Late last year, the team at Metromile, a San Francisco-based provider of usage-based insurance, met to discuss the company’s evolving identity. In September, Metromile had acquired Mosaic Insurance, which officially turned it from an MGA into a full-fledged insurance carrier, licensed in all 50 states. A long journey had reached its apex.

“By definition -- by the state law -- we are an insurance company now,” says Dan Preston, the company’s CEO, in his office in downtown San Francisco. Metromile opened the office in late 2015, and in many ways it reflects the startup culture from which the company grew: it’s a mostly open floor plan, with soft lighting, slogans and art on the walls, clusters of employees working in communal areas, and a few glass-walled offices and conference rooms dotting the perimeter. (Most offices are frosted with a silhouette of an automotive figure, like Henry Ford; Preston came in one day to find the figure scraped and replaced with himself thanks to a design-department prank.)

Metromile's San Francisco headquarters
Metromile's San Francisco headquarters Metromile

At a time when insurance companies are becoming ever more familiar with startups through the insurtech phenomenon, Metromile is one of its trailblazers – and still considers itself one in some ways. Launched in 2011, the company initially flirted with simply becoming a vendor of usage-based products for incumbent insurance companies, like many insurtechs today. But eventually, it decided to embark on the journey to becoming a carrier itself, which culminated with the Mosaic acquisition.

Now that it's licensed in all 50 states, Metromile is looking to get approved to sell in more areas. Currently, its product -- pure pay-per-mile insurance -- is available in seven states. The only data that it collects through its on-board device and applies to its rate is the amount of miles driven. Customers are underwritten based on traditional rating factors and given a base rate and a per-mile rate.

“I think the product is going to work in a lot of other markets in new ways, but we’re really excited to enter into states like New York, Florida and Texas,” Preston says. “I think the overall trend is toward driving less, especially in cities. The active use of Uber and other ride-sharing services, like car-sharing, better public transit, more bike lanes, is just meaning the car is getting used less and being used more like on the weekends or for errands but not for the commute. “

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"The only way to get this product off the ground, we felt, was to start from scratch and actually build up the insurance company from the very beginning” - Dan Preston, Metromile

However, while the company is planning to continue its metered model, Preston sees some opportunity in collecting other data and offering additional value to customers. For example, the device can be configured to transmit location and cross-referenced with legal-parking maps. For urban drivers who need to stay abreast of alternate-side parking, Metromile can alert them if they’re in danger of getting a ticket. The company also offers the ability to read diagnostic codes from the car’s computer. All these additional services are opt-in.

“What’s cool about that from a customer perspective is not only are you saving money with us but you’re also getting more value,” Preston explains. “You may be saving $500 a year with our insurance productions but you’re also probably saving like another $300 or $400 on parking tickets and maybe a few hundred dollars on getting your car repaired correctly.”

Even if Metromile is betting on people driving less – not necessarily the best-case scenario for an insurance company – it’s also uniquely positioned to operate in the changing world of transportation, especially as it relates to ride-sharing.

The always-connected nature of telematics-powered insurance is on full display in Metromile’s product for Uber drivers. Like several companies, Metromile offers a personal insurance product tailored for Uber that covers them as they are exposed to several different risks over the course of personal driving, driving while waiting for a passenger, and driving with a passenger. Metromile’s technology integrates with the Uber app to identify the precise moment when a driver stops driving for personal reasons and becomes a commercial vehicle. Uber covers the period when a passenger is in the car; but supplemental insurance is needed while drivers are waiting for a hail.

“As soon as you click the button to drop somebody off, we got a time stamp that basically told us what that was. And so now whenever someone calls with a claim, we know which period that happened in,” Preston explains.

But there are even further expansions of the transportation-sharing economy coming in the near future for which Preston imagines Metromile solving unique problems. For example, rather than driving for Uber in their spare time, some consumers are sharing their actual vehicles for periods of time. Services like Turo provide a platform for on-demand rentals, and Metromile can pick up the insurance.

“This is an interesting area for us because it’s like a perfect use case,” Preston says. “If you put your car on the street and you rent it out to people, I guarantee you’re not using that car very often. So why should you be paying a full rate for insurance? You should pay for what you actually use.”

For now, though, Preston says that the focus is on the geographic expansion, but also retaining the vitality of a startup in the company’s new position.

“It’s hard to get to where we are now -- we started as an MGA because going toward full insurance company is super expensive,” Preston says. “You have to build the infrastructure internally and you have to hire a team. So all of that requires a maturity that takes years to establish. Even going on the path of being an MGA is still pretty rare in the industry.”

What drove Metromile’s strategy, though, was the realization that new thinking required a new company. Its principals didn’t want to put their potential clients in an awkward position.

“One of the challenges was that an incumbent trying to take this product to market would cannibalize their own business in such a way that it would be exceptionally disruptive,” Preston says. “And so the only way to get this product off the ground, we felt, was to start from scratch and actually build up the insurance company from the very beginning.”

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