A few years ago, the prospect of an Aussie insurtech start-up founded by two university friends selling 10 million insurance policies globally probably seemed unlikely. Cover Genius, the Australia-born firm, recently announced reaching this milestone. The company said much of its recent increase in sales is the result of a dramatic rise in the proportion of customers who, since the pandemic, are choosing to add optional insurance to purchases.
“Driven by customers’ need for peace of mind and convenience, especially during the pandemic, we’ve onboarded dozens of partners to provide hyper-relevant, embedded protection offers,” said CEO Angus McDonald (pictured), who launched the firm with Chris Bayley in 2013.
The firm’s research shows a dramatic increase in the number of people taking out insurance on travel and retail products since the start of the pandemic. Cover Genius plotted a massive 1,200% increase in attach rates – the proportion of users adding the firm’s optional insurance – for travel purchases across its global partner network. The firm said similar trends, but less dramatic, are evident for retail products.
“Major digital companies, such as Amazon and eBay, realised the need to offer their customers protection, especially during the pandemic where research has shown a significant increase in attach rates as consumers seek peace of mind for their purchases,” said McDonald.
The firm’s data shows that attach rates in different countries have gone up and down over the last two years according to the state of pandemic uncertainty or risk. For example, those travelling to or from the US and Canada, overall, swung heavily in favour of purchasing travel insurance compared to the global average. In Hong Kong, where pandemic risks were generally better controlled, the swings towards travel insurance purchases was not so exponential.
The CEO said the firm’s ability to launch multiple products in different markets simultaneously is another key reason for their success and was an attractive proposition for big global firms.
“The success of Cover Genius can be attributed to the value our global insurance distribution platform, XCover, presents to our key partners, such as eBay, Shopee, Ola and Booking Holdings,” he said.
“When we initially pitched some of our leading partners, they were impressed by Cover Genius’s capabilities and value proposition and liked the business model where through our single API integration we can launch multiple products in multiple markets at the same time, irrespective of language and currency differences,” said McDonald.
Another reason for their success could be a willingness to work with other digital companies. McDonald said his global team had “worked hand-in-hand with some of the world’s largest digital companies to create the technology and solutions that are setting a new standard for insurance distribution.”
The CEO said his 10 million plus customers are in “key markets” in the Americas, Europe and the Asia-Pacific region.
“Global customers of our partners purchase a variety of hyper-relevant policies in the retail and travel space, as well as for shipping and parcel needs, property-related purchases, tickets and events, mobility and auto services, financial services and more,” he said.
Cover Genius started nearly 10 years ago providing travel insurance. Since then, the company, said McDonald, has seen “exponential growth”.
Read more: What's the Genius behind embedded insurance?
“For example, the Cover Genius ANZ team has up to doubled since 2020 and, in the past year, the US team has tripled as we continue to add more partners to our roster and create tailored offerings that address the emerging needs of each partner,” he said.
In September last year, Cover Genius boosted its valuation to $1 billion after a fundraising round of $100 million.
Investors including G Squared and Japanese insurer Sompo Holdings Inc., helped the insurtech raise about seven times more than in 2020, according to a Bloomberg report. The fundraising was among the biggest by an Australian fintech company, said the report.
Cover Genius offers embedded insurance using software that can sit on a third party’s digital platform. Rather than forming relationships with insurance companies like some insurtechs, the firm focuses on teaming up with companies in industries that can profit from selling insurance with their products.
McDonald’s bio describes him as a “a passionate contributor to rural and youth wellbeing programs.” The CEO’s contributions, said the bio, are through his personal efforts and those of CG Gives, the philanthropic arm of Cover Genius. The firm’s website says $155,000 in donations and $220,000 in microfinance loans have supported a range of initiatives. The projects include bushfire relief in Australia, funding farm supplies in the Philippines and education programs for women globally.
