P&C Technosavvy the October 2019 issue

Q&A with Austin Ledgerwood of Cover Genius

When people stop buying cars, they’ll still need insurance.
By Michael Fitzpatrick
Q
People have many more options for driving and mobility in general today. How does that impact insurance?
A
Mobility is a big buzzword. It would encompass everything from buying a car, leasing a car, renting a car, subscribing to a car, subscribing to a scooter, rideshare, car sharing. It’s about how someone gets to Point A from Point B. That’s how mobility should be defined. I’ve been working with a lot of different companies in the rideshare space, a lot of different companies in the automotive sector. Right now, if you took a hard look at how people are moving—outside of people having car insurance when they are driving their own vehicle—there are a lot of gaps in coverage in the mobility space. It’s taking big accidents, and unfortunately deaths in some cases, for people to realize there is a real issue here.

E-scooters are an example. They’re really starting to see an uptick in accidents, and people don’t know that they have options to cover themselves. There are not a lot of products out there to give the right coverage. That’s one of the things that we’re really focused on and working with our insurance partners on—creating products that actually fit the demand and the need.

There is a growing call for insurance on demand versus the traditional coverages offered today. The traditional insurance offerings do not allow for flexibility in how one uses mobility services. The impact is not only to the insurance companies for not having flexible coverage but also to the mobility consumers who are putting themselves at great risk with no coverage.

Q
Where do you see the opportunities for Cover Genius in U.S. auto and mobility?
A
Within the U.S., it is a wide-open space. You’re starting to see the advent of more rideshare, e-scooters, e-bikes. The sense of mobility is expanding to where I don’t have to own a car anymore. Subscription is a great example where there is a huge opportunity. Here in Atlanta, there’s a company called Clutch. They enable dealers and OEMs to offer cars via subscription. In this scenario, insurance is included as part of the transaction. If you pay $600 a month for a car, you’re really not paying for a car; you’re paying for the ability to drive any car you want within that subscription platform, kind of like Netflix.

One of the key things is that insurance can be very costly for the fleet management companies. That translates to higher costs for the driver, because they’re going to pay for it in the long term through that subscription fee. If I use Clutch or Flexdrive, which is another subscription company, what if I were to have coverage that translates to me no matter who I’m using through subscription? How about if I had coverage when I used an e-scooter this week, and then, while traveling with my family, I jumped in an AmeriDrive subscription car in South Florida and was covered regardless of what I’m driving? As an individual, why wouldn’t I want to be covered with all the extra or added coverage I want or need? The non-owner [product] is really going to revolutionize the auto insurance world.

Q
How will non-owner products revolutionize auto coverage?
A
There is a real transition right now. You’re thinking, “I’m insuring my car, and I’m covering myself in case of an accident. If I were driving and I hit another car and injured another person, my insurance will cover their medical costs or anything that they may sue for.” Right now, you think about the auto policy covering that.

When you’re driving someone else’s car in subscription, the insurance is covered by the fleet operator. That might be a dealership. That might be an OEM. You’re set to their limits. If one of them says we’ll cover you to the state minimum, that might be only $100,000 to $300,000 of coverage. If you get into a grave accident, that will go away very quickly. Why wouldn’t I want additional coverage or to manage my coverage and have control of that? The non-owner [policy] would cover that.

If I’m using car sharing and someone breaks into the car and steals my laptop and the Tiffany bracelet I just bought my wife, I’m out of luck because my personal items are not covered in those scenarios.

If you’re getting on an e-scooter or e-bike, unless there is a malfunction of the scooter or bike, you’re liable for anything that happens on it. When you go on it, there’s no way for you to add on any protection. There’s a real inherent risk.

The non-owner [coverage] is that product that is for the next generation—the millennials and individuals that don’t want to own a car. They just want to use one when they want to use it. You pay for the coverage monthly. It’s usually much cheaper than a full auto policy because you’re not covering the car, and it would cover however you’re transporting yourself.

Q
What is Cover Genius working on in commercial auto?
A
We’re partnered with several different large carriers. For us, we’re not the underwriter, so we kind of present ourselves as the agent and the broker. We’re definitely working with multiple automotive platforms to provide various levels of coverage.

You have several different verticals. You have digital retailing, which is the advent of organizations like Carvana, Vroom or even Tesla, when an individual can completely do a transaction online. I don’t go to a dealership. I select a car online, and they deliver it to me. One of the things we’re working on is enabling the ability for a car insurance quote to be provided at the time of the transaction, instead of having to go through external links or anything of that nature. We’re very much focused on that aspect. We are in talks with a couple of very large digital retailers.

You have the new car ownership alternatives, which would be the subscription models and car-sharing models. We’re looking at integration with two large subscription companies. That would revolve around the non-owner product. If I subscribe to a vehicle from AmeriDrive or Clutch, I could do a non-owner policy, and that would cover my personal items. It would give me added liability coverage, and it would follow me regardless of what platform I’m on and what I’m driving. It’s really geared around me and not around the car.

Then, there’s the rideshare market—the Ubers and Lyfts. If I’m driving with them, do I want the opportunity to have higher coverage? Within rideshare, there are usually different periods for which coverage is available. The different rideshare companies give good protection, but it varies on what you’re doing, and there are limits to what they provide. It’s not just an open checkbook. We believe there is a huge value in offering up additional coverage to the drivers. I could even foresee in the future there are options for coverage for riders.

Q
How does Cover Genius work with agents and brokers?
A
Not so much on the agents’ part, because that is a function that we can provide. We do work with several different brokers in terms of not only building relationships with different carriers but also acquiring products. We do actively work with multiple brokers, but at the same time it is something that we do as a function as well.
Michael Fitzpatrick

Technology Editor

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