Insurance companies have spent a lot of time and effort curating campaigns, even entire personas, to keep their services top of mind.
Think Progressive’s Flo or Geico’s Gecko.
But, in the digital age, Kyle Nakatsuji is betting that that kind of advertising, and the dollars attached to it, simply isn’t necessary to sell consumers the insurance they need.
Nakatsuji founded Clearcover in 2016. The premise of the Chicago-based startup is to deliver customers the car insurance they need, at the time they need it.
“We’re focused on a couple of big moments a customer might be going through, where insurance is going to be naturally relevant to them,” Nakatsuji told Fintech Unltd. “So we can spend less money buying people’s attention.”
Nakatsuji believes that by making the business relatively invisible whenever a consumer isn’t buying a car or shopping for a better insurance rate, Clearcover will be able to save on advertising and other unnecessary overhead, and enable them to sell insurance at rates up to 50 percent lower than existing insurers.
The built-from-scratch insurance company’s strategy, then, is to use partnerships to create a ‘moment-centric distribution’ and acquire customers in that way. Through partnerships with price comparison websites like zebra.com or compare.com, Clearcover’s car insurance rate will populate as an option alongside quotes from traditional insurers. And Clearcover’s car insurance product will also pop up on websites where consumers are initially looking to purchase a car itself.
The final approach will be through integration with financial partners—the places people already turn to for financial advice or services. At first, Nakatsuji said this will be with digital-first partners, like a mobile bank or personal finance management applications.
In this way, Clearcover intends to compete for customers in an industry where the average age of competitors is 95 years old.
The benefit of creating an insurance company from scratch and offering consumers your own product, then, is the ability to create more efficient processes. With its API-based integration system, Nakatsuji claims the process of onboarding partners interested in selling Clearcover’s insurance is cheaper and faster than its competitors.
“The time it takes to get them setup to actually start selling our product is days, maybe weeks,” he said.
Clearcover will also apply proprietary machine learning and artificial intelligence tools—employing chatbots to handle a portion of consumer inquiries and using the profiles of consumers from partner companies to cut redundancies when asking them to answer the questions remaining to get them properly insurance.
“We built technology that makes it really seamless to go from, ‘I’m shopping,’ to ‘I’ve found what I like,’ to ‘I’ve bought a policy,’” Nakatsuji said.
Clearcover raised $11.5 million in an initial funding round in 2017. Its car insurance product will go live for consumers to purchase in California this month.
Hot homeowner and rental insurance upstart Lemonade, founded in 2015, just raised $120 million in a Series C funding round. Similar to Clearcover, Lemonade also relies on chatbots and artificial intelligence to produce its scalability and ability to offer cheaper insurance coverage for customers. While Clearcover gets its bearings in 2018, Lemonade is looking to go global.
Just how much advertising these insurtechs will ultimately need remains to be seen, but there’s no denying the saving power of artificial intelligence and chatbots for insurtechs looking to underwrite their own claims.
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