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Can technology and data analytics make it possible for an insurance company to offer better prices for drones and fleets? UK based insurance company Flock think yes and have built a sophisticated model to assess risk in real time. The data model absorbs information about traffic, weather, and dozens of other factors and calculates a price in real time. Policies are continually recalculated using collected telemetry and location data. Flock touts the freedom and flexibility of being able to buy policies that “last from one hour to one year.”
Flock, which writes policies for commercial drone flights and car fleet travel and is expanding into the European market, today announced a $ 17 million Series A funding round led by Social Capital, involving existing investors. Anthemis and Dig Ventures. This brings Flock’s total funding to $ 22 million.
VentureBeat sat down with Flock CEO Ed Leon Klinger to understand where the company is heading and how much it will cost to insure the trip.
This interview has been edited for clarity and brevity.
VentureBeat: How much data is used to set the price of a drone flight?
Ed Leon Klinger: We only wanted to help drone pilots when we started the company to understand and identify and actually be able to quantify the risks of their flights in real time. So we created a risk engine that absorbs hyperlocal data sets in real time. Things like wind speed, humidity levels, visibility levels, traffic conditions, population, and density level. We reconcile these data sets to build a risk score for a given drone flight. So we started.
VentureBeat: And are you expanding?
Klinger: We have entered the world of commercial engines. We apply the same logic to car or van trips. We convert that risk score in real time into a price so that the price you are paying as a customer to insure your drone flight or to insure your van trip is directly proportional to the risk you are taking with that or that drone flight. van trip. It is a very different approach to insurance. We are taking a radically different approach to the traditional insurance model, which is priced annually and uses predominantly historical data sets. We set insurance prices per second and per meter using real-time and historical data sets.
VentureBeat: Per second or per meter? So I’m flying and then all of a sudden I’m heading into a high-density region. Does the needle of any meter go up and the price begins to rise? Is it that accurate?
Klinger: There is no simple answer to that question because it really depends on the product you buy from us. So the first thing to keep in mind is that we sell exclusively to commercial companies. We are completely B2B so we do not sell to people who are flying their drones or people who are driving in their cars. We only sell to commercial companies. We have a range of products. In the realm of drones, one of the products we offer is what we call a “pay per flight” insurance product that works exactly as you say. Their prices are highly personalized on a hyperlocal, real-time basis. Each flight is directly influenced by the real-time hazard conditions at the time and the precise location of that flight.
The most interesting product we should be talking about is our exposure-based car insurance product, whereby each trip is independently priced based on the real-time hyper-local conditions of that trip. So it fits exactly as you described. If you are driving through a densely populated area or an area where traffic conditions are not favorable, with the accident spectrum, or where we have data sets that show high accident rates or theft rates, that kind of decisions made by the driver. it will have a direct impact on the risk score associated with that specific trip. That risk score is directly tied to the price of insurance for that specific trip.
VentureBeat: So can a driver or company adapt to future trips?
Klinger: What we have created with Flock is not only an accurate real-time pricing tool, but we have incorporated an incentive mechanism. One of our fundamental value propositions is transparency. We provide transparent information so that customers can understand why their flights or why their van trips are priced. They can then use that information to understand and mitigate their own risk on future flights or trips by changing the drivers they are using or changing the routes they are taking. They can then reduce the risks and receive lower prices for their insurance.
We are building an insurance company that actively encourages better behavior and safe travel or safer behavior on behalf of our clients. What gets us out of bed in the morning is making the world a smarter place. It’s not just about building another traditional insurance company. We are building a very different type of insurance company that actively incentivizes clients to mitigate risks and hopefully save lives. And we want to help our clients save money, time and lives.
VentureBeat: How do you plan to grow?
Klinger: Our drone business It has already expanded to Europe and we have a subsidiary called Flock GMBH that is up and running. Actually, we are selling in about 16 countries in Europe in our drone business.
Our engine business at the moment is only in the UK, but we just raised $ 17 million. One of the main uses of that newly raised capital is to fuel our expansion in Europe. And Europe is a very big market for commercial engines. It is a dramatically underserved market. There is no comparable product to Flock in Europe at the moment, so we believe there is a huge opportunity for us to take our approach. We already have insurance associations in the UK. The next step is to grow our team. We will expand our team from around 20 currently to closer to 80 [people] while expanding existing and new insurance associations in Europe.
VentureBeat: And after that?
Klinger: We are very determined to build a fully global and fully digital insurance company for the connected and autonomous world. So while Europe is the immediate next step, the US is obviously a very exciting and very large market, and it is a market where we are seeing a proliferation of new vehicles. So electric vehicles are connected to the internet. Then there are the new business models, like same-day delivery or next-day delivery. There are models like carpooling and carpooling and models like short-term leasing or vehicles on demand. Those new business models aren’t unique to the US They are actually popping up across the developed world, and that’s a huge opportunity for Flock because these new modern digital fleets are not served by the traditional insurance industry.
VentureBeat: Any final thoughts?
Klinger: We are trying to build an insurance company that not only pays claims, but actively helps its clients understand and mitigate risks. So those customers avoid claims in the first place. One of our core beliefs is that the best possible claim experience is not claiming, right? So if you, as a commercial motor fleet, can significantly reduce your own risk and ultimately have fewer accidents and save lives, that’s the best possible insurance and claims experience. That is the future we are building towards at Flock.
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