Cover Whale’s Siry: Insurtech no longer a start-up after reaching scale and profitability

Cover Whale’s COO Darryl Siry has said that having reached operating profitability and scale, the trucking insurtech is arguably no longer a start-up, while also saying that its specialist expertise in the tough class of business acts as its “moat”.

Speaking with The Insurer TV on the sidelines of last week’s Program Manager Conference and Awards, Siry discussed where Cover Whale is in its trajectory, its unique approach, and its recent successful Series A fundraise.

The executive joined Cover Whale in November after previously working at SiriusPoint, ProSight, and Tesla, among other roles.

What impressed him about Cover Whale and led him to join the company was that it has grown to $225mn in written premiums in a short period of time and has reached operating profitability with $68mn in revenue and $42mn in net revenue.

“It's a really sizable MGA [and] there aren't a lot of MGAs out there that have that scale and have that revenue,” he explained.

The Insurer broke the news last month that Cover Whale had raised $27.5mn led by late-stage investment firm Morgan Stanley Expansion Capital.

Simplicity

Siry echoed Cover Whale founder Dan Abramsen, describing Cover Whale’s business in simple terms – the firm sells trucking insurance “over the internet” and is largely focused on smaller fleet sizes, mainly targeting owner-operators.

Two hallmarks of Cover Whale’s strategy are the ability to get a quote and policy within 10 minutes, along with leveraging technology that Siry said goes beyond just using cameras and telematics.

“It's more than that. It's the technology, but it's also the data that we use on an ongoing basis over the life of the policy, which we call ‘continuous underwriting’ – so we are continuously checking key data points about our clients,” he explained.

“Not just the telematics feeds, but things like safer vehicle counts, driver counts, making sure that the risk that we've insured is still the same risk over the course of the policy and working with our policyholders to correct that if it's changed,” he said.

Siry said that Cover Whale also works with drivers to improve their driving.

“If we're seeing that the driving is not good – if the risk is materially worse because of how they're driving – we cancel,” he explained.

“And so, as a result of that, we're able to not only have really good distribution on the platform, but also maintain industry-leading loss ratios in this tough class of business,” Siry argued.

“Anytime it’s easy, it's hard to make money on it”

With commercial auto a notoriously difficult class to underwrite, the insurtech executive said that the challenges in the segment acts as its “moat”.

“I think in insurance, anytime it’s easy, it's hard to make money on it. So, in specialty insurance, typically, it's because you have a unique approach to a certain niche market that allows you to write what other people consider a very tough market, and you write it profitably,” he commented.

Siry hailed Cover Whale’s “product-market fit” in a tough class of business, while touting its active portfolio management to maintain loss ratio profitability.

“You can't just can't take your eye off the ball. Because in trucking, things can go bad quickly,” he commented.

“But what we've learned is we can pull various levers to really work frequency down when we need to and do a little bit of the trading off of top-line opportunity and bottom-line profitability, not just for us, but for our carrier partners,” he continued.

Active portfolio management

Siry said that Cover Whale’s strategy goes well beyond just leveraging telematics and cameras, and includes heavy data analysis.

“It's the entire operational approach to the data we receive, how we process that data, how we act on that data with our policyholders and our agents, to either manage it to be better, or get off that risk,” he explained.

“It's a very interesting dynamic. It's not the kind of thing [where] you're going to see, at 90 percent renewal rates, yet the business itself, the industry itself is very dynamic,” he continued.

Siry commented on the inherent volatility in the smaller owner-operator segment in which Cover Whale operates, with a lot of business turnover with new ventures being formed, others going out of business, along with mergers and acquisitions.

“And so overall, that dynamism actually is an opportunity for managing the portfolio of risk,” he explained, as he acknowledged that trucking is an inherently challenging business where high fuel and insurance costs pressure the viability of underlying insureds’ economic models.

“I do think it's a very challenging business. It's a very entrepreneurial business. We actually enable a lot of new ventures to get insurance where they can't get insurance elsewhere,” he said, arguing that as such, Cover Whale provides significant value.

Looking to improve customer service

One area Cover Whale is working to improve is its level of service, which Siry said the insurtech acknowledged could be better.

“We have some work to do, actually, which I see as a great opportunity to improve on the things we're not doing well,” he commented.

“As I think about the next year or two, I want to actually start delivering great service to our policyholders and agents. I'll be totally honest, we are not known for giving great service to our policyholders and agents,” he continued.

“But I see that as an opportunity. If we can improve on key service issues for our agents, they're going to do more business with us,” Siry explained.

“The next phase of real growth for us is going to be solving some of the service issues for the policyholders and agents, and just seeing our business grow with the existing distribution and existing products,” he added.

Siry said that Cover Whale also plans to rebuild its platform better suited to scaling the business and improving service.

“We should be focused on the agency experience and all of the services and the middleware that makes our business unique,” he said, setting a November deadline for the new platform’s launch.

“It's a very ambitious timeframe, but I think it's really important because I do think a ton of the service issues we have – that's the root cause,” he explained.

Siry also said that Cover Whale is also undertaking an operational transformation involving all of its back-office functions including billing collections. commissions, customer service, and its contact centre.

Watch the full interview with Cover Whale’s Darryl Siry to hear more about: