At our first Facts + Snacks lunchtime event with SA’s leading entrepreneurs, we chatted to Sumarie Greybe, Co-founder of Naked Insurance about how COVID-19 has impacted the local insurance space, her advice for disrupting traditional industries and what’s next in AI-powered InsurTech innovation.
Transcript of the discussion
Hello, everyone. It feels really weird to be talking to a bunch of people I can’t see, but that’s the nature of such webinars. It’s really cool to have everyone here. So welcome to our first Facts and Snacks event. I was going to ask everyone what they’re having for lunch? I was going to have a wrap, but then I thought if I say “this is a wrap”, it might confuse people because they think this is the end of the webinar, so I didn’t do that.
And on that high roll, my name is Jomiro. I am the host of the OfferZen podcast and I work in the Content team at OfferZen. I’m really happy to be chatting to Sumarie today.
Just a brief intro – over the next few weeks for our Facts and Snacks event series we’ll be chatting to some of South Africa’s leading entrepreneurs every Thursday between 12h00 and 12h30. This is our inaugural episode, or inaugural event, which is quite cool and I’m also going to announce the next speaker at the end of this webinar, so stick around for that. But for now, welcome Sumarie as our very first guest. It is such a pleasure to have you.
Well, I’m feeling even more special man, I didn’t know I was your guinea pig. Whatever you don’t do right this time you’ll do better next time.
Absolutely. Cool. So just some housekeeping. We’re gonna start off with some rapid-fire questions to get a little insight into Sumarie and who she is, and then follow that up with some deep-dive questions. Then we will hand it over to the audience to add some of their questions in.
In terms of tech specs, you can submit your questions through the Q&A functionality, so there should be a questions tab that you can just open and pop your stuff in there. With the chat feature, feel free to chime in and share what you have got for lunch at the moment, so jump in there and share some of your lunch stories.
There’s also a swag competition, so one lucky person will get some offers and swag just for joining and we’ll also announce that at the end, so get involved in the chats and questions.
And finally, we also want to hear about your experience of the event, so please make sure to fill in the feedback form at the end. You’ll get it in your inbox after the event.
As I said, Sumarie is our first guest. She is the Co-founder of Naked Insurance. If you’re in South Africa, you may have heard about them already. She’s spent many years in and I quote “inside the belly of the corporate beast”, and she’s gone through the challenges of building a start-up from scratch with ambitions to change the industry that she’s in, and she’s also served as an actuarial advisor to many of South Africa’s largest insurers.
It’s very exciting to be chatting with you today. As a start, we’ll jump straight into some of the rapid-fire questions. So, the first is, what is one thing you wish more customers knew about insurance?
I think that’s an interesting one. I mean, insurance isn’t the most riveting topic, and I think a lot of the younger generation these days think they don’t need insurance. Why do you need insurance? I think one of the things I really wish more people knew is how important it is to have liability cover. Now there are two elements to it.
It’s not just around having liability cover on your car, so even if you drive like an old skedonk you could still crash into a Porsche or something like that. If it’s your fault, they can make you pay for that for very many years to come. You don’t want to be in that position.
The same if your dog bites someone. If you buy contents cover it’s not just about buying contents cover, but it’s having that liability protection as well. I think as the South African society gets more litigious, it is going to get more and more important to make sure you have at least liability insurance in place.
Absolutely. I think it’s one of those things that you only really come to appreciate once you’ve had to go through and claim, so rather than have that first experience, rather get up early.
And what’s one piece of advice that you’d give to entrepreneurs hoping to disrupt or enter a traditional industry?
I think it’s a lot harder to enter a big, existing industry like the insurance industry. I always think it’s important to know exactly what it is that you want to improve or disrupt, so to speak because these industries have been around for hundreds of years, so they must be doing some things right.
So, not to be too arrogant about it, but actually, to be 100% clear, when we started Naked, we were very clear in terms of the fact that we believed the current industry, although we have one of the best industries in the world, I still believe that it is not serving the needs of the modern digital customer well enough so that is what we wanted to focus on.
The other thing we think is that there’s a conflict of interest, where every Rand they pay you in claims is a Rand less profit that they make. That is something that we wanted to improve. So, that’s what I normally tell people – make sure it’s something you are passionate about when you find that thing you want to improve.
Diving a little bit more into you as an individual, what is one of the most worthwhile investments you’ve ever made? Could be money, time, energy.
Yeah, anyone who knows me will probably be able to answer this question. I think as you go through your career, the thing that has helped me the most is never to forget to build those personal relationships and the connections as you go through your career. Whenever you want to do something amazing, you need an amazing group of people around you and they’re not just all of a sudden gonna miraculously appear, if you haven’t been working on building those contacts and connections as you go. Yeah.
