Speaker 1: Curta and welcome to the special episode of Shared Lunch.
Speaker 1: Today we're talking about the world of insurance. We'll be
Speaker 1: diving into specifically car insurance, why your premiums are going up,
Speaker 1: tips on how to make sure you've got the right
Speaker 1: cover in place, and innovations that are happening in the
Speaker 1: insurance space.
Speaker 2: I'm Sonya.
Speaker 1: I'm the co CEO and co founder of shares E's,
Speaker 1: and today I'm joined by Andy Kohn, who's the co
Speaker 1: founder of our insurance partner COD.
Speaker 3: Investing involves the risk you might lose the money you
Speaker 3: start with. We recommend talking to a licensed financial advisor.
Speaker 3: We also recommend reading product disclosure documents before deciding to invest.
Speaker 3: Everything you're about to see and here is current at
Speaker 3: the time of recording.
Speaker 2: So well, for Mandy, tell us, car do you diferent insurance?
Speaker 4: Well, I did a degree in physics and maths, and
Speaker 4: then there are the holiday jobs that come out of that.
Speaker 4: But one that there is is the actual aerial training
Speaker 4: path and insurance. It's all about the maths and statistics
Speaker 4: of insurance. I also knew about that because my father
Speaker 4: was an actuary, and so that was the first job I.
Speaker 1: Got Yeah, exciting that you've followed, you know, and your
Speaker 1: dad sits there, so you started co Do you want
Speaker 1: to tell us a bit about that?
Speaker 5: Yeah, so do I suppose there was a bit that
Speaker 5: led up to it.
Speaker 4: My brother and I were working in Germany at the time.
Speaker 5: We got over there for a week.
Speaker 4: It ended up working for a digital insurance player, and
Speaker 4: while we were up there, we became really impressed with
Speaker 4: what the digital solution and insurance could mean. And so
Speaker 4: then when we moved back to New Zealand and we
Speaker 4: looked at the market and so we thought, generally a
Speaker 4: digital assurance proposition is a good thing globally and makes
Speaker 4: a lot of sense. And then in New Zealand, we
Speaker 4: quite like the fact that the market is dominated by
Speaker 4: two large players. A lot of people don't know, but
Speaker 4: most of the brands in New Zealand lead back to
Speaker 4: one of two large really had most companies they have
Speaker 4: about ninety percent market share in the lines that we operate.
Speaker 5: So we thought that the digital.
Speaker 4: Transition was something that was coming and it's going to
Speaker 4: be good for customers and a good opportunity.
Speaker 5: And then we also liked the.
Speaker 1: Market the namicing Yeah cool, Why did you think it
Speaker 1: was good for customers.
Speaker 4: Or what was it, gap me sol Yeah, yeah, absolutely,
Speaker 4: So I mean that all sounds a bit worriing for
Speaker 4: company has got. What it means for them is insurance
Speaker 4: is cheap, so we can bring the price down and
Speaker 4: also the service level can be better. So if you
Speaker 4: think about the price point, we aim to be sort
Speaker 4: of fight it's ten percent cheaper than our competitors. And
Speaker 4: then also on the service level, if you need to
Speaker 4: call us. Firstly, you probably don't need to because you
Speaker 4: can do it all online. But if you do it,
Speaker 4: we'll arts the phone in about thirty seconds compared to
Speaker 4: say thirty minutes.
Speaker 1: So les for about the assurance industry broadly, and so
Speaker 1: what's been happening lately?
Speaker 5: Yeah, so I suppose in subways not a lot. Assurance
Speaker 5: is the safe thing. It's been for hundreds of years.
Speaker 5: But then in New Zealand specificularly last.
Speaker 4: Year and the premiums went up a lot, and then
Speaker 4: car insurance, which is what we do and know really well.
Speaker 4: There were a few factors that played into that. One
Speaker 4: of them was there's quite a lot of inflation, so
Speaker 4: inflation was running really hot last year, and then car
Speaker 4: insurance inflation as a little bit more than background inflation.
