Building a Fast Growth, Cutting-Edge Insurance Brokerage: Karn Saroya, CEO of Cover (Part 7)

Sramana Mitra: Can you explain to me how this works? Is this a completely online process? Are people making full decisions online or at some point, somebody on the phone is talking to the customers?

Karn Saroya: The average basket size at Cover is $1,700. That can be a meaningful part of somebody’s after-tax income. We do allow our customer to transact without engagement with an agent but rarely does that happen. At that price point, the customer wants to go back and forth and ask questions.

A large part of that happens over in-app messaging or SMS. Our customers two-factor authenticate into our apps and make an insurance request. We programmatically market them and we market them to re-engage them. At the end of the day, messaging is king. It’s great from our perspective because messaging is much lighter-weight than hopping on the phone.

That allows us to sell products at the pace our customers want to engage with us. It keeps a record and a history active for a much longer period of time than you would find in traditional insurance companies. You would look at the cross-section of customers that buy from us. I would say north of 70% are engaging us with questions or engaging us to modify their coverage.

Sramana Mitra: Your thesis is that these 150,000 customers and the future customers that you will be acquiring will be buying more from you. There will be a lot more upselling and cross-selling going on.

Karn Saroya: A component is the ability to cross-sell. The other component of it is we have a very good view of the type of volume that we can drive. We raised a Series B to be able to help build out the infrastructure necessary to support far greater numbers from the top of the funnel.

Sramana Mitra: Is your customer acquisition mostly paid?

Karn Saroya: It’s a composite. I would say we probably pay to acquire 40%.

Sramana Mitra: The rest is referrals?

Karn Saroya: Referrals or organic.

Sramana Mitra: What is the customer acquisition for this category?

Karn Saroya: We are the best in class with respect to CAC in insurance. We spend about three cents for every dollar of lifetime premium that we generate.

Sramana Mitra: Interesting. What else is interesting in your story?

Karn Saroya: We, very quickly, transitioned from not knowing anything about insurance to building out a full-fledged national insurance entity. That, in itself, is very interesting. We’ve been able to bring relatively new pieces of technology to assist us. A central piece of Cover is the computer vision that we’ve employed.

Using Tensorflow and AR Kit, we identify and catalog properties and make sure that customers are adequately insured. There are all sorts of unique pieces of technology that have helped us be sure that we’re able to underwrite better or make the claims experience much smoother for our customers. We’re expecting to grow pretty significantly in both Toronto and San Francisco.

Sramana Mitra: Awesome. Thank you for your time.

This segment is part 7 in the series : Building a Fast Growth, Cutting-Edge Insurance Brokerage: Karn Saroya, CEO of Cover
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