Super, super, super interesting. And then if you could only work for two hours per week on your business, what would you do or focus on?
I don’t even know how I could only work that little as I’m passionate about it. My husband believes it’s like my hobby, everything is my work and my hobby because it just takes so much of my time, but if I only had that small amount of time, I would definitely focus it on making sure that I get feedback from my helpdesk team in terms of what are the latest and greatest things that they think we need to add to the offering and help to refine the roadmap of our product bowl.
We still have a lot of things that we are planning on doing and how we decide what to do next. That is really, really important – what our customers are telling us – so I would spend those two hours, making sure that I never lose sight of that.
Super interesting. I’m zooming out again, back to the industry perspective. If you had to name one thing, what in your view is most broken about the traditional insurance model?
Yeah, I think I kind of touched on this as well. I spent a very large number of years actually working with pretty much most of the insurers in the industry including advising them on how to get ready for the new modern digital customer. Now, what became abundantly clear to myself and my other Co-founders is that the current systems that they’ve got are really old and they were designed to always have a person between the customer and the system.
To have the customer transact directly on that system is really, really difficult. It’s not impossible, but it would be extremely costly. As soon as you do that omnichannel, they have the call centres, the customer wants to do that as well. We decided the only way to actually do something about that is to build everything from scratch.
Right from the beginning, know that you want your customer to self-service. So that’s one of the things, and the other thing is what I also touched on is why do so many people not like their insurer, especially short-term insurance? It’s very much a grudge purchase and people don’t like the insurance company. They do it because they have to and a large reason for that was this whole way in which the business model operates.
How does an insurer make money? They make their money with the difference between what they get in and what they pay-out in claims. Insurance is a really weird product if you think about it. You don’t know what you’re buying. It’s not like picking up a cell phone, feeling it, ooh I like it. You don’t know what you’re buying until the day you actually claim. On that day, when your product for the first time shows you what it’s all about, you are really in direct conflict with your insurer because every Rand that they pay you is a Rand that they take off their bottom line. That is one of the things we believe is making insurance less effective than it can actually be.
That is such a cool segue into the deep dive questions coming up now. So, this is really diving a bit more into Naked Insurance and what they are all about. One of the things I wanted to chat about in this Fact series was that Naked was one of the first to allow customers to downgrade and upgrade their cover using the app. You have this very customer-centric focus while still trying to create a sustainable business and, before the pandemic that was super important, but moving through the pandemic, it’s been critical to your core business function. Could you just tell me a bit about what else Naked does to help customers while still building a sustainable business?
I think that leads very naturally from what I just said so the first question. I remember when I went through this and told my husband, I don’t want to work in insurance anymore, everyone hates it, and I got to a point where I didn’t even tell people that I worked in insurance. He asked me if people even need insurance.
I told him, of course, insurance is needed, it just needs a bit of work. Our main aim at Naked is to build insurance that people actually like. I know that sounds like a very low bar, but to get to a point where people actually like their insurer is actually quite a challenge, and everything that we do always puts what will improve the customer journey and the customer experience first.
The approach that we used is very similar to the recommendations of a lean startup. We started with a minimum viable product, which in insurance is a little bit tougher because it’s still a financial services industry, but we didn’t build everything from scratch. We actually got a lot of input from our customers right throughout to decide what we should build and what their biggest pain points were.
Before we started, one of the things that a lot of people complain about is that it takes so long to get an insurance quote. You have to spend 40 minutes to get one quote, and if you do get that quote, people never stop phoning you. They will phone you for weeks after that to still try and sell you that particular policy, and once you’ve gone through that process, you have to drive your car somewhere so that they can see it and inspect it. If you have bought a new car and you want to take it off the dealership floor, you have to spend another half an hour on the phone to try and get your cover confirmation for your finance provider.
We started off focusing very much on that, and so with us, you can get a binding car quote, not a quick quote, a real quote, within 90 seconds, and you can be covered within three minutes after you select your start date, and you’re done.
You also do your own pre-inspection when and where you want to because you do it with your phone and, I think one of the things our customers really liked about this buying process is they can do it whenever they want, and they don’t have to speak to anyone. I’ve got guys buying car insurance at one o’clock in the morning, I don’t know who buys car insurance at that time – but it’s just that convenience factor that they get.
If you look at things like how we collect our payments, we only work with credit or debit cards. And the reason we do that is because you can instantly transact on the system. So, if you’ve bought and you think, I forgot to put car hire on or something like that, you can get onto the app add your car hire, I hit your card for the pro-rata premium for the month and your car hire is immediately active. You don’t have to speak to anyone, so most of the focus that we’ve had was actually that every part of the journey is to make it something that people actually find fun and enjoyable, rather than a grudge.
