PolicyMe, an insurtech startup based in Toronto, has officially launched its new digital insurance product, which allows Canadians to buy up to $5 million in life insurance coverage quickly and all online.
“We really wanted to figure out a way to be a profitable company, but also be extremely honest and objective with what we’re selling.”
– Andrew Ostro
Using an algorithmic underwriting engine, PolicyMe’s product determines each user’s risk and need to purchase life insurance. From there, users can buy their policy directly on the platform, without having to work with an agent or endure lengthy applications. The application, approval, and underwriting is all done digitally.
Canadian Premier Life Insurance is acting as PolicyMe’s insurance carrier partner for the launch of this product, while an undisclosed global reinsurance company will split the policy liability with Canadian Premier.
The product is touted as offering competitive prices and having fast approval times, as policies are fully underwritten. PolicyMe claims users can receive an approval within 20 minutes, down from what it said is an average four to six-week waiting period. The product is currently available across Canada, besides from Québec, New Brunswick, and Newfoundland.
Founded in 2018, PolicyMe’s mission is to offer a simpler path to buying life insurance. The startup initially launched as an insurance broker, but co-founder and CEO of PolicyMe Andrew Ostro told BetaKit the ultimate goal was to create a digital insurance-buying experience.
To do this, the startup made advice a key part of its practice, which means giving consumers the most helpful and accurate guidance on their plans to buy life insurance.
“Our view was if we can build the advice into the model… [and] really focus on the decision-making process, the education, the guidance, that would allow us to really move a lot of the sales to an online platform,” he told BetaKit.
Using PolicyMe, consumers can not only buy insurance policies but also see if they need to buy life insurance based on their health and financial situation. This portion of PolicyMe’s offering is not new and is free for consumers to use.
Ostro said 26 percent of PolicyMe users do not actually need to buy life insurance, and the startup is up-front in advising those clients against buying.
“We really wanted to figure out a way to be a profitable company, but also be extremely honest and objective with what we’re selling,” Ostro said. “That was one of the trends that we’ve seen in life insurance for years. Brokers are paid on commissions, so the more someone buys, the more they make.”
He said that the startup is looking to buck this trend of overselling products that consumers may not need merely for the sake of increasing profits.
PolicyMe is one of a number of insurtech startups that have sprung up looking to modernize the insurance process. A number of reports, including one from Deloitte Canada, have highlighted the insurance industry still holds on to outdated, often paper-based approaches, meaning the sector is ripe for digital transformation.
PolicyAdvisor, another Toronto-based startup, is also looking to digitize the insurance-buying process. PolicyAdvisor harnesses data from multiple sources, using algorithms that scan hundreds of complex insurance documents to identify the right policy match for a customer.
The launch of this digital insurance product follows a year of growth for PolicyMe, which claims it achieved 700 percent year-over-year revenue growth in 2020.
Ostro attributed this growth to two factors. The first was that in March 2020, PolicyMe had secured $3.3 million in seed financing. Ostro said with enough cash on hand, the startup was well-primed for rapid growth last year. The second factor was the COVID-19 pandemic. Ostro said the pandemic did not create a new need for life insurance, rather it highlighted the already-existing need for many Canadians.
The startup claims 51 percent of Canadian policyholders it engaged with said they would purchase life insurance through an online platform. That number jumped to 65 percent for people aged 18 to 34.
“It wasn’t so much that people needed the product more than before his people, it became clearer to people that they needed it,” Ostro said. “The need was there from day one.”
For the year ahead, Ostro said PolicyMe’s key priority is optimizing its platform. The CEO said he imagines critical illness policies will be needed by potential platform users, as well as a product-focused on savings and retirement.
The startup is also in the process of raising a Series A round of funding. Though the CEO declined to disclose details to BetaKit, he noted the round is expected to close in the coming months.
Ostro said he hopes to roll out the new product in Québec and New Brunswick once the startup builds a French-language version of its platform. He said Newfoundland has specific licensing requirements that PolicyMe is required to work through. Those additional provincial roll-outs will likely not occur until after 2021.
Image courtesy PolicyMe.