
As many of our wonderful customers know, WeCovr is an insurtech with a particular focus on Embedded Insurance, meaning we can build our insurance solutions into clients' offerings to enhance their users' experience and customer value. We do this by using our APIs and insurance expertise and capabilities. We've already launched and are working on launching even more embedded insurance projects.

# Embedded Insurance trends in 2022

Below is a quick summary we've put together of an excellent [thought piece](https://www.linkedin.com/pulse/embedded-insurance-3-trillion-market-opportunity-could-simon-torrance/) on Embedded Insurance by Simon Torrance published recently on LinkedIn.

## Insurance is something that nobody wants but everyone needs

Simon Torrance's focal point of the article is that insurance is needed more than ever today as the ‘protection gap’ – the gap between the amount of insurance that is economically and socially beneficial for individuals, households and firms and the amount of coverage actually bought – is getting wider and wider.

Swiss Re Institute noted that in the last 10 years this gap has doubled, driven by global trends in digitisation, urbanisation, climate change and a lack of effective innovation.

McKinsey found that 80% of insurers made negligible or negative economic profit in the years running up to the Covid crisis and, projecting forward, the situation is likely to get worse, indicating a fundamental weakness in the business model:

- on the demand side, insurance products are complicated, inflexible, expensive, regularly mis-sold, difficult and annoying to buy (all those forms to fill in), and the benefits to customers are uncertain and distant and
- on the supply side, related to these issues, the costs of distribution (of selling products to customers who don’t understand, trust or want them) are enormous at roughly 50% of total industry costs.

> Insurers are expert at managing risk, but their underwriters lack enough rich, real-time data to be able to create affordable and personalised products that can keep pace with market demands, accelerating trends and the new risks that go with them. Laws and regulations designed for a pre-digital age restrain them further.

## Embedded Insurance – to affinity and beyond…

Embedded insurance is emerging as a new way to distribute insurance services efficiently. It doesn’t solve the protection gap, but it addresses many of the supply and demand issues and could act as a catalyst for wider industry business model transformation.

> Embedded Insurance means abstracting insurance functionality into technology to enable any third-party product or service provider or developer in any sector to seamlessly integrate innovative insurance solutions into their customer propositions and experiences, either as complementary add-ons to their core offerings or as new native components.

For end users - individuals or businesses - it means simpler and more affordable solutions at the touch of a button, at a moment when it is most relevant. For third parties it means a new way to differentiate, attract or retain users, or generate new sources of revenue.

Examples of Ant Group and Uber provide insurers with access to a large new market, with very low distribution costs. There is clearly a win, win, win - for users, insurers and platforms.

For retailers and product manufacturers with razor thin margins are looking to offer add-on services like theft and damage protection at point of sale. For some, these sorts of ancillary service can equate to up to 50% of their net profits.

In the past, due to the technical and contractual complexity of dealing with traditional providers, only the very largest retailers and merchants and could afford to integrate these types of extended warranties and only on large value items.

For example, Amazon has found that offering warranties even for $40 backpacks increases their purchase rate. New insurtech intermediaries are making it easier and cost effective for any online merchant to create similar offers.

B2B Software-as-a-Service companies are also in a perfect position to add personalised insurance solutions to the range of other financial services they already provide with virtually no customer acquisition costs.

While retailers, manufacturers, airlines, banks, professional associations and others have been distributors of insurance products for a long time, Embedded Insurance has the potential to take this to another level.

> BIMA is a great example of embedding affordable health insurance into the mobile telephony ecosystem, closing the protection gap for 35 million Africans today.

## New framework emerging

Customers – individuals and businesses – are generally underserved by the insurance industry today. Customers have the closest relationships with organisations they interact with regularly or at important moments in their lives, and these are rarely insurance companies.

<img src="/images/accenture_api.png"
     alt="Insurance APIs growing"
     style="margin: auto; width: 80%" />

As digitisation blurs the boundaries between traditional market sectors new digital ecosystems, orchestrated by powerful platform businesses, are emerging.

McKinsey estimates that 30% of global economic activity - $60 Trillion - will be mediated within these new ecosystems by 2025.

> Platform businesses are emerging in every conceivable walk of life, B2B as well as B2C. At scale they generate huge datasets and insights in real time about the activities and interests of their users, creating ideal markets for embedding insurance.

_Amazon Pay, for example, announced this week that it was selling auto insurance in India, promising a two-minute sign-up process and no paperwork. «This, coupled with services like hassle-free claims with zero paperwork, one-hour pick-up, 3-day assured claim servicing and 1 year repair warranty in select cities, as well as an option for instant cash settlements for low value claims, making it beneficial for customers» said a spokesperson._

_PingAn is by far the leading exponent of the platform business model today amongst insurers. It has established a portfolio of its own platform ventures in adjacent sectors like telemedicine, automotive sales and real estate. These have attracted huge new user bases and created ideal environments in which to embed its financial services products. They have become dominant channels now for originating and maintaining customer relationships, driving 40% of new sales._

Covid has accelerated the move to digital services for organisations in all sectors, and increased the attractiveness of end user fintechs and insurtech apps.

Physical products, machines and, in the not-so-distant future, human bodies are becoming more connected and smart, generating new levels of data that, combined with AI, can support, for example, the wider adoption of parametric insurance .

> At a Tesla earnings call earlier this year Elon Musk said: «We’re building a great, major insurance company. If you’re interested in building a revolutionary insurance company, please join Tesla. Especially if you want to change things. This is the place to be. We want revolutionary actuaries.»

> He said that insurance could deliver 30-40% of Tesla’s total value in the future. «Insurance is a good example of a product that’s made by our internal applications team. We make the insurance product and connect it to the car, look at the data, calculate the risk. This is all done internally — basically internal software application».

Banks, auto manufacturers, retailers, professional associations, travel companies have long been distribution partners for insurers. While they have been big enough to absorb lengthy contract negotiations and technical integrations, they too are coming under increased pressure to be more responsive to their customer’ needs in terms of personalisation and price.

> John Lewis, one of the UK’s best loved retail brands, is re-vamping its financial services offerings. Working with reinsurer MunichRe and its network of fintech partners, it is looking to create more innovation solutions for its customers. This is part of a new five year strategy to generate 40% of profits from non-retail services. Ikea has launched new digital home insurance services in Europe and South East Asia.

Some traditional insurance intermediaries like brokers and agents are also upping their game, to interact with customers in more effective and digital ways.

A new breed of MGA is emerging to fill the gaps between the needs of digital platforms like Uber, a long tail of underserved merchants and brands, as well and the primary insurers who want to reach them. Unlike brokers MGAs manage claims, borrow underwriting authority from ‘fronting insurers’, and offload risk to primary insurers and/or reinsurers. They bring technical efficiency to underwriting, customer acquisition, claims processing and policy retention.

Brokers are increasingly interested in this model and some are setting up their own MGAs attracted by their margins and ability and control over sales processes.

‘Neo Insurers’, the equivalents of Neo Banks have dramatically improved the end customer experience of buying and engaging with insurance, use modern technology to dramatically reduce their operational costs and APIs to easily connect with third parties. Primarily they sell directly to customers and, as a result, have very high customer acquisition costs.

‘Specialist Insurtechs’ are those focused on selling specific enabling capabilities into the insurance industry today. In the context of Embedded Insurance, they may increasingly look to other sectors too as the market develops.

## Incumbent’s point of view

From an incumbent’s point of view, Swiss Re’s iptiQ venture exemplifies this trend. Established in 2016 as a digital venture focused on traditional insurance distributors it now targets multiple types.

Reinsurers are under price pressure from increasing volumes of ‘alternative capital’ entering the insurance market: hedge funds, sovereign wealth funds, pensions and mutual funds looking for new low-risk investment yields as interest rates stick at zero.

As part of their response reinsurers are moving up the stack in search of new revenue streams and to get closer to the risk. Most large Venture Capital arms, looking increasingly to partner with insurtechs to take combined reinsurers today also own primary insurance businesses and are making more investments via their Corporate propositions to market, disintermediating primary insurers. Swiss Re recently announced a JV with Daimler to create an auto insurance MGA called Movinx.

## IoT technology

What’s particularly interesting is a focus on IoT technology, as well as insurtech. Embedding protection into industrial systems and everyday products is a big market opportunity and a key enabler for many new business models.

## Alternative capital

What would happen if Alternative Capital could directly support the insurance activities of digital platforms, enabled by developer platforms, specialist agencies or MGAs? Risk data, for example, could be collected by mobility-as-a-service platform in real time from multiple sources and put on a blockchain. Capital providers, insurers and reinsurers could bid to cover different risk types to creating a more fluid supply of cost effective and customised protection.