Speaker 4: Plus then we had the floods in Auckland and we
Speaker 4: had the Cyclone Gabriel as well, So all of that
Speaker 4: happened all at once, and so car insurance prices went
Speaker 4: up by sever thirty percent or more any year, which
Speaker 4: was really quite unheard of. And then that's having causing
Speaker 4: some bigger discussions to happen about what that means for
Speaker 4: home insurance in the market.
Speaker 1: When you think about also at the same time, like
Speaker 1: the new technologies that are coming out around insurance, what
Speaker 1: do you see impacting the ad.
Speaker 4: Yeah, there are some technologies that can actually bring down
Speaker 4: the risk, and I think that's what we find most
Speaker 4: exciting is you know what's here's your expected claims cost,
Speaker 4: and then what can you do that is sort of
Speaker 4: brings that down in a cost effective manner. And so
Speaker 4: for home insurance that's relatively difficult. You just need homes
Speaker 4: to be built a little bit better or not necessarily
Speaker 4: in the floodplanes. And then for car insurance there were
Speaker 4: specific examples, say twyter aquads that were getting stolen and
Speaker 4: alarm and rate we looked at what it would cost
Speaker 4: to cover them without an immobilizer and it worked out
Speaker 4: to be about three.
Speaker 2: Grandy and which is just how what's the what are
Speaker 2: they worth?
Speaker 5: That be like six grand ten.
Speaker 2: Something like that?
Speaker 5: You just can't pay that.
Speaker 4: But then we ran a quick experiment with what is
Speaker 4: what about we only underwrite them within a mobilizer cost
Speaker 4: five or six hundred bucks to get one of those,
Speaker 4: and then the cost comes down to about twelve uncle
Speaker 4: bucks and so now it's completely endurable again and the
Speaker 4: whole thing works. So, you know, when we look at
Speaker 4: the market and how we can play in it, we
Speaker 4: really like these little innovative solutions where what's the problem
Speaker 4: that you're facing, how do you inject something relatively cost
Speaker 4: effective that brings down the risk?
Speaker 1: Why the Twitter aqua the easy to steal and people
Speaker 1: became aware that they're still So we partner to deliver
Speaker 1: a car insurance product to our customers. And so can
Speaker 1: you tell us like who needs car insurance?
Speaker 4: I can spoil us everyone with the car would be
Speaker 4: my hope. You know, there are some people who choose
Speaker 4: not to take insurance, but as someone who sells insurance
Speaker 4: on are really advocate for them. It could really helps
Speaker 4: people out. So yeah, really everyone with the car.
Speaker 2: Do you think it should be mandatory?
Speaker 4: I think it will be great if you could wave
Speaker 4: a wand and make everyone have it. But I think
Speaker 4: if making a mandatory means that there's a fine for
Speaker 4: not having it, then most of the people who don't
Speaker 4: pick it don't pick them because they can't afford it.
Speaker 4: And what you're saying is now someone who is still
Speaker 4: not going to happen sure it now gets a fine
Speaker 4: when they get caught not having it.
Speaker 5: I'm not sure really helps.
Speaker 4: Yeah, pair enought, so probably not really.
Speaker 2: Yeah, And what kind of cur insurance do people need?
Speaker 2: So what are the different kinds?
Speaker 5: Yeah?
Speaker 4: I suppose that the two big differences you could go
Speaker 4: third party or one of those experience or comprehensive.
Speaker 5: And so.
Speaker 4: I'm not a financial planner, don't have any special expertise there,
Speaker 4: but I would say that I see quite a lot
Speaker 4: of claims coming through, so I can definitely confirm that
Speaker 4: they happen.
Speaker 5: And if you've chosen something.
Speaker 4: Like third party fire and theft, you are exposing yourself
Speaker 4: to quite a bit of risk. About one in four,
Speaker 4: one and five who our customers will claim every year.
Speaker 4: And if you have third party only, you're unlikely to
Speaker 4: be able to claim for most of those reasons. So
Speaker 4: it definitely does happen, and it can be quite expensive,
Speaker 4: and it might happen more than you think.