What I love in hindsight, asking the question seemed a bit weird, but just hearing how you talk about your customer focus and sustainable business seem to go hand in hand. If you take that time to understand what the pain points of the customer are, that is building a more sustainable business.
It’s crazy to see the difference that tech makes in that because it enables so much as you said, it’s easy to get insurance in three minutes, where previously, the insurance industry hasn’t been so tech-forward. They haven’t front-loaded insurance with technology and stuff that people can use on their phones so that if they want, they can do it at 1 in the morning.
That’s really interesting to hear, and I guess, it makes sense if you actually take that time to speak to people, like, “Hey, what’s your biggest pain point?” Then build that in first, and don’t assume what people want to have. That’s really, really interesting and you summed that up nicely.
Maybe just two extra small things about that – in my experience, everyone talks about being customer-centric and thinking about the customer, but I’ve found too many people worry too much about what their competitors are doing, rather than worrying about what the customer wants. For me, that’s very, very important not to get distracted by what your competitors are doing. If you give the customer what they want, it doesn’t matter what the competitors are doing. It’s irrelevant.
Why is it so important to you?
Over the years, in all these board meetings that I have attended, I listened to all senior people in insurance speak very little about what the customer wants. It was always, “have you seen what Santam is doing?” or “did you see OUTsurance just launched this?” and I think it totally distracts you from your goal. I think in general, the focus should be more on what the customer wants and the majority of discussions within the company should be around that, not what competitors are doing, which I have seen in my experience is normally what happens.
Right. Also, central to the customer experience is artificial intelligence and machine learning. I was wondering if you could just tell me a bit more about why those things solved the problem that you’re trying to solve at Naked Insurance?
I think in the insurance space, data has always been an integral part historically right from the beginning. And I mean, that’s why you’ve always had actuaries heavily involved, building pricing models, etc., etc. Up until now, most of those models have been built using more traditional techniques, agile and parameterised models but now where we are the amount of data that you can collect on a modern system, there’s so much more, and you can use so many more sophisticated techniques that I think it’s just a huge opportunity to actually integrate that into your system.
When we developed our system, we actually developed it with AI and machine learning in mind, right from the beginning, and how we are applying it is to improve every portion of the customer journey. So for example, in terms of claims, we gather a large amount of information because when you have a claim with us, you’ve gone onto the app, you’ve taken a selfie, you tell us what happened, etc.
If we pick up sufficient markers that there’s nothing to be worried about, then we can just fast track that claim and you can get it settled very quickly, and it really improves the customer experience of the claim.
It also saves money, because you don’t have an unnecessary process that you take the customer through which then, in the end, flows through to better premiums for the customer. All of these things coherently make sense and give the customer a much better price product and also a much better experience when they are dealing with us. As we gather more and more information, and as we can calibrate our self -learning models better, it will just continue improving that customer experience and the customer journey, whether it’s underwriting, whether it’s in the pre-inspection, whether it’s claims, whatever it might be.
Just before we jump into the audience Q&A, could you briefly give an idea – if data gives you an opportunity with machine learning, what are some of those opportunities for you as a business going forward and what are some of the things you see yourself being able to do?
The most important thing is that it needs to do is delight the customer. Whatever we do, always, before we build anything, before we implement something, we ask, is it gonna make our lives easier or is it that the customer won’t even know that it is doing anything? If yes, then that normally goes to the back of the backlog. It won’t go to the front, but if it’s going to improve the customer experience, it goes right up there.
As I said, there’s so much more that we can do in terms of how we will continue pushing to fast track as many claims as we can, yeah, so that you can actually get settled and your claim can be approved within seconds of reporting it.
As we get more and more data, this is one of our key focus areas in terms of your “clap” car, for example, there’s so much more that we still planning to do in the claims process and if you’ve had an accident on your vehicle, for example, your car doesn’t have to be assessed by an assessor but basically, based on the photographs that you put through on the app, we can actually assess the damage and book your panel beater.
These are all those kinds of things that we are currently very much focused on to improve the experience that the customer has, especially at that point when they are actually getting what they paid for and why they bought the policy in the first place.
Yeah, as you said, with the cost efficiencies of both time and money, you can actually loop that back to make the experience better and cheaper for customers.
Exactly. That is definitely one of our big objectives to actually be able to bring insurance to a bigger portion of the market because of the fact that we don’t have as people heavy back end.
Yeah, cool. So, audience, please drop your questions in the Questions tab on this thing and we’ll jump straight into tackling some of them. Robin wants to know, Sumarie – if you’d be so kind, what is next for Naked and how do you innovate in the insurance industry apart from the great tech that you’ve deployed?
