How Estonian startup DriveX digitizes motor insurance claims
Estonian InsurTech startup DriveX has signed cooperation agreements with three insurance giants of the region, enjoying a privilege to choose smart investors only and starts expanding into foreign markets.
After completing the Porsche Open Innovation Hackathon in May 2019, somebody reversed into Rauno’s car in a parking lot. He experienced first-hand how archaic and frustrating it was to go through an insurance claim. Working for the well-known last-mile technology company Cleveron at the time, he formed an idea to use AI for remote vehicle inspections that would ultimately get people back on the road much faster.
Since 2019, DriveX has started working with the leading companies in the Baltic region – ERGO, Gjensidige, Carglass and more. Just recently, DriveX announced another partnership with the largest insurance corporation in Central and Eastern Europe – Vienna Insurance Group. DriveX saves costs, reduces fraud risk and provides a better, digital customer experience for insurers.
In December 2020, DriveX announced its pre-seed funding with well-known angels from Estonian unicorns Bolt, Wise (former TransferWise) and Skype, including the former Prime Minister of Estonia Taavi Rõivas.
Why is vehicle inspection a thing in insurance?
Rauno Sigur, CEO and co-founder of DriveX: Insurers have two business silos – sales and claims. Their success in business is largely determined in how much they are paying out to customers, but also how fluently the process went. In most cases, handling a claim is the only serious connection point for most consumers with their insurer. That’s where they decide if they will continue being a loyal and happy client or not.
Coming back to sales, then insurers want to understand what they are insuring exactly, since it is their business to take calculated risks. Insurance fraud is a huge issue – companies are paying out billions of euros that they shouldn’t. Essentially, the most common situation is where dishonest people are trying to add damages to their car after an accident, hoping that insurers don’t notice. And that’s the key reason insurers are doing pre-inspections when they sell casco or full comprehensive motor insurance.
In claims, it’s all about receiving trustworthy, high quality information as fast as possible. Naturally, the goal is to summarize what happened to the car and jumpstarting the claim process. At its core, the customer’s satisfaction depends on the processing speed and transparency of the insurer. If we get into a car accident, we want to get everything fixed as soon as possible and use our car again.
AI seems to be a buzz word nowadays. What does your product do exactly?
Couldn’t agree more! First, we realized that AI is indeed complicated and expensive to develop. We only use it for solving problems in which other solutions cannot.
In DriveX, image capturing is simple, yet standardised. You can only take images in real time and it is taken, our AI analyses it in a few seconds. If necessary, the application provides feedback to the user what needs to be changed – perhaps the number plate wasn’t visible, or the image was blurry. For the record, you cannot upload a picture of your cute dog. We know if there’s a car on the picture and various other aspects.
Insurers receive only relevant pictures that can be used in automating decisions – to activate a policy, to review damages and more. Furthermore, we report how the verification process went – was everything completed in a safe manner, creating more transparency if users are honest or not.
There are a gazillion apps out there. Is than an obstacle or a supporting force for you?
Apps are indeed a part of our life now but more importantly: consumers want frictionless experiences. Most people purchase insurance once or twice per year and luckily, accidents happen less often, perhaps once in 5 years. For those reasons, people don’t want apps in their phone for something they use so rarely.
We believe in progressive web apps – after receiving a link from the insurance company, our verification takes place in the web browser. No app download or installation required. We have also built ways how the solution can be customized according to the insurer’s needs, which is paramount in creating excellent customer journeys.
How innovative is the insurance sector? Are they embracing technology and digitization?
An extensive study has shown that 6 out of 10 consumers would switch their insurance provider to get a better and digital experience. Those high expectations in consumer behaviour are influenced by ecommerce and the like, pressuring in the insurance industry to innovate as well.
It is true that insurance may be conservative as a sector but that’s because it is heavily regulated. Innovation must be thought through entirely and partner companies must be crystal clear about the value proposition but also risks. What I like about working with the insurance industry is the entry barrier – not every startup is able to overcome it. But once you’re in, you’re in for good.
Insurers have understood that it’s not worth it to reinvent the wheel, they want to focus on their core business. The majority of companies want to find a trustworthy technology partner, purchase modules „off the shelf“ and thus they provide value for customers and employees much faster. Software as a Service and also Insurance as a Service will be very dominant in the coming years, combining many service providers and technologies into one winning product.
What’s your next move?
We are building towards automation in insurance sales and claims step by step. Actually, up to 50% of common vehicle damages such as dents, scratches or windshield cracks can be assessed viewing only photos. This creates great opportunities to provide a touchless and digital process in claim management. People can save their time doing inspections remotely. Given the COVID-19 situation, remote solutions also help us to be safe and healthy.
In only one year, we have managed to capture the majority of the Estonian insurance market. We are quickly expanding to new markets and already having first conversations with insurers from Germany, Poland and Scandinavia. Fortunately, we have found great talent to join our team. The market opportunity is huge since the insurance vertical consists of carriers, agents, brokers, car dealerships, other insurtechs and more.
What about raising funds?
Funds are indeed important, and we were fortunate to choose smart money in the last round. I can comment that interest from investors is fairly high – every week a new investor writes us. Estonian startups are well known for being capital efficient. We have what we need for more than a year, since our customers are generating significant revenue for us already. We definitely prefer insurtech and AI related hands-on investors that could help us in new large markets.