Speaker 2: What are the most common claims that come.
Speaker 4: Through some most common is about half them's big wind screens,
Speaker 4: so just so we've got all those chipsy roads stones
Speaker 4: flick up at the windscreen in the sparhalf. And for
Speaker 4: the claims by number, the next biggest is collisions and
Speaker 4: so that's by dollars, the overwhelming majority of what we
Speaker 4: pay for. And then taking on down the list, you
Speaker 4: get for small things like lost keys stolen cars. People
Speaker 4: always think that's what insurance is for them, but less
Speaker 4: than five percent of our claims up for stolen cars.
Speaker 4: And the big risk is really that you're distracted and
Speaker 4: you ran.
Speaker 5: To the back of someone.
Speaker 2: So what your top three if people are looking.
Speaker 1: To change providers or reviewing their car insurance provider, like,
Speaker 1: one of the top three things that people should consider.
Speaker 4: I guess number one is are you with Global Shesi's.
Speaker 5: The number two would be what's the price?
Speaker 4: And then probably number three would be around what's actually
Speaker 4: covered and what's the service standard? And what are you
Speaker 4: paying for. For most people car insurance is going to
Speaker 4: act exactly how they expect. But if you're using it
Speaker 4: in an unusual way. You know, if you do a
Speaker 4: lot of offer a driving wet, if you are using
Speaker 4: a few business, if you've converted your car in something,
Speaker 4: if you've modified it, it pays to really understand how
Speaker 4: that's going to be true it sure?
Speaker 2: And how about how to think about excess?
Speaker 4: How I think about excess is what amount of money
Speaker 4: am I comfortable paying immediately at a pinch or something
Speaker 4: goes wrong, and then pick that right them out. If
Speaker 4: you can afford to pay a little bit more, you
Speaker 4: can say by fermiums. But if you're really going to
Speaker 4: struggle to scrape together five hundred bucks in hundred bucks
Speaker 4: wherever it is, then you might.
Speaker 5: Be better off in all the lords.
Speaker 1: And how about because I'm just thinking of the information
Speaker 1: that you put in when you are looking at getting
Speaker 1: a quote, or the information that you take before it,
Speaker 1: like that calculates the premium. One of the ones is
Speaker 1: car value or the value replacement value of the car.
Speaker 2: Sometimes that comes almost of the.
Speaker 1: Time it comes prepopulated with something you know, is there
Speaker 1: something that people should be doing or what should be
Speaker 1: in factory into that.
Speaker 4: Yeah, and maybe that's another thing that people can take
Speaker 4: as well as a market early or a greed value policy.
Speaker 4: We offer an agreed value policy just because we don't
Speaker 4: like the way that a market value policy operates.
Speaker 2: What's the difference between the tip So.
Speaker 4: If you write off your car with an agreed value policy,
Speaker 4: we pay out being mopped that you and should have ford. Yeah,
Speaker 4: but with the market value policy, it can be the
Speaker 4: less or what we think it's worth and then that
Speaker 4: you picked, which just becomes a little bit.
Speaker 2: So say, you know, how often should people be considering
Speaker 2: more reviewing their charage urns.
Speaker 4: As often as you like, because if you do cancel
Speaker 4: mid term, it sure as are obligated to give you
Speaker 4: your premium back or almost all of it.
Speaker 5: And so there's no real.
Speaker 4: Maximum to how regularly be shopping. But once a year
Speaker 4: sounds pretty good. You can send the annual renewal and
Speaker 4: it's a good time.
Speaker 5: To shop around.
Speaker 6: It's a different for everyone, right, and you know, depending
Speaker 6: on the type of car, things like that, But there's
Speaker 6: also factors like around age and gender and how they
Speaker 6: play in and so typically if you're under twenty five
Speaker 6: and your mail, your premiums are higher.
Speaker 2: Can you tell us a bit about that? And is
Speaker 2: that changing?
