Seeking to apply data-driven accelerated underwriting to commercial insurance for medical, technology and other highly specialized professionals, Philip Cabaud decided to put his decades of liability insurance experience to work by founding Houston-based NOW Insurance in March 2019.
Tapping fintech veteran Glenn McKay, who later became NOW’s CMO, to join the effort, the pair determined market opportunities lay in more complex forms of coverage than were available at the time. “Most insurtechs were targeting fairly benign underwriting classes, like renters, pet and general liability for gig economy businesses,” Cabaud says. “We wanted to offer solutions that would eventually scale to meet the needs of mid-market companies.”
After raising an initial $1.25 million in seed capital, NOW began building its full-stack, AI-powered insurance technology platform in September 2019. By March 2020 the company launched a line of liability and cyber products while also aggregating health insurance offerings including medical, dental and vision.
A noteworthy feature of NOW’s approach is providing liability and cyber quotes prior to asking for business name and contact information. Instead, the company’s platform presents five initial questions including business type, business address, gross income, desired coverage limit, deductible and past claims experience, with options ranging from no claims in the past five years to more than two with greater than $25,000 incurred. A quote or decline appears within milliseconds.
“At the foundation of our liability and cyber underwriting are risk profiles we built using data science,” explains Cabaud. “So the first decision our platform makes is binary: does the applicant fit one of our profiles or not?”
For applications that fit, NOW’s algorithms go on to analyze data from four external feeds, drawn from proprietary and public databases, as well as other internal information. “This enables our platform to risk-adjust applicants and customize pricing,” says Cabaud.
Applicants who accept a quote supply their business name and other pertinent information, such as when their coverage will commence. Policies are issued immediately after entering a credit card number.
“Our entire quote/bind/issue process takes an average of three minutes,” Cabaud says. “It eliminates hours of email exchanges that are typical for medical professionals seeking liability coverage. Ultimately, we intend to narrow the number of initial questions to one.”
By combining ongoing analytics research, the external data feeds, internal policyholder data and algorithm improvements, NOW monitors rate profiles and pricing schedules monthly. More frequent modifications are expected as the company’s platform and available data sources mature.
NOW also continues gathering customer insights throughout each insured’s coverage year. “This keeps any exposure changes from being a surprise,” says Cabaud. “Plus, we don’t need to ask policyholders fewer questions at renewal to adjust products or pricing because we already have that information, streamlining the experience for them.”
According to Cabaud, another NOW differentiator is the breadth and depth of its platform. “The beauty of being full-stack, rather than API-based, is that we can meet prospective partners wherever they are on the technology spectrum,” says Cabaud. “This includes professional associations, and other types of aggregators, for distribution. And, for underwriting, we have a number of carriers reviewing our technology for plugging in their products.”
Although NOW’s liability policies are currently issued by the insurers Ascot and Canopius, the company plans to begin raising capital to underwrite its own risk in about 18 months. Meanwhile, NOW already received another $1.25 million venture infusion last December, to enhance its technology capabilities, and is preparing for an early summer Series A round, to mount a comprehensive marketing and distribution effort.
“Thus far, we’ve exceeded all of our projections and goals,” Cabaud says. “Even though our public phase, to date, has been a test marketing period, our monthly conversion rates are 50% higher than originally expected and we’ve more than doubled our anticipated annual premiums written. To accommodate, we’ve increased our software engineering and AI teams four-fold.”
In the future, NOW intends to expand beyond medical professionals to other specialties such as real estate agents, insurance agents, attorneys, CPAs, architects, and engineers. Additionally, it plans to develop products that answer the needs of businesses across their life cycle. “We will stay relevant to companies as they grow, like providing employee benefits and retirement plans,” Cabaud says.
From his vantage point, Cabaud also offers advice to the insurance industry, which he characterizes as facing a “Borders Books” moment. “We meet a lot of carriers who think insurtech is only about reducing distribution costs and, regardless, that they can sit back to watch the horse race before investing,” he says.
“But, as studies have shown, our industry is transforming rapidly and moving the profitability needle requires addressing risk assessment and pricing,” Cabaud continues. “So, carriers don’t have time to sit on the sidelines. They need to partner with one, or more, insurtechs and evolve with them to survive.”
