Flipped insurance and the end of claims

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Mitti Insurance was created to reinvigorate and turn insurance on its head by making prevention the priority and policy just additional security

FANCY A fridge temperature and humidity sensor with your insurance policy? It might seem odd, but including sensors as part of the insurance package for hospitality businesses illustrates how Mitti Insurance is breaking the mould on the role insurers play for their clients. Data analysis at the insurtech start-up showed that 37% of hospitality claims were due to the breakdown of machinery, which turned out to be mainly fridges, freezers and cool storage units once coffee machines were removed from the equation. So Mitti started offering a temperature and

Mitti is a joint venture between one of Australia’s biggest and fastest-growing tech companies, SafetyCulture, and one of the country’s largest insurers, QBE. We are also a team of people who are passionate about changing how insurance works for businesses. On our board, we have insurance industry veterans – from risk experts to underwriters – who want to make a change and liven up the insurance world.

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Proportion of hospitality claims due to machinery breakdown

“Mitti allows for a more tailored insurance coverage and provides tools and resources to actively reduce the risk and prevent the claim from happening in the first place”

Danial Cummins, Mitti Insurance

humidity sensor with its insurance policy for clients to attach to their food-cooling equipment. “The customer can set the temperature and humidity range, and if it falls outside of that range, then the customer will get a text message to either remove stock in the fridge, freezer or cold storage unit or arrange to have someone come and fix the equipment,” explains Danial Cummins, Mitti co-founder and general manager. Likewise, if a quote request indicates that a customer has a deep fryer, Mitti sends a checklist of things to watch out for when operating one. If the information is acted upon, the chances of needing to make a claim are reduced. This approach contrasts with the traditional insurance set-up, which provides value by mitigating loss only through compensating the insured after an unfortunate event occurs. “However, where Mitti comes to the fore is we integrate risk management with the insurance policy purchased – something no other insurer currently offers,” says Cummins.

Why replace the horse after it has bolted, when strengthening the fence would keep the original animal penned all along? “Mitti [short for mitigate] allows for a more tailored insurance coverage and provides tools and resources to actively reduce the risk and prevent the claim from happening in the first place,” says Cummins. Insurance not the focus The approach flips the insurance equation on its head, almost removing the need for it at all when taken to its extreme. The policy itself becomes a mere backstop – additional security rather than the primary tool.

“By helping small businesses run a safer, better business through proactive risk management tools, Mitti is taking insurance out of the equation by providing value in addition to the security of having insurance protection,” says head of sales and underwriting Megan Duckworth, the company’s other co-founder. When something does go wrong, Mitti of course strives to meet the claim and get businesses back up and running as quickly as possible. But offering risk management tools like fridge sensors as part of the deal helps SMEs see value in their ongoing insurance arrangements that never get to the point of a claim. “With only one in 20 customers ever making a claim in the policy period, customers often don’t see value in their insurance spend year-on-year,” says Duckworth.

In the long run, helping customers avoid making a claim improves their bottom lines. “Mitti rewards small businesses with premium stability, using technology and data to create greater customer value outside of insurance,” says Cummins. These tech insights, coupled with industry data, allow business owners to focus on key areas of risk and gain oversight of what's happening on the ground. “Data tells us that a well-risk-managed business is a better insurance customer, but construction, occupation, protection or exposures can’t tell us that,” says Cummins. “By using tech and data, we are able to identify and underwrite based on the culture and the behaviour of those managing the risks, specifically by conducting regular inspections.” Changing the culture Operating only since early 2020, Mitti is already turning heads, having recently been named Insurtech Start-up of the Year at the 2022 ANZIFF Australian Insurance Industry Awards. The business operates as an underwriting agency with its own product. Since launch it has quadrupled in size and actively seeks to collaborate with other like-minded companies. “Mitti continues to actively immerse itself within the insurtech community to leverage the extensive knowledge, resources and capabilities the group possesses,” says Duckworth. “We believe by partnering with other insurtech companies, as a collective we can help drive greater progress within the industry and also help build a culture of constant innovation.” Mitti offers brokers the opportunity to help clients help themselves, especially those who are proactive on mitigation. “We give brokers the data and analytics and believe the data is better off in their back pocket to help mitigate risk within their clients’ businesses,” says Cummins.

“By helping small businesses run a safer, better business through proactive risk management tools, Mitti is taking insurance out of the equation”

Megan Duckworth, Mitti Insurance

The traditional approach to insurance as a one-size-fits-all doesn’t offer much incentive to prioritise mitigation. “Customers are not rewarded for their focus on mitigating risk on often their biggest assets,” says Duckworth. “Small businesses pay too much for their protection and get little value from their insurance providers.” Rather than jumping into action only at claim time, helping customers never make a claim is a much better proposition both for them and the insurer.

“The industry seems to be fixated on pushing customers through a pipe with digitalisation and less questions for a policy, where we see an opportunity to reward those customers that are running safer, better businesses with better understanding of what will help them manage their risk day-to-day,” says Cummins. The future is bright Mitti aims to become a leading underwriting business in the Australian market over the next five years. Its focus is on three areas going forward: integrating risk management into an insurance policy that is tailored to customer needs, whether it be a business reliant on deep fryers or backhoe loaders; the development of a behaviour-based pricing algorithm that incorporates cultural and behavioural factors; and building a data and analytics function by linking over 700 million annual checks to create deep industry verticals. These tools will identify risks within businesses and allow Mitti to provide safety tools to customers to mitigate all kinds of risks. “We need to be nimble and have a roadmap of features that will continue to engage, excite and retain existing customers and attract new customers,” says Duckworth. While she acknowledges it is a hard market for the near term, with rate increases happening across the board, there is reason for optimism. “We see an opportunity to reward businesses that are proactive with risk management or looking to start their risk management journey,” she says.

Source: Mitti Insurance analysis

37%

Proportion of all incurred claims resulting from human element

52%

Source: Mitti Insurance analysis

“How do we help the other 19 customers to improve their business whilst still getting insurance? That's where integrating risk management with insurance was something we started to explore and build a business around from the outset.” Risk management tools offered as part of the insurance policy are currently standard across 10 lines at Mitti: business interruption, property, liability, machinery breakdown, business contents, theft, money, glass, electronic equipment, and motor.

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