Should you have been in the insurtech landscape for a while, you must hear about PolicyGenius. Born by two former McKinsey employees to address the fact that insurance product distribution wasn’t keeping up with the ever-evolving customer preferences and technology, the Brooklyn-based insurance tech-startup has taken the insurance sphere by storm, shaking up the traditionally stodgy industry and raising the bar for customer experience.
The meteoric rise of PolicyGenius is more of a conventional success; rather, it emerges as an inspiring story on how its founder challenged rejection and sexism to establish a $161-million insurance empire. Let’s read on to explore!
It’s Old-School Insurance Sphere That Sparks A Promising Insurtech Startup
Founded by Jennifer Fitzgerald and Francois de Lame, the story of PolicyGenius dates back several years when those co-founders were consultants at McKinsey, advising insurers on growth and marketing strategies.
“One of the big lightbulb moments was a study that found that the average age of an insurance agent is 59 years old,” shared Jennifer Fitzgerald, Co-founder & CEO, PolicyGenius. “Insurance agents are still the primary distribution channel for insurance in the US. If you couple that with the fact that increasingly, most households don’t have an insurance agent relationship, that presented a big problem for insurance companies.”
“Meaning, how do we get our products into the hands of consumers who still very much need them? The way we’ve traditionally distributed these products just isn’t keeping up with changing consumer preferences and changing technology,” she went on to explained.
Obviously, the natural answer was a digital product. Yet, Fitzgerald and de Lame noticed a repetitive pattern: Their clients who were old-school insurers consistently struggled with how to engage with digital-native customers.
This is one piece of the problem. “The other piece of it was just taking a step back and looking at how consumers transact across verticals today. There’s Amazon. There’s Expedia. I mean, you name it, there’s a digital self-service marketplace, and there really wasn’t one for insurance,” commented Fitzgerald.
After “talking to actual consumers” and performing some “research targeting consumers”, the duo found out that young consumers — different from Baby Boomers or older generations — are fine with buying insurance online and in fact, they embrace comparison-shop policies via the Internet. Confident that their idea for a digital marketplace would work, Fitzgerald and de Lame founded PolicyGenius, exchanging steady corporate paychecks for the high-stress stakes of startup life.
Early Days Came as An Uphill Climb
Insurance: The Stodgy Industry
Whereas PolicyGenius emerged as a pioneer in what is now called “insurtech,”it was an ambitious goal to disrupt such an old, regulated, messy industry as insurance.
“Everything about it is difficult,” Fitzgerald recalled.
From the industry-specific perspective, insurance is subject to heavy regulation. “It’s regulated on a state-by-state basis, which means that to get licensed as a broker or licensed as a carrier, you have to deal with state-by-state. The regulation of how you can market products, engage consumers, is also done on a 50-state basis, so you have to make sure that you are in compliance for all 50 states,” she explained, adding that “To bind the product and even just have products and prices, those will differ by state, sometimes by zip code. So, you have to reflect that in the pricing engines and the comparative raters that you build.”
Obstacles did not only come from the macro context, from the regulatory aspects, but also the consumer mindset.
Obviously, “nobody wants to talk about insurance. Insurance is something that’s intimidating, it’s boring, and it brings up difficult topics like death and mortality and your home burning down. It’s a category that’s super important to consumers, but one that they inherently distrust. The consumer challenge is, how do you get people to take action in a category where they are dreading it, and they put it off like exercise and eating healthy.”
After all, trying to change the consumer mindset around a “dinosaur” industry with a less-than-trustworthy reputation was really an uphill battle.
“Nobody was really thinking about insurance. And now it’s a big thing.”Jennifer Fitzgerald, Co-founder & CEO, PolicyGenius
The Challenge of Fund-Raising & Even Sexism
Going for an Expedia-like platform for one-stop policy shopping, Fitzgerald and de Lame navigated against major challenges as many other startups do – raising capital.
