LOOP Brings Real Tech to Auto Insurance
LOOP, a insurtech company that is launching a new concept of AI-driven auto insurance polices, was able to land $21M in Series A funding last week. The group of investors varied from venture capital groups to media companies to celebrities like hip-hop star Nas. The company claims to do auto insurance differently by changing the way they design premiums and qualify discounts.
“We get rid of all the stuff that doesn’t matter in pricing [customers],” said John Henry, Co-CEO and Co-founder of LOOP, when explaining how the ways traditional insurance companies price their customer’s rates. This is where LOOP separates themselves from the pack. Things like credit scores, education, and income are not considered when pricing out their customer’s rates according to Henry, rather it’s how and where they are driving that determines the cost of insurance.
As an [Managing General Agent] MGA, LOOP underwrites its own risk and chooses the services they partner with to operate their claims. “This is not some digital brokerage or a quoting engine,” said Henry. “When you are insured by LOOP, it’s our actual product you’re insured by. We don’t sell any other products, we don’t sell leads, we are in the business of insuring people.”
LOOP will provide information to its customers that enables them to improve their driving and decrease their future rates. They will send customers tips on where and when to drive, and how to drive if they are driving erratically via a phone-based app. Their initial rate is based on population-level statistics from the respective area, and their personalized rate is a standard 6-month premium, meaning that the monthly rate won’t change month-to-month based upon how customers drive at certain times.
“We have millennials encumbered with student loan debt, we have immigrant populations with consumer loans, baby boomers selling their homes and losing their home and auto bundles, and the realities of the post-pandemic era means that we need more flexible and contemporary insurance solutions, and we are proud to be emerging as that,” Henry said.
“We are the third step of insurtech,” he said, when asked how LOOP compares to others in the AI-based insurance sphere. “We’ve fundamentally built a novel insurance product from the ground up. Rather than sprinkle a digital layer on top of a legacy product, we completely rearchitected it.”
Henry boasted about how his company is the only one writing policies without traditional demographics in mind. “Today, I’m really proud to say that LOOP is the only insurance product that is a standard auto product that doesn’t have any of those demographic factors, it’s completely technology driven,” Henry said.
According to Henry, LOOP’s status as a public-benefit corporation, or B-Corp, will give his company the moral obligation it needs to fulfill its mission of being a fair, non-biased, and non-discriminatory auto insurance provider. The B-Corp status creates a “double bottom line” as Henry put it, creating a legal obligation for the company to hold the values in its mission statement for its customers, as well as the traditional corporate obligation to what’s best for its shareholders.
“From a business perspective, it’s kind of a risky thing,” Henry stressed when talking about the obligation to their customers as part of the public-benefit agreement. “The public can sue us if they ever feel like we are straying away from our mission.”
Customers are saving an average of 35% on their auto insurance premiums when quoted by LOOP, according to Henry. The company name directly correlates with the envisioned series of events that a LOOP customer will experience while holding a policy. A LOOP customer signs up, gets a good rate, utilizes the information given by LOOP, their driving is tracked and the data is analyzed, and the rate drops upon renewal after the policy expires. By repeating this, the customer “loops” around a cycle of better information leading to better rates.
“This is a mass market product. There is mass consumer demand. Our waitlist has grown to over 30,000 people across all fifty states, with different age groups and backgrounds,” Henry said. “I think people are excited to have an insurance company they can love again.”Last modified: October 6, 2021
Adam Zaki was a Reporter at deBanked.