Idea: 2
Friday, 02 January 2015
By. Francis Pedraza
Potluck
Get insurance on your phone, up to any amount, in sixty seconds. Enter the price you’re willing to pay as a monthly premium, and Potluck tells you how much it is willing to insure you for. To raise the ceiling, raise your premium. To get better rates, provide more information. Right there, in the app. API access to your bank. Or, do it the old-fashioned way. But with a few simple data points — assets, debt, and income for starters — your rates go down because models become quite efficient.
When Lloyd’s of London invented insurance in the 17th century, they were willing to insure anyone against anything — not just merchants or pirates fearing catastrophe at sea, but gamblers fearing one at the casino. I like to imagine that life insurance began when Captain Hook took out a policy against being eaten by the crocodile with the clock. It was all fair game, because it was all math. The pioneers of the industry knew that there was always a price at which they were willing to transact. More information, more accurate risk models, lower margin pricing. Less information, more uncertainty, higher margin pricing. So, generally speaking, clients benefited from insurance companies having access to data, including their data.
Fast forward to today. Insurance sucks as an experience. Gone, the swashbuckling sailors; gone, the swashbuckling insurance. Instead, its a bureaucratic process, strangled by regulation, with very little trust remaining between client and insurer. Clients don’t have peace of mind, because they’re not sure, if they make a claim, that the insurer won’t find some loophole to get out of paying. Also, insurers are in an informal racket with service providers. So if your car is broken, you can’t take it to the mechanic you want, you have to take it to the mechanic they tell you. If your arm is broken, you can’t take it to the doctor you want, you have to take it to the doctor they tell you. They tell you that all these deals help keep prices down, but they don’t. Much like government financial aid for student tuition, more money in the system drives prices up. The higher prices are, the more insurance you need — hence the racket. To boot, what should be the simple act of making a claim, is instead a horrible customer service story — going to an ugly website, navigating an incomprehensible phone tree, waiting on hold, speaking with a drone, not getting help.
Experience
Why not make the whole thing much simpler? Enter “Potluck”, a mobile application. Enter the price you’re willing to pay as a monthly premium, and the app tells you how much it is willing to insure you for. To raise the ceiling, raise your premium. To get better rates, provide more information. Right there, in the app. API access to your bank. Or, do it the old-fashioned way. But with a few simple data points — assets, debt, and income for starters — your rates go down because models become quite efficient. No explanations necessary when something bad happens. Instead of a claim, it’s more of a withdrawal against your policy — money is instantly sent your way. Of course, your premiums will go up. If you want them to go up less sharply, you can provide more information. No more hesitation to make claims because you simply don’t want the headache.
References
Simple, Robin Hood, Able & P2P models, Insurance Startups, Financial Services Startups
