155 karma · joined October 9, 2016
This is funny, I actually do say this. I co-founded Goodcover, we provide renters insurance and USAA is an inspiration. But we still have a really hard time beating them! I'm also a USAA Member (car insurance) and also can't say enough good things about them.
On a jobs page, thanks for your interest! We have something up on AngelList right now: https://angel.co/company/goodcover-co/jobs
I think (correct me if I'm wrong) you're asking about comparison sites - in those cases the law requires them to establish an agency relationship. We're open to it and think we'll compete well, but much like Southwest it would be hard to give better prices anywhere else than our own site.
However the environment those companies started in is gone. Insurers went in and out of business all the time in the 1920s and 30s, it's the survivors who are left (I think it really is amazing how many of the top insurers started in the 20s and 30s!). It's good there's more regulation and safety for insureds.
It does mean though we have to work in the current framework to get things done - the companies of the 1920s can't be started the same way in the 2020s.
On voting rights - we haven't worked out how to legally do so, but we're experimenting with ideas over how to give the community more control. Would love to brainstorm ideas! Feel free to reach out, chris @ goodcover com
How much is hard to say. An old mentor of mine always said, "There's a price for every risk, but sometimes it's as much as the limit of insurance." That's a bit geeky but basically, as wildfire becomes more common, the models will adjust to accommodate. Community efforts to make their communities more resilient will go a long way though, like mentioned above.
The original business model we were looking for is known as a "Reciprocal Exchange" (RE) - a type of co-op or mutual (like you mention) where the members own the claims capital, but the business is managed by a company called an "Attorney in Fact", which is usually a for profit (Farmers is an example). That would be us - we’d make money providing an amazing service to as many people as possible.
Unfortunately, we found out from the CA regulators very early on that starting a Reciprocal Exchange today was basically a non-starter. The capital requirements I mention in "Quirk 2" mean we can't just raise money from somewhere and kick-start the RE. We would need to get future-subscribers to put up the cash, and the amount we were talking there was just not possible. Farmers started in 1928 with a loan for their backend capital, something that is illegal today. So we were stuck - how do we start a new co-op insurer given this requirement?
The above story is the process of us figuring that out. Goodcover is an MGA that manages insurance on behalf of its Members, like an Attorney in Fact does for an RE. However since we can't have an actual RE until we have sufficient number of Members, we rent the capital backstop from conventional carriers. They pay us a fee and return the "underwriting profit" to us (that part is even more complicated and can talk later if you want), which we then return to Members, like Farmers should, but doesn’t anymore.
So, long answer - but yes, we are a for profit company. We operate the insurance like a cooperative, but like many other coops we do that for a for-profit fee. But, given the regulatory environment today we don't really look like your 1920s co-op!
To your question on self insurance - it's a matter of risk and statistics. No insurance is less money up front than coverage, but you retain the risk which may or may not cost a lot. We give a quote everywhere, and we think it accurately represents the risk Goodcover is covering for you, but I concede it is more expensive than it used to be.
Something else to know - CA has a non-renewal moratorium in force for wildfire areas, if anyone is being cancelled or non-renewed in your area please check this out: http://www.insurance.ca.gov/0400-news/0100-press-releases/20...
To your question: Premium: Our model has granular rating for high risk areas (fire is the biggest issue there). And part of that is the defensibility of the specific property for sure. But unfortunately the biggest factors there are all location specific - distance to water, slope, ease of access, distance to burnable area, etc, which not much can be done about. This is why although it is hard, communities investing in collective defense has the biggest impact on insurance prices.
On claims: We have reinsurance, so no need to fear us being blown out capital-wise. To actually get the claims paid and work done we (like most others) have contracts with emergency-overflow claims administration teams, so that a force is ready at peak times.
More info: We have to roll out state by state, meaning we need to get approved in a state before we can do business there. That can be a pretty tedious process. So although we are working on it, we don't really have a good estimate for when we'll be available in each one. Since our model is a bit... different... some state regulators may take more convincing. California is very consumer friendly, so we got along because our model helps people. But other states don't share that point of view.
In the renters insurance market our ALE numbers are pretty normal (or better!), so wanted to get a sense of what you think is needed here.
PS you've got me thinking about how I would explain insurance to a five year old! My son is 3 and Dan's is 4 so we'll get practicing.