The fact that Fitzgerald did not look like a typical “tech-bro” entrepreneur also made it tough for PolicyGenius to win early-stage capital. “Investors didn’t get it,” Fitzgerald recalled. “We didn’t look like your typical co-founder team. We had one man, one woman, both of us ex-consultants, neither of us software engineers — we basically had every strike against us.”
After fruitlessly pitching over 100 investors during a frustrating 4-month period, Fitzgerald and de Lame decided to change tack. Appealing to friends and family, these former consultants raised $750,000 in early seed money, which was less than their fund-raising goal of $1 million, yet quite enough to keep them and a small team afloat for the following 18 months.
Undoubtedly, that initial rejection was tough and women – either because of socialization or innate behavior – tend to handle rejection worse than men. And Fitzgerald was not an exception. She started to doubt herself, “You’re led to believe that if you just work hard enough, things will happen. We were working our tails off, and it still wasn’t happening.”
Compared to her male counterpart, Fitzgerald struggled more, affirming that “I took it more personally than he did. I internalized it a lot more than he did. He was like, ‘Let’s go pitch again, see what we can do.’”
Things got worse when Fitzgerald came up against sexism. In one memorable pitch, “the perspective investor kept directing his questions to my co-founder, not me, and it was just so out of the ordinary,” shared Fitzgerald, adding that “Thankfully, that was atypical.”
Being a super-persistent female entrepreneur, undeniably, Fitzgerald did not let rejection or sexism stop her from success. And ultimate, she did succeed – stunningly!
“Smart” Work Paid Off!
The Strategy of “Offense & Defense”
In an effort to change the long-established consumer mindset as to this “dinosaur” industry, Fitzgerald and de Lame surprisingly turned their focus to design practices. Almost all people think of tech as a cure-all, yet PolicyGenius chose to adopt a more balanced approach to problem-solving.
“I think of it as offense and defense,” Justin Ternullo, Chief Design Officer at PolicyGenius
When it comes to tech startups, “offense” could be attributed to innovation, disruption, harnessing technology to push for change. “This is a huge part of what we do at PolicyGenius. There’s a reason why we had the first-in-the-nation online life insurance marketplace. That’s a part of the nature of being a tech startup, that’s in our blood,” explained Ternullo.
Whereas several entrepreneurs lay sole emphasis on technology, the “defense” piece is equally critical – at least, in the case of PolicyGenius. “Real impact doesn’t just come from pushing boundaries, being on the bleeding edge with tech. It’s also about acknowledging the reality of working in a slow-moving industry with ancient technology. If we ignored that, we’d be trying to solve problems with one hand tied behind our backs. For us, technology isn’t the entire story. It’s a tool we use to make our expertise more accessible.”
This explains why since the very first beginning, the insurtech has had solid design practices and the table stakes for every PolicyGenius design:
- Solutions: The Brooklyn-based insurance tech startup begins with the problem the user tackles, and they end with that.
- Contextual: PolicyGenius unearths the full context (user, market, team) and reveals critical constraints (industry, tech).
- Structured: They focus on delivering well-organised, scannable experiences with an emphasis on content hierarchy.
- Efficient: The mentality of simplicity – doing more with less – is embraced
- Hardened: They account for the many ways users experience PolicyGenius’s designs. Nothing is precious or brittle.
Such a comprehensive and wise approach proved to do wonders for PolicyGenius.
Time to Erase Fund-Raising Concerns & Get Traction
Particularly, after launching the first iteration of PolicyGenius, signing up initial customers by reaching out to personal finance blogs and winning strong advocacy with exceptional digital experience, Fitzgerald and de Lame won their first investor: TX Zhuo, a former McKinsey consultant who was a managing partner at Karlin Ventures.
“It was a relief because we were probably 2 weeks away from running out of cash,” stated Fitzgerald. “He actually had to advance us a million of it so we could make payroll.” In total, PolicyGenius team did nab a Series A round of $5.3 million.
