Since its inception in 2015, Flock has grown from a promising insurtech to setting its sights on becoming a truly global insurance provider.
The company’s micro-duration policies have made it a market leader for insuring drone flights, and it launched Flock Motor last year to provide flexible, digital-first products to the commercial motor space.
CEO Ed Leon Klinger joins Matthew to discuss the company’s growth, its new connected vehicles division, and a whole lot more.
Talking points include:
- Finding funding and building a brand
- Identifying and researching new markets
- How to innovate with insurers
- Augmenting traditional datasets
- Embedded insurance solutions
If you like what you're hearing, please leave us a review on whichever platform you use, or contact Matthew Grant on LinkedIn.
Sign up to our newsletter for a fresh view on the world every Wednesday morning.
Continuing Professional Development - Learning Objectives
InsTech London is accredited by The Chartered Insurance Institute (CII). By listening to an InsTech London podcast, or reading the accompanying transcript, you can claim up to 0.5 CPD hours towards the CII member CPD scheme.
- Claim 0.5 hours for listening to Episode 126 of the InsTech London Podcast
The insurer of the future has arrived - Episode 126 highlights
Matthew: Ed you did a degree at Oxford and a Masters’ at Cambridge before joining Flock. How did you come across the company and ultimately decide to join?
Ed: I specialised at Oxford on biotechnology, specifically on technologies that could destroy brain cancer using high-intensity ultrasound. What I learned was that it's possible to come up with really cool technology but getting it to market can be extraordinarily difficult.
That's why I went on to study Technology Policy at Cambridge. I wanted to learn how to take the wonders of engineering science and apply them to the real world. I ended up digging deep into drones, driverless cars and AI and published a few thesis papers arguing that we needed a better and more analytical approach to risk in these emerging industries.
By complete coincidence, Antton Peña, who founded Flock, was working on this problem at Imperial College London, and we were introduced because our ideas were very similar and well-aligned.
I was supposed to be starting work at Blackstone, which is a private equity company, and Anton had founded another technology company called Farewill. We both left our respective roles to start Flock and we’ve never looked back.
Matthew: What about funding for the business?
Ed: The original idea for Flock got funding in 2015 from Innovate UK, to whom we remain immensely grateful, and we won five Government grants to fund our research and development.
We raised a venture round back in 2016 and since then we’ve been backed by venture capital and angel investors. We’ve raised an angel round, a pre-seed round and a seed round. Our next round is our Series A, which we’re undertaking at the moment.
Matthew: How does the business work? What is it that Flock offers?
Ed: Flock started off providing bespoke, micro-duration policies for drone pilots and is still our main business area. Insurance premiums depend on the specific conditions relating to the customer, the pilot and their flight. We might price a flight at £5.95 for an hour because it's being undertaken in a relatively safe area, the weather looks good, and the customer is using a low-value drone. Someone in a more congested area, using a much more expensive drone in poor weather conditions might pay £175 for that flight.
We provide a comprehensive and visual risk management tool to the drone pilot. They can see why the flight costs what it does. If they move, or change the takeoff time or the drone, the price will change according to the risk. We’re incentivising lower risk behaviour and we use price as an incentive mechanism.
Matthew: Flock functions as an MGA using capital from Sompo and a whole range of underwriters. How do you work with them?
We have delegated underwriting authority from Sompo, who have been brilliant. We partnered with Sompo because we’re actively expanding into Europe via Flock GmbH, which is a company we set up with Brexit looming. We’re also working Sompo on building new products for drone delivery, drone swarms, and for drone applications which may not even exist yet.
We still work with Allianz and other insurance providers on larger, more complex risks which don't fit our relationship with Sompo. We come across clients with equipment costing upwards of £1m and in those circumstances, we go to the market to place that business.
Matthew: Why did you decide to partner with Sompo?
Ed: We have a shared vision with Sompo, which is the most important piece of the puzzle for insurtech. Partnerships are often slated on both sides, e.g., the insurtech wants to move too quickly, or the insurer wants to be more thoughtful and consider the risks more carefully.
The reason we formed a long-term partnership with Sompo is they believed in the same future as us. We know where the drone industry is going, we know the future of aviation and the future of aerial mobility looks nothing like the present. When we take a completely new use case to Sompo, they help us figure out how we can insure the client and unlock the innovation they want to achieve.
Matthew: Distribution is one of the biggest challenges for new organisations selling insurance. How did you manage to get known and bring in clients?
Ed: We have a two-pronged approach. We have a direct sales and marketing team, and by entering the niche of drone insurance we've been able to build a brand which is now recognised and trusted. Our data-driven, technology-first approach allowed us to win an enormous amount of market share quite quickly. That would have been harder for us to achieve if we had entered a more traditional market.
