Interview with Alan Inskip CEO of temporary insurance provider Tempcover
Why do so many great ideas occur in the pub? But, while the majority are flatter than a day-old pint the next day, it can’t be said for the story behind insurance specialist Tempcover.
Conceived by its now CEO Alan Inskip in 2005 on a works-outing with colleagues from insurance broker the Fyfe Group, who saw an opportunity for on-demand motor insurance. The idea was simple: the ability to quickly and easily insure yourself to drive someone else’s vehicle, without the hassle of amending an existing annual policy.
On the strength of his conviction, Inskip was greenlighted by his employers to develop an idea that was in many ways ahead of its time. As a concept it resonates with the current shift to Mobility as a Service (MaaS); a trend sending shockwaves across the automotive sector.
Whether its ride-hailing with Uber, renting a car with a sharing platform like Getaround, or subscribing to car subscription services, Tempcover shares one common denominator: payment on usage rather than ownership. In their case, the ability to provide insurance from 1-hour to 28-days. Priced from £8.99 for an hours-coverage, it competes favourably with other on-demand driving and transportation services.
Moreover, while ride hailing, car sharing and car subscription tend to suit an urban customer base within reach of an available car or driver, temporary insurance has a broader range of applications. The ability to borrow a friend’s car; sharing the driving on a road-trip; covering a casual worker to drive the company van. It’s a longlist of use-cases wedded to flexibility and convenience.
Like most ideas, it has taken perseverance and, to Inskip’s admission, a certain degree of luck to deliver - “in those early days other insurers dabbled with the idea of fractional usage insurance. But, in most cases they were speculative punts lacking the ambition and digital savvy to secure scale.”
Competitive threats also came from technology firms looking to disrupt the dyed in the wool ways of the Insurance sector. But although these would-be InsureTechs had the technical knowhow, many were caught unawares by the fundamentals of running a profitable insurance business. Notably, an inbuilt resilience to fraud and a tactical focus on pricing and margin.
With this, Inskip cites his deep-rooted connection to the industry. Both his parents worked in the industry for over forty years and he himself had worked in the sector since graduating from Aston University in 2002.
Tempcover’s initial market foray was as a broker service. But, after witnessing above expected business, he switched to a direct to customer model, within days selling in excess of 100 policies.
His tactical focus was sharpened by the fact his initial team and overheads were low; for two years he was the only employee in the firm. In Inskip’s words it “enabled a relentless focus on margin. Using hands-on management of Google AdWords to drive traffic to the quote engine and outsourcing to trusted suppliers to build the tech. At all times keeping a tight rein on budgets.”
First mover advantage
From the outset Tempcover was self-funding and within a couple of years he realised he was onto something big. By 2009 he recognised a need to take his company to the next stage. Tempcover had first-mover advantage but new competitors were entering the space and he needed to defend his market position.
He soon dismissed the option for a trade sale; he didn’t fancy being usurped by a new management team, lacking the nuance for hands-on strategy. Instead he went to the world of Private Equity and, over a nine-month period, orchestrated a management buyout, backed by Connection Capital.
From Inskip’s perspective, “PE-backing brought a level of credibility that opened doors and enabled us to face-up to industry giants. Connection Capital also led us to our Chairman Peter Barrett, someone with significant industry experience. Peter in turn introduced us to new partners who are now a key part of our distribution strategy.”
The cash injection enabled Inskip to increase headcount from 20 to 30 staff, building a senior management team with blue chip, technology and pricing experience. As Inskip suggests, it also unshackled him from self-inflicted spending restrictions: “pre-MBO I tied myself to the mantra that every member of staff had to generate an uplift of £1m in turnover.”
InsureTech by nature
Thirteen years from launch, Tempcover is amongst a breed of InsureTech’s rewriting the rulebook for an industry traditionally geared to annual policies. It is a company that sees technology alongside a deep understanding of insurance, as key to business success.
“Every good insurance business is an InsureTech. Technology in reality is just a hygiene factor, an enabler fundamental to all customer focused businesses."
“Perhaps the difference between us and many emerging InsureTechs, is that we’ve been profitable from day one. Our roots in insurance also brings a more innate focus on areas like fraud management and loss ratios that might otherwise trip up the uninitiated entering our sector.’
“We’ve also been fortunate to build from a roster of insurers able to support a competitive pricing model from the get-go. Other InsureTechs – particularly those from a Tech background - have had to spin-up a network of insurer partners while simultaneously trying to compete on price. Building a network can take many years, taking you out of synch with your ability to build a brand and pricing strategy.”
Inskip says his insider’s perspective of the insurance sector has also enabled him to spot weaknesses and opportunities. “For years this space has been governed by processes and systems geared to annual policies. Legacy systems not geared to fractional time periods.”
In contrast Tempcover’s platform has been designed from the ground-up, with a “frictionless user focus. The quote engine has as few steps and questions as possible. Antifraud and ID-verification work behind the scenes to cut down application and purchase to under 90-seconds.” A recent platform overhaul has helped to accelerate the business to some 400,000 policies a year, putting it on target for its three millionth policy this October.
Data-led and partner oriented
As the company evolves, Inskip says things have turned from gut-instinct decision-making to coordinated strategies based on data and MI. He admits he was “late in the day to the introduction of CRM but, now in place, he has seen both a marked increase in repeat business as well as a reduced dependency on traffic from Google.”
Investment in technology has also enabled him to build new partnerships, further extending his distribution and reach. Earlier this month he secured a 6-week trial with a major car supermarket who implemented a Tempcover-backed “driveaway” product. The service enables a car buyer to get five days coverage for around £20. The dealership in turn receives a revenue share on any policies sold.
Within a week the dealer asked the trial to move to a full-blown partnership, having witnessed higher than expected sales, as well as evidence that driveaway helped to convert same-day car buying decisions.
Moving forwards, Inskip sees partnerships as a key area of focus, enabling him to scale business and leverage his underlying technology platform. He also sees a big opportunity in extending to new geographies, “the UK is a global leader in insurance services. Other markets are not as far along the distribution path, with more emphasis on brokers as opposed to aggregated, online user experiences. I can see Tempcover extending into other territories in perhaps 18-months’ time.”
Inskip also hints that Tempcover might become a “self-insurer, able to underwrite its own policies and take a share of the growing revenue pie.
Ten years from now he expects the insurance space to be a very different. Fractional motor insurance has low consumer awareness in a market geared to annual policies. But consumer expectations are likely to shift against a backdrop of easy-in / easy-out usage models typical in telecoms and entertainment services like Spotify and Netflix.
As the market evolves Inskip says he will keep a close eye on telematics and subscription services that enable end users to purchase “miles-based” coverage. Albeit he suggests “mileage-based services might be difficult to scale financially, given current consumer awareness of temporary motoring insurance.”
As a leader, Inskip is quick to shrug off the label of entrepreneur. Asked whether he is proud of setting up a business scheduled to write its 3 millionth policy in a couple of weeks’ time, he prefers to describe himself as “lucky.”
His self-confessed management style is relaxed but detail centred. He likes to give his staff autonomy but according to colleagues is hugely results driven, leading weekly team stand-ups to share financial performance. In his words, “knowing the numbers creates a shared vision and focus on results, as well as a context for compliance and legal rigour."
Whether he is lucky or just a good judge of focus, Inskip has settled on a business aligned to the future direction of travel across the automotive landscape. One that is gripped by thoughts of fractional ownership, subscription, autonomy and car sharing services. Within that context, it’s easy to see short term insurance as part of the mix.