INSUBCONTINENT EXCLUSIVE:
As the insuretech space fills up, a new entrant is joining the fight.Y Combinator -backed Goodcover is launching today to take on the likes
of big insurance, as well as insurance startups like Lemonade, Jetty, Hippo and Zebra.The company offers renters insurance in California
Goodcover operates as a managing general agent, which means they write the policy, set the pricing and build their own risk assessment
model, but partner with insurance carriers to hold the back-end capital and write on their book
This differs from Lemonade, which is its own insurance carrier, but is similar to Hippo and many other new insurtech startups.The first
priority of the company, according to co-founder and CEO Chris Lotz, is to use technology to bring down the cost of insurance in the first
That means eliminating paperwork, sales agents and expensive acquisition tactics used by big insurance
Statista reports that GEICO, Progressive and State Farm alone spent upwards of $3 billion on advertising in 2018.But tech is also used to
rethink the insurance model
and charge you accordingly, even when you were not at fault
Models designed with the Member in mind determine whether a claim is likely to reoccur, or whether mitigation has actually reduced risk and
Good technology empowers us to build this new data into our models, keeping prices as low as possible for as many people as possible.Lotz
says that USAA was actually a part of the inspiration for Goodcover
Lotz looked to model Goodcover after USAA, the insurance co-operative for military service members and their families, which has no outside
agents, pays a dividend and uses technology to both keep costs down and offer quality policy coverage.Goodcover takes a 20% cut up front
Risk Services (claims services) and Milliman (actuarial services).The majority of that 80% goes toward indemnity, or paying out claims, with
some going toward loss adjustment expenses (paying the human that goes and checks out or works on the claim), carrier fees and reinsurance
These portions of the revenue are where partners like KnightBrook and Transatlantic Reinsurance make their money.Whatever is left over is
passed on to the policy holders
Lotz says that that number is expected to range from 5% to 10%
However, in a case where reinsurance premiums are applied (if, for example, a major earthquake were to destroy multiple Goodcover-insured
apartment buildings), there may not be extra cash left over
insurance.Goodcover has raised a total of $2 million in funding from Fuel Capital, YC, Liquid 2, Box Group, several angels and Transatlantic
Reinsurance, one of their insurance partners.The company has plans to continue expanding, though insurance is regulated at the state level,
which could make that a more tedious process
Lotz explained that starting in California was very purposeful, as regulatory approval is relatively difficult to secure in such a consumer
The company is also interested in introducing home owners insurance.Insurance is a crowded market, with startups racing to rethink the
model, employ tech to advance the product and update the value proposition for a millennial audience that may be new to insurance
are scrambling to stake their claim.
