One API To Rule Insurance!

INTRO

On episode 22 of the InsurTech Geek Podcast, talking about One API to Rule Insurance with Darcy Shapiro from Cover Genius.

The InsureTechGeek Podcast powered by JBKnowledge is all about technology that is transforming and disrupting the insurance world. We will be interviewing guests and doing deep dives into specific technologies we see changing the industry. We are taking you on a journey through insurance tech. So, enjoy the ride and geek out!

INTERVIEW

JAMES: All right, we got a cross country crew today. I am joining from the shores of Lake Michigan in the summer studio. This is where I go to escape the heat of Texas and evidently to escape all the restaurant and bar closures. What the heck man! Back to closing stuff again, are we? And in the heat of the action, San Antonio Texas, Rob Galbraith. Rob, you are okay? 

ROB: I ’m great James, great to be with you another week. Our local top local health official did resign this morning, and the bars did close at noon. I do not know why Governor Abbott did not let it go to midnight but anyway, we are good. I have been home either way so, it is all good. We are making homemade pizza tonight.  

JAMES: You were not planning on a big day out at the bars tonight? 

ROB: I was not planning on bar hopping tonight. Nope. So, it is all good to me. So, this is what happens when your dad of 3 at 45. It pretty much does not matter. Coronavirus or no Coronavirus. My day is the same. And I am embarrassed to say that.  

JAMES: Impacts me zero. We are going to order takeout anyway. If you are in Texas, they have got a great program Drizzle, that’s alcohol delivery to your house. I think they operate in other places too, but that is super convenient to use. I use Shipped today to get some Michigan hard cider delivered to the Lakehouse here. So, that was all good. Nice. Got to have a drink. It is Friday. Come on.  

ROB: Are you at the beach house?  

JAMES: Yeah, I ’m at the beach. 72 degrees, sunny blue skies. That is great. And with us from New York, not in the city, she is in the burbs thankfully. So, she actually can go outside into her own patch of grass with her kids. That is Darcy. Darcy Shapiro. How are you doing?  

DARCY: I am doing great. Thanks, James, for having me.  

JAMES: Oh, glad to have you on. This is definitely one of those times when you are glad you are in the burbs huh? 

DARCY: I am yeah, much better than the 700 square foot apartment I lived in, in Manhattan for many many years with my children. 

JAMES: Yeah, so how long was the commute and how long is it now?  

DARCY: So, our office is in Manhattan and it takes me about an hour and a half, door to door. And, now it is about 10 feet from my bed to the desk that I have set up in my bedroom. So, the commute has decreased significantly.  

JAMES: Wow. Three hours of your day just going back and forth to the office? 

DARCY: Yeah.  

JAMES: Holy Shamoley. That is a commute. I have heard a commute, but you win sister.  

DARCY: Welcome to New York. 

JAMES: Oh, my goodness. On a train? 

DARCY: Yeah, the train is actually quite nice. You can spread out, sit down, do work, read the paper. I missed that piece, to be honest with you with two children in my house. 

JAMES: Yeah. I understand that. I had a panic 13-year-old daughter this morning who evidently, we did one class for summer school and she decided to procrastinate until literally the minute it was all due, so, I was dealing with a panic 13-year-old this morning, trying to get the assignments done. It was an interestingly enough, a computer literacy class. So, I had to go in and do a bunch of PowerPoint work with her. And I made her do like 95% of it. I just finished the last little pieces and I showed her how to do it. And she did a good job. We went through Prezi and PowerPoint and Google slides and of course, Word and Excel. And she had to learn all the major office applications. And she agreed with me that PowerPoint is still way easier than Prezi. And Prezi is a giant pain in the butt. I tried moving all my presentations to Prezi a while ago and I moved back to PowerPoint pretty quickly. Is not going to happen. So, I understand having kids all up in your business, all the time, because it has been that way for a few months.  

But we are not talking about that for this show. We are going to talk about insurance technology. A reminder for all of our listeners out there that you can find out more information at insuretechgeek.com. You can subscribe to our weekly newsletter and then you get the show notes and you get the stuff we talk about in the link to the show. It is all in there. And of course, you can subscribe to the show on any major podcast. Any subscription that you have got. And get more information on that. Back to Darcy. Darcy. We love talking about insurance. We love talking about tech, but we also love talking about the people behind it. You are one of those people. So just give me a rundown. You went to a very beautiful school for undergrad. The University of Notre Dame. Not too far south of here. So, I am about an hour‘s drive North of South Bend.  

DARCY: Okay. In enemy territory in Michigan. 

JAMES: I am not a Michigan fan, so you can let go of that. 

DARCY: Good. Then we can chat. Yep.  

JAMES: I am a raging Texas Aggie.  

DARCY: Okay, okay.  

JAMES: I think we played Notre Dame one time. I think that was it.  

DARCY: Yeah. 

JAMES: So, tell me, where were you born and raised? You went to Notre Dame. You went to Fordham for Law School. What did you envision doing when you were growing up and then what landed you at an InsureTech company? 