The other part of our approach is using third-party distribution partners, the most obvious being brokers. Brokers work with us for the same reason out customers choose Flock. We have a slick, digital approach that puts flexibility and speed first, and brokers get to sell products that their customers like. We’re the official British Insurance Brokers Association (BIBA) broker for the Unmanned Aerial Vehicle (UAV) industry and we're expanding distribution across Europe and further afield with our broker partners.
We’ve also got embedded insurance partners. Drone companies use all sorts of management platforms to fly and record their flights, so we partner with those third parties and absorb their data. Those platforms can then be used to sell Flock insurance directly to their customers.
Matthew: You launched Flock Motor last December. How did you decide that commercial motor was the right area to target next?
Ed: We had four criteria. We wanted to launch into an industry that was large, one that was growing; that had a high degree of connectivity today and an expectation of even more connectivity in the future. We looked at micro-mobility (scooters and e-bikes), commercial motor, haulage, aviation, and cargo shipping. We ran paid projects in some of those spaces and spoke to thousands of customers.
What we discovered about commercial motor was that the space is evolving at breakneck speed. Companies are buying telematics and installing devices into their cars quickly. Not only are they adopting new technologies, but they’re also adopting new business models, so ride-hailing, short-term leasing, self-drive hire, you name it. They're adding new vehicles and new drivers to their fleets every single day.
The critical part is that the insurance industry isn't moving fast enough. There is a gap between insurers and these growing companies with digital-first, flexible fleets. The fleets feel underserved and come to see insurance as a blocker. When we started speaking to fleets about our approach and product, the response was overwhelmingly positive. We launched our connected vehicles division, Flock Motor, to specifically go after the connected element of commercial vehicles.
Matthew: Are you able to talk about clients you’re working with?
Ed: One of our clients is a really exciting company called Elmo, who offer electric vehicles on subscription. If a customer doesn't want to buy an electric vehicle but wants access to one for a few months, they offer a flexible subscription service. They needed an insurance product that is as flexible as they are, and that can scale as they scale.
We integrated with their telematics platform, which is called Samsara, and they’re doing brilliantly. We’ll do anything we can to help them scale. We see ourselves as very much their partner rather than their vendor.
Matthew: Traditionally, information gets shared in the MGA space through spreadsheets and monthly bordereaux. I suspect that’s not how Flock is getting access to data from providers or sharing it with your insurers?
Ed: We get access to vehicle data through telematics integrations. That allows us to pull data, undertake our risk analysis and price up policies. We're fortunate to work with some incredibly innovative motor insurers who provide capacity on the back end, but also work collaboratively to make sure we're moving as quickly as our customers want.
But when you're a start-up and you launch into a new space, it's really important not to wait until everything is 100% perfect. Building a start-up is sometimes like jumping off a cliff and building an aeroplane on the way down. I wouldn't say that’s high risk but we certainly move quickly. By meeting our partners in the middle, we're able to do things relatively quickly from an insurance perspective.
Matthew: You’re new to the commercial motor market, how do you know that you're charging the right price?
Ed: We work collaboratively with our insurance partners to achieve that. What's important here is that we augment traditional datasets with newer and less explored datasets.
We're pulling data on traffic conditions, weather conditions, and data from Google Maps so we can start understanding specific location data as well. We pull data from Google Street View and we're analysing hundreds of thousands of images to get a granular understanding of risk in real-time.
We bring those new datasets to the table and work closely with our insurance partners, who bring their data and experience as well. That coming together of our experience and technology and their experience and data allows us to do quite remarkable things.
Matthew: Is Europe the next target for Flock Motor?
Ed: We have the ambition to expand into Europe. Our drone business is active across Europe via Flock GmbH and our motor business will follow. Ultimately, we have our eyes set on the US, which is the largest and most developed insurance and drone and motor market on Earth. The commercial space is crying out for a solution like ours but launching in the US is particularly tricky.
Matthew: How does what you're doing in the UK compare, from a technology point of view, with what's happening elsewhere?
Ed: The commercial fleet space is quite dramatically underserved across the globe. A lot of the UBI (Usage Based Insurance) and telematics innovation has been in the personal line space. The commercial space has been surprisingly neglected, especially given how large the opportunity is.
Commercial motor insurance is a £100bn+ market globally and it's underserved by technology. We could probably count the number of innovative data-driven insurance providers in this space on one hand.
A surprising number of them are here in the UK. That is testament to the ecosystem that you and others have helped to build. We have a brilliant technology culture in London and further afield in the UK and some of the hottest UK fintech startups are doing brilliant things globally now. We also have a large, thriving and innovative insurance industry.
