If you are deciding your insurance policy based on price alone, you are doing it wrong. While price is important, it is not the only factor to consider and a plan incompatible with your needs could cost you even more money down the line. Luckily Anorak Technologies is the smart insurance companion that helps you make the wisest policy decision for you. Analysing your complete profile using machine learning and data science, the company provides value beyond a price comparison engine, combats the existing model of insurance that has moved away from being customer focused and is technologically obsolete.
London TechWatch chatted with CEO and cofounder David Vanek about the state of insurtech and the company’s most recent round of funding.
Who were your investors and how much did you raise?
Our investor is Kamet Ventures, AXA’s €100M funded startup studio. They have invested £4M in a Seed round of funding.
Tell us about your product or service.
We’re building the world’s smartest independent life insurance adviser with a mission to redefine the way millions protect their future and to put people back in control.
We’ve developed a new model for buying life insurance that enables all of us to make the right choice not just the cheapest. A smart independent insurance adviser founded on trust and transparency. To do this, we use data science and machine learning to power a service that gives everyone access to tailored advice about their life and their risks.
Anorak is an easy way to offer personalised, regulated life insurance advice (and route to purchase) to your customers. Anorak has built smart data service using open banking (bank transaction data) to analyse user’s risks and coverage need and transform bank data into protection advice. Anorak’s API can be integrated with any app or website (PFM apps, banks, price comparison site, mortgage broker, challenger banks, etc.).
What inspired you to start the company?
My cofounder and I started working on the idea in the middle of 2016. At the time we were incubated by Kamet, the AXA funded €100M Startup studio. At the beginning, we iterated around how to put people in a position where they feel in control of their insurance decision making, as we felt that Price Comparison websites had failed to do so.
During this incubation period we came up with 3 convictions:
- Life Insurance is broken and stuck in the dark ages.
- People need clear advice in order to take action. From raising awareness to getting covered.
- Through tech and smart data, we can put people in a position where they finally control their financial vulnerability.
We started to build the platform in November 2016. It took us a year to bring it together to a point where we could deliver a smart, automated and regulated advice platform.
How is it different?
Our model and value proposition has currently no equivalent on the market (in the UK or elsewhere). Life insurance is still a sector lagging behind in terms of innovation.
So our biggest competitors are the legacy distribution networks and the status quo from insurance carriers.
Most of the innovation in the life insurance has come from the US so far. A number of Startups (are creating more simple life insurance products (ex: Ladder Life, Fabric, etc.). Also this simplifies the fulfilment part of the journey, this does not address the awareness and engagement gap, helping people figuring out what exactly they need and why. We are complementary.
Anorak is building the digital distribution infrastructure enabling any people to access the most suited products at the right time (whether the product comes from a leading insurance carrier or a Startup).
If I was to make a simple analogy we are the Netflix for Life Insurance (when Netflix was not a producer of content) or we are the Wealthfront for protection (Life insurance, income protection, critical illness).
What market you are targeting and how big is it?
8.5 million breadwinners in the UK don’t have life insurance in place to protect their loved ones. Other key stats to illustrate this are:
- One in four breadwinners in the UK do not have a life insurance in place, potentially leaving their families open to financial problems if they died
- More than 50% of people in the UK only have up to 3 months of income in savings
- 50% of mortgages are not protected, leaving families at risk of losing their home if they are affected by unforeseen events
- 25% of first-time mums fear losing the family home if their partner died
- Increased number of workers joining the gig economy means there is less access to workplace benefits, and more left with no protection.
This is because the sector is stuck in the dark ages. Current distribution channels have failed to make life insurance accessible. People have a complete lack of awareness that life insurance is something available to them. There’s a misconception that it’s expensive or, because you often have to go through a financial advisor, that it’s only for the affluent. That means many don’t explore options at all.
Our target audience are young families. People need life insurance when they start having dependents (partner, children, etc.). There are key life events when people need to consider getting protection: birth of children, taking a mortgage, change in income, etc.
We believe couples or parents with young children want to protect their family, but need help getting it right. We help them by assessing their personal needs, and providing smart and contextual recommendations that give her confidence to make an informed decision.
We have designed our service to make those conversations accessible to the masses.
Typical customer would be a parent aged 30 to 45 years old, with or without a mortgage, and a household income ranging from £40,000 to £85,000.
What’s your business model?
We have a platform model. We take an intermediary commission from the insurance carrier when a client buys the insurance we have recommended them.
How comfortable are people purchasing life insurance online rather that in person?
Current distribution channels have failed to make life insurance accessible. People have a complete lack of awareness that life insurance is something available to them. There’s a misconception that it’s expensive or, because you often have to go through a financial advisor, that it’s only for the affluent. That means many don’t explore options at all.
Somewhere along the way, the life insurance industry lost sight of its customers. Clarity and trust dropped off the menu. If you’ve ever been through the process, you may understand: it’s a universe of confusing products, insurance jargon and painstaking user experience (if we can call it that). Even when you know you should sort out your life insurance, it gets pushed to the bottom of the to-do list, because, well, life takes over. For that reason, it’s often actively sold, not proactively bought.
As a quick reminder, life insurance distribution mainly happens offline through a stalling and ageing base of Independent Financial Advisor (75% of policies are sold through this channel, highly fragmented market). Banks have left the market following massive PPI mis-selling scandal – their market share shrunken to 10% (it use to be c/50%). Banks don’t want to take the risk of advising people anymore.
Online, very little has been done. Price Comparison websites have not managed to crack this market. Getting people to take life insurance requires personalised advice (regulated activity). This is not what a Price Comparison Websites (PCW) do, hence why all PCW outsource Life Insurance to brokers (phone and paper forms ones).
We are convinced that next distribution channel will be online as it is the best way for people to easily engage with their life insurance need. 20 years ago people were buying travels in high street agencies…same disruption will happen with life insurance.
What factors about your business led your investors to write the check?
Kamet bought into digitizing life insurance distribution channels. Using smart data and particularly bank transaction data to make the experience personal and seamless has been a strong argument.
What are the milestones you plan to achieve in the next six months?
Integrate with one distribution partner and continue to enrich our recommendation engine with open-banking.
What advice can you offer companies in London that do not have a fresh injection of capital in the bank?
Keep bootstrapping and improving your product until you see some customer engagement metrics picking up.
Where do you see the company going now over the near term?
UK market is our test market. We plan to roll in other geographies once product market fit is reached.
What is your favorite restaurant in London?
The Quality Chop House in Farringdon. Their meat is amazing and atmosphere us unique.