Basil Enan, founder and chairman, CoverHound, a San Francisco-based online insurance comparison platform, on the need to bring price transparency and consistency to shopping for insurance telematics.
Enan formed CoverHound in 2010 on the belief that insurance telematics should be open to price comparison as are other parts of the insurance industry, and the firm has grown steadily since then. Before founding CoverHound, he was vice president of business development at InsWeb, where he developed and managed partnerships with dozens of the country’s top car insurance carriers.
He spoke to TU’s Jan Stojaspal about comparison shopping for usage-based insurance (UBI) at a time of limited portability of UBI data.
You’ve singled out brokers and agents as crucial to the growth of UBI. Why?
There is clearly a shift in the market towards UBI, and we have to understand where brokers and agents fit into this model – as trusted advisers and intermediaries. We have thousands of policy holders all over the country asking us questions every day about Snapshot. What does it do? Will my rate go up? What about privacy? What about all the other carriers’ offerings?
How is this role changing?
The value proposition of CoverHound, as well as other independent agencies, is price transparency and consistency. When you think about UBI, though, how do we do that? How do we drive price transparency when the biggest question in our consumers’ minds is: Are they going get a zero percent discount or a 30% discount? How do you help that consumer make a smart decision?
Exactly, how can you help a consumer make a smart decision when he has to actually drive around with a tracking device for a while before a price is set?
Given that we have so many policy holders around the country and that, slowly but surely, more and more of our customers are enrolling in UBI programs, we can bring data to the floor and say, ‘We cannot tell you exactly what discount you are going to get, but people like you save on average X amount of dollars.’
It almost sounds like you are trying to go back to pricing proxies like gender, age or location.
To a certain extent, the more things change, the more they stay the same.
I guess once data portability is part of the deal, it will be a lot easier. How are you going to cope for the time being?
It’s very difficult to tell right now. If you were to give me a time frame of five, ten years, we’re absolutely moving in that direction, where somebody would come to CoverHound and say, ‘Here’s my information.’ Then we could say, ‘You don’t need to have that 30-day or six-month trial period, this is the discount.’
In the next few years, we have to use proxies for that and say we can give you some transparency, but not total transparency. We really try to be the advisor, and, if anything, the role of an intermediary is even more crucial in this new world of UBI because it’s so much more complex.
UBI is adding a whole new level of complexity and opacity to grades, so the value of having a conversation with one of CoverHound’s insurance advisors is multiplied.
Still, it sounds as though you’ve gotten a little ahead of yourself with the absence of data portability.
We’re trying to stay ahead of [the game] as much as it is possible, although that’s kind of difficult. To a certain extent, we’re being pushed into it by buyers and consumers who want to know more about if they should buy Snapshot or they should buy this other program.
We’re trying to build awareness for these products because we think it’s good for a lot of our policy holders, and they are pushing us to say we need more data to make a confident decision. We have to be careful from a consumer experience perspective as an industry.
It’s a very negative experience, in my mind, to drive for 30 days and then receive a zero percent discount. What we’d like to do is better understand the factors that went into those decisions, so we can steer people in the right direction.
Jan Stojaspal is the executive editor of Telematics Update.
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