Erik Skaar is Co-founder & CEO of Tillit, a Norwegian based InsurTech start-up that works with dynamically priced premiums and is striving to put customers back in the driving seat. Erik shares the story of Tillit and why it is part of a new generation of insurance companies.
[KAE] Tell us more about Tillit, including what makes the company and its vision unique?
Tillit is an InsurTech start-up that was borne out of the idea of dynamically priced insurance premiums. Premiums that change slightly each month based on the actual claims ratio of the insurance product.
“We can’t decide how many claims our customers will make but we can decide how much we will charge.”
That was the concept and the philosophy behind Tillit. But we needed a product and we were not going head on against a bunch of 300-year-old multibillion corporations, so we started looking for the worst products out there. A niche they didn’t care for, something that was new. It needed to be heavily overpriced and something young, early adopters and tech enthusiasts were interested in.
Tillit is an insurer provider for electronic valuables.
We follow a “limited profit model” that we control with dynamic premiums. We have a great level system that rewards claim-free customers. And when it comes to claims handling, we have developed a network system that offers a much better solution to the customer and the lowest price in the market.
[KAE] What have been the critical components for Tillit’s success up until now and what barriers have you encountered along the way?
The hardest part of penetrating the insurance industry is that as an industry, it is not particularly keen on being penetrated. They make a lot of money the way things are, and presenting a business concept with lower margins is not something you will get applauded for.
Finding the right partners has been essential for us. Doing something that is considered disruptive is very tough if you don’t have any backing.
We were a part of Norway’s No.1 accelerator called TheFactory. In the spring of 2017 they had their first InsurTech programme, and we were the only one of five InsurTech companies to excel and get an investment from the angel investors. Through the programme we meet a lot of players in the industry and have built a solid network around us. We also got the backing we needed to enable us to continue our journey.
[KAE] How does your business model differ from other insurance players in the market, in particular in Northern Europe?
The sole thing that is most unique about Tillit is that our business is based on arranging and not controlling. When it comes to handling claims we use an independent network of repair shops relevant to the product. We are outsourcing a major part of the claims process to give the costumer the best service possible and at the same time keeping costs down to the bare minimum.
[KAE] ‘Tillit’ means ‘trust’, but how does Tillit build trust and transparency with its customers? And how is this different from what other providers have done, or failed to do?
Incentives are the foundation of trust. There is a reason you trust your friends more than your arch enemies. You know their motivations.
We are a firm believer that you cannot build a genuine great customer experience with the existing business model because the incentives are corrupt.
In the new world things are supposed to be easy, transparent and the consumer is to do everything themselves. When the basis of the relationship is built on conflicting interests, doing the full transformation would be devastating.
Our business model is a “Limited profit model”, we are limiting ourselves to only take 20% of the premiums and using the remaining 80% on claims. The only way we can keep this ratio is with dynamic premiums.
With this model we are no longer making money on denying claims.
We do not get to keep the money we don’t pay out.
Our business model has similarities to a well-known American InsurTech company. But instead of giving your money away we just charge you less.
[KAE] How does Tillit leverage existing and emerging technologies, and have there been any challenges in doing so? From your perspective, how are FinTechs able to adopt and adapt quicker than the incumbent providers?
We have a lot of focus on gamification and machine learning.
Gamification is motivating someone to do something and to have a good time doing it. So we really wonder why the insurance industry is not a bigger player in this area. You have telematics and usage based insurance but driving like an old lady is really difficult to make fun. But they are brave for trying.
We have integrated a level system on all products that rewards the customers with points for each day they don’t make a claim. The points are used to level up which gives the customer a discount for the following month but are also used to reward the customer in other aspects.
Machine learning is used to process receipts both digitally and with OCR. At the moment we are integrating it into the claims handling process to determine the severity of the damage. Instead of just storing the receipts in image and text files, we use state of the art machine learning/OCR software from AI developer LucaLabs, that interprets the text and categorises all information from the receipt no matter what kind of layout or format. The data we extract is used to simplify the claims handling process and enables us to automatically get in touch with distributors in the case of damages covered by warranty.
[KAE] What other areas of Insurance/InsurTech do you feel are ripe for disruption and why?
All areas of insurance are ripe for disruption. But if innovation is going to provide the customers with any real value, insurance companies will have to find a way to limit the conflict of interest.
[KAE] What is the one pearl of wisdom you would share with anyone starting their journey as a FinTech and why?
If what you are doing is disrupting an industry,
you are attacking an industry,
and if you are attacking,
you are an enemy.
Make sure you have the right team on board and that what you are doing is beneficial to someone with big muscles. Your product may be the best product ever invented but that alone is not enough. Partnership and alliances will be the key to a successful outcome.
About the Author:
Erik Skaar is Co-founder and CEO of the Norwegian InsurTech start-up Tillit.
The company was founded by Erik Skaar and Elias Ottosen in 2016 after they both had been working in Norway’s biggest and oldest insurance agency Lyberg & Partners. The goal of Tillit was to create an insurance provider that belonged to the digital era and to do that they needed to start from scratch.
Erik is a tech enthusiast but an economist by trade and started working in insurance after coming back from studying in Shanghai.
More about FinTech Vantage:
This post is part of the FinTech Vantage series by KAE that provides a fresh perspective and hears first-hand from various players across the FinTech ecosystem.
KAE will be posting a number of interviews with FinTechs that share their candid viewpoints and to really get under the skin of the FinTech world.
If you would like to share your views and participate in the FinTech Vantage series, feel free to reach out to us at FinTech@kae.com