Data is the key to enabling all the scenarios we’ve discussed here. Accessing new sources of data, combining them, making sense of them and embedding them into new solutions will be key. One of the richest sources is bank account data, increasingly exploitable due to the move towards Open Banking around the world.

To avoid monopolies forming, regulators across more and more sectors are looking to enable data to become more ‘portable and mobile’ – i.e. allowing them to move between different consumer domains in fair, transparent and controllable ways that stimulate innovation and consumer value.

## Market sizing

Personal and Commercial P&C lines combined represented just under $1.7 Trillion of Gross Written Premiums in 2019, roughly a third of the overall insurance market which was above $5 Trillion. Western markets currently represent about 80% of premiums, highlighting the magnitude of the protection gap in emerging markets.

<img src="/images/embedded_ins.png"
     alt="Embedded Insurance forecast"
     style="margin: auto; width: 80%" />

Some other things to note: P&C insurance is a very local business, even within individual countries. It is highly fragmented, with 2500 P&C insurers in the US alone of which. The top 10 companies control only about 40% of the market. There are different types of distribution for different types of products, but in general sales in most countries today are still dominated by face to face and phone interactions.

**Since Embedded Insurance is a tech-centric distribution channel, based on current valuation multiples of leading insurtechs of 5-7 times GWP today, businesses that enable Embedded Insurance could be worth $3-5 Trillion in ten years’ time or, in other words, more valuable than the Top 30 financial institutions today, and this is P&C alone.**

## New ventures

In terms of how to win, Simon concludes that all players in the market will need to consider whether to build things internally, collaborate with others or create completely new ventures.

There are pros and cons of each, depending on levels of ambition and capabilities.

Taking a portfolio approach and making bold moves works best. Doing nothing, or doing things half-heartedly, are not good options.

## Want to offer embedded insurance to your customers?

WeCovr already works with a number of great companies who have been able to offer insurance products to their users by leveraging our technology and insurance expertise.

Please don't hesitate to [reach out to us](mailto:hello@wecovr.com?subject=Embedded%20Insurance) to discuss your particular requirements and use case. We'd be delighted to assist.


Embedded Insurance: a $3 Trillion market opportunity


As many of our wonderful customers know, WeCovr is an insurtech with a particular focus on Embedded Insurance, meaning we can build our insurance solutions into clients' offerings to enhance their users' experience and customer value. We do this by using our APIs and insurance expertise and capabilities. We've already launched and are working on launching even more embedded insurance projects.

Below is a quick summary we've put together of an excellent [thought piece](https://www.albion.vc/blog/why-we-are-excited-about-embedded-insurance-2021/) on Embedded Insurance by Jessica Bartos of AlbionVC.

**Why we are excited about embedded insurance in 2021**

At Christmas 2020, online sales as a percent of total retail reached 32% in the UK, advancing almost the last decade’s worth of ecommerce penetration in just one year. More surprisingly, the crisis has shown us that consumers are willing and able to make even very high value or complex purchases online. For instance, Cazoo’s banner year proved that the notoriously offline car purchase can be done successfully online at scale.

<img src="/images/ecommerce.png"
     alt="E-commerce"
     style="margin: auto; width: 80%" />

A knock-on effect of society’s accelerated consumption of digital services will be a similar acceleration towards embedding insurance into digital offerings. Embedded insurance is the bundling of coverage or protections within the purchase of a product or service. The insurance product is not sold to the customer ad hoc but is instead provided as a native feature. In this post, I’ll explain why tech is so well positioned to offer insurance in this way and why embedded insurance creates a win-win-win outcome for tech, insurance and consumers alike.

To set out the problem: a system in which the insurance purchase is separate from the purchase of the product or service associated with the underlying risk is ineffective and inefficient. Insurance is an afterthought or rejected as an unappealing hassle, resulting in protection gaps, estimated to be c. $1.2 trillion globally. The size of this gap is growing, having doubled over the last 20 years due to urbanisation, digitisation, climate change and lack of innovation.

When consumers do buy insurance, the customer journey is poor and mostly offline. For instance, while 74% of consumers research their insurance online (expressing their intent to buy digitally), only 25% are able to complete their purchase online.

But embedding insurance in digital services can fix what’s wrong with insurance today. Embedded insurance offers insurance when the risk is top of mind for the buyer. And it brings insurers closer to the underlying risks. Tech players — whether ecommerce, SaaS or digital services — are well suited to embed insurance into their platforms because, in our online world, they control four critical pieces of the insurance puzzle: 1) customer journey, 2) data, 3) trust, and 4) communication

<img src="/images/insurance_puzzle.png"
     alt="Insurance puzzle"
     style="margin: auto; width: 80%" />

The biggest tech ecosystems, such as Amazon, Apple, Google and Alibaba, that bring together services, marketplaces and devices into one trusted experience, will be especially powerful in embedded insurance. But those who can play in embedded insurance is broader than just the largest tech giants. It could also encompass an array of digital-first disruptors in various verticals:

<img src="/images/verticals.png"
     alt="Verticals"
     style="margin: auto; width: 80%" />

I’d argue that if your digital business has control of the customer, the data, the trust and the communications, you’re well-placed to embed insurance.

1. Customer Journey

First, as more of life happens online, tech players control the customer journey. They can serve an insurance offering to a buyer exactly when it is most relevant to them, increasing conversion rates compared to a separate purchase of insurance. Meeting the customers where they are should expand the amount of insurance that is purchased in the first place, closing protection gaps. Digital players can easily weave the insurance purchase into the customer workflow to reduce friction, as compared to incumbent insurers’ failed attempts to build functioning, pleasant online purchase journeys.

For tech players, embedded insurance adds a high margin revenue stream. For example, one of the best penetrated embedded insurance categories is insurance into the rental car customer journey – selling extra insurance at the checkout counter. In car rentals, there is intense price competition leading to razor thin margins on the standalone car bookings. But the add-on insurance is extremely high margin. In these businesses, the insurance and other ancillary services often drive over 100% of the profits.

2. Data

Tech players’ second asset is their control of data. As offline services come online, vast amounts of data are collected. Digital services end up having the most data about risk. Depending on the type of service, the nature of the data collected and its relevance to insurance varies. Transaction history, device data (for instance, mobile data from smartphones, Apple Watch, Google’s Fitbit or fixed device data from Amazon Alexa, Ring or Google Nest), or through other types of customer profiling (such as browsing history or income and expenditure data) all have relevant insurance use cases.

<img src="/images/data.png"
     alt="Insurance data"
     style="margin: auto; width: 80%" />

By contrast, the status quo insurance purchase asks the customer to provide data about the risk in a separate process. In the first place, the data entry process creates friction in buying insurance. Further, this data often has limited fidelity to the truth as people forget information (what material is my roof made of? how much is that jewellery worth?), misunderstand what the insurer is asking (just what is a BS 3621 lock?) or do not report things correctly (have you really never smoked?). And importantly, the data is not updated in real time; it is based on static, historic demographics than actual risk behaviour in real time.

3. Trust

Third, digital services command high levels of consumer trust. Tech companies have created superior customer experiences and developed powerful brands, manifested in their sky-high NPS scores. Digital services have an average NPS of 75 vs an average of 30 across various lines of insurance.

<img src="/images/trust.png"
     alt="Insurance APIs growing"
     style="margin: auto; width: 80%" />

By contrast, insurance brands are weak and command little customer loyalty. For instance, in the UK, 73% of consumers are looking to switch their insurance provider.

<img src="/images/bigtechinsurance.png"
     alt="Insurance APIs growing"
     style="margin: auto; width: 80%" />

Embedded insurance presents an opportunity to arbitrage this trust gap between insurance and digital. Insurers can piggyback on the positive customer experiences and brands of digital platforms to get better distribution and differentiate. In turn, the tech players get to leverage their hard-earned brands into additional high margin revenue streams and a longer, deeper relationship with their users. As early as 2018, we started to see green shoots of consumer willingness to buy insurance from Big Tech, but we expect this trend to accelerate dramatically.

4. Communication

Finally, tech players are fluent in “millennial” and command high frequency, positive communication channels with their users.

Millennials and younger generations now make up over 50% of the US population. However, this generation is the least engaged with insurance. According to Gallup, Millennials are twice as likely as other generations buy insurance online and yet are the least satisfied with existing digital insurance options. This explains how new entrants like Lemonade reach multi-billion dollar market caps ($9bn at the moment, up almost 200% from its IPO price), not just on the basis of their written premium growth but due to the promise of unlocking the Millennial insurance consumer. Meanwhile, digital services speak to Millennial and Gen Z cohorts natively, building brands and experiences that naturally delight them.

