When the Interviewer Becomes the Interviewee

This episode is a recording of a Clubhouse room, “Insurance Innovation,” hosted by Thomas Verduzco-Weisel, Director Central Europe at CoreLogic | Symbility and an active insurtech evangelist. For once, Gilad Shai was the one being interviewed, and the wide-ranging hour moved from failure to embedded insurance, blockchain and the ethics of corporate venture capital.

Thomas and Gilad met in person in the summer of 2018, over a cappuccino in Los Angeles, when Thomas had just left Munich Re after about 20 years in Munich, the US and Singapore and was working in claims innovation. They had only a little contact on LinkedIn before that, and Thomas offered the lesson of that meeting: be active and open on LinkedIn, then take the extra step of reaching out for a real conversation.

About Thomas Verduzco-Weisel

Thomas Verduzco-Weisel is Director Central Europe for CoreLogic | Symbility and a regular voice in the insurtech community, running the Insurance Innovation room on Clubhouse.

What Went Wrong With Bound

Thomas asked Gilad to talk about the embedded insurance platform he left Farmers to found, which had recently shut down. Gilad separated the “fail fast” hype from reality. It fits a startup, but a project inside a company has different politics, structure, funding and risk. And while people celebrate failure from successful founders, nobody talks about the nine out of ten that fail, or what they learned. He has been taking notes for another book on the topic.

His own post-mortem:

• Too early, and poor at explaining it. For the first two years, the company was advocating the concept of embedded insurance, which only later became a trend.
• Staying pure technology. The company wasn’t licensed, took no commission and was just a platform handling the relationship and payment management. In hindsight, three years ago a platform needed to be part of the distribution and insurance, so a carrier could understand it: “are you a wholesaler, a broker?” The answer should have been yes.
• A hard-to-sell efficiency story. The company was going live with two large carriers and a huge wholesaler to solve the long-tail agent problem, turning agents who won’t sell small GL policies into direct sellers who embed insurance on their own sites. But asking a carrier to invest now for a possible benefit later was a hard sell.

Today, he sees traction from players that own distribution: Coterie, and brokers and MGAs such as Brisa that offer their own agents an embedded solution. The next question is what the layer is that can work with everyone through seamless multi-carrier integration.

Thomas added his own failure story from Munich Re’s claims innovation team: a platform that searched the internet for claims events, extracted company and person names and their relationships, and drew them as a knowledge map. It was a showcase project for years but was never really tested with customers, and was eventually scrapped. The lesson both took from it is that new business models are harder to understand than new technology, and the first version may fail until someone else picks it up and fills it with life.

Disruption Is Cool in Your 20s

Gilad said his view of disruption has shifted with age. He was on stage at TechCrunch Disrupt in his early years, but now thinks the industry needs enhancement and growth rather than slapping disruption in people’s faces, which creates antagonism. He pointed to Japan, where the president of one agent organization told him he had about 180,000 agents responsible for roughly 20 percent of the market, whose job is to knock on doors monthly and collect checks, and who will retire in the next 20 years. Lemonade, he said, was the rock thrown in the lake that started the ripple of innovation, drawing in investors, then entrepreneurs, and now legal tech and agritech.

Is Embedded Insurance a Dead End?

Gilad’s definition: insurance is a by-product of something else, like the check box when you buy an airline ticket. He gave the example of an insurtech embedding homeowners coverage into loan officers’ software because it recognized the bottleneck in a mortgage, where the customer needs insurance anyway. No one wants to enter the insurance journey; they are on a journey to buy a home.

Thomas pushed back from the insurer’s side. In his view embedding a policy in another product’s journey means the insurer gives up its option to build its own touchpoints beyond the sale, and insurers need more touchpoints over the life of the policy to get data and serve customers better. Gilad answered that it’s a spectrum from zero to a hundred depending on product and coverage: a $150 liability policy for a yoga instructor may not need ongoing interaction, though the data can still feed analytics, enrichment and targeted introductions to agents. He also noted the weak spot in many carriers’ relationships with their captive and independent agents.

Blockchain: Still Mostly Smart Contracts

Thomas asked whether blockchain might return as a trend after NFTs and Bitcoin. Gilad said apart from smart contracts and parametric insurance, he still doesn’t see it as a thing in insurance, and he worries about its environmental cost, a point he’d discussed with Dan White on a previous episode. Thomas added that for smart contracts to gain ground, contracts first have to be parameterized so the coverage decision is machine-friendly and binary.

Gilad’s logic is that parametric is “if this, then that,” and the only reason to do it is a financial case: cutting claims costs, fraud and leakage by settling immediately. It also gives a brand story, like Lemonade’s claims paid in seconds. Thomas noted a simpler contract is also easier for consumers to understand, which matters because exclusions are usually discovered only at a claim. Gilad saw the best near-term uses inside companies: transfer pricing, transparency (he cited Estonia’s government audit trail), and moving data between silos created by mergers and culture.

A Question From the Room: Corporate VCs and Fact-Finding

A founder, Connor, in his first time on stage, asked about carrier venture arms: how can he tell the ones that want to invest from the ones on a fact-finding mission? A call with a carrier’s venture arm had turned into 45 minutes of underwriting questions with the carrier’s P&C team on the line. Gilad said this is a classic case where you have to read the table. A CVC can invest from the balance sheet or from a separate fund, but it also has to keep the investment aligned with the company’s strategy, and an MGA could benefit that carrier’s competitors. A good investor will say when it has invested in a competitor and put up a wall.

Some of the questions are fair, as they need diligence on your underwriting and premium, but the information flow should be reciprocal: if they ask about your underwriting, ask about theirs, and find out whether you want capacity, paper or distribution from them.

Gilad on Podcasting and What’s Next

Gilad described how he moved from in-person InsurTechLA events to video and a podcast, because it was easier to have a weekly conversation than spend a month marketing a webinar. He is also working with the InsureTech Connect team on the next Vegas event, and talked about the broader state of the “third, if not fourth wave” of insurtech startups, and how Clubhouse rooms have become an El Dorado of 30- to 60-second startup pitches, though it can be hard to tell which have real investors present.

Advice: Push-Ups and Reaching Out

The lighter ending came with a push-up comparison: Thomas had recently been doing five sets of about 30, and Gilad joked about a friend’s Peloton. Thomas’s summary of the session: fail fast, but dare to fail; explain a new business model clearly to incumbents and be ready to iterate; disruption is cool in your 20s but few in insurance are in their 20s.

Key Takeaways

• Gilad’s post-mortem: Bound was early, stayed pure technology without a license or commission, and asked carriers to invest for a later benefit, a hard sell in 2018.
• “Fail fast” fits startups, not internal projects; the useful part is documenting why companies fail.
• Embedded insurance works when the platform controls or joins distribution, and works for products that don’t need an ongoing relationship; Thomas’s counterpoint is that insurers lose their own touchpoints.
• Blockchain’s real insurance use is smart contracts, which depend on parametric contracts first, and the financial case is lower claims cost and fraud.
• With corporate VCs, read the table: due diligence is reasonable, but the questions should go both ways.
• Disruption without enhancement creates antagonism; the industry’s agent workforce is the people who feel it most.