2020 is shaping up to be a watershed year for a Boston-based insurtech startup, Openly. After announcing a $7.5M Seed investment by Google’s Gradient Ventures, the insurtech has begun officially rolling out its upmarket homeowners product, and is already operating in four states with Massachusetts soon to follow.
After having first profiled the company almost two years ago to the date, Agency Checklists spoke with co-founder Ty Harris about how the company has evolved or the past two years, what it has learned, and where it looks like the company will be heading. The following is our interview with him, which has been edited for clarity:
For those who did not read our initial interview with you, could you give them a quick recap of what exactly Openly is and what it aims to do?
Absolutely. Openly is a technology-enabled personal-lines-insurance provider. Right now, we are in four states with what is effectively a relatively upmarket homeowner’s product.
Google’s Gradient Ventures made a significant investment in Openly, what has that meant for the company?
It was a good sign [Google’s investment] that brought us a lot of credibility. We need to work with a lot of different partners: We need agents to trust us, we need customers to trust us, and we need reinsurers to trust us. We need data providers too. Having that stamp of approval, and that support has given us, and these partners a lot of confidence.
What would you say differentiates Openly from its competitors?
There are three key things or differentiators about the Openly model. The first is what we offer for our consumers. The coverage Openly provides is very comprehensive, particularly in the way in which we treat coverage A and guaranteed replacement costs, and the like. Openly also offers open perils, contents coverage in every policy, and very high “Sub” limits on art and that kind of thing. So, it is a nice policy for consumers to buy and agents to sell.
The second differentiator concerns the technology Openly employs. While other insurtechs have technology, we believe we have taken ours to the next level. It is extremely fast and easy for an agent who uses Openly to get through the underwriting stuff to obtain a bindable price. So, we literally can offer a truly bindable price, with just three questions–Name, Date of Birth, and Address. There are no surprises hiding in the application process, just three questions.
The third thing is that our technology has been designed specifically for the independent agency channel. And that technology works for everyone in that channel–from small, local, traditional agencies to big platform national agencies. If you go in to tour our agency quoting portal, it feels like this is a tool designed for a professional agent, not a consumer.
Some of the other Insuretech out there have sort of pivoted into the agency space, but they are essentially presenting their agents with something that does not work for an agent. If you shop for insurance once every ten years as a consumer, you need one screen flow that acts like a wizard. It is slow and asks one question at a time.
If you are a professional agent who does this ten times a day, however, you need a very different tool. That is the tool Openly has built for independent agents.
Can you expand on that a bit?
One thing you do see with certain Insurtechs is that they started as truly direct-to-consumer, and their attitude about agents was “get them out of the way.” Yet, many of them are quietly in some cases pivoting to effectively marketing through agencies, right?
Recently we have seen big, big pivots where maybe they do both [channels] still. But, most of the revenue is coming from the agents. You have seen that in multiple, multiple cases. However, if you are built from day one to face consumers, then it is not always the best product to be sold through agents.
Everything from the technology to the understanding of how commissions work and in between, I think, is sometimes lacking in these pivots. From day one, Openly has been built for agents.
You also mentioned the importance of actuaries to Openly.
In addition to myself, we have two others very, very strong actuaries who are on the Openly team and have built this type of product before. When I hear about some of these Insurtechs who do not have an actuary on staff for years—that is crazy to me— I mean, that is the core of what our company is in many ways.
So how exactly did you build the Openly platform? Why ask three questions versus just one?
We built it literally from a very low-level programming language, which we did not set out intending to do. We thought we were going to borrow a lot of third-party components to create the experience we wanted and needed to do. Ultimately that meant building our own platform. As a result, we now have the speed to do 10,000 rates a second on a policy in serial. We do, however, leverage external providers of data. So, we have not built our own massive database. The records of every house in the country, for example, are accessed in real-time by contacting multiple data vendors every time we do a quote.
Under the hood, however, is where I think we have much more than many other Insurtechs. We have built our own rating and underwriting models, our own policy contracts in many ways, although they are ISO driven— they are very much our own. Add to that the technology to support all of that.