_What will 2021 bring for embedded insurance_

With digital consumption unexpectedly accelerating, new and greater risk protection gaps are arising. Embedded insurance creates a win-win proposition for both tech players and insurers to better protect consumers and strengthen value propositions. Tech players’ control of the customer journey, their data, their trust, and the lines of communication make them best placed to bring insurance into the 21st century.

Insurers represent 10% of the Fortune 500 and industry net profits were over $100 billion in 2019 in the US alone. Yet there has been minimal innovation and a glacial pace of transition to a world of digital consumption. If insurers don’t innovate, someone will come after those profit pools. As Jeff Bezos famously said, “Your margin is my opportunity.” And insurance presents a world of opportunity — for those ready to embed it in our digital lives.

2021 will be the year when embedded insurance starts to come into its own. With Stripe, every company can now offer online payments. With Klarna, every company can offer buy-now-pay-later. We’re excited to find the start-up that enables every company to offer insurance.


Why are people excited about embedded insurance


People use life insurance to make sure their families or dependents will receive cash benefits if they are no longer there. However, some people are having to pay more than others for the same amount of coverage. Below are some practical steps and actions that help reduce life insurance payments.

**1. Quit smoking and vaping** – 20% of people in the UK smoke. Quitting smoking is a great way of reducing your premiums as they can go down by up to 50%. However, be aware these changes won't happen overnight. That's because insurance companies will require you to not smoke for a minimum of 12 months to qualify as a non-smoker for lowering your premiums.

> If you do quit smoking, don't forget to tell your insurer about it - 51% of smokers who quit forget to do so thus missing out on lower premiums available!

**2. Get life insurance at a young age** - insurers love statistics and statistics suggests the younger you are the less risky you are for them. This translates into lower insurance premiums for you!

**3. Stay fit and healthy** - not only this is good for you, it is also good for your wallet. Insurers ask much lower premiums if you are healthy. So make sure to eat healthily, exercise often, get enough sleep, and enjoy wholesome relationships.

**4. Lead less dangerous lifestyle** – hazardous activities and pursuits such as sky diving or working with explosives inevitably mean higher life insurance premiums.

> Have a think if this is what you want to do for the rest of your life? It might help you in lowering your premiums.

**5. Use a professional life insurance expert** - such experts are just a quick form away and available via WeCovr. They will do all the paperwork for you and search the market for the best plans matching your needs.

**6. Watch your BMI (Body Mass Index)** - as an indicator of a person's health, insurers look at their BMI. It is a simple formula which requires your height and weight.

> The formula is BMI = kg/m2 where kg is a person's weight in kilograms and m2 is their height in metres squared. A BMI reading of 25.0 or more means overweight, while the healthy range is 18.5 to 24.9.

**7. Let experts shop around for you** - fill in a quick form on the button below to get our insurance experts do the legwork for you and compare multiple life insurance policies that fit you best.

**8. Honesty is the best policy** - it might be tempting to claim you don’t smoke when you do or lie about your medical condition, as you think it will reduce your premiums.

> However, this could be a false economy in the long run because your insurer might not payout in the end if they find out you were less than honest when getting the cover.

**9. Do checkups if you have medical conditions** - this may help you get better premiums in case your medical situation improves thanks to a healthier lifestyle or diet for example.

> Should your health parameters become healthier, you may request a more competitive quote either from your existing or other insurers. Again, WeCovr's experts would be happy to shop around for best available plans for you at no cost.

**10. Consider having multiple policies** - your choice of life insurers gets more restricted and premiums rise as you age and/or get any health issues. So if you took a policy when you were younger or healthier, don't cancel it. If you'd like to top it up, you could keep your existing cover and take out a new policy in addition. This will mean lower overall premiums.

**11. Write your policy in trust** - even though life insurance payouts aren’t subject to income or capital gains taxes, they might be liable for inheritance tax if your net assets including life cover payout exceed a certain threshold.

> By putting your life insurance policy into a trust, you take it outside of your assets and thus make it tax-free. This can help you lower your premiums should you wish so or you might want to keep them at the same level, but leave your loved ones a larger tax-free sum of money.

**12. Make a plan or a will** - having a plan or a will in place helps you understand how much you have in assets and what you intend to do with them. As a result, you can plan for inheritance tax payments your loved ones might have to pay and adjust your sum assured accordingly.

**13. See which extras you require** - there are various extra features in many, including a waiver of premium, bereavement counselling or some others. If they come for free, that's great, keep them. If they cost extra, you may want to consider whether you really need to keep them.

**14. Reviewable vs guaranteed premiums** - watch out if you're offered cheaper reviewable premiums. Those tend to be
cheaper initially, but can go up later to account for your age and state of health. Guaranteed premiums stay the same over the entire length of the policy so could be cheaper for you in the long run.

**15. Choose a policy that better fits your needs** - whole of life insurance covers you for your whole life which makes it more expensive because it is guaranteed to pay out at some point. At the same time, term insurance can be a cheaper and the most common type of life cover.

> Term policies cover you for just the duration of your policy – for example, 20 years that you have left on your mortgage.

**16. Consider single policies rather than a joint policy** - a joint life insurance policy pays out on the first death if this occurs within the term of the policy. This can be seen by insurers as likelier than two single life insurance policies and therefore more expensive on the same value basis.

> Separate policies are also easier to deal with, should a couple separate at some point.

**17. Reduce the term of the life insurance policy** - policies get more expensive with longer terms. If you only need life cover for your mortgage, you might want to consider just insuring for the remainder of its term or just while your children are young. This will help lower your premiums down.

**18. Check your employee benefits** - if your company offers life insurance cover as part of your benefits package, it may be for a significant amount of a multiple of your annual salary. As a result, your additional life cover requirement might be less and therefore premiums you pay for the balance.

> Be careful though - should you leave your current employment, your life cover available from them will stop and your overall coverage may shrink significantly.

**19. If self-employed, explore tax deductibility** – life insurance can be structured in different ways for business people, often taking advantage of tax deductibility for business purposes.

> Check with professional insurance experts at WeCovr. They will assist you with what might be a more tax-effective option for you to help reduce premiums.

**20. NEVER reduce cover just for the sake of lower premiums** - living life without or with little life insurance is like betting your loved ones won't need any help should you pass away. Make sure your policy provides enough cover for your loved ones, so they have the financial security and confidence when you're not around.

> As covid has shown, life events can quickly change for the worse. Don't be penny wise, pound foolish - let a life insurance company take that bet for your loved ones in exchange for an affordable premium.

Before purchasing your or your family member's life insurance, it is always recommended to consult with life insurance experts. Our FCA-authorised and award-winning insurance partners can help guide you in a friendly and free phone consultation.

> Why not let experts do the hard work and analysis for you? At no cost, they can find you those life insurance plans that can be most suitable to your particular circumstances as well as help deal with all the necessary paperwork!

<p style="font-weight: bold; font-size: 20px;">
It takes less than 30 seconds to set up a free phone consultation with them to check how different plans from various insurance companies compare against each other and fit you best. Just fill in a quick quote form on the button below and get a free, no-obligation quote from FCA-authorised life insurance experts!
</p>


20 ways to reduce your life insurance premiums


People use life insurance to make sure their families or dependents will receive cash benefits if they are no longer there. Use the list below to clarify terms insurance providers use in life insurance. If you'd like to clarify anything, please don't hesitate to reach out to us via the contact section.

**Acceptance** – approval of an application by an insurance company, either instantly or some insurers take up to 14 days to decide if to accept a risk.

**Accident, Sickness, and Unemployment** – coverage in the form of a replacement income (usually up to 12 months) to cover regular expenses, including rent or mortgage payments should the person insured become ill or unemployed.

**Age limits** - the maximum or minimum age of the insured that an insurer will issue a policy for. Typically, the limits are between 18 and 80 years to apply for life insurance, but it may vary by insurer.

**Beneficiary** - any person who gains a payout from a policy.

**Convertible Term Life Insurance** – level term life insurance coverage with the option to possibly convert the policy into a different type of coverage, such as the whole life cover

**Critical Illness Cover** – this coverage supports you and your loved ones financially if you’re diagnosed with a specific illness or medical condition. You’ll receive a tax-free lump sum to help with things like bills and treatment costs. It can be taken out at the same time as life insurance as they cover you for different risks. The insured person must usually survive at least one month after the diagnosis before a payment is made. The conditions included vary according to the life insurance company, but should usually include cancer, stroke, heart attack, renal failure, coronary artery bypass, multiple sclerosis and major organ transplants.

