Young Alfred Streamlines Insurance Shopping ProcessBy Lisa Kapp
Young Alfred Streamlines Purchasing Process for Insurance
Young Alfred is an online marketplace that helps consumers compare and shop for personal and casualty (P&C) insurance such as homeowners, rent, auto and pet.
As Young Alfred co-founders Jason Christiansen and David Stasie describe it, today’s process for purchasing homeowners insurance involves cumbersome questionnaires, unnecessary paper-pushing, and hours spent talking on the phone with an insurance agent. “Wouldn’t it be great”, they thought, “if we could buy insurance without ever needing to pick up the phone?”
Since launching in 2016, the company has brought on 15 insurance carrier partners. In light of that progress, I sat down with co-founders Christiansen and Stasie to better understand the nuances of the P&C insurance industry and where Young Alfred fits in.
The Problem: Difficulty Purchasing Insurance
Two years ago, Wharton MBA students Christiansen and Stasie went through the process of purchasing renters and homeowners insurance for the first time. In order to identify the best deal, they were required to first identify a list of prospective insurance carriers, individually visit these insurance carriers’ websites, fill out several lengthy questionnaires, and even spend hours speaking with insurance representatives on the phone. They quickly became disillusioned with what they considered to be an inefficient process for comparing and purchasing insurance products.
Traditional home insurance application
To Stasie and Christainsen, it seemed that there should be a centralized location to shop for insurance and an actor who could serve as a consumer advocate: someone who could educate consumers on how insurance actually worked and the differences in policies. That notion is how Young Alfred was born.
Leveraging Machine Learning to Improve Customer Shopping Experience
The value proposition of Young Alfred includes three components. First, it helps consumers compare different insurance products in one centralized online location thereby reducing the need to visit each individual insurance company website. Second, it streamlines the insurance purchasing process by shortening the number of questions customers need to answer and allowing for consumers to purchase insurance directly on the website without needing to speak to an insurance agent. Finally, it serves as a consumer advocate, educating consumers on the “fine print” and serving as a resource for customers who may have follow-up questions post-purchase. All of this is administered through an easy-to-use customer interface or as the founders explained, “[a] customer service portal where [you] can self-service and shop for…policies as well as chat, text, email, or call Alfred Service Butlers.”
Young Alfred website interface
Currently, Young Alfred has shortened the historically bulky insurance questionnaire from 100+ questions down to roughly 40. Over time, Young Alfred believes they can get the screening process down to just five questions. How do they plan to achieve this? By leveraging machine learning, developing smarter algorithms and utilizing image recognition technology. For example, rather than asking a customer to manually fill out what type of house he or she is looking to insure and the features of that house, Young Alfred can use satellites and image recognition technology such as tensorflow to identify house features automatically. As Christiansen explains, “[tensorflow can] differentiate between a 2 and 3 car garage [or]…tell if your pool in the backyard has a diving board or not.”
Not only does Young Alfred allow customers to compare different products in its one-stop-shop marketplace, but it also offers plan recommendations based on the customer’s price and coverage requirements. Once consumers decide on the policy they want, they can purchase directly on the Young Alfred platform. Young Alfred is paid a commission by the insurance carrier for every policy they help place. The Young Alfred platform translates into significant time saved for shoppers. According to the founders, they can cut the average insurance shopping time from 6 hours to 30 minutes.
While Christiansen and Stasie eventually went through the cumbersome process of purchasing insurance, many don’t make it that far. Research shows that insurance shoppers of all ages are often discouraged by the long and complicated insurance application process. However, according to a study conducted by Deloitte, if the process were more digitized, this conversion rate could dramatically increase: from 70% to 90%. Young Alfred is part of a broader industry trend of “digitizing” the insurance marketplace, or specifically, moving from an offline purchase model (e.g. meeting or speaking with an insurance agent) to an online purchase model. This new online purchase model is referred to as a direct-to-consumer in industry lingo.
On the carrier side, there has been an explosion of new InsurTech start-ups that offer direct-to-consumer insurance policies. One such example is Ladder which can help place life insurance policies online in mere minutes. Another in the renters and homeowners insurance category is Lemonade. Both of these companies target millennial shoppers and emphasize customer experience and a streamlined, simplified shopping process that is done on the web. While these start-ups have enabled customers to purchase one type of insurance directly online, it still doesn’t allow customers to compare plans across different insurance companies. This is what differentiates Young Alfred as it aggregates all insurance products in one centralized online marketplace. Moreover, new insurance start-ups do not rely on expensive sales representatives like industry incumbents and are excited to partner with a distribution channel such as Young Alfred to help drive customer volume.
Why are industry incumbents embracing a market “disruptor”?
While the benefit for insurance start-ups is clear, the benefit of the Young Alfred platform for industry incumbents such as Progressive, Geico, and AllState is also compelling for several reasons. First, Young Alfred offers a way to connect with millennial shoppers who, according to Ernst & Young, value “self-directed functionality and a seamless customer experience”. Second, insurance incumbents are experiencing talent shortages as the average age of a sales representative is 50+ years old and few college graduates are choosing to pursue insurance sales roles.
In addition, acquisition costs for new insurance customers are quite high. GEICO spends over $1 billion per year on marketing expenses. Young Alfred represents a more cost-effective channel for gaining a new demographic of customers.
What’s next for Young Alfred?
In line with the company’s mission of serving as a consumer resource, the company recently launched a learning tool that, as the founders put it, “make insurance so easy, an 8-year old can understand it”. Check it out here.
The business is currently focused on two main objectives: (1) continuing to build out their carrier partnerships, and (2) further refining their algorithms and data capabilities. The company’s ultimate objectives is to provide customers the single-best-resource for understanding and purchasing insurance.