So, our rating model, for example, has dozens of individual components that then add up to the final premium. It is much more granular than many competitors. We consider data based on machine-processed photo evidence of the house t as well as records-based evidence about the house. We have overlapping data sources, we have multiple opinions on the square footage of a house, and it is smart enough, if they do not match it well enough it will just pop a question and say, “Hey, make sure you ask the customer this question to confirm for sure.
And then we order lots of data about the customer. That is why we ask three questions and not just one. We need to understand things about this customer, not just about the house, not just about the location. So, I think by combining the data about the customer, the house, the location, the coverages, we are gathering more data than just about anybody else out there. We are getting an extremely accurate risk predictive price that for some customers is an amazing price, and for others, it is not.
Where is Openly available as of today, and when is it planning to enter Massachusetts?
We are currently live in four states: Pennsylvania, Illinois, Arizona, and Tennessee and are dying to enter Massachusetts as soon as we can. The carrier that backs our insurance, Rock Ridge, is now approved as a carrier in Massachusetts. So, we will be filing in Massachusetts very shortly.
With respect to our immediate roadmap, we have just filed in Kentucky. We are about to file Massachusetts. We will likely go to Indiana after that. A little bit farther down the road, for New England, it would probably be Connecticut, although that is likely further on the back end of this year. And then we would love to get up into some of the Northern states. Ultimately, it is like a puzzle we need to work through with our resources, but also with the insurance company we work with, Rock Ridge.
Do you envision eventually having a presence in all 50 states?
Yes, but it will not be immediate. I would say we have a long-term goal that by some time in 2021, we would love to be in most of the country. So, I am not going to say a year from now we’ll be in 50 states, but that is certainly our aim. Our goal is not to be only a regional player.
How did Openly’s relationship with Rock Ridge come about?
Rock Ridge is basically a subsidiary of Clear Blue. Clear Blue is a little bit better known and is effectively a fronting company. As I mentioned in our earlier interview, I used to work at Liberty Mutual, and an ex-Liberty person I knew was one of the early employees there. We happen to reconnect at some conferences and started talking to them, and we just hit it off with the team.
Pivoting back to the four states in which Openly already has officially launched, how has the reception been? Did it match your expectations? What has been the biggest takeaways thus far?
One of the things we have been most excited about has been the anecdotal agent reception, which has been really positive. It has been easier than we thought it would be to attract agents and agencies. Not that it is necessarily easy, but we have found that a lot more agencies have been willing to put their trust in us during these early days than we had expected.
Honestly, it has been more our time and being able to sign up agencies and onboard them that has been almost the limiting factor at this point. We have a pretty decent queue, which we are excited about having so soon.
Are there any metrics you can share with our readers, thus far?
While it might be too early for us to talk about exact specific sales numbers, I can say that it is roughly going the way that we expected. And if anything, a little bit of a positive surprise.
One item that I think is important to note is how we are doing in the states we have chosen to enter. With a lot of other insurtech startups, you see, what they do is they take a state where the rest of the market does not want to be, and then they go to some underserved market and underprice it, and they sell $20 million in the first month.
We are very explicitly not doing that. We picked four very attractive states for the industry to enter first: Arizona, Pennsylvania, Tennessee, and Illinois. These are generally profitable states for the insurance industry with a lot of insurance competition there, and we are doing very well.
So, to have a diversified portfolio in those types of states as opposed to 85% of your book in one coastal county that no one else wants to be in, that is a metric to note that has been very attractive to the reinsurers behind Openly.
Was there anything that surprised you after starting Openly, particularly since you already had such an extensive background in insurance?
Starting a startup, in any industry, until someone has done it—I almost do not even try to describe it—is extremely hard. And you see why people talk in theory about having determination and persevering, but until you have done it, it is hard to comprehend. There have been a hundred times when I was sure our company was probably not going to make it to another week for one reason or another. So, to have gotten to market and launched has just been such a feeling of success
Working at a big insurance company you are very insulated from all the supporting infrastructure. Having to run the entire company, and doing everything necessary to keep it going is wildly complex. It is like a math problem coupled with a complex factory, right? As such, I completely respect anyone who has brought an actual insurance product to the market. I guess it has been harder than I would have guessed after leaving a corporate environment.