DARCY: Yeah. I am from New York originally, born and bred around these parts. When it came time to go to college, my father had gone to Notre Dame Law School so, there was a big push. I was the last of three children. The first two, who would get annoyed at me for saying this, but did not get into Notre Dame. So, I was the last great hope and I got in, and it was not much of a question on whether I was going. So, I did my time out in South Bend.  

JAMES: Did your time. Wow. 

DARCY: I did. South Bend is a lovely place. It is gotten a lot nicer since I graduated, but I mean, the school is beautiful.  

JAMES: It is just the parts that are not the school that are not nice. 

DARCY: Exactly. It could be a little rough around the edges. 

JAMES: I am class of 2001 from Texas A & M. So, I remember South Bend in the late ’90s, early 2000s and it was rough around those parts. And you have this like manicured gorgeous university, right? And then literally across the street, you are like, oh boy, we are not on campus anymore. It is a different experience. So yeah, I have been there a bunch of times and that was awesome.  

DARCY: I was there around then, so I graduated in 2001 as well. And then moved back to New York. Before I moved to New York, I did a stint in Australia, in Sydney, working for a legal publishing house down there. And then moved back to New York. The timing was fortuitous, trying to find a job in New York, right after September 11th. So, I did some time bouncing around, not sure what I wanted to do until I finally relented and went to law school. I was in ad sales for some time before then, but so, like every great lawyer, I had no idea what I wanted to do, and that is how I ended up in Law School. 

JAMES: So, we were both class of 2001, from our respective schools. When I finished undergrad, I flew up to New York to hang out with one of my good buddies who had taken the job there on wall street. And he lived in Battery Park City. And so, he lived two blocks from the world trade center. I went there on August 23rd of 2001 and hung out with him, stayed, and crashed at his place. Had a phenomenal time in New York City. And like one of his roommates who was also a fellow Aggie that worked in the trade center. I went home, maybe a few days later, end of August, May 28th, 29th of August, and needless to say, I started grad school right after that at A & M, and a few days later, the whole world changed. 9/11 happens. 

The towers I was just on, we‘re no longer there. My friend could not get to his apartment for a month and a half. I mean, it was crazy. And I decided on all things to start JBKnowledge, right then. The Dot.Com Boom had just bust. 9/11 destroyed the rest of the economy that was leftover. It was a terrible time. So, I remember what a crazy transformational time it was. And certainly, I had a lot of friends in grad school who was in a similar boat. They were like, well, nothing better to do, let us go to grad school. But your dad was a lawyer, so, you had some family influence there. 

DARCY: I did. He had been trying to convince me for years that the law was my path and I was fighting against it. Obviously for not, because I ended up there. And to your point, I think the applications were up like 50% the year that I applied because there were a lot of us that had no idea what to do with our lives and thought law school would be the way to go. So, I ended up at Fordham in the city, in New York, graduated in 2006 and went into private practice just right away with a legal defense firm, mostly doing insurance defense work. So that’s sort of where my insurance career started. No intention whatsoever of entering into insurance defense work or any interest in working in insurance whatsoever. I did not even understand how policies and coverages worked and that insurance company paid legal bills when I went to work for this firm, so that was eye–opening for me, if you will.  

And then after about two years in private practice, filling 2,500 hours a year and newlywed and having decided, oh I should also say that my husband who I met in law school who also was working 2,500 hours a year, we were having our first baby and kind of decided, that maybe it is time for one of us to take a job in house if you will, so one of us will be around at least to pick our kids up and drop them off at daycare. And that is how I ended up at AIG as a claims attorney in June of 2008. Which again, my timing is just impeccable because three months later was the bailout. So, I was at AIG for five years during an interesting time period. And they were undergoing massive transformation during that period. 

JAMES: That like a nice way of putting things at an interesting period. So, AIG had taken a bunch of bets on credit default swaps if I remember correctly? 

DARCY: Correct. Correct. 

JAMES: And they were on the wrong end of the bet, so they were instantly insolvent and then the government stepped in and then backed them. Cause if AIG would have defaulted on the payout of all that insurance they had put out, it would have completely wrecked the rest of the market, right? 

DARCY: Correct. Yep. So, we had an interesting year, around that time occupy wall street, the Zuccotti Park, folks were around all the time, and outside our office and we are insurance people. We are not the credit derivative people, the financial products people that did this. I think they were in some office in Connecticut. 

ROB: They were like a small group, like 30, 35 people, right? 

DARCY: Exactly. In Connecticut, nowhere near the New York campus. I mean, Michael Moore was having these protests that were coming up and we were getting heckled coming in and out of work. It was an interesting time. We were told not to talk to the media. I will never forget the day, we are all sitting there watching our stock price just plummet, and my colleagues, because I was the new person in the team, dared me to walk out of AIG that day with a massive house plant that was in my boss’s office, cause it was right around the day…. We had media camped outside our offices, the Lehman pictures of all the people walking with their boxes out, and then my boss said, yeah, but tomorrow you have to bring it back. Otherwise, you are not going to collect the money. And so, I declined to do it, but then the bailout for AIG was announced that night, so it would have been a pretty funny picture of me walking out one day with the plant, and walking back in the next day with it. So, it is one of my great life regrets that I didn’t take the bet, but, yeah. 