**Decreasing Term Life Insurance (aka Mortgage Payment Protection Insurance)** – Risk life insurance with a lump sum payout which decreases according to the outstanding balance of a capital and interest repayment mortgage with premiums normally remaining fixed.

**Serious Illness (Diabetes, HIV, etc) Life Insurance** – life coverage specially designed for those insureds who have conditions like diabetes, HIV and others. It is based upon the type of the condition, its age, family history, treatment methods and other parameters

**Estate** - means property and money left by someone who has passed away.

**Executor** - person who you name in your will as responsible for handling your estate according to your instructions when you pass away. Their duties include arranging burial ceremony, handling of your assets, payment of unpaid bills and distribution of the surplus to your beneficiaries.

**Family Income Benefit Life Insurance** – after the death of the insured, this insurance provides regular income for the entire policy period instead of a one-time payment

**Gift Inter Vivos** - are gifts you give away during your life. If the giver were to die within seven years of giving a substantial gift, this could leave the person receiving the gift with an unexpected inheritance tax (IHT) bill. A gift inter vivos policy, set up in trust, can help provide funds to pay an IHT bill by providing cover for any IHT liability on gifts that you make over your available basic IHT nil rate band.

**Group Life Policy** – life insurance coverage provided to many people, such as individuals working for a single company. It is characterised by more lenient coverage limits. Depending on the payroll, the minimum number of people in a group is usually 20-25 people, although some companies provide group life of up to 15 people.

**Guaranteed Life Insurance** - a kind of life insurance where anyone is accepted without any medical exams and regardless of their health condition.

**Guaranteed Premium** – the premium doesn't change and stays at the same level throughout the duration of the policy.

**Income Protection Insurance** – insurance that pays you a fixed monthly amount (usually covers around 80% of your pre-tax salary) if you can’t work due to sickness or injury, with payments continuing until you are able to resume your work, retire, die, or upon the expiry of the policy.

**Increasing Term Insurance** – coverage and premiums increase annually by a predetermined amount without a medical examination requirement. People who need additional coverage to mirror income or inflation increases often select this coverage.

**Indexation** – when a policy is tied to inflation, with benefits and premiums increasing annually

**Insurable Interest** – when one party has a dependent and/or close financial relationship to another. Insurable interest relationships exist between spouses, a company and key workers, in a close company between director shareholders, and someone who financially depends upon another person.

**Key Person Life Insurance** – life coverage for a person who makes a significant contribution to the financial status of a company. Directors, partners, executives, and shareholders are commonly considered key people. The coverage features a lump sum payout benefit designed to financially protect the company upon the death of the individual.

**Lapse** – where a policy stops because the customer stops paying premiums or a policy not renewed.

**Length of cover** - amount of time you’ll be covered for by an insurance policy, often also called the policy term.

**Level Premium** - a payment that stays at the same amount throughout the term of a policy.

**Level Term Life Insurance** – payout under this life insurance policy is a fixed lump sum.

**Life of Another** – an application for life insurance which is made by someone other than the insured. The applicant must provide evidence proving that he or she has an insurable interest in the insured before an insurance company will approve the policy.

**Lump Sum** - benefit that a life insurance company pays out in one amount when the insured person passes away.

**Renewable Term Life Insurance** – life cover for up to five to ten years that may be renewed without a medical examination.

**Reviewable Premium** – if a policy which specifies a reviewable premium, it means the insurance company can change the premium at the pre-set review times (typically every 5 years, but can also be annually). Normally insurers will review premiums every five years however some companies do review them annually. Insurers may change premium to account for average claims or wider economic conditions. As a result, your monthly premiums could increase significantly without any control on your part over how much the policy will cost you over its lifetime.

**Settlor** – means a person or entity that makes a settlement of property and other assets under a trust, also known as a donor, grantor, trustor, and trustmaker. This person appoints trustees, designates trust beneficiaries and agrees to the trust terms.

**Terminal Illness Benefit** – an additional usually free 'bolt-on' option provided when you buy life insurance that allows to get a payout under life insurance policy upon diagnosis of a terminal illness, rather than waiting to pay out after passing away.

**Total and Permanent Disability** – a term used in a critical illness policy that applies to cases in which the individual may never be able to work again and there is no hope of recovery due to injuries.

**Trust** – trust used in insurance is an irrevocable trust with a life insurance policy as its asset, allowing the trustor or settlor to exempt assets away from their estate for inheritance tax purposes. The type of trust most commonly used with a life insurance policy is a a flexible power of appointment trust, which allows the trustor to appoint new trustees and change beneficial interests. After a life insurance policy is placed in the trust, its insured person stops being the owner of the policy. The trustee manages the policy payout on behalf of the policy beneficiaries when the insured person passes away. Trust can offer you control over how your assets from insurance policies are used after your passing and can protect your beneficiaries against having to pay inheritance tax on the life insurance payout.

**Trustees** – person or entity appointed by a settlor to manage a trust according to its provisions. The settlor is often also a trustee and must appoint at least one other trustee, perhaps a solicitor, family member or family friend, who must be over 18 and would serve as legal owners of the assets in trust for the trust beneficiaries.

**Underwriter** - an insurance expert or insurance company that decides on the risk of your insurance, the amount of risk of your cover and the premium for this, i.e. how much you should pay for it if the risk is within the risk appetite as sometimes it can be outside of it.

**Waiver of Premium** – a feature in an insurance policy that covers your monthly premiums if you’re ill and out of work, either until you’re working again or the policy expires, while keeping your coverage intact. Waivers can be found in life insurance policies, but can be also obtained in health insurance and critical illness policies.

**Whole of Life** – life insurance policy that lasts the lifetime of the insured person. It's also known as traditional or permanent life insurance and pays a lump sum benefit upon the death of the insured.

**Will** – a legal document setting out the names of one or more people to manage a person's estate, who are known as executors, and how they should distribute the estate upon the person's passing.

Before purchasing your or your family member's life insurance, it is always recommended to consult with life insurance experts. Our FCA-authorised and award-winning insurance partners can help guide you in a friendly and free phone consultation as to what life insurance plans can be most suitable to your particular circumstances, searching the market for you and dealing with all the necessary paperwork.

<div style="font-weight: bold;">
It takes less than 30 seconds to set up a free phone consultation with them to check how different plans from various insurance companies compare against each other and fit you best – just fill in a quick quote form on the button below and get a free, no-obligation quote from FCA-authorised life insurance experts!
</div>


Glossary of terms used in life insurance


People use life insurance to make sure their families or dependents will receive cash benefits if they are no longer there.

## Are life insurance benefits taxable?

When money is paid as part of a life insurance policy in the UK, the payout is not taxed, meaning the person or persons receiving the payment should not automatically pay tax on the money. However, although generally exempt from income tax, some life insurance benefits may still be subject to inheritance tax.

## Life insurance and tax implications

Since life insurance benefits are considered part of your estate, which is subject to inheritance tax (IHT), your loved ones, the beneficiaries of your life insurance, might have to pay tax on the inheritance they received from you, including its life insurance portion. This inheritance tax depends on your financial situation at the time of your death and the size of your life insurance policy payout.

If you want to leave an inheritance for your family, chances are you will also want them to suffer from as little tax as possible on the inheritance you are passing on.

> Tax numbers are always subject to change, but at the time of writing, if you are single, the current threshold for inheritance tax in the UK is £325,000, meaning that, if the total value of your possessions at the time of your death exceeds £325,000, any amount over £325,000 will be taxed at 40%. If you are married or in a civil partnership at the time of your death, each part of the couple has their own inheritance allowance of £325,000, meaning the couple will benefit from a total inheritance tax-free allowance of £650,000 and will only have to pay 40% tax on anything above that level.

If your life insurance payout was to take the total value your estate to a level in excess of the above threshold relevant to your situation, and unless the money is going to a charity, that excess value will be taxed at 40%.

## Trusts for life insurance

However, there is an easy way that families in the UK can legally use to avoid having to incur inheritance tax liabilities on their life insurance payouts. To achieve this, they simply put their life insurance policies into a trust. If a life insurance payout is "in trust", it is considered separate from your estate and thus not likely to be subject to any inheritance taxes.

Trust means that someone else, be it your lawyer, family member or other trustee of your choice, is in control of the life insurance payout distribution from a legal perspective. This takes life insurance payout outside of your estate and thus outside of your tax liabilities. At the same time, you can still have the trustee follow your wishes when handling your life insurance payout. So the funds will be paid out the same way as you wish, probably even faster as the payment will not have to go through the estate inheritance tax and legal procedures.

