The Future of Insurance Podcast – Jim Albert

Guest Bio

Jim Albert founded the insurtech startup Neptune Flood in 2016 based on a business model leveraging artificial intelligence and data analytics to make it easy to buy flood insurance. Neptune, with business in 48 states and over 60,000 policies, is the fastest growing private flood insurer in the US.

Prior to forming Neptune, he was CIO at a US insurer, ran a group of technology businesses in the UK, and led the consulting firm Idea Integration.

Jim holds a degree in Electrical Engineering from Vanderbilt University, and received additional education at Wharton, INSEAD, and Cornell.

Highlights from the Show

• Neptune was founded in 2016 by Jim Albert and Bill Martin to make it easy to buy flood insurance
• There are about 5.5 million insured homes for flood risk, but about 60 million homes actually at risk, so this is a currently-small market that isn’t protecting enough of the people at risk
• The average loss in Hurricane Harvey was $117k, and 80% of the homes did not have insurance for the water damage
• Using advanced analytics based on third party data presented a real opportunity to do better underwriting faster, with less effort on the part of the customer
• The dominant player in the space is the US government, with the National Flood Insurance Program (NFIP), which takes weeks to get coverage in place at high cost with limited coverage
• Neptune asks three questions (vs. 54 from NFIP), and can provide a bindable quote in 45 seconds (down from the 2 minutes they started with, so it’s getting faster and easier)
• Rather than cutting the insights they get by asking few questions, they stopped asking things they knew or could know from a verifiable third party, so their accuracy is higher than if they asked for the data, and get more data than they could ask for from 150 external data sources
• Digital insurance was very new when Neptune was setting up, so it was tough to find capacity willing to back an MGA without an underwriter, but Neptune found support at Lloyd’s, and found that regulators are starting to recognize the benefit to consumers from model-based underwriting
• Neptune just launched their Commercial offering on a direct basis, on top of their residential product through multiple channels (agents, brokers, other carriers, direct, partners like realtors and mortgage brokers)
• Neptune seeks to be present in the transaction where you think about needing insurance, like buying your home, rather than having to sell it to you when you aren’t thinking about it
• Themes in the industry going forward
  • Touchless insurance – no need to have someone come out to your house. This isn’t just nice to have now, it’s no longer an option not to be touchless, so you need to be there today and not starting a multi-year plan to get there
  • Partnerships & Acquisitions between incumbents and startups – it makes a lot of sense for big/legacy carriers because of the ability to move past a lot of the legacy constraints through your InsurTech partner; it helps the startup move faster, too, so it can be mutually beneficial
• Advice for startups
  • Focus & Attention – you will get lots of great ideas, but you can’t do them all, so pick one, validate that it’s a good model, and stay the course to deliver before taking on new things
  • Build for Sustainability – become a profitable business as early as you can so your people can see the long term of being there; they’re still growing very fast, so the trade off isn’t as absolute as people think
  • Choose your investors carefully – you may get to the point of desperation and just want someone to cut you a check, but that could ruin everything, so make sure your investors are strategically aligned with and supportive of what you’re trying to do
• What Jim is most proud of is being able to expand the market to protect more people than were being protected from flood in the past

Watch the Episode