Edmund Dilger of PolicyCastle explores the digital insurance ecosystem in an interview with Insurance Post

Edmund Dilger, Founder and CEO of PolicyCastle is interviewed by Rosie Quigley of Insurance Post, to discuss; data, funding, Brexit, connected devices and insurance relationships, digital insurance allowing customers to mitigate their own risks and much more, read the full interview here:

Digital household insurance broker PolicyCastle is on the hunt for funding as it looks towards partnering with high street brokers and large insurers. Since it was launched in 2016, PolicyCastle has already raised £150,000 from a Seed Enterprise Investment Scheme. With recent years showing a trend of incumbents and insurtechs joining forces, Edmund Dilger, CEO of PolicyCastle, says the market is likely to see insurtechs partnering with each other to strengthen their businesses; but with Brexit uncertainty looming over the insurance industry, there is a risk insurtech funding will be squeezed, making it harder for start-ups to raise significant capital. Dilger spoke to Post.

PolicyCastle is looking for £1m in funding from investors. It joins a number of start-ups in its pursuit of cash flow – is the insurtech market competitive when it comes to funding?

It’s good that there are other people out there looking for funding; it makes the whole market aware of what’s happening in insurtech. There isn’t just one source of funding available and all insurtechs have their own unique offering. We have our own technology platform geared towards using data better, we are focused on home insurance and assisting brokers and insurers with digital processing. We have our own white-labelled technology that is something which sets us apart from other insurtechs in the space. We are competing against all the other start-ups out there which are looking for funding. Right now, we’re looking at seed funding and angel funding, people have responded pretty well but I wouldn’t say it’s easy. It takes up a lot of time but we’re getting great responses from people.
Are you concerned Brexit will impact funding – will investors be tightening their purse strings?

I’ve never heard anyone say they aren’t going to invest because of Brexit, but because there is uncertainty, investors may be treading more cautiously, and funds may shrink as a consequence. A lot of venture capital raising new funds get their money from the European Investment Bank, which will no longer offers funds after Brexit. This will make it very difficult for VCs to raise money and will have an impact on investment in different areas of the market.

PolicyCastle has recently partnered with smart home security system Cocoon. How do you see the dynamic developing between connected devices and insurance?

Smart devices are very important to insurers and the dynamic is currently working. There are advantages to these devices but there is the question of cyber risks. What we want to do is have a database which shows that these devices effect losses in particular ways. Our partnership with Cocoon and nCube is about getting more data on how people live their lives in their homes and figuring out how we can make products more dynamic and price things better. When I talk to insurers, they understand this is going to be good, but they want to see more adoption of these devices, so the data is more reliable. Our way of building up a strong database and promoting the use of smart devices is by offering a discount to our customers who use a device in their homes. It will take time to build a database, which underwriters will need to make an executive decision on and whether or not they can write policies which factor in smart devices. The insurance industry has experienced a trend of insurers partnering with insurtechs.

Do you think we will see insurtechs partnering with each other to increase their offering?

We’ve had two years of insurtechs building things and they will definitely start to seek out partnerships with other start-ups as well as incumbents. We are currently in talks with a start-up which is asking us to distribute their home insurance product. Start-ups, ultimately want to see money at the end of any partnership and if they have a proof of concept with a major insurer, that will happen. But insurtechs who partner with similar companies who are digitally focused in other areas, such as claims, will find their business proposition is made stronger. But start-ups are still reliant on their insurer partners’ providing them with capacity and that won’t change any time soon.

Do you think digital insurance is playing a significant part in helping customers identify and mitigate their own risks?

I don’t think digital insurance has reached the point where it has totally changed everything, but it is picking up and it could make a significant impact. Where insurance could be improved, is in providing an ongoing service and really what we are about is using data to cater to the individual. If you know where a customer lives and what sort of building their home is, you can send out warnings to them regarding crime and extreme weather incidents. There are plenty of brokers out there that do this sort of thing, but it could be better and there needs to be more transparency over what data we use and how we use it. Insurance will never be something which people interact with on a regular basis, but it can be made much more personal and attractive. The smarter we are with customer data, the more we can protect them from risk and in turn this will mean loss ratio goes down.

How will the General Data Protection Regulation impact how able digital insurers are to clamp down on and use Big Data?

GDPR is about giving the customer control over their data and that will not lead to any sort of clampdown on data. The Financial Conduct Authority is looking at Big Data and focusing on how the customer can be best informed about how their data is used. If there’s a factor the customer can change, it’s fair that they are able to change it. But GDPR is an opportunity for start-ups, there is going to be a period where customers are told what data companies hold and they can pass over whole data sets to new companies. Start-ups will be able to use this to their advantage in a way that large insurers, with massive databases, won’t be.

You’ve previously mentioned the possibility of partnering with high-street brokers in relation to SME clients, how will this work?

One of our distribution channels is servicing the home insurance books of SME focused high-street brokers and they are using our technology to service their business. We have had a lot of interest and signed up Medical Risk Services quite recently and are in talks with others. Often, brokers want to do schemes in SME and premiums might be quite large; the customer may also want other services on the back of their current policy. What we do is we look after the customer, by using their data, and provide them with the products they need. We share our commission with them and they’re then free to work on higher margin business with us looking after their customers. This appears to be of interest to a lot of brokers.

You’ve started with home insurance, what other areas are you looking into?

We’re focusing on home insurance at the moment but will provide other insurance products on the platform. We’ll also be adding non-insurance products on the platform; so if a customer wants to hire a handy man to repair their home, they can do that. For us, it’s about reaching out to customers and giving them an all-round service which they won’t be able to find via a price comparison website. Price comparison websites are great if you’re a low risk customer and not so great if you’re high risk; they generate price competition. But there are customers who need a different type of service which isn’t available on an aggregator.

You’ve partnered with UK General – are there any other partnerships in the pipeline?

UK General have been fantastic and we are in the process of testing its Prestige product on our platform. We’ve been talking to Plum and Pen a lot and various mortgage brokers and estate agents that are looking to tie in home insurance products as part of their services.

Are you focusing on using new technology to drive your business?

We wouldn’t say it is one particular thing, it’s about technology which is designed for how people live now rather than legacy technology. We are keen to use smart phone technology and provide customers with services via those. We aren’t about AI or chat bots specifically. However, we would like to include an inventory feature on our platform and we will be looking to use the IBM Watson chat bot feature. But we would only do that once we have a clear use case.

To learn more about PolicyCastle, what we do and our partnerships click here.

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