When you talk to one of our FCA-authorised life insurance advisers, you can ask if you can buy your insurance policy in trust, they can certainly help and guide you how you can set it up.

## Benefits of life insurance in dealing with tax liabilities

If a family's wealth likely to be transferred as inheritance is of a size exceeding the above thresholds (which would be the case for most property owners in the UK given the rise in average property prices over the last several decades), one of the important benefits of life insurance and putting it into a trust can be the support it provides to families who have to pay their tax bills on the inheritance received.

As life insurance payouts from trusts are exempt from inheritance tax, families can use life insurance as a very cost-effective and efficient mechanism to meet their tax liabilities on the estate that will arise on a family member's passing. Thus, senior family members can quite affordably help their loved ones to avoid having to sell off their inherited property or other possessions in order to meet the demands of the taxman they would have to deal with.

> If you believe your family is likely to have to pay inheritance tax on your estate after your passing, it might be worthwhile to look into setting up a life insurance plan and calculate the amount of this tax before purchasing it. This will help you make sure your life insurance payout is at least sufficient to cover the potential tax liabilities for your loved ones and if you'd like to leave more than the taxman's share then go for some extra help for your family as your future policy payout.

Before taking any practical steps, it is always recommended to consult your own financial adviser who will be able to look into your specific situation and assist in making those decisions. Our FCA-authorised and award-winning insurance experts can guide you in a friendly and free phone consultation as to what life insurance plans can be most suitable to your particular circumstances and life planning.

<div style="font-weight: bold;">
It takes less than 30 seconds to set up a free phone consultation with them to check how different plans from various insurance companies compare against each other and fit you best – just fill in a quick quote form on the button below and get a free, no-obligation quote from FCA-authorised life insurance experts!
</div>


Are life insurance payouts taxable?


The cruise industry has grown rapidly over the last decade or so. Before COVID, data from the Cruise Lines International Association showed thirty-two million passengers expected to set sail in 2020. Three hundred ships were projected to be in operation by the end of this year, all between 50 different cruise lines.

There is no doubt that this industry has experienced exponential growth over the past decade or so.

Unfortunately, many countries across the globe have begun to close their borders in response to COVID-19. Back in March, Canada banned all ships carrying more than five hundred people from docking at their ports.

Some countries like Australia, New Zealand, and the United States banned ships arriving from foreign ports. They also directed all foreign flagged ships to leave the country.

If you watched the news a few months ago, you would know that passengers were quarantined and kept at sea for almost a month. They were required to stay in their rooms and not allowed to roam the ship freely.

With cruise lines not being able to host cruises for the past few months, the global cruise ship fleet has collectively lost over four billion dollars in value.

The longer the virus continues to persist, the cruise companies and their stakeholders will continue to lose vast amounts of money. Think about it, the main revenue channels for cruise ships are ticket sales and onboard purchases like alcoholic drinks and casino gambling.

Now, what is the future of the cruise industry? Will there be cruises happening in 2020?

It looks like most cruise companies continue to push the reopening of cruises back due to the uncertainty of the virus.

However, when cruises do reopen, there will be a number of safety precautions and extra steps taken to ensure that passengers and crew are traveling safely. Ships will now require robust screening and monitoring protocols along with comprehensive sanitation practices. There will be more onboard medical facilities and increased medical staff.

Eventually, the cruise industry will bounce back from this setback and get back to enjoying and traveling with their many valued customers.

This time is uncertain for many of us, but one thing we do know, we all want this pandemic to be over so that we can enjoy time spent with family and friends.


The impact of COVID-19 on the billion-dollar cruise industry


When you hear the words ‘health insurance’, I am sure that most people do not find it to be very glitzy or exciting. But I am here to tell you that it is especially important to be educated on the basics and importance of having insurance as an adult.

If you or someone you know is planning on living or working in a place different from your home country for an extended amount of time, you might want to look into getting an international health insurance plan.

This type of insurance is ideal for:

-Expats (people living outside of their native country)

-Individuals with dual residences

-Multinational employees

-Students studying abroad

If you fit into one of these categories, you may want to consider adopting a policy.

We tend to ignore the value and importance of health insurance. Being in a foreign country can come with certain challenges. What do you do in a situation wherein there is an emergency, and you can’t speak the local language? Are you financially prepared to meet the expenses in case you must visit a local healthcare provider?

Most domestic health plans provide limited coverage overseas and won’t cover prescriptions abroad.

Experts say that 15% of travelers encounter some kind of medical problem on their journey overseas. Depending where you are, your U.S. health insurance may not be of much use.

Download WeCovr app from your app store today or click on the international health insurance link here and find an international health insurance plan that best fits your needs.


Five things you need to know about International Health Insurance


With the world becoming more modernized, universal payments have been becoming more necessary especially with everyone becoming more familiar with products that are international based or just ones that are within the country. Whether it’s based off paying things such as household utilities, important bills like insurance and even just shopping from websites online or at the local store; having your card on your phone regardless if it’s on app or a digital wallet has become more ideal. It’s only a bonus that you don’t have to carry around your physical wallet making it better for contactless payments.

Furthermore, taking in these eight apps, let me explain why you should consider having one of these apps at hand next time you want to pay for something big like insurance or maybe even something small during your trip to the store.

**Apple Pay** is probably the easiest thing to have on your phone especially if you’re an Apple user. These days almost every website or store takes Apple Pay in order to assure a faster process at checkout. Whether you’re buying shoes online or at the boba shop trying to pay for your drink, Apple Pay allows many to pay for things at the tap of their phone with the shipping address already being saved in order to avoid unnecessary time. Not only that, but Apple now allows people to send money through iMessage.

**Samsung Pay** just like Apple Pay serves the same purpose but for Samsung users instead.

**Google Pay** which is formerly known as Android Pay, is exactly like Samsung Pay and Apple Pay but it is more opened towards other phone types that aren’t supported by the two phone brands.

**PayPal** is known to be one of the biggest money exchange apps there is. Anybody can send money to a business when purchasing things online or even to their family or friends. It also allows people to send money abroad by altering the money currencies accurately for somebody on the other side to receive.

**WeChat Pay**, although only really used in China, is actually one of the most important money apps there is. People use this app to pay for utilities or medical bills that need insurance, entertainment or just for anything they really want. WeChat Pay has it all.

**Venmo** is exactly just like PayPal but more widely used among the younger crowd especially college students!


Best payment apps to have on your phone


Based on a recent survey made by HSBC, where they questioned 18,059 expats based in over 30 countries or territories about the best place to live in for expats. The criteria included many things such as finances, quality of life, and society.

Switzerland came in top, as it excels in many aspects including having the highest income and the best when it comes to political and economic stability. The country was ranked #8 in 2018’s survey.

The full list of countries can be seen below:

1- Switzerland

2- Singapore

3- Canada

4- Spain

5- New Zealand

6- Australia

7- Turkey

8- Germany

9- United Arab Emirates

10- Vietnam


Best countries for expats to move to in 2021


In today’s society, we are basically glued to our phones. We use them consistently all day, checking our social media apps, finance apps, or even playing games.

When traveling to different countries, there are some apps that will make your vacation or trip much simpler.

Let me break down a few of these apps, the purpose of them, and why you should consider downloading them the next time you travel.

<img width="200px" alt="googletranslate" src="/images/googletranslate.png"/> **Google Translate**, aka a traveler’s best friend. In case you run into any language barriers; this app is ideal. It supports fifty-eight different languages via text.

<img width="200px"alt="tripadvisor" src="/images/tripadvisor.png"/>**TripAdvisor** makes it easy to find top destinations and attractions. You can find places to stay, eat, and anything else you would need on your trip. They even provide customer reviews and contact info for each place.

<img width="200px" alt="hopper" src="/images/hopper.png"/>**Hopper** can help you find the cheapest flights possible, and even help you save some money along the way. You tell them where you are from, where you want to go and then the app shows you a calendar of the upcoming year with predicted flight prices.

<img width="200px" alt="packpoint" src="/images/packpoint.png"/>**PackPoint,** an app that shows you what to bring based on the length of your trip, weather conditions, and the activities you have planned. This app can take the stress out of last-minute packing and feeling like you don’t know what to bring.

[<img width="200px" alt="Great personal and business insurance as a service via API's ..." src="/images/LogoWeCovrOrange.png"/>**WeCovr** app](https://wecovr.com/get-wecovr-app/) is a handy app offering on-demand insurance coverage when you're travelling or living abroad. If you're in the UK, you can also get other types of coverages such as life insurance or car insurance right in the app.


