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Cuvva have some hundred employees, 400,000 UK clients and 5% of the short-term UK car insurance market which is a phenomenal achievement for any Fintech in any sector. In this episode founder Freddy Macnamara joins us to discuss how price comparison websites have changed the insurance industry, the regulatory review of pricing in re and how to go beyond such websites to, schematically, re-invent the model of a broker who is looking after you for the 21stC insurance markets.

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At a higher level this is another delayering play. In the LFP157 we discussed how direct bank to bank payments for merchants would massively delayer the conventional credit card payment chain which has lots of mouths to feed. In the case of insuretech it is simplest to quote from Cuvva’s about page:

“But we soon realised insurance isn’t just lacking. It’s completely broken. It’s built on layers of middlemen and outdated systems.”

Topics discussed include:

• Cromwell (?!)
• Freddy’s career journey from teaching cookery in Scotland to insuretech in one easy leap
• 1990s insurance was a “brokered market”
• Direct Line as the only innovation – call someone on a phone
• internet => price comparison websites
• Impacts:
  • this has pushed prices down
  • but also completely commoditised the insurance products which are now down to the bare minimum
  • to be at the top of a price comparison website you need to be losing money and hoping to reclaim it by increasing prices in the following year
  • disintermediated the insurance brokers for anything other than complex needs
• Admiral owns confused.com and so have to have Chinese walls
• the response of insures has been for their pricing teams to use all sorts of enriching databases to work out whether they can charge you a little more
• “it’s no longer about who you are and the risk you pose, it’s about going up a layer and trying to work out whether or not you are someone who really wants to get through quickly and doesn’t really mind what they pay versus someone who is extremely price sensitive.”
• this has been taken to an extreme eg there is a team of 10-20ppl at Aviva just working on customers’ price elasticities
• “the forty questions you are asked about your insurance needs is actually a small proportion of the overall data they use to form the full picture.”
• comparison with buying flights and holidays – searching with your IP address invisible to avoid the pricing models spotting how keen you are to buy if you keep checking and rechecking for days/weeks
• Defaqto has done a good job at star rating insurers by claims experience
• the realpolitik of the motor claims industry and how this ends up inflating the insurance cost by some 50-100%
• the FCA review into dual-pricing (under-bid to get new customers and later charging them much more once a customer)
• regulation – practice and philosophy
• “Google makes most of the money in the insurance market in the UK” [near-monopoly of search in the UK]
• Cuvva as a 21stC intermediary acting on your behalf and delayering the value chain to create extra value
• Cuvva is person-centric as opposed to the conventional industry perspective which is policy-centric – the advantages of this
• what Cuvva’s app delivers in terms of flexibility
• Cuvva’s short term car insurance where you pay per hour is the area in which they do 5% by volume of all such UK insurance
• the dependence on good tech to make flexibility work cost-effectively
• how Cuvva’s marketing which has been so successful works
• mostly used by young folks who need to share assets
• could this model work the other way round – rather than hour-up, year-down?
• Cuvva’s products and new products and desires for new staff/partners

And much much more

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