It hopes to scale this year after hitting all its acquisition goals for 2019
Startup Coverly is on the path to becoming a ‘virtual insurer’ as it builds up its tech, operational, marketing and underwriting capabilities, the MGA told Insurance Times.
It follows two appointments last year – Daniel Berry as underwriting and pricing director and Sarah Joy as head of marketing.
Jodi Cartwright, Coverly’s managing director revealed to Insurance Times that the key to success for the firm this year and beyond is to continue building on the foundations that have been laid so far.
“We still have four basic products – public liability, employers’ liability, business equipment and personal accident. But [2020] will be about building out that product set so we can service more customers by offering cover for a broader set of trade and larger businesses.
“So, we will be moving to a new capacity provider in 2020, and we will end 2020 with a number of different capacity providers serving different products,” Cartwright explained. Its policies are currently underwritten by Builders Direct. Professional indemnity insurance will also be launched soon.
This move is to enable the business to scale effectively.
Meanwhile, its proof of concept that is due to go live in Q1 with the cloud accounting platform, which it intends to integrate with other third-party platforms to enable customers to obtain quicker quotes by using pre-filled data.
But it intends to bring most of its processes in-house.
Broker problem
Speaking about insuring SMEs, Cartwright added: “The broker market with their manual processes, find it difficult to manage that business economically because its low premium, low incomes.
”I can see what is happening in micro-SMEs, they are following the same pattern as what happened in personal lines, because it’s quite low premiums you need to cut the cost out of the distribution chain.”
However, in Coverly’s model the capacity provider sits on one side and the customer on the other so there are fewer people in the chain, and it is focused on the purchase and technological journey of the end customer.
This allows it to deliver products more competitively, she claimed.
“One of the trends that we have seen is that reinsurers are seeing insurtech and MGAs as a route to market, traditionally reinsurers always sat behind the incumbent whereas now with this new trend they can get closer to the end customer.
”In that respect for the right proposition I think there is a lot of interest out there for capacity providers – particularly ones that are going to deliver volume through a digital model,” she said.
Going beyond 9 - 5
Meanwhile, the company revealed its business plans for 2020 after research it conducted found that most of its SME customers do their admin outside of business hours.
Most brokers work a traditional 9-5 which does not suit the purchasing habits of SME customers.
“The challenge for us [now] is how do we run a 24-hour contact centre,” Cartwright said.
The research cited that 70% of the interaction it had with its customers was via its webchat, Cartwright believes that the application’s popularity is because customers can use it while doing something else with 50% wanting to transact online and buy digitally.
A year in review
After going live in January 2019, it has hit all its acquisition targets for the year as it focused on scaling in the latter half of last year.
“It’s proven that there is the space for a new challenger brand in the insurance marketplace, similar to what we have seen in banking,” she said.
Back in October 2018 when the London based MGA which is backed by Bibby Financial Services was pre-launch it said that it was going to shake up the SME market by delivering pay-as-you-go commercial insurance to solve an industry issue. Its target customer is SMEs paying £1500 or less in insurance premiums.
The firm interviewed 300 SMEs pre-launch, it found that these businesses find the purchase process a hassle due to too much jargon and questions and they do not understand what they are buying.
Other problems include SMEs forget to tell their insurer when their business changes. Similarly, with cyber cover, some SMEs could be paying for cover they do not need if it is not tailored.
Cartwright said that Coverly is “massively data driven” and so it is constantly analysing the metrics of customers journeys using various methods such as heatmaps to optimise the experience.
The company has grown its staff base from six pre-launch to 14 people at present, and the business is 65% female.
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