After that, things started to get easier when it came to investors, “there’s a little bit of a herd mentality.”— and backers then included Steve Case’s Revolution, among others.
“It was hard and then eventually got easier, although it’s never easy because the later rounds just get bigger,” she said in an interview. “But I think the success begets success.”
“The other thing that happened in the industry overall is we were ahead of our time. When we got started, InsurTech wasn’t a thing … Since then, InsurTech has exploded. There are hundreds of InsurTech companies all within the last five years. So, we were a pioneer in the space. When the space started to catch on, I think that’s what created a lot of interest in us, and a lot of realization that “Oh. Those guys were onto something.””
“Because when we started pitching insurance five, six years ago, we got questions like, “Really? Is this an opportunity? Is there money in this?” Which seem like silly questions now, but they were questions that we got five or six years ago.”
Beyond any doubt, assuming on the initiating role is never a straightforward path, yet, resilience, coupled with smart work, will pay off in the end. Apparently, the Brooklyn-based insurance tech startup has grown into the fastest-growing life insurance distributor with $45 billion in life coverage issued as of January 2020.
Within that year, as the leading online marketplace for comparing and purchasing insurance, PolicyGenius, also won $100 million in Series D funding led by global investment firm KKR. Existing major investors in the company, including Norwest Venture Partners, Revolution Ventures, Susa Ventures, AXA Venture Partners, MassMutual Ventures and Transamerica Ventures, also participated in the round. Since raising its $30 million Series C round in early 2017, PolicyGenius has grown annualized revenues to $60 million, a 10-times increase.
“With increased competition in the insurance sector, we believe there’s a need for platforms where customers can easily manage their relationships across a number of insurance policies and carriers throughout their lifetime,” Allan Jean-Baptiste, at KKR, stated. ” PolicyGenius has created a model to provide for exactly this, set apart by its sophisticated proprietary technology, and the traction of its marketplace platform among carriers and consumers alike.”
From Entrepreneur to Entrepreneur: Jennifer Fitzgerald & Her Leadership Advice for Female Founders
Once struggling with sexism, Jennifer Fitzgerald is ranked 44th on Quartz’s “rising stars” 2018 list of nearly 250 female founders. Besides, she gets recognized as the Ernst and Young Entrepreneur of the Year New York 2019, one of Fast Company’s 100 Most Creative People in Business for 2018 and is also one of only four women founders in Fintech to raise more than $50 million in funding.
Learning from her own experience, Fitzgerald offers some pieces of advice for female founders. “If you’ve got a solution or a product that solves a real market problem, keep at it. Find the folks that will believe in you whether that’s investors, whether that’s employees. But you’ve got to stay persistent.”
When it comes to leading a team, “one piece of advice I would give to other women leading teams is to stay positive and optimistic. Particularly in the early stages, building a new business can be difficult and discouraging, but it’s your job as a leader to keep everyone motivated — and this spans to both investors and employees.”
A larger team goes together with higher responsibilities and also more problems to work on. Regarding that, Fitzgerald stressed the importance of delegation, noting that “One of the most important things any leader needs to do is to distinguish between what’s truly important and urgent versus what you can delegate. Once you have a large team, you have people to delegate even some of the urgent important things to, which can be a challenge. But doing so ultimately gives you the opportunity to focus on the things only you can do.”
“Of course, this requires that you hire the right leadership team to support you — and this is probably the most important thing that you can spend your time on. You cannot overinvest in finding and retaining the best people.”
The Bottom Lines
Disrupting such a heavily regulated and conventionally stodgy as insurance is undoubtedly a tough row to hoe, yet, PolicyGenius managed to navigate against this “pandora’s box” and phenomenally thrive within the sphere. The hidden gem behind such a stunning success is Jennifer Fitzgerald – a female founder and CEO that overcame rejection and sexism to establish an admirable empire.