Hyper Scale

Slice is just three years old. A lot has happened since it was founded.

We started three years ago, and that was ground zero. That’s three of us sitting around the dining room table. Our first year, what we were setting out to be was two things. One was seeing if we can reimagine insurance. We’re very big believers in on-demand. It’s an on-demand world, and things are going to be more on-demand and digital. The other was the new economy. We realized the world was shifting. People didn’t imagine cars driving themselves, their houses being shared or things like cyber risk. We thought that, if we wanted to get to where we wanted to be, we’d have to focus on the gaps, and there are lots and lots of gaps in insurance.

Our first year was primarily around testing our hypothesis on how we could change things. We wanted to completely depart from any existing process or system. We did things like imagining there was no application for insurance, because that didn’t make sense. You don’t apply when you hit the buy button on Amazon. We wanted to focus on the customer experience backward, because we’ve entered the age of customer engagement and the insurance industry was still thrusting quote, bind, issue, endorsement—all these arcane transactions on customers that really don’t make any sense for customers.

What became your initial business?

Slice designs and develops its own policies and provides all customer service, including claims. Slice underwrites on the paper of Great Lakes Insurance SE, a member of Munich Reinsurance Group, under a binding authority agreement. In October 2016, we wrote our first policy, which was a home-share policy for Airbnb, HomeAway and VRBO for short-term rental in the great state of Iowa. After the first year, we were very certain it would work, but we were also fairly certain that we can’t scale on our own. You take Airbnb—I think they’re in 191 countries. The largest insurer in the world after 150 years might be in 68 countries.

How did you set out to grow, to scale?

We needed a different model. We thought we could innovate, but in order to scale, we’d have to partner with incumbents. In October of 2017, we went live under the Progressive brand. It’s a very high-volume website. It was a win for us, and it forced us to grow up. That was our second-year goal—product, market, fit. We got into 50 states fairly quickly. We’re in our “scale” year this year, and next year we’re going to work on how we can hyper-scale and get as many products out in as many jurisdictions as possible. That was the reason for our recent $20 million funding.

That was for Slice Insurance Cloud Services. Tell us about it.

We launched Slice Insurance Cloud Services in January of 2018. These are cloud-based offerings that help insurers build on-demand, usage-based products. We had started a beta of it in October of 2017 with Legal & General in the United Kingdom. We thought we’d do maybe three of these relationships in our scale year, but by the end of the first quarter of this year, we could say it’s going to go a lot quicker than we thought. Because of that, we raised more money, so we could go more quickly. The whole hyper-scale is coming quicker than expected.

Does Insurance Cloud Services represent a change in focus for Slice?

When you’re a startup, you come up with a hypothesis, and you test, and you do these things called “pivots.” You try things out, and you decide to do next things. You could plot our trajectory by our past. We used to build policy, claims and billing systems for carriers. We used to build back-end systems for carriers for 12 years, and all three co-founders were doing that. In our last life, we built a distribution platform. For us, it’s just an evolution. From outside, it might look like a pivot.

There’s no way for us to scale on our own. How do you go head to head with somebody who has a $1.2 billion ad spend or a $2 billion ad spend? Our hypothesis was the only way for us to scale and hyper-scale would be to collaborate. If we truly have the innovation and a new way to do insurance—and it performs significantly better than traditional insurance—then the only way to scale it globally would be to partner.

Who are some of your other partners?

We are licensing our ride-share product to a large auto carrier in the United States. We want to show that homeowners and auto and commercial insurance and all property and casualty insurance can be digital and can be brought into the on-demand world.

We’re working on a large pilot in the United Kingdom with a 130 million to 200 million subscriber telecommunications company on embedding a travel accident product. From there, you can draw the trajectory by looking at our investors, like JetBlue and Veronorte, which is Grupo Sura in Central and South America. That’s the model that we’re looking at. We didn’t create the market, but we have something that people are looking for. Our appeal is that insurance will be part of a different experience. It will be part of the mobility experience or the travel experience or the habitational experience.

What does this mean for Slice’s own ride-share and home-share products?

I think we will continue to build our own products. Again, we have less capacity to build products than a top-10 global insurer. If they had our platform, they could build a lot more products quicker. We’re going to continue in the jurisdictions where we’re licensed, the United States and now the United Kingdom. We’ll continue to build and sell product under our own brand or white-label to other brands. We think that’s consistent.

What are some other products you’re working on?

We are doing a cyber product with Axa XL in the United States. That’s important because that shows that we can take the platform and—as long as the product is digital and as long as it meets the experience of Netflix and Uber and Amazon—we can put out a completely different digital product in a very short time frame.

What are the technologies transforming insurance today?

We know that tomorrow’s technology will be exponentially better than today’s. Technology on its own does not sustain competitive advantage for insurers. Removing expense does. In insurance, the product is data and being able to understand that data and understand that risk—that is what insurance is all about. I think data and AI is sustained competitive advantage. And to that point, we’re looking to launch a Slice line, which is our next offering, along the AI/data science side.

How do you see technology changing the role of agents and brokers?

In our previous life, we were online agents. We were licensed in 50 states. It was very frustrating because, when you’re an agent, you have to go out and get all the business and you have all these ancient carrier systems and processes and somehow you have to make it look like a good experience. I say that’s why we created Slice.

I always say if we eliminated the agents, the next day I would open an agency. It would be similar to Amazon opening a bookstore now. It would be a new kind of agency. It would be a base digital agency, and it would have good products that are easy to buy and easy to use. Agencies are going to morph. They will go the digital route as well.