Almost 1-in-4 (23%) Canadians do not consider themselves knowledgeable about life insurance despite the fact that it is a key avenue for Canadian families to protect themselves should the unthinkable happen.
To better educate and protect Canadians, PolicyMe was founded by insurance industry veterans Andrew Ostro and Laura McKay, along with Jeff McKay, as a digital-first insurance company that offers transparent, accessible, and comprehensive life insurance.
After its launch in 2018, PolicyMe has since created its own life insurance product that, through its proprietary tech, is faster and more affordable than buying through traditional insurers. The company has now sold over $5 billion in insurance coverage and recently closed on an $18 million CAD Series A funding round. Earlier this month, PolicyMe rolled out its Critical Illness Insurance product, the company’s first product outside of life insurance.
Fintech.ca sat down with PolicyMe’s CEO Andrew Ostro to learn more about PolicyMe’s growth, trends in the insurance industry, and the future of insurtech.
How has the life insurance industry changed since PolicyMe was founded in 2018?
AO: Over the past four years, the biggest change in the industry has been how much insurance technology (insurtech) has matured. We initially saw that there was hesitation from traditional insurers to partner with PolicyMe as they needed greater validation and proof points for our model.
Since then, many now recognize the value that insurtech can play in unlocking innovation, efficiencies, and ultimately, in pushing the industry forward. The mindset has certainly shifted from ‘the industry is how it is, prove that it needs to change’ to ‘this is how it needs to be.’
More importantly, from a consumer perspective, this means that Canadians have greater availability of options when it comes to deciding how they access insurance products. When PolicyMe was founded in 2018, there was really only one way that Canadians could get insurance – speaking to an insurance broker in person. The overnight shift to digital-first during the pandemic accelerated the need for alternative options and we have since helped demonstrate that a more digital, convenient and accessible way to buy insurance is possible.
Through technology and rethinking the traditional buying process for life insurance, we have proven that it is possible to deliver high-quality insurance coverage while removing many of the in-person interactions that we once thought were mandatory such as having to sign physical paper documents or even blood tests for many customers.
PolicyMe came out with its own life insurance product last year, how has this changed how the company has been able to service Canadians?
AO: The launch of PolicyMe Term Life Insurance was a game changer as we can now ensure Canadians receive the same high standard of care and transparency from start to finish. Under our initial broker model of selling other insurers’ products on their behalf, while we could improve the experience around product education and recommendation transparency, it was out of our control once it came to the buying process.
By launching our own product, we are now able to ensure that the entire experience for customers, from application to approval to purchase to even minute details like making changes, is to our standard. Beyond the experience, we are also able to provide more affordable pricing to Canadians by making the cost of underwriting more efficient – typically a major cost component of traditional insurers – and then passing those savings back to the customer.
What has been the response from traditional insurers and other companies in the space? Any notable partnerships?
AO: When we started the process of building our own products, we were very selective about who to partner with in order to bring our model to market. Much of our decision came down to the alignment of core values as we sought partners who had a wealth of underwriting experience and were mutually dedicated to meeting the evolving needs of Canadians through the development of a product from scratch.
The first companies we partnered with – and who we continue to partner closely with today – were Canadian Premier Life Insurance Company as our carrier partner and RGA as our reinsurance partner. It was quite exciting how we were able to cross-collaborate and involve all three parties in the design of the PolicyMe Term Life Insurance product.
Now that we are more proven out, there has been an influx of carriers approaching our team for partnerships after seeing our progress and strong year-over-year performance. As we continue to scale, we’ve expanded our mindset beyond being just a single carrier partner company, and are now exploring how we can support other insurers in meeting their goals.
While our B2C strategy will continue to be the foundation of PolicyMe, we are also actively developing the B2B2C applications for what we’ve built. Looking ahead, we’re excited to expand how we build partnerships, proving to other carriers that beyond being a great brand with a strong product line, PolicyMe is a life insurance conversion engine with a high-value offering.
Recently, PolicyMe announced a $18M Series A close. Can you share a bit more about expansion of the company’s B2B2C distribution, particularly, what that means for both Canadians and the wider insurance industry?
AO: With our B2B2C expansion, we’re looking to partner with other companies beyond insurance carriers. We are considering how we can collaborate with adjacent brands who service high potential customers – Canadians who need life insurance – to co-develop new and tailored buying experiences that introduce their customers to PolicyMe and funnel them to the best life insurance in Canada.
Two years ago, these partnerships were very tricky as we weren’t selling our own product, but now the value we provide is quite clear. PolicyMe can provide our partners’ customers with a great experience, and in addition, offer them the best quality products and the lowest possible price. This has greatly expanded who we are able to partner with and we’re investing in further building that funnel. PolicyMe is not a one-size-fits-all company, and as we continue to seek new partners, we are committed to delivering the best value for their customers and vice versa.
As part of the Series A announcement, PolicyMe shared that a new critical illness product will be rolled out. What does this mean for Canadians and why is it important right now?
AO: PolicyMe’s new critical illness insurance product has now launched, and shares a consistent framework to our term life insurance product – offering low cost and a high value by removing all the noise and operational inefficiencies from the traditional model. Over the past two years, PolicyMe customers have often asked what else we can provide them because they love their experience with us, and so, we’re excited to expand into critical illness insurance and offer Canadian families another way to access high-quality financial protection.
Although critical illness insurance is a product that most Canadian families should consider, it can be extremely complicated. The general idea is that if you’re diagnosed with a significant medical condition that has financial implications (such as lost income or unforeseen expenses), critical illness insurance provides a lump sum payment to help support the policyholder and their family through that difficult time.
However, then the question becomes, “What counts as a difficult time?” or “What does it mean to be diagnosed with a critical condition?” All critical illness insurance policies will detail the different critical illnesses and nuanced conditions which are covered by the insurer, and this is often where we see a wide difference in the number of covered conditions between insurers.
We are incredibly proud of the PolicyMe Critical Illness Insurance product because we’ve designed a policy that not only covers what all our competitors cover, but goes above and beyond to cover as many serious medical conditions as we possibly could, resulting in a product that covers the most number of critical illness conditions in Canada.
This means there’s a much lower probability that someone with our product doesn’t get financial resources if diagnosed with a critical illness, and more importantly, a lower probability that someone thinks they’re insured for something when they really aren’t. It happens quite often that people are sold a product without fully understanding what’s covered, so our goal is to educate and create a comprehensive product to ensure that Canadians are well protected.
What are you most excited about for PolicyMe in 2023?
AO: We’ve always been confident about what we were capable of and believed in the opportunities that were in front of us, but as a startup, there’s always the balance of running quickly with conserving cash so as not to overextend the company. Now with the funding and trust of investors, it’s really exciting to be able to accelerate our efforts to build new partnerships, reach more customers, and add new products.
In 2023, our focus will be to fully scale everything PolicyMe has already achieved and the strong foundation we’ve built, in order to expand our impact, grow the company and see all of our different ideas come to fruition. 2023 will be an exciting and productive year for PolicyMe.
What do you hope to see come out of the insurance industry in the next five years?
AO: In the past couple of decades, insurance products have become more complex. The added intricacies have caused too many people to end up with the wrong products when, for the most part, what most Canadians need is fairly basic and clear-cut. I hope that in the next five years, the industry focuses on aligning customer needs with what exactly they’re buying and bringing it back to where the industry started – meeting customer needs with a matching product.
I hope we can be a catalyst for that by educating customers on their needs, simplifying the buying process, and making sure customers clearly understand what they are buying and are confident that they have the right products to be fully protected.