JAMES: Lehman was kind of a travesty because it is like someone had to go for everyone to realize that nobody… That we could not afford to let them go. I mean in retrospect, I know this is an InsureTech, but I mean, it is an interesting part of insurance cause a lot of insurance is investments. And so, you have to worry about the market. Had the government not stepped in the backstop, it would have been an epic nuclear meltdown.  

DARCY: Yeah, for consumers. Yeah.  

JAMES: It would have been about 500 times worse. And the backstopping allowed the companies not only to recover but then pay back the money. And so, ultimately the government was made whole on all of those loans. 

DARCY: Yeah, and they made money on it too.  

JAMES: Yeah, they turned a profit on lending the money to the companies. The company survived. They kept the employees on the bankrolls and then it ended up being a much better outcome than it would have otherwise. 

DARCY: Yeah. It is an interesting time period. So, then I ended up, I have done a few stints at some of the big insurers. So, I was at AIG for a while. I was at Liberty Mutual, actually a subsidiary of Liberty Mutual, the Specialty Division. Most of my career in insurance was in the specialty, specifically cyber tech media before I moved over into InsureTech. So, my last stint was with the Hartford, who I am sure you have heard of before I came to Cover Genius.  

At Hartford, I was doing product development work and worked on getting their first admitted cyber product out into the market and did portfolio management there. They were a bit late to the game on cyber. They were on one of the other companies that in 2008 got hit hard and took the tarp money. And so, I think they were scared of cyber for a long time until they realized that they were writing cyber in every policy that they had. So, if you are not explicitly writing it, you are silently writing it, right? So that’s kind of my career path up until about two years ago. I jumped ship from the carrier side and came over to Cover Genius, to head up their insurance operations for the Americas region.  

JAMES: Why, what excites you? First off, what does Coverage Genius do? 

DARCY: Yeah. So, Cover Genius is a global InsureTech. Primarily we are an insurance distribution platform. What we do is, as you mentioned at the beginning of this episode, we are an API driven InsureTech platform. We integrate with other digital partners to deliver insurance products to those partners customers. We pretty much work with any large digital brand that has like a shopping cart experience, where we can integrate through that single API call and deliver relevant insurance products through to those customers. 

JAMES: So, give us an example.  

DARCY: Okay. So, our biggest partner, I mean, this kind of goes to our origin stories, but our biggest partner to date has been a booking holdings subsidiary, Rental Cars.com. They are a rental car aggregator platform. And, we integrate it with them. We deliver car rental insurance through. So, whenever you are on one of those booking sites where you are renting your car and there is an offer of an insurance product being made in conjunction with that car rental, that box that is asking you if you want insurance, that is us. That is what we do. That is the most simple way to explain it and it is probably the easiest sort of example for people to understand. They are used to that sort of in the travel field, ensuring trips that you book online, but our philosophy is that we can pretty much offer those protection products through any sort of digital experience where there is a shopping cart involved and a relevant insurance product offering makes sense in conjunction with the underlying product.  

JAMES: The rental insurance is something that the rental car companies themselves /make a boatload of money on. They strongly encourage consumers to not buy third party insurance policies because they said, well then you got to go file a claim and it is a separate company, if you buy it from us, then you do not have any deductible, and there is no hassle. And I have been through this pitch because, I have an American Express Platinum card, so when I reserve it, as long as you do not get it, by the way, do not ever get a Tahoe or Suburban, those are not covered. You got to get midsize SUV’s or down, also do not go and get full size… That happened to a friend of mine.  

DARCY: Yeah, it also does not cover car rentals in Australia, which I learned the hard way. So, you do have to read the fine print. 

JAMES: You got to read the fine print on that rental insurance. So, I always decline everything because my credit card covers it, but there is a lot of money to be made and I’m guessing y’all can sell it for cheaper than the rental car companies are selling their add on insurance. 

DARCY: Yep. That is exactly right. And we are getting there. We are getting the first bite of the apple because now as consumers are booking their trips online more and more, where they are making the offer when they are booking their trip. It becomes sort of that natural, yeah sure, I will click it, that is relevant to me.  

JAMES: So, you are also selling travel insurance? 

DARCY: Yes. So, we also have some travel insurance partners, e-Traveler is one of our big partners. They are based out of Europe. They have several brands. Go to Gate is one of them that you might have known here in the US. So, we do offer travel insurance packages as well. But again, travel is one business vertical that we work in. We work across several different business verticals now, to provide those protection products. 

JAMES: So, in lay terms, you are kind of like a broker and you are interfacing with the end consumer and you are arranging for insurance to be sold to them in a way. So, walk me through the legal structure of your organization. So, are you writing the paper yourselves or are you only working with existing carriers? 

DARCY: No. I mean, we are set up in as a digital MGA model, depending on which jurisdiction we are in because we’re a global company and we operate in 60 plus countries as a licensed entity in 60 plus countries. It depends on the specific regulations in each of those countries as to how exactly we are organized, but taking the US as an example, we are a licensed agency. We call ourselves the digital MGA because that is effectively what we get is that binding. Sometimes we get claims authority through our agency contracts, and we have licenses in both ANH and PNC and some surplus lines licenses as well so that we can deliver pretty much any product that might be relevant to a partner’s customers through our API. 

