Extracting Value and Building a Purpose-Driven Brand

Description

LOOP, an insuretech startup, is seeking to remove unfair bias in the way insurance premiums are determined. Having removed discriminatory factors such as credit score, income and education level, variables commonly used by the incumbents to set rates, LOOP's novel AI models instead focus on where and how people drive. By spring 2022, LOOP had been operational for six months and its co-founders faced a host of short and long term decisions.

Session Preparation

1. LOOP's initial customers are up for renewal. How should the company decide who to renew and at what price?
2. Do you recommend making further changes to LOOP's pricing model? For example, would you exclude additional demographic factors? Would you incorporate marketing variables, such as acquisition costs, in determining rates?
3. Do you believe LOOP can create a "loveable" brand in the insurance space, where the vast majority of companies have an NPS score of less than 40 (see Exhibit 4)? Who do you see as the main target market for such a brand?
4. Beyond growing geographically by selling auto insurance in more states, LOOP management is debating whether to expand vertically by adding more insurance lines or horizontally by offering other financial services. Which of these routes would you prioritize?
5. Do you believe LOOP can make a meaningful change in the $250 Billion US auto insurance market? Would you invest in this company?