Speaker 4: Yeah, so I suppose the bad news is it's not
Speaker 4: changing creerly. And I suppose there's a few things that
Speaker 4: lead into it. And we do our pricing based on
Speaker 4: what are costs to actually pay for claims for those people,
Speaker 4: and so it costs a lot more to ensure you
Speaker 4: am a person because they crash more. And then there
Speaker 4: are a few factors that come into it. One is
Speaker 4: that they haven't been driving for as long. Another is
Speaker 4: that they're just younger and more prone to risky decision making.
Speaker 4: Another is that they have busy social lights and so
Speaker 4: they tend to be driving out late at night, maybe
Speaker 4: after a drink or two.
Speaker 5: Hope not too many, but all of them.
Speaker 4: That just increases your risk and increases the amount that
Speaker 4: we pay out. And not many of those things are
Speaker 4: really like to be a change. The one thing that
Speaker 4: could change is there are technologies out there for ensuring
Speaker 4: that we don't do some of the worst behaviors. So
Speaker 4: the worst things really is pulling out when there's not
Speaker 4: a big space, following people too close behind, and looking
Speaker 4: at your fine and you're supposed to be drunk it.
Speaker 4: And so there are technological solutions that either penalize you
Speaker 4: with your premiums if you do those things, or are
Speaker 4: conversely ruw warch you if you die, or they can
Speaker 4: prompt you when you're doing one of them and kind
Speaker 4: of intubate. So we have looked at those for kind
Speaker 4: off but the problem is the cost of the technology
Speaker 4: is quite high compared to what it saves in kinds cost.
Speaker 4: And yet also the services are quite sort of intrusive
Speaker 4: and annoying, and we just didn't think people would go
Speaker 4: for them. But then logited, as cars become more autonomous,
Speaker 4: this has to matter less or less who's in the
Speaker 4: driver's seat.
Speaker 5: So there is some good news avingually and.
Speaker 4: Probably the final point a is younger males are a
Speaker 4: little bit worse than younger non males, but not that
Speaker 4: much worse. So everybody still in that position in the
Speaker 4: younger group.
Speaker 2: So if we think about the future of insurance, like
Speaker 2: how does it need to change?
Speaker 4: I think there's becoming more of an awares of individual risk.
Speaker 4: And if you think back a long time, everyone paid
Speaker 4: more or less the same premium and then all the
Speaker 4: risks swept up and that's changing now. People in more
Speaker 4: earthquake prime cities are definitely seeing it. And we're talked
Speaker 4: a little about younger drivers and why they pay more premiums.
Speaker 4: And I think where insurers need to get better is
Speaker 4: displaying to people what these risk factors are. You know,
Speaker 4: we've done a lot of work to figure it all out,
Speaker 4: and we don't always share that with the consumers. I
Speaker 4: think if you think of an example where people are
Speaker 4: looking to buy a house, they're not geologists. They don't
Speaker 4: necessarily know what the what the risks are that they're facing,
Speaker 4: and we could quite readily tell them. So the government,
Speaker 4: I think the banks have a fairly good idea too,
Speaker 4: but making that or a much more visible part of
Speaker 4: the process is good. And then we talked about some
Speaker 4: of the things with driving in the ways that you
Speaker 4: can help people mitigate their risk with actuals as well.
Speaker 4: We gave people a good path to bringing down their
Speaker 4: their premiums by reducing the risks that they face. So
Speaker 4: I see that as the future of insurance. It's becoming
Speaker 4: kind of a risk partner that helps you before something happens,
Speaker 4: rather than me in the ambulance at the bottom of
Speaker 4: the cliff cleaning of the mess after it's already happened.
Speaker 2: Before we go.
Speaker 1: We've teamed up with Cove to offer car insurance for
Speaker 1: Chasis customers with discounted prices. You can check out more
Speaker 1: on our website or get a quote within the Chasis app.
Speaker 1: Thanks again to and for joining us and talking about insurance.
Speaker 2: Have a great week.