JAMES: Awesome. Rob? 

ROB: Yeah, Darcy. So fascinating. So, I was fortunate enough to be in Sydney, Australia in February, and I met Chris Bailey who is a Cofounder and Chief Innovation Officer of Coverage Genius. And I was quite honestly, the first time I had heard of Coverage Genius and, just kind of hearing him kind of explain this unique business model and approach is just something I had never thought about. So, it was a bit mind-bending. So maybe you can just talk a little bit more, like, I am fascinated by kind of where you guys sit in the value chain. Who comes to you, or how do you decide, like, is this something where you look at an opportunity and say, hey, we’re going to work with that rental car company or that airline or whatnot, and this real estate, they want to make this part of the experience? Which carrier partner wants to have that contract or have that space, or do you go to the insurance company first and they say, this is how I want to distribute it? Maybe you can just kind of walk us through like, cause you are bringing multiple sides together here, but I am just kind of curious a little behind the scenes of how that works and maybe it is different for each deal you do. I am really curious. 

DARCY: Well, the short answer is yes, to all of that, which I know does not make complete sense, but the point is, we operate in all of those manners. So, just kind of giving our origin story, our founders had founded an online travel agency and when they were trying to get insurance products to offer through with their travel products, what they were running into this issue, which is insurance people understand this completely, which is that everywhere they went to try to, they were trying to find one solution to offer all of their customers that are coming online from everywhere in the world. And there is no such thing as one insurance policy that you can sell to everybody in the world to cover anything. And so, even when they were working to try to find a carrier that could help them, even with the global carriers, their countries have different appetites. Their countries often operate siloed like separate corporations that do not talk to each other.  

And so, it was just a minefield field for them to have to navigate that and they thought to themselves, hey, if we’re having this issue just in travel, which is a pretty mature space in terms of the digital insurance marketplace if we’re having these issues, there’s just, there’s so much opportunity here because there’s got to be a lot of other digital brands out there that could benefit from having protection products sold in conjunction with their core product set, that is not getting access to those products in such a way that it serves all of their customers. So, they set out to prove the proposition, again in this rental car space, which they did. They ran around the world. They got compliant operations in place, partnerships, licensing, etcetera, products with different insurance carriers. They establish the office in London as a means of, you know getting tapping into Lloyd’s market there, obviously for obvious reasons. And, the better part of the first two years of the company was that journey and they became profit positive within, I think it was two and a half years, so they proved it out.  

And, and that is when, the decision was made to invest back into the technology and create this product–agnostic technology, which is what X Cover, which is our platform today. To the question of like how we bring those together, where our vision is on those sort of untapped opportunities, what we tried to do was think about, what are the types of digital players. As you might have called them e-commerce brands before, that sell product that would benefit from a protection product being attached to it. So, retail is an obvious one. You have these large retailers that are already selling warranty products. And again, that is a cash cow in the US, but the interesting thing is, warranty is insurance in other markets. And so, if one of these large retailers wants to expand into Europe, the deal that they have with an unnamed large company in the US is not going to suffice because they are not going to be able to serve the type of product that is compliant in the European market. So that is one example.  

Another place is logistics. So, with the parcels being shipped, I mean, obviously now more than ever, people are ordering stuff online, offering that protection when people are shipping their items, that is another area where, again, here, it may not be insurance sometimes, sometimes it is. It is a minefield Marine cargo anyway. But you want to be able to get that sort of global solution in place, which some of the legacy carriers cannot do. And then, from the perspective of, how we partner with these folks, it is we have business development teams that come from the industry who understand what the challenges are and understand what the customer needs are of our partners‘ customers, and then we also have an insurance team, which is pretty cool at an InsureTech. Cause a lot of InsureTechs do not focus too much on insurance as I am sure you guys know. And it is our insurance team that also understands what the product landscape is. The insurance product landscape is, who are brainstorming with our sales team about, hey, what can we do to deliver value here. What are the products that would work?  

And the cool thing is that since I have been at Covered Genius, in the beginning, it was, to your point, you did not know who Covered Genius was. I mean, we were not found in this country, so, two years ago when we established the US office, it was just trying to get people to listen to us and understand who we were. Now, two years later, we have large insurers coming to us saying, we love your technology. We have this partner already that we are working with and they are global, and we can help them here, but we cannot help them in certain markets where our technology is not up to snuff and we can help them on this one product, but not others. And so, they are looking to us to problem solve in that way. So that is a long–winded answer to yes, which was the original answer, is that we work with everybody and we have partners on both sides and the way I see it, we’re stewards of our digital partners‘ brands while we’re stewards of our insurance partners balance sheets and brands as well sometimes, but we take that responsibility seriously. 

ROB: I love that story, Darcy. I love the fact that the founders were not in insurance, and trying to do something different, but then insurance happened to be part of that value proposition and they could not find a partner that met their needs, and so, they just started their own company to fill that void and then kind of started looking around and realizing, hey, it was not just us, but the travel side that had that need. There is a whole bunch of places that have that need. So, that is just an awesome origin story and it is just amazing your growth. So, thanks for sharing. James? 