Since a launch here in Massachusetts appears to be imminent, what ideally would be the result you would like to see here? Do you have any agencies already lined up for Massachusetts?
We are extremely excited about it. We have a lot of Massachusetts agents on our signup list who are, in theory, ready to go once we are live in the state. So even though it is our fifth or sixth state, depending on when Kentucky comes out, I certainly think it will over-perform just based on the early interest levels we have already gotten. I am expecting it will be a core state and would not be surprised if it becomes our biggest sales state later this year.
You personally have a lot of ties to the Massachusetts insurance industry. Could you share those with our readers?
I do. I spent 12 years at Liberty Mutual, where I designed personalized insurance products. Eventually, I was the chief product and underwriting officer there for Liberty’s personal lines. Of course, Liberty had the Safeco brand, which I also supervised toward the end of my time there. So, I have seen insurance from that perspective. I also have seen it from the agent’s perspective as my wife runs a local independent insurance agency here in Massachusetts.
Where is her agency located?
It is located here in Boston. It is called Elements Insurance Agency, and it was a scratch agency she founded four or five years ago.
So, for an agent who reads this interview and wants to know more—What are the next steps involved in working with Openly?
It is quite streamlined. What we typically advise is that an interested agent should go to our website where there are all kinds of ways to get in touch. You can chat with us on the website, you can call us, you can sign up on the website.
After initial contact is made, we then typically have a half-hour introductory meeting, where we just get to know the agent. During this initial meeting, we demo the software and the product and just see if it is a fit. Sometimes it is not. You may meet an agent who sells a fair bit of homeowner’s single-family homes, a little bit of upmarket business, et cetera. If it is a fit, we can onboard them very quickly. I mean, we do the basic, the checks we need to with licenses and background and that kind of thing. But we have onboarded agencies in a day or two when it is a good fit.
It appears you have a pretty clear vision of what type of agents will best benefit from using Openly.
The practical reality for an agent interested in Openly is to know that we are not going after every customer. That is why we are selling through agents. An agent is not going to find that you placing 60% of their customers with Openly… That would be rare. And we are fine with that. Our underwriting models select relatively upmarket, lower-risk customers and the pricing for them can be good when it lines up. So for agents that are interested in learning more, we see Openly as one more tool in their quiver, and the great thing for agents is that they can find out if it is the right tool for them in a certain situation in about 15 seconds. They can type in the information and if it is a fit, great. If it is not a fit, move on. That is the model.
Do you have plans to expand beyond homeowners eventually?
I would be very surprised if we do not branch out into other adjacent and obvious products. We will almost certainly have an auto product, a motorcycle product, things like that. I know those are not coming this year. We want to get the homeowner product right this year. It will not be until 2021 when we probably start to give serious thought as to if it is the right moment to start rolling out a different product.
Are there any other insights you would like to share with your readers about your experiences in insurance that led to co-founding Openly?
Fundamentally, I think a lot of folks in insurance have the wrong view of the future. They have it half right. There is a view in insurance that the whole future is direct branding. Meaning, I am going to build a huge brand and have someone come to my website or my call center, where I am only going to sell them my brand. That has worked for the last 20 years. But in many ways, you see the huge brand spends, but ultimately, it is not right for the consumer.
If someone comes to Openly, I do not want always to sell them an Openly policy. It might not be the best price or the right product for them. I want them to go to an agent where they have a choice.
We want to use digital tools to empower humans to do what humans are good at. So, we want agents to be offering coverage advice and counseling people and providing empathy and things that computers cannot do. We do not want agents to spend their time entering a hundred pieces of data, that do not make sense, into some clunky system. Empowering humans and fueling transparent choice in insurance. I think embracing those core values is what we are trying to do. And it is also why my wife ultimately started her own agency, because she said, “Hey, the future of insurance is an efficient choice.” And that is why we started Openly.