If you ask in terms of what are we looking at next in terms of product? At the moment, one of our big focuses is our API, our insurance API. We believe that customer journeys are changing the way that people are buying cars, devices, cars, furniture, whatever it is, it is changing, and you want to be there at the right moment of truth to offer them insurance in an extremely convenient way. One of the big things we are looking at the moment is partnerships as well as perfecting our APIs.
Super. Then, Ben is keen to hear if Naked is profitable yet and if so, how long did it take to get there?
Anyone who knows insurance will know that after we launched to the public in April of 2018, insurers normally take quite a while to become cashflow positive because of the fact that you have quite a large amount of new business strain. So no, we’re not there yet, but we are planning to be there soon.
Super. Then Lisa asked, what process or system do you have in place to prevent a customer from logging a fraudulent claim?
Well, that is quite a difficult question to answer because there are so many aspects to it.
What we can do, and there are different ways in which you can handle your claims, you can either go through a very cumbersome process at the claim stage, or you can make sure that you already have most of the information that you need to make sure that, for example, the item actually exists, that it’s not damaged already, what the value of the thing is before.
That’s why we place so much emphasis on our pre-inspection process. We make sure that after you’ve bought a car and you send us your car video, for example, or if you insure your device – that you take a photo for us like this, so that we have your IMEI number, all those kinds of things, so we know that item exists because that’s one of the things that are potential with fraudulent claims.
We make use of machine learning and AI during our claims selfie process to try and pick up certain markers as to how the person is telling their version of the events.
It’s so interesting to hear the different challenges that pop up with more of a tech-forward app. That’s really interesting. Then Chris wants to know, how has your actuarial approach changed significantly for younger and more tech-savvy customers?
I’m not 100% sure – are you talking about the pricing approach or an actuarial approach?
I don’t know if Chris wants to drop that in the questions, but I think let’s take it from a pricing approach.
Yeah, normally, if you do traditional underwriting, if you phone into a call centre, they will ask you about 40 to 45 questions that they base their rates on. Anyone who’s gone through our quote process will know that we only ask you about eight questions, and then we collect a large amount of data from external databases. In addition to capturing 500 plus additional data points online, before you actually get your quote, I know what speed you’re going through it, I know if you’re clicking back, I know if you are changing some of your answers, I know where you came from, and all those additional pieces of information are being fed into our engine that then determines your price as well.
Right. And Chris has just added also from a risk approach, from a risk point of view.
Our actuarial guys are involved from a risk point of view, where your risk determines your premium, so I guess that answers exactly the same question. The riskier you are, the higher premium you’ll pay, and we use all those pieces of information in our actuarial models to determine how risky you are.
Right. Cool. Stephen wants to know, you’re doing a lot to make a pretty broken thing better. How can we, as the tech community, help you on your mission?
We are a technology company that happened to be selling insurance – that’s how I always positioned us. The bulk of our team consists of developers and guys who do AI and machine learning. We have a very small and different component to our team, so if the tech community wants to help, I’m always looking for really good developers. If you want to work in a really modern stack. Also, tell other people about us – the biggest portion of our sales still come from word of mouth. Telling your friends to try us out will definitely help us. Or send your CV – if it’s really good – to me.
And just on a final question before we run out of time, Steele wants to know if you think that COVID has accelerated the movement to digitisation and on-demand insurance?
Absolutely. That is abundantly clear to me in terms of how I’ve seen some of our competitors trying to also react to it. To be honest, our CoverPause feature was put in originally to demonstrate (it was a proof point to show) that you can transact directly on the system for new customers, but I think it’s definitely gonna speed up the change in the industry in terms of using technology.
Fantastic. That’s so interesting. Thanks to Sumarie and the audience for their questions. I really like the way Ben put it – I think he tweeted the other day, but thanks for showing us how to get Naked.
And in terms of our swag winner, we’ll be in touch with you to hand over your swag hamper and ship it in the coming days. Swag is on its way.
Our next speaker, same time, same place – well not the same place – technically the same place but different link – will be Alexandria Procter, who is the founder and CEO of DigsConnect, a student housing app. They’ve been doing some pretty cool stuff, and Alexandria is also quite a character and definitely a fun person to chat to.
When the event ends, we will redirect you to that event page in case you would like to register but thank you Sumarie it was so cool meeting you.
And you can send some of your swag my way as well. I have a T-shirt that I have been wearing for over a year.
Sounds good. Well, thanks to everyone.
Thanks for the opportunity. Really, it was awesome.
Cool chat. See everyone next week, I guess.