JAMES: Yeah, and being a digital MGA is a pretty popular route right now for InsureTechs, and potentially for a few different reasons. Largely because being a carrier requires so much capital. So, as I have gotten to know more and more InsureTechs, that seems to be a fairly popular model. Your company picked a challenging road because you are covering 60 countries. I mean, just the regulatory burdens alone in the United States mind boggle me because you have 50 insurance commissioners with 50 different rules. And then on top of that, you are jumping into the deep end in 60 countries. And then your website says all lines. It did not say some lines. It says all lines. Do all lines mean all lines? Like, are you legitimately writing business in lines of insurance?  

DARCY: So right now, no. I mean, frankly, no. The point is, that with our technology we can because the technology is flexible and again, it is product diagnostic. Like the initial product that was built, was specifically designed for rental car insurance. And then when they proved that model out, they said, well, wait a minute you know, why would we constrain ourselves and have to build different API’s for each different product when there are already several products. So, it was designed to be flexible. It was designed to be customizable. In terms of the product lines that we are writing, we do operate globally. We have product insurance out there, which is more commonly known as warranty here, as I was discussing although there can be insurance elements to it.  

We just launched with e-Bay, which is a really exciting partnership for our company, to launch that insurance. We have event insurance; we are doing travel insurance. We have, believe it or not, personal lines auto policies through integration with a large dealer management system company here in the US called Auto–Matrix. So, the point being that, and I should preface that by saying, we really established our US footprint two years ago. Two years ago, exactly was when the New York office was founded. I was the second hire. Again, I think it is a good sign when the second hire is the insurance lead in an InsureTech company. Cause I think they realized; this is not the place to mess around with things like you got to get it right. And so, let us hire the lawyer, the compliance minded lawyer who understands completely coverage stuff. So that we do not get in trouble, in an ideal world.  

So, and then we built out an insurance team here. And so, the amount of growth that we have just done in the US over the last two years is just unbelievable that we have as many products coming online, as we do stateside. Especially considering that the first year was pretty much just getting all the licensing in place. I mean again, as you know, 50 States takes a while to do that stuff. So, we were out there kind of evangelizing, during that time period about our capabilities. Cause we knew what they were elsewhere, and now we are up and running and it is cool. It has been really exciting, it is probably the most exciting, definitely the most exciting point in my career. Believe it or not, coming from three large carriers before this. 

JAMES: Yeah, well, I believe it. I mean you are creating this almost interface list middleware that is taking care of, cause that is when the API… APIs are invisible to the end person using it right? I mean, you are receiving data. You are doing a lot of stuff in the background and then pushing data back out, but no one ever knows it is you. And so, like the commercial for, was it for 3M where they said you do not know our products, but you use products that use us all the time? 

DARCY: Yeah. 

JAMES: Their slogan was something around that. And would line up well with what you have described and what this sounds like. You had an interesting product on there for claim payments, and it looks like you are now trying to act as a middleware layer between other InsureTechs and getting claim payments out as well. So, you are an InsureTech potentially servicing other InsureTechs? 

DARCY: Well, no, that’s part of, so our X Cover Platform, is full–stack platform and it has several different modules in it. Typically speaking because our is focus B2B Sales. We integrate with this business partner of ours and then we do everything full stack from soup to nuts. So, the X Cover is capable of the quote and bind functions. It has a policy admin. There are interfaces, even for customer policy admin through our X Cover. And then we have the X claim. We have licensed claims folks too as well. And then X pay, which is what you are referring to, which is the payment function of the technology, which enables us to deliver pretty much, instant payments, into any sort of digital banking apparatus, whether it’s a bank account or gift cards or whatever. 

JAMES: So, you have licensed claims adjusters? 

DARCY: We do. Yeah.  

JAMES: And you are doing all the claims, adjudication yourself? 

DARCY: We are. Yes. So, for our live US business, it is going through our own claims. So, we have TPA authority that we have gotten from our underwriting partners.  

JAMES: So, you did not partner with the TPA? Did you decide not to and to tackle it yourselves? 

DARCY: No. I mean, look that will not always be the case. I will be pretty candid about this. As a former claims counsel, there are claims that we do not want to touch. The claims that we want to touch are the ones that our technology services well, so that are high frequency, low touch, were pretty much, you want to get that payment out pretty quickly and assessment is light. But that costs companies, insurance companies as well, tons of money. And to be able to streamline that process as part of this makes us also an attractive partner for our insurance partners. It cuts down on those costs. 

JAMES: Rob? 

ROB: So, Darcy, what I love about this conversation is Cover Genius is the kind of InsureTech that makes my head hurt. Like I have to think hard and kind of think about it because it is different. It is not the way that we are used to doing things. And so, I always loved those... There are certainly ones that say, hey, we kind of do insurance the way it is supposed to be done and the big guys cannot execute or whatever, but this is kind of turning a little bit on that side that makes you think about it in a new and different way. So. just kind of wrapping up the conversation here, and I know we want to get to a bit to the weekly news, which we would like to do on this podcast, but what is next for Coverage Genius. I mean, you kind of talked about your growth. You talked about obviously the expansion in the States and, two years in. So, I am just curious both here in the States and globally, where are you guys hoping to go over the next three to five years?  