Apps that every great traveler should have on their phone


Going abroad has always had risks, this has been further complicated by a highly contagious disease that brought much of the travel industry to a halt. As airlines and holiday providers look to recuperate, costs look likely to rise. The ongoing spike in cases in many countries is a cause for concern, with quarantines becoming mandatory after visiting certain countries, particularly in parts of Europe. As lockdown ended, cases have started rising again, and this could coincide with the next flu season – it is recommended that people only make essential travel. There is a real chance of being infected, falling ill and being at the mercy of an expensive foreign healthcare system.

**EU COVID-19 cases June-July 2020**

<figure>
<img src="/images/Blog-1-Image-2.gif" alt ="Source: https://www.euractiv.com/section/coronavirus/news/autumn-challenges-ahead-as-covid-rates-rise-amid-european-travel-season/" />

 <figcaption>Source: https://www.euractiv.com/section/coronavirus/news/autumn-challenges-ahead-as-covid-rates-rise-amid-european-travel-season/</figcaption>
</figure>
<p></p>
Spain has had a significant rise in COVID cases, the average age of a British expat there is 53 and 7% of businesses are run by expats. This means a fair amount of risk exposure, not only will lots of business owners be cash strapped but also potentially be in contact with customers when re-opening.
<p></p>
Emergency repatriation, affordable treatment and transparency with medical costs are a necessity now when abroad, being stuck in a country ill and in an unfamiliar healthcare system is a vulnerable position to be in. International health insurance not only provides a safety net in the wake of such events, but also provides peace of mind that things will not spiral out of your control. Expats and travellers often need bilingual support, to make smooth claims and to gain a second opinion from insurance provider in-house clinicians such as 24/7 GP’s. The emergence of COVID-19 specific insurance policies, merging travel and medical insurance, lays testament to an increased requirement for customised insurance policies that are tailored to meet an individual/family’s situation.
<p></p>

[**WeCovr** mobile app](https://wecovr.com/get-wecovr-app/) is a handy mobile and web app offering oinsurance both for travelling or living abroad. If you're in the UK, you can also get other types of coverages there, such as life insurance or car insurance right in the app or get in by tapping the button below.


Stay healthy holidaying COVID-19 amid the new challenges


Startups not synonymous with young people. Bill Gates, Steve Jobs, and Mark Zuckerberg are three of the biggest role models for entrepreneurs. They are all famous for starting their companies in their early 20s and in many ways set the benchmark for what a successful entrepreneur looks like.

And yet, there is reason to believe that we’d be better off investing in older entrepreneurs. They are actually far more successful than younger ones, according to [new research](https://theconversation.com/most-successful-entrepreneurs-are-older-than-you-think-95402), which analysed the age of all business founders in the US in recent years and how well they did.

Young entrepreneurs may have some advantages. They are often native users of the most modern technology, are more flexible and do not have family commitments (and therefore inclined to take more risks). But a [recent publication](http://www.nber.org/papers/w24489) in the National Bureau of Economic Research shows that middle-aged entrepreneurs are far more successful than younger ones.

<iframe frameborder="0" height="400px" id="ffhDM" src="https://datawrapper.dwcdn.net/ffhDM/1/" style="border: none;" width="100%"></iframe>

The study reveals that entrepreneurs who are under 25 tend to perform poorly. The probability of success increases once people reach 25, then performance seems steady among people aged between 25 and 35. The success probability then starts to jump after the age of 35, jumping again at the age of 46 and remaining stead toward the age of 60.

## Respect your elders

Success as an entrepreneur depends on [your skill set](https://www.sciencedirect.com/science/article/abs/pii/S0883902609000998), which includes education, experience, knowledge and skills. Economists call this human capital. It’s essential for exploring hidden opportunities and exploiting existing ones.

While young people may have an edge creatively and technologically, their lack of industry experience, as well as financial security, will also effect their business success. We gain knowledge and skills through both education and working experience. And, perhaps unsurprisingly, the research found that entrepreneurs with longer industry experience – particularly when it was industry specific – have higher success rates than those who have shorter experience.

<iframe frameborder="0" height="400px" id="jvdXi" src="https://datawrapper.dwcdn.net/jvdXi/3/" style="border: none;" width="100%"></iframe>

This has serious implications for the way we teach business in higher education. The idea of the young entrepreneur has fuelled a huge number of courses in business schools, which are a very popular choice for young people.

In the UK alone, there are 64 entrepreneurship bachelor degrees and 106 entrepreneurship masters degrees. Universities invest in entrepreneurship support to students such as co-working spaces and entrepreneurship hubs, as well as helping students gain graduate entrepreneur visas.

But, the clear evidence that older, more experienced people make for better entrepreneurs suggests that MBA graduates without the requisite work experience should not be encouraged to start their own business right away. A lot of entrepreneurship education promises students that they will be ready to launch their own start-up as soon as they graduate. As a result, universities overemphasise start-ups among graduates as a key success indicator of their education programme.

## Good things come to those who wait

Sure, there is potential for students to start something of their own after their graduation. But the question remains: will they become successful entrepreneurs? Would it be better to encourage them to start a career first, and consider entrepreneurship at a later stage, where the chance of success will be double?

Unlike science or engineering education where students are trained to work as scientists or engineers after they graduate, entrepreneurship graduate students may need to change their mindset that they have to start their own business right away. This is often accompanied by thinking that if they don’t, it will be too late or may be seen as a failure to launch their entrepreneurial career. Yet, although Jobs started his business at 21, arguably the peak of his success came with the iPhone, which was released when he was 52.

Entrepreneurial graduates have a lot to offer existing businesses, including bigger corporations. While some traits, such as risk taking may not align well with corporate culture, a lot of companies are in need of employees who will innovate and take their own initiative. Companies such as [LinkedIn](https://www.fastcompany.com/3003818/linkedin-launches-incubator-turn-employees-entrepreneurs), [Apple](https://www.cultofmac.com/200915/apples-blue-sky-program-gives-select-employees-20-time-to-do-whatever-they-want/) and [Microsoft](https://www.microsoft.com/en-us/garage/about/) are constantly trying to encourage their employees to take time away from their regular duties to work on new, innovative ideas.

Business schools should also think about shifting their education toward more middle-aged, experienced candidates. The same goes for the numerous start-up grants and programmes, which target young people, often giving funding without a need for collateral. Older entrepreneurs, meanwhile, have to resort to using their savings or home as collateral – despite the fact they are clearly a much better potential return on investment.

[Sukanlaya Sawang](https://theconversation.com/profiles/sukanlaya-sawang-467930), Associate Professor (Reader) in Small Business, Innovation and Well-being, _[University of Leicester](http://theconversation.com/institutions/university-of-leicester-1053)_

This article was originally published on [The Conversation](http://theconversation.com).

## To make sure your startup is successful, you need quality insurance protection​!

**To find our more, simply press the button below and fill in your details**


Startups not synonymous with young people


There are millions of companies globally trying to figure out how to reach and satisfy more customers. This talk by marketing expert Rachel Hepworth, who is the head of Growth Marketing at the billion-dollar company Slack, helps you understand what your business should focus on.

## Overview of Growth Marketing Insights from Rachel Hepworth, Slack

Rachel is a very experienced marketer with a background spanning several high-growth startups, including Slack, LinkedIn and Climate Corp that sold to Monsanto for a little over a billion dollars about five years ago.

Here is what we learned from her talk. You can watch it in full in the video below this digest.

## Business Model Fits

Rachel set out very clearly how to think about <u>some key business model fits and how to find those fits, how to think about growth, the key growth tactics and strategies and measure them</u>.

People talk a lot about **product market fit**. It sounds like a really easy concept, but one that’s really easy to forget when you’re in the midst of trying to build your company and your idea is fantastic. Rachel said she made this mistake at Climate Corp, where the founders had a vision: they <u>built up the product and the company before asking anybody if they actually wanted that product</u>. <u>The hard reality was nobody wanted that product because they didn’t ask them. So they scaled before finding product-market fit, which was really painful</u>.

How is product market fit defined? Rachel likes Marc Andreessen’s definition, who basically says:

> “Product market fit means being a good market with a product that can satisfy that market.”

So if you break this down, what does this mean? **Being in a good market means being in a market that is large enough to sustain your business.** You can envision a world, where you have fantastic product market fit and your market is one person. Unless that person is Richard Branson and he’s going to buy your spacecraft or whatever it is, it’s probably not a good idea to build a company off of it.

And then a **product that can satisfy that market is obviously a product that satisfies a particular need that the market has, but the key thing** is that **<u>product market fit is not the only fit that matters</u>** and this is something that’s often overlooked.

Rachel elaborated on a very useful framework that Brian Balfour recently came up with. He called it the **market-product-channel model** fit and it’s about how **you have to master all of these fits if you’re going to have a company that is successful and grows**.

