We talk to Mark Costello, the CEO of hubb, a tech based insurance company focused on the SME market, which uses technology and AI to automate all but their advisory functions.
What is the concept behind hubb?
hubb was born from the inherent belief that the existing broken model is broken.
We want to see insurance sold with radical transparency and proactive commission disclosure. Equally, we want to see broker earnings that directly correlate to the value being delivered to the customer. When all of that is coupled with technology focussed on customer-centric service delivery, we believe we can change the face of an industry.
The insurance market is extremely overcrowded. How has hubb carved out a niche for itself?
hubb are introducing usage-based broking; the principle of paying for the service you consume. UBI is not a new concept but has until now focussed upon the insurance itself. We have SaaS-ified the broking model, enabling you to define your own service levels as and when you need us. Moreover, our charges are proactively disclosed up front, allowing you to directly assess the value of everything we do.
Do you believe the traditional insurance model is failing SMEs and if so, why?
Any model where you are financially incentivised to get your client a worse deal, cannot be without moral ambiguity. It demands the customer to blindly trust that their broker is happy to sacrifice their own earnings in pursuit of the best deal.
The fees being charged to customers are no longer reflective of the value being delivered. Instead, customers are subsidising extensive M&A activity, at inflated valuations, and high acquisition costs.
Why are they so high? Because brokers find themselves unable to win voluminous new business, unable to differentiate themselves from their cookie cutter competition. This is why so many policyholders buy on little more than price…because it’s the only obvious point of difference.
What are the main challenges facing SMEs today and how can companies such as hubb support them better than traditional insurers?
In the last few years, those challenges have changed dramatically. For many, simply keeping the lights on or staffing their business is now front and centre. Cost savings and the concept of value for money is central to their thinking. The concept of paying thousands of pounds up-front, for broking advice that you rarely ever use, is nonsensical.
Insurance has always been a grudge purchase and many just want to feel assured that their broker has taken the necessary steps to protect them. They want the necessary cover at a fair price. The problem is that they have to trust that both points are true – they have no basis for comparison themselves.
There have been a number of insurance technology start-ups launching over the past few years, especially focussed on SMEs. Should this be seen as a wakeup call to traditional insurers that they are missing something in the services they provide or is it too little too late?
That horse may already have bolted. The insurers succeeding are the ones working closely with InsurTechs. They are embracing it as an additional distribution channel, able to offer the laser-focused customer (and product) experience that a behemothic entity cannot.
As with anything, the issue with larger companies is that to scale they need to homogenize their processes. In doing so, they can lose the essence of what matters to the customer, or miss the nuances of specific industries.
It’s not too late, but incumbents are undoubtedly playing catch up as customers demand more, delivered better. There needs to be a real, focused commitment to improving their customer experience.
What advice would you give an SME business owner looking to buy the insurance and is unsure how to go about it or who to choose?
Put simply; ask some difficult questions.
Ask your existing broker to disclose what they earn from every quote they provide to you. Not just commission, but what they might stand to earn from premium financing, profit shares and marketing budgets. They’re obliged, by the FCA, to disclose those details when asked.
If it’s fair and a good deal for you, they should be only too keen to tell you, right? If they’re not….draw your own conclusions.
Once you know, assess for yourself whether you think those earnings are fair. If you don’t think it represents good value for money, consider a new way of buying business insurance. Ask to work on a fee basis and remove any temptation for the broker to keep your price higher than it needs to be.
But mostly, look for a broker who can clearly demonstrate that they are working for you…and not themselves.