DARCY: Yeah. I mean, so we have some pretty aggressive growth plans. We have been growing at a clip and using our capital to fund things. We have taken on pretty minimal investor capital. So, which is great that we can pursue the things that we want to pursue. And, I think the goal now is more product diversification, which as I mentioned, we are already on the path to do. We started sort of in that travel, sector, and we have done a great job diversifying since then. I wish that I could talk about some of the things that are on the horizon that will be announced in the next two to three months because we have got some big partnerships, that are going to be announced shortly. I think, for us in the States, particularly one of the things that we have learned about quote–unquote, like disrupting the insurance industry is that disruption happens best when you sort of play nicely and play from within. 

So, we‘ve really like met with and are partnering with some engaged, huge, huge global carriers who love what we do and know that there are things that we do well, that they cannot do well really well. They also know that there are things that they do well. And, the claims. Complex claims are a perfect example of that, sort of, let us all take a step back and appreciate each other’s, the gifts that we all bring to the table and let us make something together that focuses on the customer. So, yeah, it will be product diversification. Some, again, some really exciting partnerships on both the insurance side and on the digital partner side, that we are looking to just expand and grow, and keeping that sort of solution that can work with everybody. We want to be friends with everybody.  

ROB: That is awesome. Do you want to be the popular girl at school? I got it. So that is awesome. Thanks for sharing Darcy. James, you want to get into a bit of news.  

JAMES: Sure. Yeah. There is always interesting stuff going on in the insurance space and the InsureTech space and then Fintech. And it is kind of hard to separate all of these. There is an update today, cause we reported on this recently, that the updated Lemonade IPO filing indicates a down round. And typically, and again, I am a bootstrapped InsureTech guy. I like, we like to not raise the money, and this is one of the reasons why, because when you raise another round and it is at a lower valuation, that is called a down round for those of you do not play in that space. And down rounds are typically not very good, because your existing cap table gets crushed a bit and people, in particular founders tend to get hurt a good bit and down rounds on the valuation of their stock and so, this was a form S1A, that was filed with the securities and exchange commission.  

By the way, the ticker is going to be L M N D on the New York stock exchange. The updated filing included the expected price per share, which has been pegged at $23 to $26 a share, which would be a lower valuation. Now we are seeing, again, this is a Softbank –backed company, and we are seeing, valuation cuts across the board at Softbank investments. Of course, Softbank has pumped values on a lot of these companies. This would value the company at 1.4 billion, which is a pretty big decrease. The last funding round was reported at a $2 billion valuation. So, this is a $600 million haircut on the valuation, for Lemonade. So, it is interesting, Remember, they had gross written premiums of 116 million in 2019, and they are still seeking an evaluation of 1.4 billion on 116 million on GWP with top–line revenue of 67 million. So that’s a still a very high valuation when you kind of are looking at what any other insurance company is valued or what any other business is valued, either as a multiple EBITDA, multiple gross written premium or a multiple of revenue, whatever number you want to look at, it’s still a fairly high valuation. So, I would be interested in hearing your thoughts on this Rob. 

ROB: Yeah. Some I will confess, I have seen, of course, lots of chatter out there among friends and some people have done some very, very detailed analysis, on the filings and valuations and lots of speculation about purchasing the stock and at what price, after the fall they would purchase it when it starts trading. I have not done any of those digging, so, I will mostly reserve a judgment. I will say simply from my personal experience, Lemonade started with runners, they have got homeowners insurance as well. In my prior role at USAA, I was responsible for four renters underwriting and saw some of the performance of the renters line there. And, the big reason to write renters was that 70 plus percent converted to a homeowner policy. And then, by having that property, the auto is stickier. And so, renters by itself was not necessarily a great book of business. And so, obviously, there is a homeowner’s part to Lemonade they do not have the auto part, so I do hope to get the time to dig through it. But that is the part that I would kind of look at it.  

And I will also tell you that their attention is not there, relative to auto and home, like the other personal lines. I think again and I am remembering off the top of my head, so, do not quote me on this, but typically, only about two–thirds of the people that are going to retain. And this is just, again, based on the kind of my experience. Two–thirds of the people are going to retain every year. And so, every three years, your book kind of turns over on the renter side, which is much faster than the auto or home side. So, I love innovation. I love what they have done. It was a space that was right for disruption because no large carrier spent a ton of time investing in the renter space. And now you are seeing a lot more like Marchetti and others. Toggle from farmers and other says, there is some interesting work being done in the renter space, but I do worry about that valuation and I worry about, has Lemonade matured enough as an insurance carrier. I had a lot of high hopes for them and right, they may or may not be dictating the timing. Lots are going on with the Coronavirus and all that. So, lots of caviar. Some thrown out left and right about the exact timing of this IPO. But, yeah, I do kind of wonder about the future and where things will go. So, there are lots to read out there. This is interesting. I want to pivot real quick cause I have a bit of personal news I want to share. And then I wanted to kind of throw something out for both James and Darcy to comment on.  