If one breaks it down, it looks like follows:

1. The first is **the market,** i.e. who you are selling to and this is going to define your opportunity. Its size drives how big your company can grow. It’s not always easy because defining the market correctly is not always simple. In a classic example that people quote is Uber, where the market was taxis, but it’s actually not taxis, it’s basically _anything that needs to move from point A to point B_. In a market, one needs to think about who are _the people, what are the challenges that they’re trying to solve, do they know they have those challenges_ (because it makes a difference if they realise they have them or not) and then _do they care about them_ (because sometimes they have a challenge, but they just don’t care about it that much so it’s still not a particularly good market to enter).
2. **Product** is obviously what you’re selling and then product-market fit is _if you are selling something that solves a real need of the market_.
3. The next fit is **channel** – it’s about _where you’re selling it_. This can be _online ads, this can be field sales, this could be a retail store_ – how are you getting that product to the market. Balfour’s insight is really that **you can’t change the channel – you can only optimise your product to fit a channel.**

- So as an example of this, if you have a _high-volume transactional, quick time-to-value product_ – a good example is travel like Priceline – _your channel can be online ads_ because people know what it is, they understand the need, they search for it, they buy it, they get the value from it right away, it works really well. If you have _a low volume product that needs a lot of education online_, _ads is not going to work as well_ because people _don’t trust you enough to purchase the product_. If you have a product that is _inherently viral, you can use social._ So LinkedIn works really well. <u style="font-size: 14px;">Priceline strategy if we’re going to go viral and that’s how we’re going to scale is clearly not going to work that well because the product isn’t built for that channel</u>.
- And then model is inherently about **how much you’re selling it for**. So do you have a _high-cost/low-volume model_, do you have a _low-cost/high-volume model_ and that’s going to influence **the channel that you sell in**. Because once again a <u>high-volume/low-cost model will work really well in ads, but something that is a million dollars – good luck getting somebody to buy it online</u>, <u>without speaking to a human being</u>! You probably need something like _field sales consultative selling_. That’s _the classic enterprise SAAS model._
- And **you can’t mix these up, so a classic mistake people have made is thinking that they have built a better mousetrap and now they can do an SEM ad for something that cost five hundred thousand dollars because their product is so amazing and people are going to buy and it’s the new way of working**. This is not reality and Rachel tells us from her Slack experience that it was an evolution they had to go through. <u style="font-size: 14px;">Slack now has a large field sales component.</u>
- And then finally market-model fit. So again if your model is low-cost/high-volume and your market is five people, you fundamentally have a problem. So you have to make sure that your market and model fits. And the key is that all of these things need to work together for your business to scale successfully.

Rachel gave a great illustration of a real-life example of what happens when this goes wrong. A classic example of that was Climate Corp, which actually had a lot of these fits correct, but **\*what they got wrong fundamentally was the marke**t\* and what that means is there was a **domino effect where everything else fails when one of your assumptions turns out to be untrue**.

Climate Corp, originally called Weather Bill and rebranded to sound more adult and sophisticated, was built on this concept that _weather impacts 80 percent of businesses in the world._ So if you’re a ski resort and it’s too warm or you’re NASCAR and it rains, or you’re a grocery store and there’s a snowstorm and you can’t get your trucks through on time, there’s real financial impact from the weather and there’s actually no way to mitigate that risk at that time.

You could swap billion-dollar derivatives and that was about it, which is obviously not super-useful for most companies. So Climate Corp’s founder said:

> “wouldn’t it be a great idea if we build a weather insurance product that was highly customisable,  
> you can edit it online, and you can buy easy contracts in just a few minutes to protect against weather risk, just like you do flood insurance, car insurance, whatever it may be and then you could have more predictable revenue. Market is huge because it’s 80 percent of all businesses, the risk is clear, financial impact is obvious, so we clearly have a winner!”

And the answer was:

> “we do not have a winner”!

The reason for that is that nobody understands weather risk. The founders did because they spent years researching it, but if you ask your local bike shop, if they suffer if there’s one inch of rain or two inches of rain and what are the dates that that rain might fall, how much money they’re going to lose what if it’s super-hot, do they get fewer bike rentals on that day? They simple don’t know!  
So a highly customized model just meant many opportunities to select the wrong inputs for something you’ve never heard about before. And then **hand over money to prevent losing money versus to make money**. All things that make it particularly unattractive to a small business owner, but Climate Corp didn’t realise this at the time. They thought they were brilliant.

> <u>This market that we envisioned, this very large market did not exist, it wasn’t real.</u> **There wasn’t market in here that was real that we eventually did figure out and that is it’s a particular industry: agriculture!** So who has weather risk and they really know it right deep in their bones – it’s <u>farmers</u>! What specifically is the agriculture that has the most risk in terms of revenue – it’s corn and soybean because it turns out that’s 80 percent of farming and they have very similar risks. Who’s willing to spend a lot of money to protect their crops? It’s farmers. So the market was there, but it was a different one than we originally envisioned and it also is very different from the thousands of SMBs that we pictured.

So what happened? So Climate Corp got their market wrong and because they got their market wrong, they got their product wrong – they built a product that could be customised by anybody online, highly iterable, but not specific so you had to understand your own risk. They didn’t tell you what it was. So **the product market fit wasn’t there**, Climate Corp ended up creating a **correct product market fit by deeply understanding the risk that the farmers had and then serving enough to them.** So instead of saying “hey corn farmer, you got a lot of risk, go buy a contract, figure it out”, they said:

> “Hey we know **that when your corn is pollinating, if there’s low heat, it won’t pollinate, you’ll lose money**. Here is a **corn pollination heat stress – all we need to know is where is your farm located and how many acres do you have** (which is something that people do have a great deal of confidence in), **so you’ve removed that risk.**”

Because they had the market wrong, they had their channels wrong. So the founders came from Google (this was about 10 years ago) and they believed the world was going to be transformed by Adwords and all businesses would be sold through Adwords. As you know, they weren’t totally wrong, but they were a little bit wrong. Turns out that weather insurance does not work to be sold through Adwords and there are a couple reasons why:

1. didn’t exist before so nobody’s searching for it,
2. people don’t understand it. They **land on a website and you’re asking you to give a lot of money to a company you’ve never heard of.**

<u>None of this is good for an Adwords channel</u> and again because the product was very complex and the time to value was long, ads didn’t work very well. **What does work is field sales**. In the beginning they did online ads – really poor, <u>they eventually turned to field sales.</u>  
As a result, Climate Corp had their model wrong – their model was a mass volume of cheap daily contracts. It turns out **it should have been a couple of million dollar contracts a month**. <u>And again your channel is going to change based on your model </u>and then finally because our market was wrong, we didn’t realise that we had to have really expensive contracts. **What they did is they changed their channel sales model through agents.** **It’s expensive, highly consultative**. Also, agriculture is a very relationship-based market. So you’ve got a farmer – he buys insurance from his crop insurance partner, his father bought insurance through that crop insurance agent’s father and on and on and on. It’s really amazing, it goes back generations, they certainly don’t trust a start-up company from San Francisco. They needed to go through trusted agents and again you only know this **by deeply knowing your market model**. They went from <u>high-volume/low-cost to low-volume/high-cost</u> and again it all reflects the market of corn and soybean farmers.  
So how to figure this out without spending a year and a half and a lot of money throwing things at the wall and failing and thinking are going to go out of business? Rachel’s answer is **a customer development model which Steve Blank has evangelised over the years**. And the <u>theory of customer development is that this is really you can apply the scientific method to building up your business:</u>

> **So you have a hypothesis, you don’t go all in, you test it, you prove it, you either iterate, because it didn’t work or you invest more deeply, which is a fundamental mistake that they made in the beginning of Climate Corp.**

The first two stages of customer development are really about building out those four fits that Balfour talked about a lot and the second are about scaling your business. 2. - So **customer discovery** is about **understanding the problem your customer has and validating that it’s real**.

- **Customer validation is validating that you can sell to them** so not only do they need to have a problem – **they need to be willing to purchase a solution**.
- Then **company creation is about creating a scalable process to keep selling**.
- And then **company building** is about **operationalising that process so you can scale.**

<iframe allow="accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture" allowfullscreen="" frameborder="0" height="675" src="https://www.youtube.com/embed/gmO4jomGuXI?feature=oembed" title='E806: Rachel Hepworth, Slack Head of Growth Marketing: how startups can best "Go to Market and Grow"' width="1200"></iframe>

## To make sure your marketing efforts are productive, you need quality funding and insurance protection​!

**To find our more, simply fill in your details in this quick form below or give us a call on 020 3797 1287**


Growth Marketing Insights by Head of Growth Marketing at Slack


WeCovr and Startups and Makers Week are co-organising an evening of startup stories and pitches on the 23rd of May at [Orrick, Herrington &amp; Sutcliffe LLP](https://www.linkedin.com/company/5833/) in London.

