Unrated Alpha demise spells opportunity for tech-driven rideshare MGA

Alpha Insurance’s collapse brought chaos on thousands of professional drivers, who lost their cover and were forced to queue outside broker offices for days and fork out thousands of pounds for new insurance which is critical to their livelihoods.

Alpha’s drivers may have been left in limbo, but there is some good news on the horizon for some, with a soon-to-be-launched UK MGA.

The start-up, which has its beginings in busy New York hopes to fill the void with its app Ami.

Ami aims to empower a new generation of rideshare and professional drivers by providing a policy within three minutes.

With reinsurance provided by AA- rated Munich Re Digital Partners (MRDP), INSHUR is banking on its snappy app and respected reinsurer partner giving it the edge over unrated insurers, which frequently offer bargain bucket prices.

“I think the tide is turning. Price is going to be important, but now, certainly with companies being liquidated and the impact that has on the drivers, the reputation of insurers and the brand will become much more important,” says UK-based co-founder David Daiches.

Drivers in New York have encountered similar problems to those in the UK faced with unrated Alpha’s collapse, as insurers Fiduciary and Park Insurance Company both recently plunged into liquidation.

Unrated insurers may often offer the most competitive prices in the market – Danish unrated insurer Gefion’s business has boomed since Alpha fell from grace – but INSHUR will aim to use its smart tech and data to optimise pricing levels as it grows.

While price is still king for drivers when buying insurance, insurer and brand reputation is now a strong second, according to the firm’s US research.

Picking up speed in New York

Following the launch of its new 100% digital product in New York in February 2018, INSHUR delivered $3.5m (£2.6) in gross written premium (GWP) in the first month of trading.

A large majority (88.8%) of its drivers work for Uber, with the average customer aged between 28 and 32.

Daiches says it has put “transparency” and driver ease at the heart of its product.

The MGA will be launching in the UK in September and has taken on former ERS taxi insurance expert Edward Hill to inform its underwriting proposition.

While the UK market is more competitive than New York, in which two main carriers hold around 70% of the market share, INSHUR’s Daiches sounds confident that its product can hold its own in the UK.

It has already faced notoriously hefty regulatory barriers by launching in New York, like insurtech favourite Lemonade, where undercutting the market requires bucketloads of supporting evidence.

It took INSHUR six months to get pricing approval in the Big Apple.

The MGA’s team believes that its experience of the cantankerous regulator has left it well-prepared it for the regulatory system in the UK, which is more “flexible”, says Daiches.

Humble beginnings

INSHUR’s Daiches is confident that the company is “solving a problem”, rather than throwing technology at the industry to see if it sticks.

The idea came to fellow co-founder Dan Bratshpis two and a half years ago, when he was working for a yellow cab insurance broker in New York.

Bratshpis’ father immigrated to the US in the 1970s and the first job that he took on was as a taxi driver.

Due to this, Daiches explains, INSHUR’s leadership team feels it has an obligation to the customer.

“Rather than it just being a case of making money from a customer, there is a connection with the driver,” says Daiches.

It began as an aggregator, acting as a go-between for drivers and the four main insurers in New York, but the idea quickly morphed into an MGA.

INSHUR has built on its team, spoken to drivers, and will hope to make its mark on the UK rideshare industry.

Trust and tribulations

When drivers gathered outside Protector’s London office after the collapse of Alpha earlier in May, many told Insurance Times that price was still a sticking point, but several were reconsidering using unrated insurers again.

They bemoaned the thick queues and the near impossibility of buying insurance online and the inability to reach their broker by phone during the crisis, while several felt that their broker had failed to provide them with enough information.

INSHUR’s model could solve these issue, with an AI interface, go-to support, MRDP’s partnership and a customer-centric approach.

Brokers may wish to beware.

Come September, their loss could be INSHUR’s gain.