Bought by Many’s personalized insurance products are changing the way we manage risk

Steven Mendel is the CEO and co-founder of Bought by Many.

Why is buying insurance so hard?

There has been a lot of innovation/ change in the way in which consumers buy and interact with most retailers/ distributors in most industries, just this change has not arrived in the insurance world – so we are all forced to deal with intermediaries to buy insurance through poorly designed web offerings. So rather than saying buying insurance is hard, I prefer to say that it hasn’t moved on, in the same way that most other industries have.

Also, everyone dreads having to renew/ take out an insurance policy, not knowing who to buy from, how much cover to buy, whether they are being ripped off, etc.

How does Bought by Many change that? How does it work?

Steven Mendel, Bought by Many
Steven Mendel, Bought by Many

Consumers are used to transacting on their mobile phones, and indeed 70% of Bought by Many members join us on a mobile device – this is the medium consumers are now demanding.

We enable our members to interact with others looking for the same type of insurance to discuss this with them. We work with each group to help individuals get a better deal on their insurance.

We write a lot about the complexities around insurance decision-making and encourage our members to share their insights as well, making the whole experience much more social and less about the individual, thereby giving our members much more comfort that they are making a good decision.

What’s the genesis story — where did you and your co-founder come up with the idea?

Was there a personal reason? Both Guy and I have been frustrated with the financial services industry that takes advantage of individuals in a way that the industry doesn’t take advantage of other corporates – evidence is widespread: group life assurance is much cheaper than individual life assurance — retail share classes in unit trusts can be 3-5 times the price of institutional share classes for the same fund.

My personal example was in private medical insurance where the price for me was four times as a self-payer compared to the same offering from the same insurer when part of a corporate scheme.

How does arranging insurance buyers in groups change the dynamics of the underwriting/brokerage relationship? At what benefit to your users?

We cut the traditional face-2-face broker out of the equation – which has been costing consumers 30-35% per annum and instead use that saving to improve terms for our members.

You recently bought an insurance underwriter in the pet insurance industry. Why?

We are keen to show consumers and the industry what a great mobile-designed customer experience can be like in the insurance industry and found that the only way to achieve this was by being able to own the whole customer journey – hence the acquisition. Watch this space for the launch of this new experience soon….

What’s next for users of BBM — product enhancements/services?

So the roll out of the new customer experience for a small number of our groups is definitely next. We’ll then be expanding this to a number of other groups. We recently launched our first private medical insurance groups, which you’ll appreciate from my personal experience above, was important to me. We’ll be adding more medical insurance groups in the coming months, so if you don’t find what you are looking for now, let us know!

[interview] Paying for the insurance we actually need via a peer-to-peer model

friendsurance - paying for insurance we need
Friendsurance's Tim Kunde
friendsurance’s Tim Kunde

Tradestreaming had the opportunity to chat about the future of insurance with Tim Kunde. He’s co-founder and managing director of Berlin-based friendsurance, a company taking aim at disrupting the insurance industry. It’s doing so by changing the way we purchase and subsequently, behave with insurance coverage.

Tim graduated with a Masters in International Management. He started his career with The Boston Consulting Group, advising various companies on consumer goods and insurance matters. He is responsible for marketing, business development, sales, IT, product, customer support and CRM.


What was wrong with the way traditional insurance worked? Why do you think it was expensive and opaque?

In 2010, the founders of Friendsurance realized that many people own insurance that they don’t or only rarely use. However, insurers don’t reward caution and fair play – even though this means less work and lower costs for them.

We don’t think this is fair.

This is why we have developed a disruptive peer-to-peer insurance concept, which rewards small groups of users with a cash-back bonus at the end of each year if they remain claimless: the claims-free bonus, which has been selected as shortlisted project at Word Summit Award 2015.

How does this all work?

Policy owners with the same insurance type form small groups. A part of their premiums is paid into a cashback pool. If no claims are submitted, the members of the group get some of their money back at the end of the year. The claims-free bonus is available for new insurances and can also be added to existing home contents, private liability and legal expenses insurances very easily – without any change in coverage, premium or provider.

You provide bonuses if groups go claims-free during a period. How does that work? Do policy holders really change their behavior in this model? What’s the role of insurance companies in your model? Do they benefit as well?

how friendsurance works
how friendsurance works

The claims-free bonus can be added to existing insurance contracts: A deductible is integrated into the contract, or rather, the existing deductible is increased to the maximum. The increased deductible comes along with a lower premium. The difference between the old contract without deductible and the new contract with deductible flows into the cash back pool.

The premium reduction allows the cash back in case of no claims. In case of a claim, the policy owner does not have to pay for the deductible himself because it is covered by the pool. Therefore, the policy owner profits from the low premiums of insurance contracts with deductible without having to take the risk of high expenses in case of claims.

As the claims-free bonus rewards careful and fair behavior, we record a claim frequency below market average. For insurance companies, improved behavior means reduced cost of claims and also reduced processing cost for small claims.

Additionally, the claims-free bonus helps to increase customer satisfaction as well as customer loyalty. Currently we are cooperating with approximately 70 domestic insurance partners.

You’re active in Germany — will friendsurance model extend internationally? Do you have expansion plans?

Friendsurance has always been planned as international project. We are currently checking expansion possibilities in other markets.

It feels like the insurance industry is ripe for disruption but fewer firms are focused there. Why do you think that is? Why did you target this industry when you created friendsurance?

That there are few startups may be due to the fact that the insurance industry is still very regulated and lacks trust, making it hard to convince consumers of new ideas. You need long vision and patience. But we can see a change: Recently more and more startups are entering the insurance market.

Can you give readers a taste for what else you have planned with the product/service in the future?

We plan to offer additional insurance categories and expand to other markets.


[x_share title=”Share this Post” facebook=”true” twitter=”true” linkedin=”true” email=”true”]