Article written by Dexter Cousins

Chris Bayley - Cover Genius

We were extremely focused and spotted an opportunity in a sizeable niche that was being overlooked by the large insurers. The niche we identified was car rental insurance. It's worth US$7 billion globally, US$6 billion of which is profit.

Chris Bayley - Cover Genius.

Cover Genius is an Aussie success story and is on course to becoming Fintechs next Unicorn. They are the Keith Urban of Australia’s FinTech scene, much bigger in the US than they will ever be at home.

Over the past twelve months, Cover Genius has been gaining recognition. With accolades including ANZIIF Insurtech of the Year 2018, Smart Companies fastest growing company, KPMG’s FinTech global top 100 and Insurance Innovator of the Year at Australia's Fintech Business Awards.

What is truly outstanding is the commercial success of Cover Genius. I caught up with Co-Founder, Chris Bayley to find out the secret to bootstrapping a global business from zero to US100m GWP in less than four years.

How did the Cover Genius story begin?

Cover Genius began four years ago with Angus McDonald (CEO and Co-Founder) and myself having this vision of empowering the world's largest e-commerce companies to sell insurance products.

As we see it, the market is at about 1 percent penetration. Cover Genius has developed two critical technology platforms that bring connectivity to big eCommerce companies wishing to sell or optimise their insurance products. We are the pipes, not the plumber!

We see it as our job, mainly because large insurers are not that good at providing the technology to enable eCommerce partners to sell insurance. It's difficult for them: technology platform development requires a lot of work and a skill set you will not find in a large insurer beset with legacy systems.

A sweet spot for us is global insurance wherein we combine our platform capability with extensive global underwriting capabilities (we are an authorised representative in over 60 countries). e-Commerce sites can very quickly sell insurance all around the globe from a single API call.

How many people told you that the Cover Genius vision was not possible?

Heaps. They were short conversations, but we've done it!

We are regulated in more countries than the largest insurers globally who all require dozens of country managers to sign off on every multi-jurisdictional deal.

Neither myself or Angus come with a traditional Insurance background, which has probably helped us in achieving what we have. Looking at Cover Genius from a traditional Insurers angle and seeing the scope of the challenge, I can understand to some extent why global insurers would think building a global platform is not possible. But we have done it in four years.

How did the idea for Cover Genius come about.

I previously ran the insurance team at Google. So, coming out of the Google business I could see the commercial opportunities for selling insurance online. It was just a matter of finding the right model.

The ancillary revenue for eCommerce sites is significant. However, it needs to be done at scale and to do it at scale you tend to need partnerships with the big e-commerce players. Initially Angus and I took a reasonably cautious approach because we were largely bootstrapped (Cover Genius is not VC funded and the small rounds to date have been funded by London-based insurance executives including Jim Sutcliffe, former Chair of Sun Life Canada and Julian Roberts, former CEO of Old Mutual).

We were extremely focused and spotted an opportunity in a sizeable niche that was being overlooked by the large insurers. The niche we identified was car rental insurance. It's worth US$7 billion globally, US$6 billion of which is profit.

Compare that to travel insurance, US$21 billion gross globally and about US$12 billion profit. So, the car rental market is 50 percent the size of the travel insurance market. And there was no one doing it. None of the big Global Insurers had customized car rental access products. None of them were able to sign deals with the largest distributors. It was totally overlooked. And when we engaged global insurers to provide policies for our early clients, their inability to provide capacity in short time frames and other archaic processes all got in the way.

So, we took it upon ourselves to go and find smaller agile underwriters and shortly thereafter we signed a cornerstone partnership with Booking Group (the owner of


How did you win the largest travel site company in the world as one of your first clients?

The nature of partnerships has changed over the last five years. Startups like Cover Genius exist to resolve pain-points that are inherent for companies who would otherwise need to partner with incumbents.

If your business model is to power insurance offerings on the world's largest e-commerce sites and you're the world's largest e-commerce site, who are you more likely to partner with? If you have grown an internet business to that sort of size and scale you're looking for like-minded businesses. eCommerce businesses know inherently from their own experience and by the nature of the industry that they're in, that it's going to be the little guys who can make it work.

When you're pitching your service to someone who understands you can do it - and you come with an attitude of wanting to make it happen - that's how eCommerce companies partner.

The alternative is big corporates who put everything through an RFE process.

That doesn't get you into the position of co-creating a solution.

It doesn't get you into the position of aligning mutual interests.

What tends to happen is the incumbents reply, because you have not engaged the tech startups, ending with a substandard outcome. And it is a real shame, because there's always a tech startup who wants to do it, who can do it and who won’t fail the partner.


The advantages of hiring a great team

We also have a great Tech team, many of whom were in the founding team of Viator (which sold to Tripadvisor for US$200m. )They had an excellent vision for a micro-service architecture, well before the word was coined.

The early versions of the API were very well received. The early release of our XCover platform was one of the world’s first APIs for insurance distribution. So, we were able to go from a couple of small clients in Australia to having the largest global travel sites within 6 months. We’ve increased gross premiums from a tiny amount in August 2015 to an expected monthly GWP of $30m by 2018 year end.


With the distribution problem solved early in the journey, what have been the challenges for the business since?

There's all sorts of stuff. The technical challenges are interesting but they're solvable. Scaling products, scaling technology, scaling the team etc. they are all interesting challenges.

We've deliberately not sought outside funding. So, we have the freedom to run an efficient, focused business and not worry about external investors. The lesson we've learned is it is better to have the founders running the business, not out raising money. It makes a huge difference.

Angus and I know all the internal workings of the product and operations. We know the internal workings of how we get new partners in place. The execution risk is reduced immensely.

It's very difficult to have your executive or senior management level performing the roles which would naturally fall to founders. I think that's probably been a cornerstone of our success, having the founders around.


What would you say is so special about the relationship between you and Angus?

Complementary skillsets. I used to think meant having someone technical and someone commercial, but we're both commercial. I am more product focused and Angus is more partnership focused. Both of us being commercial helps in the way we communicate and how we manage our expectations.

Ultimately it is like a successful marriage. Which means making it through difficult patches and remaining close. You must keep celebrating all the little victories.

How is Cover Genius using AI and Machine Learning to grow the business at scale?

We primarily apply machine learning and data science through a part of the Cover Genius platform, BrightWrite. While our XCover platform does the connectivity, BrightWrite introduce dynamic pricing and product recommendations. These optimize a partner’s profit margin, both on premium and on the risk side. BrightWrite primarily concentrates on non-traditional ratings factors and pricing factors.  It enables partners to sell product packages where the mix of individual products is bespoke to a single user.

Brightwrite is part of XCover, our distribution platform, but the microservice approach means we also sell Brightwrite to insurers.

What does the future hold for Cover Genius?

Simple - continue to work on the original vision and expand the reach of the XCover distribution platform. We’ve set up our US office, ably led by Mitch Doust who has years of US insurtech experience. Big e-commerce partners want to sell insurance and its Mitch’s job to get those to commercial and product outcomes.

What piece of advice do you have for InsurTechs just getting started?

Follow the money. Figure out who can be a big distribution partner for your business and talk to them. Then invest in the operational and technical scale.

Founder of Tier One People and host of the Fintech Chatter Podcast.

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