Nobody is really winning in the startup insurance world, says Kim Miller. Most don’t know what they are trying to do
The CEO and founder of Guevra, a peer-to-peer based insurance company, believes the future for insurance startups lies in decentralised systems.
“I don’t think the startup system understand insurance, at all. I don’t think venture capitalists want to put the time and effort in to understand,” he said at WIRED Money.
He claims if companies and investors “want to disrupt insurance you need to understand it.”
There’s some evidence to support his claim. Oscar Health Insurance, a startup in New York, raised $700 million (£472m), but in 2015 lost $100m (£67m). The market is ripe for new companies to enter the sector.
Guevra itself has raised £3m, Miller says. The company is currently going through the process of being approved as an insurance carrier. This will mean it is able to focus on other general insurance areas other than vehicles, which its UK focus is based on at the moment.
“Instead of taking all of your money each year, we let drivers pool part of their premium together in groups,” the company explains on its website.
Miller admits most customers don’t want to hear from their insurance companies – ideally, he says, they wouldn’t want to pay either – unless they’ve been involved in an accident or need to get in touch with them.
In the battle between old insurance “incumbents” and those new startups, there’s one big difference, he says. “Incumbents have historical claims and cost data.” This means they are able to utilise the data to make predictions and know everything about their customers.
Startups, by their very nature, don’t have this data to work off of initially. But, Miller, says this isn’t a problem. “That’s our advantage, we start with a blank sheet but we start from behind,” the London-based CEO says.
Startups have an advantage in being able to quickly innovate and develop new models to base their businesses from. According to Miller, this will see new companies that develop machine learning and artificial intelligence competing with legacy firms.