For many American families, homes are their single biggest financial asset and a primary way to save and build wealth. Therefore, home insurance is often a fundamental financial service — and for most homeowners with mortgages its mandated by lenders — representing a $100 billion annual premium industry in the US.
While many sectors in financial services have been completely reinvented by technology, insurance in general, and home insurance in particular, by and large has not taken advantage of today’s advancements in order to modernize its operations or streamline consumer onboarding.
Over 90 percent of policies are still sold through agents or brokers. Signing up is often a complex experience, requiring customers to fill out 100-point questionnaires, often asking them for information they don’t usually know the answer to, such as “what percent of your home’s foundation is poured concrete, concrete block, or pier?”
Underwriting is still based on historical actuarial tables and does not include new, alternative data sources, like satellite imagery that shows the condition of your house’s roof or personalized information from Internet of Things (IoT) devices, such as home sensors that can be used to alert owners if the garage door was left open or that your stove is on. And what’s worse, insurance companies often raise rates when customers make claims or stop insuring areas altogether when they are no longer considered profitable.
Kin is trying to change this paradigm to make home insurance more reliable and friendlier to consumers. The company has created an online insurance platform that pulls from multiple data sources –such as Multiple Listing Services (MLS) data to pre-fill age of the home, type of construction, etc. — and dramatically decreases time spent on sign-up process to less than three questions that are easy for customers to answer, and that materially drive the policy price.
Over time, the company plans to leverage additional data sources like water sensors to decrease losses — water leaks cause over 25 percent of home damages in the US — and change consumers’ behavior, such as reminding customers to move cars into the garage ahead of hail storms. The combination of digital distribution, big data in underwriting, and human-centered design could fundamentally change the insurance cost structure and significantly lower prices for customers.
Globally, and particularly in emerging markets, home insurance is a nearly nonexistent product category. A few of the barriers include high cost of distribution and lack of data availability about homes, limiting ability to underwrite it. We believe lessons learned from companies like Kin will be highly applicable over time in emerging markets and will inspire replication and scale globally.
We are excited to partner with Kin and its two founders Sean Harper and Lucas Ward. Sean is a previous FinTech entrepreneur, having sold his last business, Fee Fighters, to Groupon. Similarly, Lucas founded Rippleshot, an Artificial Intelligence-based platform to help financial services organizations detect data breaches.
Currently, Kin is available for consumers in Florida and will arrive shortly in Texas, two major home insurance markets in the country. More states to come soon.