Lifeguard (www.lifeguard.insure), an API authentication product. BOUND (www.boundapi.com), a distribution play using APIs to deliver insurance quotes where people are. Is Los Angeles big enough for the two companies? Probably. Greater LA Metro has 13 million people. Will there be bloodshed? No, of course not, we’re talking about InsurTech.
Often thought of for beaches, Hollywood, and glamour, LA isn’t the first place that comes to mind for insurance technology. Even though I am a native Angeleno, I think of Connecticut (Hartford), Des Moines, Ohio (Columbus?), then Boston, and NY. The carriers tend to be based in the Northeast and Midwest, and there are a few other scattered around. I always thought of CA as more of a broker-influenced market, although maybe it’s the shorter history? Is this why some interesting plays are coming out of the LA neighborhood?
Joany looked to revolutionize healthcare distribution. MATIC makes it super easy to get homeowners’ policies for real estate and mortgage companies. Both are great LA insurance start-ups, but they are a part of the ecosystem that had been previously built. Even Hugo is revolutionizing on-demand car insurance by making it time-based, but it’s still car insurance. They’re just changing the communication pattern of when the policy is utilized. (Side rant: If you have on-demand insurance, remember to turn it off! Otherwise, it’s just high rate insurance.)
Lifeguard and Bound are making API-based plays that are on the cutting edge of insurance and InsurTech, and it’s fun to see them happening locally.
Full disclosure: I am an advisor to Lifeguard. We are building out a widget that will help local insurance brokers and FinTech companies operate as smoothly as Mint.com does for personal finance. We want intelligent ease of use when it comes to gathering customer information, making a broker / agent connection, using their current info, and running it across comparable options based on the customer’s actual data. None of this would be possible without APIs. APIs are the portals between databases that help websites like Kayak run. They have been all the rage internally in insurance, but Lifeguard and BOUND are starting the charge to take them to the consumer.
BOUND is being led by a friend too, but my tie to the company is a lot looser. BOUND is using APIs to deliver insurance products where users are. For instance, rather than trying to get you from the bass fishing boat blog to the insurance website, they’d bring the applicable insurance (boat) policy to you. This makes a ton of sense to me. Acquiring users and eyeballs is always incredibly expensive. The acquisition of a simple homeowner’s policy is typically around $100. It pays off over time, but it’s always hard to get people to a site. Why not sell them on the one they’re already on? APIs and simple policies that can bind online make a ton of sense to have on travel blogs (travel insurance), tech YouTube channels (small device coverage), dog breed (pet insurance) websites, and more.
Lifeguard is an Insurance API aggregator; similar to what Plaid,Yodelee, Xgnite, and Quovo do for Fintech. Currently no such aggregation exists in the insurance market. On the other hand, Bound is an API platform for the carriers themselves, and is a way for carriers to more easily get into the insurtech market. I could very easily see a future where the Bound APIs are aggregated by Lifeguard to downstream providers (Bound providing premium APIs and connectivity, and Lifeguard bringing the eyeballs) so really these two services are complementary to each other.
I would be remiss if I didn’t mention HazardHub (hazardhub.com) as a cool LA (OC!) InsurTech play. They use publicly available data as well as modeling (wildfire, flood, wind, hail, etc.) for an incredibly intuitive rating system for man-made and non-man-made risks, giving insurers a very easy report. I wish I had their tools when I was quoting homeowners’ policies all the time; it’d take a 30-minute data dig down to two minutes. They also have a “pay if you bind” policy when people are checking out their company; one more hint of the laid-back CA style there. There are also companies like reThought Insurance (rethought.insure) that have team members all over the country and regularly get to San Francisco for meetings.
Larger carriers have started setting up insurtech funds and incubators, but are they going to disrupt themselves? If leadership comes from within, will it be able to change the game? Again, I am biased. This article is mainly about my local “teams,” but I do think there is something to be said about creating outside of traditional ecosystems. It’s a lot harder to take flight without the traditional support, but I think the wins have a greater chance to have outsized returns too.
LA does not have as thriving of an insurtech ecosystem as compared to our friends on the East coast, or even North in the Bay Area, and I think oddly enough that may be an advantage. In my opinion, if there is a system, if there is a structure, consciously or subconsciously, you’re going to try and be beholden to the structure to climb it. I tried to run an InsurTech MeetUp in OC and it morphed into Broker Brews. Gilad Shai runs a great InsurTech MeetUp in Santa Monica, but that’s just one group in a huge metro area. In my opinion, not having a ton of resources to lean on creates a very tight-knit, independent, and creative community, and a chance to work outside of the traditional Insurance / InsurTech Orthodoxy.
There is not one way to build an InsurTech start-up. I am proud of our local API guys, Lifeguard and BOUND. I do think it is interesting how they’re working outside of what I would consider the traditional ecosystem. A lot of the insurtech tools that I see are streamlined replicas or models of what has existed before, and there’s nothing wrong with that. I am excited to be around two projects that are enhancing front-line underwriting and the way insurance in distributed in the greater digital ecosystem.
In my opinion, to innovate, you must look wide, and there are still plenty of changes that have enhanced other ecosystems that we can bring to insurance to help make it greater too. We are still going to need human wisdom and touch to help keep insurance a phenomenal glue of society, but it’s exciting to see tools that help connect the need and the product more fluidly.
BOUND is currently in alpha working with carriers and the progressive InsurTech MGAs; Gilad Shai can be reached at firstname.lastname@example.org with any questions. Lifeguard is in beta, working with test brokerages to tune the quoting and agent consumer connection process; they can be reached at email@example.com for any follow-up questions. I’d be glad to answer questions too.