So, this is my humblebrag the week, I guess, I got word last night that the first foreign language translation of my book, The End of Insurance As We Know It has now been completed by two gentlemen. It has been translated into Farsi. That is not the first language I would have guessed if I had a betting pool of what language my book would be translated in, but I want to thank them for their passion and dedication. It is a process that has taken months and so, through this translation, I am hoping that other insurance professionals, in the Middle East, Iran, and those other countries that speak Farsi will benefit from that. And so just the fact that people are taking the time to go through that strenuous effort, just hats off to them. And, I am super humble, through their efforts and excited about that.  

The other thing I wanted to mention is, we have a new insurance nerds book. So. James, you, and I talked to Bryan Falchuk last month about his new book, The Future of Insurance from Disruption to Evolution. So, he had a book launch party on Tuesday. The book is now live for those that might be interested in finding out. So, he had a great kind of Facebook live virtual party and did a great Q & A kind of talk through some of those use cases with top insurers talking about their innovations so, some great book views there. And then, I do not know how this missed my radar. So maybe Darcy, you were on top of this or James, but ITC has announced they are going to virtual this week. I heard it on a call yesterday and I was like, where did, what rock was I under? And I went to the website. I did not believe it. It is like, there it is. It is pretty much something to remember. So, Darcy, I am just curious about your thoughts on virtual and then how are you guys dealing with, you know, I was on a call yesterday, a lot of great discussion about how do you sell it and how do you create relationships and partnerships when there may not be any more alive conferences or events the rest of the year? 

DARCY: Yeah. The conference, how I miss it so. Yeah, the virtual conferences, and obviously, I was scheduled to speak at a bunch of conferences this summer at some of the digital conferences this summer, which were all, postponed or canceled. A couple has gone virtual and I have been on one virtual panel thus far, and I have another one coming up in a couple of weeks. 

It is interesting. I think, what it does is while it may limit that… Face to face interaction is important. Like, let us face it. We are sort of at a lucky time in the company’s growth, where we had developed these partnerships. As I said, we are two years in, and we are kind of in implementation phase right now so for us, there was some luck involved timing–wise, that I do not know how I would get those partnerships off the ground without these face to face meetings. These conferences, seeing these people over and over again, going to dinner, having a drink with them, and getting to know each other as people so that you are invested in the business partnership on that side. We are kind of focusing on the existing relationships we have in that regard because you can do existing relationships over zoom. The new ones are harder. There is no question it is harder. Virtual conferences are harder as well.  

Although that being said, I have noticed like there is some conference that was out in San Francisco, that was super expensive. And now for the virtual conferences, it is like $99 to go. So maybe that broadens the audience because you have more people who can afford to go, or don’t have to carve out the time to fly out to San Francisco for the week, who may pop in and listen to the things that they’re interested in. Learn some stuff and reach out. This is what happened to me after the virtual conference that I did the panel on, I had prerecorded it. Did not realize when my session was going up and woke up in the morning to about, a hundred Linkedin connections, which was a little confusing at first, and then I realized like, oh, I was the last panel on this virtual conference. So, I do think that there are still opportunities. I think it is worth doing. How people are making money on it, I do not know. ITC. 

JAMES: Darcy, they are not. 

DARCY: Yeah, they are not. Exactly. Vegas is, I mean, last year to the year before, just the growth in one year in the conference, I mean, I find it exhausting so, in a way I am kind of happy that I do not have to be on my feet for three days having 15-minute conversations, one after the other. But it is an interesting time. It is challenging for sure. In that case, though, I mean, it is the same way in my personal life. I am not sure if you guys agree, but this sort of COVID re-evaluation, I do not want to waste my time talking to people where I know that there’s not alignment. Because time is so precious now with, you are basically going from one meeting to the next every day now, one zoom meeting to the next. So, I think for me, there has been a focus on making sure that there is synergy as we approach these new relationships in this challenging environment. 

JAMES: Ah, there is the phrase. Oh, I was trying to avoid phrases like that. 

DARCY: Challenging environment? 

JAMES: It is one of the lesser phrases that … I have been doing webinars like crazy. I did three this week and then I did like two the week before and three the week before that, so I have done a lot of them. So, I added a slide. Here are all the phrases I will not be using, these challenging times. And I am like, I am not going to say it. It is all good.  

DARCY: I will say it for you. 

JAMES: Yeah, that is fine. It is all good. So, I have spoken at 400 conferences since 2005 and attended a lot more than that. And met some great friends, did a lot of business, right? I did a lot of business. I mean, got a lot of deals closed, formed a lot of new relationships, made a lot of headway, built products, sold products. I built a SAS product, ran it for 12 years, got a quarter million companies using it, sold it, and conferences and events played a big part in all of that. And, so it tough. I would be interested to talk to a psychologist at some time about why everyone feels the compulsion to load up so many video meetings every day right now? I have noticed that it is starting to settle down a little bit, but it is almost like the absence of face to face compelled managers who did not trust their people to work from home to over-schedule video meetings. I do not know how to like, describe this. I think like they are scheduling more of them because they are not sure everybody is working. And so, they want to see them and like control their time. I do not know what is going on, but I know that there are more meetings. Surveying of my clients. They are having more meetings than they had when they were in person.  

