Guest blog from Mark Musson, Co-Founder, Humn
Becoming Humn took longer than we initially thought
Starting an insurance business is daunting
The complexity across the insurance value chain is a significant barrier to entry for new businesses, the upstarts calling themselves insurtechs.
One thing that founders and investors need to realise when entering this space, is that the timeline is much longer than the standard lean tech startup model.
We could not declare victory until we sold the first Rideshur branded policy, and there were many dependencies en route.
To launch a fully developed product we needed
- The risk capital to back it
- An authorised legal entity to sell it
- The systems and operational processes to run it
Unfortunately, for insurtechs, these three elements take a significant amount of time to achieve.
Finding the right investor
After wandering around in the insurance wilderness with our Lonely Planet guide to insurance for a few months, we finally found Insurtech Gateway. Founded by Robert Lumley and Stephen Brittain, the Gateway has created a platform to accelerate building and launching an insurtech business.
By delegating authority of their regulatory permissions to Humn, the Gateway enabled us to get into the market at speed. We could then operate a sliver of the insurance business, while building out our secret sauce tech IP.
They continued to work with us to build our operational and regulatory compliance muscles, such that we were able to become directly authorised by the FCA in record time.
But more than that, the Gateway also helped us to define our insurance proposition clearly and then navigate the complexities of sourcing capacity for our product.
Working with the Gateway delivered results for us:
- FCA authorisation in the UK can take up to 18 months. We completed ours in 6 weeks.
- Insurers generally dislike commercial fleet risk. We finally convinced one to come onboard.
- Insurers rarely agree to underwrite an insurtech’s pricing model, preferring to control pricing. Our actuarially verified model is in the process of being approved by two insurers.
- The true acceleration will come when we sell our first policy, because the marginal cost to sell 1000’s of the same policy is near zero, and massive economies of scale kick in.
Tech to insurtech
Curiously, we started as a pure tech play, but the complications of working with insurers uncovered the true scope and scale of the problem. The complex challenge of becoming an insurtech turned out to be the one worth tackling. We have the core skills in data science and streaming data, which are intractable issues for insurers.
However, we are not looking to displace the insurer. We work collaboratively with our insurance partners as far as binding authority for capital is concerned.
Working with the Gateway helped us to crystallise our value proposition and build a unique market offering.
Our core differentiator comes from our product positioning as a Category Consolidator.
We have developed a next-generation rating model that works with the live data from our platform.
In our hypothesis around Commercial Fleet Insurance, we saw a set of customer needs currently served by multiple independent solutions. The tools/solutions typically operate in categories that are considered discrete (risk management, fleet management, fleet insurance).
There is no current winner at consolidating this market.
Dynamic Fleet Insurance
When initially combined, telematics, streaming data, a next-gen pricing model and real time geospatial risk exposure forms a consistent and desirable flow which solves an overriding customer requirement.
We offer a consolidated solution that is more cost-effectively for customers and can do so profitably for the company.
For more information vist humn.ai
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