by Emmalyn Shaw
It was the summer of 2016 when co-founders Sean Harper and Lucas Ward took the stage for the first time at the 500 Startups mini conference to give their two-minute pitch and launch their business. At the time, the start-up was named Bright Policy and Sean kicked off the discussion comparing Insuretech to government tech solutions.
The founders placed a couple of key bets out of the gate: 1) they had a vision – they didn’t want to be a technology provider to large insurance companies or try to be a middleman that reduced friction in current processes, 2) they knew they could create a new direct-to-consumer (DTC) insurance company from scratch in such a way that it would make insurance more cost-effective to underwrite, and customers happier in the process, and they made good on their word.
Fast forward to the five-year mark and it’s time to celebrate the company for delivering on their promise to create a revolutionary type of home insurance company. What usually takes a fintech startup 10 years, such as $100 million in annualized premium run rate, they accomplished in half the time. And they did it well:
- Kin’s model boasts strong unit economics, tracking towards an LTV to CAC of 7+
- An impressive 200% year-over-year growth rate
- Customer retention of 92%
What’s more notable is that Kin did it all in a $105B U.S. home insurance market that has historically been dominated by legacy players (e.g., State Farm, Allstate) with antiquated technology, poor user experiences and high-cost structures. Kin’s ability to lead a crowded field of U.S. insurtech startups comes down to three key moves:
1) Commitment to Setting the New Standard for Customer Experience in Home Insurance
The Kin team started from the ground up with customer experience. They thought about every frustration — such as the 100-point questionnaire that asks homeowners what roofing materials they have — and eliminated each one to make a seamless signup, onboarding and claims experience.
Kin controls the entire experience by working directly with customers and eliminating bias, errors in underwriting and conflicts of interest introduced by agents. The team built an efficient claims management process (somewhat foreign in the land of insurance) that delights its customers and ensures the highest level of support. It’s working. Kin has a Net Promoter Score of 85 in a market where the typical home insurer has a 42.
2) Creating a Virtuous Defensible Data Model
Kin actively engages with customers through each step of the journey. At the top of the funnel, it uses a sophisticated marketing data engine to select potential customers according to a propensity to bind and offers customized solutions and optimal pricing. The onboarding data creates a rich repository to draw upon and it lets Kin proactively communicate with customers in advance of potential claim events, driving a superior claims processing experience while sustaining lower losses.
The company began by targeting critical U.S. markets (i.e., Florida, Louisiana and California) where highly volatile climate conditions made underwriting for traditional incumbents increasingly difficult. Kin’s data-centric approach resulted in lower losses and more granular pricing. Coupled with its direct model with the end customer, Kin tailors coverages to market conditions.
With thousands of data points involved in underwriting an individual home, Kin’s data model is robust and defensible. One of the latest examples: risk modeling in Florida lets Kin offer insurance to homeowners at a time where they need it most. Sean’s post here.
3) Embracing The Full-Stack
While Kin started out as a managing general agent (MGA) licensed to broker insurance for major insurers, they quickly learned that, in order to truly offer a differentiated solution, Kin needed to own all aspects of the insurance value chain, optimize economics and offer consumers the best experience. In the summer of 2019, Kin became a full-stack insurance company and a direct issuer in Florida.
Today, Kin’s vision is bold – to leverage their platform and broaden access in challenging climate-impacted geographies, while at the same time, introduce transparency and improve pricing in the home insurance system more broadly.
It’s been an incredible five years capped off with a significant milestone this week. Kin Insurance announced its intent to go public through a merger with Omnichannel Acquisition Corp. We could not be more excited for the founding team as they continue their journey to becoming a direct-to-consumer insurance market leader. Can’t wait to see what the next five years bring!