With traditional health premiums soaring and annual deductibles that often reach into five-figures, the financial consequences from having an accident can be ruinous — especially for uber-active adrenalin junkies who tend to wipe out a lot.
But that is exactly the type of person that Richmond-based on-demand accident insurer Buddy is looking to serve, by offering up supplemental insurance plans that are super easy to fill out and can take the burn out of crash and burn for as little as $9 per day.
“We recognized that the technology that powers insurance was ready for an update and that consumers were ready for an update in how they interact with the industry,” Buddy Co-founder and CEO Charles Merritt said in a recent chat with PYMNTS.
“I think in some ways what we’re doing is very disruptive to the insurance world,” Merritt added, noting that when most people think of supplemental insurers, they think of Aflac. Buddy enables users to sign up in less than three minutes and then hit the slopes, whitewater or bike trail.
“I think globally last year [Aflac] did like $30 billion in premiums,” he said, “and so if we as a startup can find our way to make that market more efficient, more effective and easier for people to access, we think that that is a good-sized duck for us to take a bite out of.”
Flat Rates, Stackable Benefits
This app-based insurance interface for on-the-go athletes is now available in 38 states, and while there are terms and conditions that apply (e.g. no claims for things like bull riding, big wave surfing, cliff jumping, free-climbing without ropes and use of drugs or alcohol) Merritt said the ability to be on-demand is incredibly important.
“We think revolutionary, especially in our category,” he said. “We’re being very transparent about those tiered benefits so you know what you’re going to get if you break an arm, if you go to the ER, if you have to have an open reduction surgery.”
According to the website, that hypothetical crash would pay $500 for the ER visit, plus $5,000 for open reduction fracture surgery and $75 per visit for up to 10 sessions of physical therapy, with all money going directly to the victim to be used however they wish, without any deductibles.
The whole idea for Buddy came from true-life experience of Merritt and his co-founders, who themselves are active outdoor sports enthusiasts.
“It was less of a lightning strike and more of building momentum,” he said. “We just started to see lots of GoFundMes pop-up where people needed extra cash to help pay their bills, even though in a lot of cases, they had health insurance.”
Nuts And Bolts
To make it all work and to “think through some of the regulatory and premium handling challenges that come up with insurance,” Merritt said Buddy has partnered with online payment processor Stripe.
“Because we work in a regulated environment, our business has to receive payments of premium as opposed to invoicing someone else,” he said, using the add-on to a typical ski lift ticket purchase as an example.
“So if our partner API is integrated into a lift ticket sales platform, for example, and a skier checks the box to cover themselves while they are on the slopes for the day, that resort can’t take the money that is meant for insurance,” he said. “So Stripe has been very helpful in terms of helping us think through how that customer’s experience is seamless and how Buddy receives [the insurance premium] to our bank account directly.”
New Markets And Opportunities
Merritt said Buddy is already looking to get its product into new markets and places, by bringing simplified coverage to new categories beyond its core outdoor sports business.
“We think that we can get our nose under the tent and provide a significantly better experience,” Merritt said. “We’ve now begun to expand our product portfolio and we will, in fact, be launching our first partnership with a new product beyond accident,” he added, acknowledging that not everyone wants to be hurtling down a mountain at a hundred miles an hour.
To that point, the company announced its first indoor activity tie-up Tuesday, in which it will offer one-click registration coverage to thousands of travelers from all over the world who will be attending the InsureTech Connect conference in Las Vegas this October.
“We recognize that some people get their juice from meeting other people, from going on a food tour, [attending] a lecture,” he said. “The risks may be a little bit different than going to the ER. It may look more like cancellation or more like providing some travel coverage for when people are going out of state or out of the country as part of those transactions,” he added.
The Bar-Belling InsurTech Business
Merritt said the birth and growth of Buddy comes at a time when “the world of insurance is really bar-belling” into people who control the customer touchpoint and people who are using artificial intelligence (AI) and machine learning (ML) to more effectively manage the risk.
“Our plan now for the immediate future is to roll out some of these partnerships that we’ve been developing through the end of 2020 with platforms, fundraising and applying that fundraising to growth and building out a full business development marketing core in 2021,” Merritt said.
That means, everything from outdoor and sporting to professional conferences and more recreational nonsporting leisure events, he said.
“I would be over the moon if we did one [new expansion] of each,” he said. “I would be probably out of the solar system if I was showing up with 10 at this time next year.”
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