Last month, according to Bloomberg, the Australian insurtech company Cover Genius boosted its valuation to $1 billion after its latest fundraising round of $100 million.
“We’re solving a really big ambition. We’ve got a massive goal to be a distribution platform across the whole globe,” said CEO Angus McDonald (pictured).
Cover Genius offers embedded insurance using software that can sit on a third party’s digital platform.
“That’s end to end that allows you to be able to sell a product but also service it and then handle the claims as well, and allows for our partners to embed it within their own digital platforms,” said McDonald.
Insurtechs like McDonald’s don’t base their existence around finding insurance customers like a traditional insurance company. They also don’t focus on teaming up with insurance companies like other insurtechs might. Instead, they team up with other companies in industries that can profit from selling insurance with their products. So, they cleverly take advantage of existing customers and existing platforms.
“So, we’re part of their process, part of their application process, part of their shopping cart. Traditionally, you might have seen white label products where you click out to do a search for a product on a cobranded website. That’s not us. We’re all about embedding the offer to provide a convenient experience for the end customer where they don’t have to leave the environment, they stay on the same digital platform,” said McDonald.
Embedded insurance is a canny combination of technology and opportunism, he believes.
“That’s where we focus. Insurtechs, or traditional insurers, focus on building an insurance product and then going out and selling it. We focus on that distribution channel and then offering whatever is the right insurance or warranty product for that particular digital experience,” he said.
After starting with travel insurance products, insurtechs specializing in embedded insurance now offer product protection and insurance across a range of industries including retail, auto, logistics and property.
Cover Genius counts massive companies like Booking Holdings, eBay and Shopee among its clients.
One of Cover Genius’s more interesting customers is Descartes Systems Group, a Canadian multinational technology company specializing in shipping software for logistics and supply chain management.
“So, they use our platform to embed insurance offers into their shopping cart, or their booking paths or their registration forms, within their own websites or apps or whatever. They connect to our API, which is a connection method that allows them to be able to embed our products within their own digital websites and things like that.”
But McDonald said the most interesting feature of the Cover Genius insurance offering to Descartes is less about the shopping cart and more about the automation and the data.
“In shopping carts you might be offered a protection product - and we’re certainly part of that and we’ve been part of that experience in our history - but we’re starting to see new interesting areas of product design in the other software platforms,” he said.
One of those areas, he said, is with companies who ship products on marketplaces like eBay or Amazon. Embedded insurance is automatically insuring parcels.
But McDonald said the underwriting methods for shipping are also changing because all the data from the digital platforms processing these parcels is allowing for more accurate underwriting based on precisely what’s in any one parcel.
“In the past people just went, ‘OK, that shipper sends 10 million parcels a year and we assume that roughly half of that is going to be electronics, maybe 30% food and 20% something else,’ you know,” said McDonald.
That approach is now old fashioned.
“Now with the software platforms knowing actually what’s in the parcel or the container or the truck, we can more accurately underwrite each individual one and help insurers get the risk that they want,” he said.
McDonald said property technology, or proptech, is another exciting area for embedded insurance offerings.
“There is increasing automation in how lending is done and how properties are bought, and we think there’s opportunities in that environment to be able to offer insurance products in there,” he said.
There’s also fintech, especially embedded lending.
“There’s a lot of data in there about a customer and often those kinds of programs need the end customer to have insurance to be able to buy the finance product, so that’s another area we’re really excited about,” said McDonald.
Cover Genius already operates in about 60 countries including the United States. McDonald plans to double his workforce of 200 within the next 12 months.