There's something unique about London specifically, but soon it will be much broader than London, especially with the proliferation of remote working. The UK is on track to be the insurtech leader of the world if it isn't already. The coming together of technology and insurance expertise is allowing that to happen.
Matthew: You've got a positive tailwind behind you with the shift towards electric vehicles. Presumably, the acceleration of reducing our dependence on diesel and petrol is going to help as well?
Ed: Electric vehicle adoption is going through its fastest-ever period of growth. It's not just the proliferation of electric vehicles though, it’s the technology in general. That’s what takes these new emerging industries even further from a traditional insurance approach and broadens that gap.
That's really where Flock steps in. We sometimes describe ourselves as bridging the gap between the insurance of today and the technologies of tomorrow. We have our sights set on electric vehicles, telematics, and connected autonomous vehicles.
Matthew: Are you looking at the large automotive distributors as a way of distributing your products?
Ed: We are and there's an enormous opportunity there. Most of the major manufacturers are building connectivity right into the vehicle itself. By 2025, the vast majority of new vehicles will have a degree of internet connectivity, so the rate of change is extraordinary.
I certainly hope they're looking at us. We're already working with many of the leading drone manufacturers that way and they see us as their insurance partner. When they sell a drone, it comes with a connected, embedded insurance product.
Matthew: Commercial fleet operators have been monitoring driver behaviour for decades now, albeit somewhat mechanically. How are you innovating their risk reduction?
Ed: This is possibly the most important piece of the puzzle. The future of insurance is not a company that pays a claim when something goes wrong. That's absolute table stakes. The future is a company that leverages its unique position to the data it has to allow customers to mitigate risks and ultimately save lives.
We want to be providing fleet managers with dashboards to help them understand the risk of their fleet at any given time. We also want to pass those insights onto the drivers themselves, so they can understand risks in real-time and take active steps to mitigate them.
We've issued more than 1.5m quotations in the drone space and the last time we checked, we had reduced risk on average for our customers by 15% by helping them make up to 15 changes per flight. If we can achieve something similar in motor we will significantly impact road risk and ideally save a great number of lives.
We're already running experiments with our existing motor fleet customers. We identified one customer with over 50 vehicles and just three of their drivers were contributing to 25% of the risk, which was astonishing to learn. When we provided that feedback to the customer, they were willing to make active changes to mitigate that.
Matthew: In terms of potential partners, are there specific people you'd like to hear from that might be able to help you?
Ed: This would fall into four broad buckets. The first is fleets themselves. We have a flexible insurance product and we want to meet them. Second is insurers. It won't be long before we move into new spaces and we're always keen to speak with insurance companies, innovation departments, and business units with data-driven products that can help improve the lives of customers.
Thirdly, would be distribution. Any broker interested in distributing these kinds of flexible, data-driven products can contact us and we are actively working on building our distribution right now.
Fourth would be potential hires. We're looking for extraordinary, creative people and we don't care where you went to school or what university you went to. We care about the energy, excitement, passion and new insights that you can bring. We want to meet anyone in the insurance sector that would like to work with a technology-driven insurtech. The same goes for technologists. Go on our website, take a look at the work we're doing, read our story and get in touch.
Matthew: Thank you for your support for InsTech London. We’ve known you for a while, but why did Flock become a corporate member?
Ed: We love what you're doing. We love that you're building the insurtech ecosystem in London and connecting the dots. It’s really valuable. Everyone in the Flock team loves your podcasts, loves the materials that you put together, so we are big fans.
We met one of our most important hires, who ended up joining our leadership team and becoming an investor in Flock, through an InsTech London event a few years ago. At the end of the event, Robin offered anyone in the room 60 seconds on stage to pitch their start-up. This was before we had a product or had raised any money. I got on stage and said we were building a risk analysis company, we might be able to change the way that insurance works with our analysis, and anyone working in insurance interested in joining us should let me know.
John Rowlands put his hand up and said he was up for a chat. It wasn't too long after that that he left his job in the city to join us and came straight onto our leadership team, so we owe you a debt of gratitude.
Matthew: You’ve mentioned some of your plans already, but can you leave us with a look at what you see in Flock's future?
Ed: We want to become the go-to insurance provider for connected and autonomous vehicles. That's the one-liner. If it's connected to the internet, if it’s autonomous, we want to have access to that data.
Today, it's drones and commercial motor fleets, specifically cars, soon it's vans, trucks, and then the world's our oyster. We see a really interesting future in the world of connectivity and autonomy and that includes everything from cargo shipping to aviation and beyond.
Right now, we're in the UK and Europe, but we have our eyes set on Asia and the US and creating a truly digital, global insurance company for connected and autonomous vehicles. Hopefully, that's what I'll be telling you about on this podcast in a couple of years.
For more information about Flock, go to flockcover.com