Charlotte Koep: How an API platform, an insurer and an EV lessor came together

“The hypothesis – the core principle of Root – has always been [to ask] how we unlock innovation in insurance for developers and builders.”

This is how Charlotte Koep, chief executive at insurance technology firm Root, describes her business’ North Star.

Root – which describes its product as a quote-to-claim, API-driven insurance operating system – signed its first insurance customer in 2019, the year before Koep joined the firm as chief operating officer.

Since then, Koep has become Root’s chief executive and now leads the firm’s efforts to supplement the financial services sector’s “antiqued legacy systems” with a “technology layer that opens the industry up for developers to build interesting things”.

One such innovation, possible only through modern API-driven architecture, Koep tells Insurance Times, comes in the form of a novel, three-way partnership between Root, Admiral Pioneer and Octopus EV.

APIs, or application programming interfaces, are a set of protocols that allow software applications to more easily and securely exchange data. Crucially, they act as an intermediary layer, allowing developers to integrate with separate apps and services.

Backed by insurer Admiral Pioneer, Octopus EV, an electric vehicle leasing company, offers tax-efficient vehicle leases via salary sacrifice schemes run in partnership with the leaseholder’s employer.

However, the mechanics of the insurance provided with the offering, originally delivered via fleet cover polices, contained inefficiencies that Koep felt could be addressed.

“The structure of the group policy is a great way to simplify the way the insurance is managed, but it adds a separation between the customer and insurer,” she says.

“The customer has no real oversight into what their insurance looks like, how to make changes or how to cancel.

And then, at the policyholder level, pricing is generally aggregated across a risk pool and everyone gets the same price. There’s no dynamic pricing or event-based pricing. Ultimately, what we’ve seen is higher premiums.”

The technology solution

Root, through its partnership with underwriter Admiral Pioneer, presented a solution to Octopus EV – a new API-driven digital customer journey to facilitate better individual pricing, ultimately aimed at reducing the risk to the insurer and lowering overall lease costs for customers.

Koep explains: “Our product is a comprehensive set of APIs. APIs enable system and data interoperability, which means we are able to bring different systems, events, information and data into a digital journey.

“What that means for platforms like Octopus EV is that, during the leasing journey the customer goes through, we can – in the background – assimilate a whole bunch of data that previously would not have been available to price more dynamically.

“We do multiple calls to multiple systems, which means the customer has to answer fewer questions but still gets a more bespoke price.”

The platform, for example, uses a vehicle’s unique Cap ID, also known as a Capcode, to return large volumes of data on the car’s specifications, valuations, ownership costs, mileage records, lifecycle events and more.

Likewise, the process queries an ABI database commonly used by motor insurers, for which Root had to develop an artificial intelligence (AI) matching process to link with the Capcodes – something Koep describes as “a bit of fancy footwork”.

To her knowledge, no one else in the industry has developed a successful pairing of the two datasets.

Beyond motor

Koep feels that not only does the brand of embedded insurance her firm enables have wider applications, but that such processes are growing increasingly necessary in uniting insurers with customer-owning distributors.

“Beyond motor the potential is only growing, because platforms with big brands and loyal customer bases increasingly have information asymmetry. They sit on a lot of data about that customer base that the insurer doesn’t have,” she says.

“If the insurer wants to access that distribution – and it’s a competitive space – the question is how do they access that data? And how do they use that data in their core offering, which is risk strategy and underwriting?”

“So, I think we’ll see more embedded activity in other platforms beyond motor. Property is a big one – rental processes, property financing and mortgages.”

But Koep stresses that her vision for the future of insurance technology goes beyond the traditional understanding of embedded insurance, moving past simply delivering a quote at the right time to becoming an integral part of the customer experience.

“Ultimately, what we’ll see is insurance become a core part of the main business, not an add on.

“The analogy I always use is that you want to buy an insured bicycle, you don’t want to buy a bicycle plus insurance. That’s the future we’re aiming towards.”