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Grr…eat to know you
Bought By Many has scaled rapidly since focussing solely on customer-driven pet insurance, developing its own model of MGA. In the year it broke into the unicorn club, Chief Financial Officer Luisa Barile says it wouldn’t have been possible without its partners
Dogs naturally run in packs and, according to one pet insurer, so should insurance companies.
Bought By Many’s enthusiasm for partnership working is understandable. Originally established as an insurtech offering niche cover in a broad range of circumstances, its business took off With digitisation comes another motivation for players of every breed and size to collaborate, this time by working closely with a new generation of data aggregators and technology providers.
Overcoming the cultural differences between them, though, is no walk in the park. To help address that, insurance firms have been invited to sign the government-backed Fintech Pledge, setting out a voluntary framework in which such partnerships can flourish and, in April, six major players did – including Munich Re Digital Partners.
The Pledge seeks to manage expectation, avoid exploitation and maximise benefits for both sides. And, for Luisa Barile, chief financial officer of Bought By Many, signing it is necessary to allow the insurance industry to modernise.
when it paired up with Munich Re Digital Partners to focus exclusively on developing customer-centric pet insurance.
It’s also a case study in how alpha players and whippersnapper startups can come together to reshape an industry by creating business models that support the UK’s ambition to unleash a new generation of financial services.
There is, of course, already a long history of collaboration in an industry that is predicated on a network of operators that all need each other to bring a product to market: reinsurer, underwriter and broker, with, more recently, specialist managing general agents (MGAs), acting on behalf of one insurer, and price comparison websites (PCWs) added to the mix.
“Collaboration and partnership haven’t always worked well in the last few years; there have been frustrations on both sides,” says Barile. “The Tech Nation Insurtech Board published, thanks to the support of Lloyd’s, a report on the collaboration of incumbents and insurtechs, which analysed the reasons why there have been challenges in really getting the partnerships to work. It looked at what could be done to lower barriers, and that was the background to participation in the Fintech Pledge – there was a strong recognition from both sides that partnership working is the way to go.”
As co-chair of the trade association Insurtech UK – which has more than 100 members across the industry – Barile says there is a strong desire to move forward through collaboration.
“Tech Nation and Insurtech UK are engaging extensively with the Treasury and the Government to create the environment for our members to flourish,” she says. “For that to happen, insurtechs need access to capital. The UK is a fantastic place for investment, though there are areas we must look at to ensure insurance becomes the centre of attention and doesn’t fall into the shadow of fintech investment.
“Secondly, insurtechs need to collaborate, and, since London is an insurance hub, it is a natural place where this collaboration can happen.
“Third comes regulation, and insurance is a highly-regulated industry. But the Government has been highly engaged and is looking at how to simplify processes for companies that operate in a very different way to the traditional insurers.”
Investment target
In terms of investment in insurtechs, the Insurtech Board reported a year-on-year increase of 61 per cent in 2020, to £250million, and a large chunk of that was Bought By Many’s Series C funding round of £78.4million, led by FTV Capital. In June this year, it announced it had raised a further £270million in Series D funding through its holding company Many Group Ltd. One of the largest insurtech investments in Europe, it was led this time by Swedish investor EQT Growth with participation from Munich Re Ventures, among others. It was widely reported to have taken Bought By Many’s valuation to more than $2billion.
Now with a headcount of around 250 staff, the pet insurer aims to build on its international expansion, which has already begun in Sweden and the US, under the ManyPets brand. The US, especially, offers huge potential, since less than three per cent of pets are currently covered by an insurance policy there. But Bought By Many wouldn’t have reached the stature needed to take on such a market without the support of much bigger partners.
Barile says: “We are not a full-stack insurance company, we operate as an MGA, and, especially in the early years, we wouldn’t have been able to provide the policies we did without the support of our capital partners – particularly Munich Re. Not many companies can set up from the start as a fully-independent, full-stack insurtech, because that requires a huge amount of capital. The barriers to entry are really, really high. So, partnerships are important, especially at the beginning – and even more so when your clients are other insurance companies – for insurtechs to flourish and continue to grow.”
In Bought By Many’s case, the firm focussed solely on pet insurance after identifying a need among customers that wasn’t being met by existing players. Its policy administration system is built on APIs: it develops its own policies, giving it the flexibility to respond quickly to the market, launching new products in a matter of days, all of them underwritten by Great Lakes Insurance, a division of Munich Re. It continues to be driven by customer data and feedback, and offers features such as completely paperless online claim capability, video calls with a vet, and a price guarantee that means renewing customers are not charged more than new ones.
“Insurance is probably not the first industry that comes to mind when people think about the digital experience, but it is an industry that needs to transform, and I think everyone realises that the moment is now,” says Barile.
“The pandemic has been an accelerator, both from a customer expectation perspective and the operating point of view of the insurance companies. Partnerships are going to be the answer, yet insurance companies are very complex, and not the easiest organisations to change and adapt – partly because they tend to be very risk-averse. Nevertheless, over the last few years, we have seen an increasing number of partnerships, both B2B and B2C, where insurers have partnered with software providers to automate processes.
“In Bought By Many’s case, we get capacity from Munich Re and run the entire process, from the acquisition of a customer to the support and the administration of the customer, up to and including claims.”
Because MGAs, like Bought By Many, tend to specialise in an insurance niche, the head of the UK’s MGA Association has said they are front of the queue to benefit from technology partnerships, particularly with others that can provide marketleading data capture and analytics.
Barile is hopeful the Fintech Pledge will prove to be a turning point for partnership working, after a period in which some incumbents have attempted to digitise on their own, with, she says, ‘mixed results’.
“There has always been tension around whether insurtechs are competing or collaborating, and the truth is it’s a bit of both. Bought By Many couldn’t have achieved such a level of growth without the support of partners, but we’ve also delivered really good value for our partners, both from an underwriting and investment perspective.There are definitely positives on both sides of the table.
“I think, for us, being one of the most mature insurtechs in the UK, it’s always important to see the sector growing with us. Ultimately, we want to see better outcomes for customers, and we are convinced that insurtechs can deliver that.
“We also want to ensure that standards are high for the whole industry, and that the elements that have allowed us to be successful can be replicated by companies in other sectors.”
