customer-centric model from scratch. “Basically we locked ourselves in the office for two years to figure this thing out,” he said.
Because insurance is heavily regulated, his team had access to a wealth of data. This helped them figure out how to design policies that increase coverage for today’s homeowner’s needs—such as working from a home office—that other policies don’t usually cover. Wand also saw an opportunity to use technology to enhance Hippo’s offerings—for example, its online platform can provide a quote in 60 seconds, and policyholders receive smart home sensors to help them detect potential problems early and avoid loss in the first place.
Hippo officially launched in 2017 as a virtual insurance company, having partnered with some of the nation’s top carriers to offer policies. This year Hippo increased its coverage area to 40 percent of the US population, up 10 percent in six months, and seeks to reach 60 percent of the population by the end of the year. Its loss-ratio performance is under the industry average, which Wand attributes to its underwriting policies and its use of big data and artificial intelligence to monitor customers’ homes.
The Takeaway: Entering a new industry is challenging, as entrepreneurs need to study the data to learn its complexities, but it can take an outsider to see where innovation can have a positive impact.
Founder and CEO of Canopy, London
The Challenge: Renting an apartment can be expensive and inconvenient: deposits can cost one month’s rent, and then there’s at least the first month’s rent to be paid in advance. Apartment brokers can be another expense. Renters may have to wait on any reference checks before landlords will agree to rent the place. And even if responsible renters make on-time payments, landlords don’t often report this to credit bureaus, so renters don’t build up a credit score. Tahir Farooqui experienced this himself living in apartments while his career took him around the world. He saw it again as he had to help his brother, a millennial, secure an apartment in London following college graduation.
“That personal pain point led me to realize there must be a way to offer customers a unified experience.”
The Solution: Approaching the problem with his insurance experience, Farooqui thought renters could save money up front if they could pay an insurance premium to cover their deposit rather than put down the usual significant lump sum. In 2015, while working at KPMG, Farooqui started to analyze the property-rental sector. He was intrigued by how these markets are often fragmented and lack a truly customer-centric experience, even though renting and related expenses make up the largest annual expenditures for most people.
“That personal pain point of renting led me to realize there must be a way to offer customers a unified experience,” he said.
Farooqui is now on a mission to build a marketplace that connects with renters as soon as they rent their first home, stays with them while they live in it, and assists them in buying a home one day. Canopy’s RentPassport, akin to a LinkedIn for renters, nudges people to make responsible, forward-looking decisions. Good behavior, such as paying rent and bills on time, will now count toward improving renters’ credit scores and, over time, will enable them access to affordable financial well-being products. Additionally, Canopy’s insurance offering, developed in partnership with HISCOX, provides an affordable deposit solution for renters, while giving landlords up to eight weeks of protection, compared to six weeks with a traditional deposit.
Launched in January 2018, Canopy now has 8,000 renters and is tracking over £8 million in rental payments. The company recently received $4 million from Direct Line Group, Experian Plc, and RoundHill Ventures.
The Takeaway: When you’re seeking to innovate in the consumer market, research unmet customer needs and design around those pain points in creating a solution.
Cofounder and President of Snapsheet, Chicago
The Challenge: When should entrepreneurs take their business in a different direction? This was the question facing CJ Przybyl in 2011. His startup, BodyShopBids, offered an app that allowed customers to upload photos and have body shops bid on self-funded car repairs. However, the business model wasn’t scaling well, advertising was expensive, and the company couldn’t get consistent revenue. “We had to make a decision to pivot or to shut down,” Przybyl said.
“We had to build an entire infrastructure that didn’t exist to be able to digitally interact with the customer.”
The Solution: By networking, Przybyl and his cofounder discovered that 90 percent of body shop revenue comes from insurance, a field they weren’t as familiar with. Through conversations with one of their customers, the largest body shop chain in the United States, the cofounders realized their technology might allow insurance companies to skip the step of sending an adjuster out to view damage, thus controlling claim expenses and decreasing the time it takes to settle. It also would advance the industry to a more customer-centric, technology-driven model.
The chairman of the body shop chain introduced Przybyl to a large insurer and vouched for him. To have the technology work for the insurer, Przybyl realized they’d have to take the company in a completely different direction, which meant learning how the claims process works.
“We had to build an entire infrastructure that didn’t exist in the industry to be able to digitally interact with the customer and then process the work and return it back to the insurance carrier for the customer,” he said. By 2013 BodyShopBids had become Snapsheet, which licenses its technology to insurance companies, enabling them to let their customers file claims from their smartphones. At its peak BodyShopBids had 10 employees. Today Snapsheet has over 500 employees, works with 70 insurance carriers, and is now starting to partner with European insurers.
The Takeaway: Entrepreneurs need to realize when their original idea isn’t going to work and then decide if they are going to salvage the idea, iterating it by using the skills learned along the way, or start over by pivoting to an entirely new business model.
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