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Can technology and data analysis make it possible for an insurance company to offer better prices for drones and fleets? U.K.-based insurance company Flock thinks so and has built a sophisticated model for evaluating risk in real time. The data model sucks up information about traffic, weather, and dozens of other factors and calculates a real-time price. Policies are continuously recalculated using data gathered from telemetry and location. Flock touts the freedom and flexibility of being able to purchase policies that “last from an hour to a year.”
Flock, which writes policies for commercial drone flights and automobile fleet trips and is expanding into the European market, today announced a $17 million series A funding round led by Social Capital, with participation from 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 going and how much it will cost to insure the trip.
This interview has been edited for clarity and brevity.
VentureBeat: Just how much data goes into pricing a drone flight?
Ed Leon Klinger: We just wanted to help drone pilots back when we began the company to understand and identify and actually be able to quantify the risks of their flights in real time. So we built a risk engine that sucks in, in real time, hyper-local datasets. Things like wind speed, humidity levels, visibility levels, traffic conditions, population, and density level. We reconcile these datasets to build a risk score for a given drone flight. That’s how we started.
VentureBeat: And you’re expanding?
Klinger: We’ve moved into the world of commercial motors. We’re applying the same logic to journeys with cars or vans. We convert that real-time risk score into a price so that the price that you’re paying as a customer to insure your drone flight or to insure your van journey is directly proportional to the risk that you’re undertaking with that drone flight or with that van journey. It’s a very different approach to insurance. We’re taking a radically different approach to the traditional insurance model, which is priced annually and using predominantly historical datasets. We are pricing insurance on a per-second and per-meter basis using historical and real-time datasets.
VentureBeat: Per-second or per-meter? So I’m flying along and then, all of a sudden I head over a high-density region. Does some meter needle jump up and the price starts going up? Is it that precise?
Klinger: There’s not a simple answer to that question because it really depends on the product that you’re purchasing from us. So the first thing to note, we sell purely to commercial businesses. We’re fully B2B, so we don’t sell to individuals who are flying their drones or individuals driving in their cars. We only sell to commercial businesses. We have a range of products. In the drone space, one of the products we offer is what we call a “pay as you fly” insurance product that works exactly like you say. Its prices are very bespoke on a hyper-local, real-time basis. Every single flight is influenced directly by the real-time risk conditions of the precise time and location of that flight.
The most interesting product that we should talk about is our exposure-based motor insurance product, whereby every single journey is priced independently based on the real-time hyperlocal conditions of that journey. So it adjusts exactly as you described it. If you’re driving through a densely populated area or an area where traffic conditions are not favorable, with the specter of accidents, or where we have datasets that show accident rates are high or rates of theft — those kinds of decisions made by the driver will have a direct impact on the risk score associated with that specific journey. That risk score is then directly linked to the insurance price of that specific journey.
VentureBeat: So can a driver or a company adjust on future trips?
Klinger: What we’ve built with Flock is not just an accurate real-time pricing tool, but we’ve built in an incentivization mechanism. One of our core value propositions is transparency. We provide transparent insights so customers can understand why their flights or why their van journeys are priced. Then they can use those insights to understand and mitigate their own risk in future flights or journeys by changing the drivers that they’re using or changing the routes that they’re taking. They’re then able to reduce risks and receive lower prices for their insurance.
We’re building an insurance company that actively incentivizes better behavior and safe journeys or safer behavior on behalf of our customers. The thing that gets us out of bed in the morning is making the world a smarter place. It’s not simply building another traditional insurance company. We’re building a very different type of insurance company that actively incentivizes customers to mitigate risks and hopefully save lives. And we want to help our customers save money, time, and lives.
VentureBeat: How do you plan to grow?
Klinger: Our drone business has already expanded into Europe, and we have a subsidiary called Flock GMBH that is up and running. We’re actually selling in about 16 countries in Europe in our drone business.
Our motor business right now is just in the U.K., but we have just raised $17 million. One of the core uses of that freshly raised capital is to fuel our expansion into Europe. And Europe is a very large market for commercial motors. It’s a dramatically underserved market. There’s no comparable product to Flock in Europe right now, so we think there’s an enormous opportunity for us to take our approach. We already have insurance partnerships in place in the U.K. The next step is growing our team. We’re going to be expanding our team from currently around 20 to closer to 80 [people] while expanding new and existing insurance partnerships in Europe.
VentureBeat: And after that?
Klinger: We are very much set on building a fully global, fully digital insurance company for the connected and autonomous world. So while Europe is the immediate next step, the U.S. is obviously a very exciting and very large market, and it’s a market where we’re seeing a proliferation of new vehicles. So electric vehicles are connected to the internet. Then there are new business models, like same-day delivery or next-day delivery. There are models like ride-hailing and ride-sharing and models like short-term leasing or on-demand vehicles. Those new business models are not unique to the U.S. They’re actually popping up all over 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’re attempting to build an insurance company that doesn’t just pay claims, but that actively helps its customers 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 no claim, 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 claim experience and insurance experience. That’s the future that we’re building toward at Flock.
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