(Kevin Abramson, President, Cover Whale. Source: Cover Whale.)
InsurTech Age might be said to have begun with dragging insurance into the era of online customer engagement; and while first-rate CX remains a moving target, the most important innovation gains today are likely to be in two other areas: more sophisticated use of data for pricing and underwriting, and collaboration with policyholders to mitigate risk and avoid losses. Cover Whale, a New York-based InsurTech MGA focused on commercial auto, is working on both of these fronts to differentiate itself in the market. Working from a starting point of deep insurance expertise, the company has built the capacity to digest vast amounts of data with the goal of providing accurate rates to better commercial drivers. It has also introduced the dash cam as a critical tool in a collaborative approach to risk management and loss control.
Dan Abrahamsen, CEO, Cover Whale.
Cover Whale is a technology company focused on changing the landscape of insurance and making the world safer, according to the company’s president Kevin Abramson. However, he acknowledges that one of the reasons he joined was that founder Dan Abrahamsen was an insurance person who loved the technology, and not the other way around. Abramson has similar deep roots in the industry, having started his insurance career in underwriting at GenRe, followed by brokering at Willis Re and Tiger Risk.
“We’re different in the way we deliver our product, and how we strip out human bias by utilizing massive amounts of real-time data,” Abramson says. “That’s one of the key value-adds to our distribution partners. Equally important is that once a customer becomes a policyholder, we provide a real-time, 24 hours a day, seven days a week, 365 days a year continuous underwriting loop.”
Cover Whale offers a full suite of commercial auto products including auto liability, auto physical damage, motor truck cargo, truckers GL and non-trucking liability. The company requires all of the drivers covered by its liability policies to use dual-facing AI dash cams.
Heavy Influence on Coaching Program
“It’s a heavy influence on our coaching program which is an important part of how we’re able to drive substantial benefits and reductions in loss ratio,” Abramson explains. “This helps to identify who are the riskier drivers and the riskier behaviors—and then hopefully coach those behaviors before the loss event even takes place.”
Dash cams can provide evidence of fault in an accident, whether that’s on the part of the driver it insures or some other motorist. It thus makes intuitive sense that drivers being watched will be on their best behavior. However, Abramson stresses the voluntary nature—or self-selection factor as he calls it—in acceptance of dash cams. Neither the employer nor the driver wants an accident; the former wants to provide a safe working environment and prevent losses, and the latter wants to be safe and retain status as an employee in good standing. Nevertheless, Abrasion agrees that the monitoring has a postitive influence on conduct. The question remains, however, as to how that is quantified.
Kevin Abramson, President, Cover Whale.
Given that Cover Whale does not require dash cam use for auto physical damage policies, that line of business serves as a kind of control for measuring the effects of dash cams on driver performance. “We’ve got significant amounts of data that demonstrates that insureds of Cover Whale that are installing the dash cameras have a much better outcome when it comes to reduction of frequency as well as severity of loss,” Abramson says.
How much better? Cover Whale’s most recent study of its internal data showed a reduction of 7 loss ratio points for the insureds who use the dash cam. “We’ve got two cohorts of data and it’s very clear: you install the camera and your loss ratio will be better on frequency, severity and on a projected ultimate loss ratio basis.”
Abramson characterizes the findings as a validation of a general thesis that visibility into driving behavior creates an opportunity to mitigate risk and reduce loss. In Cover Whale’s application of that hypothesis, it’s a matter of a creating a continuous underwriting loop to identify risky behaviors and eliminate them before they cause loss.
Monitoring and coaching are important because even conscientious drivers may not know whether their driving behavior is risky or not, Abramson notes. “Just because you haven’t gotten a speeding ticket doesn’t mean you don’t speed,” he observes. “Of course, telematics has evolved considerably to gain a more nuanced understanding of risk. If you’re driving on I-80 in Iowa at 11:00 pm in August, it might not be the end of the world if you’re doing 80 mph. On the other hand, if you’re tailgating someone and going 35 mph trying to get on the George Washington Bridge, that could be a problem.”
It’s a matter of how to get real time visibility and to identify the characteristics of motion and driving behavior, Abramson elaborates. “Your driving behavior will be different than mine, so how do we really get that insight into what makes you either riskier or less risky than the next driver?”
The overall picture requires the combination of telematics and loss data, Abrams stresses. “Separately telematics data is sort of helpful; separately insurance loss data is sort of helpful, but when you put those together, that’s really the Holy Grail: to be able to kind of really have some very clear visibility, variable identification of what really is driving loss—and how you price for that up-front as well as eliminate it on the tail,” he explains.
A Line in the Sand
Abramson says that industry observers were initially skeptical about a dash cam requirement, believing that drivers would resist using them. “Many in the early days said, ‘There’s no way you can get an owner operator to install a camera; it’s just not possible,” he recalls. “But we drew a line in the sand and we’re happy we did so. I think the industry is now coming up to where we are and following suit.”
Cover Whale sees itself as delivering a different kind of value proposition in a different way. “It’s not just to monitor drivers; it’s to help them to be better at their jobs, lower their cost of insurance, and eliminate loss and keep their trucks on the road,” Abramson says. “Oftentimes insurers in certain segments have used blunt force, so to speak, trying to jam things down policyholders’ throats. That’s never been our approach; we’ve always sought to add value throughout the process.”
As for drivers for whom drive cams would be a deal-breaker, Abrams reiterates the self-selection and collaborative element in risk that is part of Cover Whale’s overall proposition. “There’s a group of insureds that just will never want to use dash cams, that won’t abide by that requirement and simply don’t believe in it. And that’s OK. They’re not for us, and we’re not going to chase them.”
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