Impact as a source of value case study: Urban Jungle
At Big Society Capital we believe that, with the right alignment, impact can be a source of value to a business. This can play out in different ways and we have been exploring case studies across our portfolio. We believe that Urban Jungle is another example of a business set on creating impact and leveraging that to drive success. In this blog we dig into how this is working in more detail.
But first, let us look at the social issue Urban Jungle is tackling.
The problem
Insurance protects individuals and households against unexpected and uncertain loss. For example, the cost of replacing your contents if a pipe bursts. More than a quarter of people in the UK have less than £500 in savings highlighting the need for insurance to cover even modest unexpected losses.
However, 1 in 4, or nearly 7 million households, in the UK, don’t have home contents insurance. These uninsured households are often on lower incomes — ONS data highlighted insurance penetration for the lowest decile for contents insurance is 43% vs. 92% for the highest decile. Furthermore, in 2019 an FCA review identified that of those that do have insurance, 6 million policy holders were not getting a good deal on their insurance and a third of those showed characteristics of vulnerability such as having lower financial capability.
The solution
Urban Jungle is a digital insurance platform leveraging technology to provide affordable home and contents insurance to previously underserved customers. In short, Urban Jungle is on a mission to “fix” insurance.
“When we looked at the insurance industry we saw something that was slow, outdated, and in serious need of modernisation. No one was making the most of technology, and customers were too often forgotten — so we decided to fix it”
Urban Jungle CEO Jimmy Williams
How impact drives value
Impact focus leads to unlocking a new market opportunity: This desire to create impact and serve customers that have been underserved meant redefining what is possible. The resulting innovation has led to favourable cost / pricing dynamics which has unlocked a market segment that others are ignoring. Through automation, better risk scoring and leveraging modern data science Urban Jungle are able to provide policies that start at £5 per month, which is 50% cheaper than the average contents insurance policy. While affordability improves access, Urban Jungle have also gone after other barriers to accessing insurance — for example not discriminating based on age, marital status or how long one has been living in the UK. This approach allows for accessible options for those who have been turned away by other insurance providers. Urban Jungle provides access to more than 95.5% of individuals who apply for insurance and have no price discrimination based on demographic characteristics. In their latest customer survey, Urban Jungle found that 89% of respondents didn’t have contents insurance at the time of signing up and 63% had never had it before.
Reaching underserved customers leads to higher customer conversion and retention rates: While the starting point is reaching the underserved, Urban Jungle’s operational model puts them in a competitive position to be able to compete for incumbents’ existing market share. Their desire to reach the underserved has meant their product has been designed with customers at the core, building features including 100% digital access, bespoke policies, monthly contracts with no hidden fees and simple and easy to understand terms. This has helped build a compelling value proposition for customers which has helped with both customer acquisition and retention.
Urban Jungle is one of the highest rated home insurance providers in the UK (4.8 out of 5 stars on Trustpilot with over 4,600 five-star reviews). 87% of their reviews are excellent. They have been listed on Trustpilot since 2017 and are in the top 25% of rated insurance agencies across the UK.
This compelling value proposition to a previously underserved market has led to Urban Jungle seeing twice the standard ecommerce conversion rates, one of the drivers of the conversion rate is that Urban Jungle has industry leading coverage of customer segments and a low percentage of customers who Urban Jungle doesn’t provide an insurance quote too.
Impact driven means staying ahead of the regulatory curve and being in a strong position to capitalise on any regulatory shake ups: There are numerous examples where regulation has impacted new tech driven markets as regulators intervene in industries with high negative impacts on consumers. The insurance market is no different, and in December 2021 the FCA ruled that the practice of price walking (a practice where insurers acquire new customers on low pricing and then increase the pricing after the end of the initial term) would be banned from 2022 onwards. Given their mission here, Urban Jungle have committed not to price walk. Now all insurance companies must either charge a year 5 price in year 1 or stop taking on new customers as they would have to offer all existing customers the cheaper price. In either scenario, it is expected that incumbents will lose customers. Urban Jungle are well placed to pick up new customers re-entering the market. Since the FCA regulations have come into effect, Urban Jungle has seen a rapid acceleration of growth, conversion and retention.
Conclusion
The above demonstrates how focusing on impact and innovating around a social issue can create and drive value in a business. Being able to understand and demonstrate how these dynamics are working is important in inspiring other investors to increasingly consider impact, meaning that more impact driven businesses like Urban Jungle get the backing that they need. Not only that, but the greater success of the business reinforces it’s ability to deliver impact. This then, through the drivers we have explored above, leads to even further commercial value.
Have we said anything that triggered a thought? Want to find out more about BSC or Urban Jungle? Get in touch, we look forward to hearing from you!