DARCY: So, I have a theory on this. 

JAMES: Tell me about your theory. Cause I want to hear it. 

DARCY: So, I know from like our internal stuff, I think a lot of it has to do with the fact that, how they say, you went on a business trip, it could have been a zoom call, and that is what you have learned now, and then a zoom call could have been an email. Well, it is sort of on that vein where, if I am sitting across from my colleague, in our office, and I have questions to ask, I will just shoot the question. But now, because we are blocked into these time schedules and some of us have kids at home as well that were homeschooling, you have to schedule the meeting just to ask that five-minute question. And so that is what I am finding that a lot of it is the stuff that would have been answered immediately, had we been in the same room with each other. Or when everyone is in the office and you can just pick up the phone now everybody is scared. There are Federals are all over the place with home and family and … 

JAMES: Yeah, I kind of feel like people are a little nuttier about being called now. Like, I have noticed that people apologized to me for calling me without scheduling a meeting, I ’m like, that is what I have a phone for. Why would you apologize? 

DARCY: But that is what I mean, though. I think it is because people are sensitive to it now.  

JAMES: Yeah but they are overly sensitive at some point. It is a little ridiculous. I mean, I have a phone, I answer it. I am like why did you put this on my calendar? Just call my phone. You have my cell phone number. Like, it does not make any sense to me, Darcy. 

DARCY: Hey, I tell everybody to text me if you need something, do not call.  

JAMES: Why do you hate phone calls? Do you hate phone calls?  

DARCY: I do. I hate phone calls.  

JAMES: Yeah. Yeah. My wife hates phone calls. She prefers to text. I prefer phone calls because I like verbal context. I want to hear the tone of their voice. 

DARCY: I get it. A lot gets lost over text. 

JAMES: People will get wrapped around an axle about what they think someone’s tone was on a text I am like you could have called them and found out. Or if you want to know, you can just facetime them. I facetime people regularly.  

DARCY: Oh, you are one of those people. You are the worst.  

JAMES: I want to see your face. I want to read what you are doing, and then I want to hear the tone of your voice. 

DARCY: And that is when I hit decline because I have just finished a workout and I am like, oh no, no way! 

JAMES: I am going to facetime you every week from now on. Just to mess with you. 

DARCY: I can’t wait. 

ROB: We are still working out the protocols. I do a lot of early morning meetings and you can tell it is like, do I need to shave and put it in my context before I take this meeting, like, is this going to be on camera or are we all going to have the teams or the zoom where everyone’s camera is off and you know, what hour of the day do the cameras come on or whatever? I do not know that we fully figured that out. So, I always feel like that’s not just a, can I get from my bedrooms, my office. That is pretty easy, but yeah. What state do I need to be in for that early morning meeting to be acceptable?  

JAMES: Yeah, so we require video for our internal meetings. We run on an entrepreneurial operating system EOS. So, we have far fewer meetings than the average bear. So, it is a little bit of a different story. I started shaving at night. Explicitly because of that, by the way. So, I used to shave in the morning. Now I shave before I go to bed.  

ROB: I started doing that as well, so… 

JAMES: I actually changed my schedule, so that when I wake up, and you can tell I do not have to do a lot with hair, Robby, do nothing with hair because he has no hair. 

ROB: No. It is growing out actually. 

JAMES: I noticed. But you can pull it off by the way. I have shaved this off completely because I was in the court at A & M and it is a terrible sight, so I can’t pull it off. Okay, so we had a great discussion and I want to end it there. This was fascinating. Darcy your company fascinates me. It is behind so many sites. e-Bay. e-Bay does $12 billion. People do not talk about e-Bay anymore, but they did $12 billion of revenue last year. They are a huge company and y’all are behind that. It is it is awesome. So, thank you for dedicating your career to insurance, and thanks for sharing your thoughts with us today on the podcast.  

DARCY: Thanks, guys. appreciate it.  

JAMES: Yeah. And, Rob, as always again, you can check out his book soon. You can check out his book in Farsi. Cause I know there were a lot of you out there who listened to this show in English who were waiting for the Farsi translation. But, no, that is super cool. Iran is an interesting place and what an awesome deal. Get into Spanish man. Get into Spanish. I have got a couple of hundred people in Argentina who want to read your book in Spanish 

ROB: I would love to yeah. So, if there is anyone out there listening that can help or know someone that translates, look me up on Linkedin. 

JAMES: Yes, absolutely. Spanish is it!  

So, with that, thank you again for joining us today for this episode of the InsurTech Geek Podcast powered by JBKnowledge, it is all about technology that is transforming and disrupting the insurance world. I have been your host, James Benham. This is my co–host, Rob Galbraith, endofinsurance.com. A big thanks to Jim Greenly, our podcast producer & Kara Dalton-Arro, our creative producer. And thank you for joining us today.

We are taking you on a journey through insurance tech. So, enjoy the ride. Keep geeking out. Talk to you next time.