I'll just add that I loved the packages on the front page. I never bothered with renter's insurance, because it seemed like a hassle and I have been willing to self-insure. But seeing my options immediately made me think, "Maybe I should!"
Please do put a jobs page up, though. Your thoughtful and frank description here definitely has me curious.
Thanks! Yeah it was always annoying to us that you needed to give away all your personal details before you even found out whether something would be worth it, so we wanted to be different. Glad to hear you like it!
Thanks for your question, it's an important one, and deserves more than a handwave answer. When we started Goodcover, our goal was to make it so we were not in conflict with our Members - and the core of this is a cooperative model.
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!
No problem, it's important I think. It is a heavily regulated industry so we always have to be mindful of what is legal, what is going to get regulatory approval, and what we actually want that will serve Members the best.
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
Thats is not good marketing -- do you want customers to believe that you are the only innovation that happened in the field of _insurance_ (worth what, many trillions of dollars a year? ) in 100 years?
That sounds like a scam. You may want to change the pitch, just my 5c.
Thanks for the feedback, that's not my intention. We're definitely not claiming we're the only innovation in 100 years.
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.
Thanks! Yeah, if the whole industry ended up working the way we do, we'd be thrilled.
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.
A few months ago during the socal fires my community was up in flames, as were a lot of other's.
The house a mile down from me burned. We were evacuated
There is no insurance company willing to insure our area
> This is why although it is hard, communities investing in collective defense has the biggest impact on insurance prices.
100%. My neighbors and I self insure. We have built defensible areas and maintain it together.
It's cheaper (?) to self insure than pay premiums some, who managed to get a quote, said.
It is a lot of work maintaining that defensible area and keeping it up to spec!
We like to say our actions stopped the fire from spreading but when I saw embers in the air around me, I could not stay around to verify whether that was true.
Our firefighting department, incidentally less than a mile away from us, is one of our best buddies.
This is possible because of the rural location I have chosen to live in.
I see no way of pulling this off in a city.
I will keep checking with you and recommend to my community.
Firstly, I'm sorry to hear about your community, that is rough and hope people are ok. And thank you (and your fire buddies - my cousin is a wildfire-fighter) for all your work to keep your community safe!
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.
So, given the underlying risk, I think the premium for wildfire in CA will be going up in general with or without this. The moratorium on non-renewal only lasts one year, and really just reiterates existing law. Most insurers have been trying to adjust their rates long before this came out.
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.
Thanks! Short answer, Months - but perhaps not in 2020. Definitely recommend you get renters insurance if you don't have it.
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.
That makes sense! I have renters insurance now but will be needing to renew within the next few months so I'll probably still have to go somewhere else for now but I'll keep checking back with Goodcover. Thanks for the reply and congrats on the launch!
Yeah there's a misconception that since insurance is an "annual contract" you are locked in for a year. Truth is the law protects the consumer - it's your right to cancel any time and your new provider can help you do it. If you prepaid the other guys they have to refund you. Of course some insurers make you fax them cancellation requests and stuff but we make it our job to sort that out for you and copy you along the way.
The math for any insurance pricing is basically Price = Expected Loss Severity x Expected Loss Frequency. The frequency of getting sued (Liability Coverage) is really low, hence low price, even though the expected loss is high. But yeah it really is mind boggling!
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.
