What is Cover Whale? For one thing, CEO and co-founder Dan Abrahamsen (pictured) describes it as “the next class of insurtech, or insurtech 2.0.” What that means is the commercial auto insurance MGA is not necessarily about making bold announcements about transformation as earlier start-ups have done over the last decade.
“We have a very strong focus on underwriting profitability and maintaining solid unit economics,” Abrahamsen said.
And trucks. The company generally services commercial truckers and truck fleets (small to medium-sized businesses). It uses data and advanced technology in the vehicles it covers that serves essentially as a co-pilot to drivers, reducing accidents but also helping to keep insurance prices lower.
Cover Whale has had a healthy growth trajectory so far since its mid-2019 launch. The New York-based start-up was initially bootstrapped until it raised $15.5 million in late 2021 in a round led by Ambac Financial Group and TigerRisk Partners’ Applied Financial Technologies subsidiary. The company employs approximately 130 people today, with 90 full-timers (contractors make up the difference).
It has also expanded from handling $5 million in premium in 2020 to $65 million in 2021 and $100 million so far for the 2022 calendar.
While headquartered in New York City, Cover Whale also has an office in Orange County, California, and a remote team spread across the US and in other countries.
The company is laser-focused on commercial auto, initially targeting trucking and owner/operator companies in the space. Cover Whale is broadening this to other classes of commercial auto over time. According to Abrahamsen, commercial insurance was a logical business target despite the sector’s cost and profitability challenges in recent years.
“It is underserved [and] ignored versus some of the progress that you might see on the personal lines side of things,” Abrahamsen said. “We like it for those reasons – being able to provide some of the [products and services] to smaller accounts on the commercial side that they could really benefit the most from.”
He added that the commercial side has “much higher premiums and much higher potential for savings” versus the personal lines.
Abrahamsen describes Cover Whale’s insurtech elements as covering a few different components.
There’s an online platform, of course, designed to make it easy to transact business with Cover Whale and get a quick quote for purchasing a policy. The “real tech” kicks in, however, in terms of how Cover Whale handles data.
The policies the company sells come with a risk management program, including a dual facing AI camera. This enables “coaching” provided back to drivers, both human and automated. The dashboard camera, mounted on the windshield, also collects telemetry data such as location, speeding, braking, or acceleration information. There’s no worry about constant filming, however. The camera is only triggered when an “event” happens such as an accident, and it snaps video on both sides of the vehicle just before and a minute or two after, he explained.
AI and machine learning are important parts of Cover Whale’s focus.
“When we look at AI and machine learning … it’s [about] the implication of the driving data, and how it correlates to real world outcomes on the insurance side, which are claims,” Abrahamsen said. “We’re looking at what patterns of driving behavior actually result in claims, and that’s, for us, when machine learning aspects are most heavily used.”
Most sales so far are through Cover Whale’s web portal, though the company is gearing up to form integrations and partnerships on the distribution side, such as with retail agents or wholesale brokers - about 80% of its business is on the retail side and 20% wholesale. A couple of partners are in the process of integrating right now, with the first policy bound via partnerships expected in July, Abrahamsen said.
To integrate with an agent, the first step involves paperwork and other preliminary documentation “pretty standard” to integrations, he noted.
Step two would involve Cover Whale providing API documentation and identifying what information the agent partner would need to send to Cover Whale to make that process happen.
Next, once the API links are established, both parties identify what the connection response from the server would look like programmatically and then provide a link to get the actual code document and complete the connection.
The integration process can take days or a couple of weeks, depending on whether the partner has a tech team and dedicated resources.
But the quote process and initial API connection can be done in seconds, he said.
There’s also training too, because the connection includes a web interface component, where producers can log in and enter the information they need to obtain a quote. Cover Whale provides videos, webinars and training sessions to help, but the company found that “most producers do not really need a lot of hands-on training,” Abrahamsen said. “It’s pretty intuitive as you might imagine.”
