Creative brokers and carriers are helping to bring new technologies to the fore.
RISK REPORT: TECHNOLOGY
For a company
that’s changing the
way people drive,
building the right
was a collaborative
By Michelle Kerr
In 1999, Netflix launched not just a new way to rent movies but a new way to buy — pay one price and swap out titles as often as you please. In the two decades since, companies have applied the same model to high-end handbags and designer clothes, among other things. Clutch is one of a handful of companies that has taken that concept and
kicked it up a notch.
This Atlanta-based startup partners with automakers and dealers to offer
vehicles by subscription as an alternative to buying or leasing. The prospect is
appealing: pay one monthly fee, flip vehicles as often as you like to suit your needs.
Everything is included except gas.
But the model created a gray area as far as insurance was concerned. It’s a
commercial venture, yes, but the vehicles aren’t driven for commercial use, nor are
they being driven by employees. It required a commercial policy that responded
like a personal policy — certainly not an off-the-rack program.
“Subscription is blurring this line between personal and commercial silos.
What are we? Where do we fit?” said John Phelps, the company’s vice president of
strategy and business development.
As other innovators have discovered, issues inevitably arise when you try to fit
the company to the policy rather than the other way around.
“Where traditional carriers try to apply traditional products, it just doesn’t
quite work,” said Iain Boyer, partner and head of product/underwriting
management for Y-Risk, an underwriting management company.
“When you put a square peg in a round hole, sure, you can probably fit it in.
But both the peg and the hole might be damaged a little bit. [With insurance]
there’s a risk that if it doesn’t quite fit, there may be problems down the road.”
BUILDING A LASTING POLICY
Clutch experienced that early on with a traditional commercial fleet policy.
Phelps characterized the policy as “very vanilla.”
“They looked at us like, ‘Well, if you were a plumbing company with X number
of cars and eligible drivers, we would generally do pricing that looks like this.’ ”
It didn’t give them what they needed. It couldn’t accommodate the kind of
features that Clutch wanted for its customers. It was also prohibitively expensive.
To get the coverage right, Clutch needed a broker committed to understanding
their unique model. Phelps was introduced to Jillian Slyfield, managing director
and U.S. sharing economy practice leader, Aon. Slyfield is a 2018 Power Broker®.
Together, Clutch and Aon had to tackle a problem many new products or
business models face: a dearth of data.
“It’s the early days of a new industry and so we didn’t have … 10 years of
experience from 100,000 drivers. But the data we had started to grow and become
more statistically relevant.”
With Slyfield on board, the team leveraged data to look like an approximated
personal risk — something underwriters could wrap their heads around. Slyfield
reached out to Y-Risk, which specializes
in the sharing and on-demand
economy. Y-Risk’s strong relationship
with Hamilton Specialty gave the
project the momentum it needed.
“Y-Risk was ultimately the one
to say, ‘I get it, I like it, let’s do it this
way,’ and Hamilton was the one who
said, ‘I trust Y-Risk to do this.’ All of
the entities came together to create
something that has never existed,”
“I enjoy working with people like
“We can’t just show up to
the table and say ‘Hey, we’re
new and we’re technology
driven, therefore you should
understand us.’ ”
—John Phelps, vice president, strategy and
business development, Clutch
• As technology advances,
traditional insurance models and
policies are often a poor fit.
• Building a program that lasts
means thoroughly planning for
every possible contingency.
• Some carriers are eager to
understand new risk.