Keynote on startup lessons from [Eamonn Carey](https://www.linkedin.com/in/ecarey/), MD of Techstars. Limited spaces only.

Please reach out via the Contact form on the right and we’ll be glad to see you join us at the event.

Follow us on Twitter [@wecovr](https://twitter.com/wecovr).

<img width="300px" alt="WeCovr at Orrick" src="/images/IMG_20180523_202833-min.jpg">
<img width="300px" alt="WeCovr - Techstars talk" src="/images/IMG_20180523_185429.jpg">
<img width="300px"  alt="WeCovr - Techstars talk" src="/images/IMG_20180523_185617.jpg">
<img width="300px" alt="WeCovr - Techstars talk" src="/images/IMG_20180523_191118.jpg">
<img width="300px" alt="WeCovr - Techstars talk" src="/images/IMG_20180523_185454.jpg">
<img width="300px" alt="WeCovr - Techstars talk" src="/images/IMG_20180523_185245.jpg">

## Enquire for free now!

Fill in the quick form below and one of our colleagues will be in touch shortly!


WeCovr had a blast at our startup pitch night


Over 627,000 new businesses open each year. With this large amount of competition in certain markets, it can be hard for companies to stand out.

That is where growth marketing comes into play.

Marketing is the activity, set of processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large.

Based off this definition, it is apparent that marketing is essential for businesses to stand out amongst the competition. The word “growth” means increase and expansion. One way to grow your business involves learning how to market your product or service to your customers.

Now, how do you put this strategy into action?

Here are some growth hacking tips that we have gathered:

- Implementing content upgrades! These are extensions of one of your content pieces made available for download in exchange for contact information. Some examples include video recordings, resource/tool guides, or checklists. Content upgrades prove to be highly effective in lead generation.
- Send emails from a real person. Rather than sending generic emails, have an actual person from your company with a first and last name send emails out. People are more likely to read or even respond to emails from an actual person versus a computer-generated email.
- Engage in communities such as LinkedIn or Quora. Respond to questions that pertain to your business or to related topics. This can drive people to your website.
  These are just a few of the many hacks that can be used to grow and market your business well.


Why growth marketing is essential for new and existing businesses

WeCovr startup pitch night with a keynote from MD of Techstars!


We are pleased to offer our select clients a solution allowing them to convert invoices from their creditworthy clients into cash on a flexible and low-cost basis and without any risk of recourse to them.

Receivables discounting is your key to unlocking working capital as it’s a cost-effective mechanism of risk-free financing your short-term cashflow gaps by converting invoices from creditworthy counterparties into liquid funds. Unlike other business funding products, the solutions we put together for select clients don’t require any collateral, personal guarantees or counter-indemnities as non-payment risks are managed with the help of major credit insurance providers.


Working capital solutions and new service


According to a recent study by Siemens Financial Services, SMEs are an integral part of the UK economy, accounting for 47 percent of all private sector turnover.

They bear the brunt of late payments and long payment terms. Businesses (with turnover of under £1m) wait for 72 days for payment. Businesses with an annual turnover of £1m-£10m wait on average 53-54 days, and the largest businesses wait on average 48 days. A typical SME spends 130 hours a year chasing outstanding invoices. The cost associated with this time taken is £10.8 billion per year. Unpaid invoices account for 14 percent of SMEs’ annual turnover.

These costs combined mean that SMEs are missing out on over £250bn of cash flow. Outstanding bills are viewed as a drain on cash flow, yet finance products such as invoice finance can be used to unlock funding. Invoice finance is increasingly being seen by SMEs as a flexible and reliable tool to unlock working capital and now provides more funding than ever before to SMEs with funds used across the UK recently exceeding £20bn for the first time.

This further emphasizes the increasing need to protect SMEs’ receivables against non-payments by clients by using either credit insurance or non-recourse invoice funding solutions.


UK SMEs missing out on over £250bn due to late payments


We are happy to say that we don’t charge our clients for finding them an insurance solution.

So if you are working on a transaction or with a portfolio which exposes your organisation to potential losses from credit or political risk events, please get in touch. We are happy to offer our customers a free no-obligation quote service for all of your political and credit insurance needs.

Just pick up the phone or fill in our simple contact form with the description of the risks you are looking to cover and we will be in touch with quotes from our insurance partners. If you have a quote from another source, please send it through as well and we’ll be happy to beat it for you.


Free credit or political risk insurance quotes


According to recent insolvency statistics from Infolink, total unpaid/unsecured credit losses totaled over £1.9 billion for the second half of the year, up 6 percent on the first half of the year. 80,000 ordinary unpaid trade creditors (excluding 8,000 occurrences of HMRC as creditors) lost an average of £23,900, from 5,178 insolvencies. The average asset shortfall for unsecured creditors in each Insolvency was approximately £499,000.

At least 20 percent of the unpaid creditors don’t have sufficient financial reserves to stand the losses they are incurring; almost 10 percent of the unpaid creditors are themselves insolvent and 15 percent have a working capital deficit.

With only 10 percent of unsecured creditor losses covered by a trade credit insurance policy and 20 percent of unsecured creditors not having the financial reserves to stand the trade credit losses, it is hardly surprising that unsecured creditors are more than 3 times as likely to enter insolvency proceeding themselves, when compared to rest of the business universe.


Massive losses for uninsured creditors

In 2015, the following major Western European companies have become insolvent:



<img src="/images/WE-Insolvencies-2015.png"
     alt="Western European insolvencies according to EH"
     style="margin: auto; width: 80%" />

Source: Euler Hermes

While more than 100 US oil and gas companies declared bankruptcy since 2015:

<img src="/images/US-OnG-Insolv-Since-2015.png"
     alt="US oil and gas companies insolvencies"
     style="margin: auto; width: 80%" />

Source: Wall Street Journal

Major insolvencies in the US and Western Europe


Latest ABI figures show that claims paid by trade credit insurers are running at over £4 million every week – their highest level since 2009. Over 200 firms every week helped by trade credit insurance. A record £340 billion of UK trade is being covered by trade credit insurers.

Insurance pay outs made by trade credit insurers in 2017 to help businesses get through challenging trading conditions were at their highest level since 2009 according to figures published today by the Association of British Insurers (ABI).

During 2017 high profile company failures included Monarch Airlines, Palmer and Harvey and Misco, which have continued into 2018 with the collapse of Carillion, Toys R Us and Maplin. With company insolvencies up 4 percent in 2017, UK firms continue to face challenging trading conditions at home and abroad.

The ABI’s annual trade credit insurance statistics highlight that:  
– Claims paid to businesses due to non-payment of debts in 2017 totalled £225 million, the equivalent of £4.3 million every week. This is up 7 percent on 2016, and the highest amount since 2009.  
– In 2017 there were 11,017 claims. This equates to 212 firms being helped every week.  
– The level of trade covered by trade credit insurance in the UK stands at a record £340 billion, up 7 percent on 2016.  
– A fifth of policies covered businesses exporting goods or services overseas, with just over three-quarters covering domestic trade. The trade credit market continues to grow, with nearly 13,000 policies in force.  
– Unsurprisingly, given a number of high profile insolvencies in the second half of 2017, the value of claims received in the last quarter of last year, at £130 million, was the highest quarterly figure since the first quarter, 2009.

Commenting on the figures, Mark Shepherd, ABI’s Assistant Director, Property, Commercial and Specialist Lines, said: “The failure of a number of high profile businesses, such as Monarch Airlines and Palmer and Harvey in 2017 and the recent collapse of Carillion, dramatically highlights the value of trade credit insurance. With over £4 million paid to businesses every week, trade credit insurance can make the difference between survival or demise following non-payment by a customer. The expertise of trade credit insurers is helping firms navigate challenging trading conditions, enabling them to expand at home and overseas, so helping Britain thrive. With the number of policies rising and insured trade at a record high, more firms are recognising that this cover is an essential business tool to help them assess the credit risk of potential business partners. But too many firms remain unprotected, and with intermediaries selling the vast majority of these policies, we need to raise awareness of the importance of trade credit insurance.”

**Fill in the quick form on the link below to discuss how a credit insurance policy can protect your business against potential credit losses**.

## Enquire for free now!


Bad debt Britain – unpaid bills are at their highest since 2009


As many of our readers will know, the construction and outsourcing services provider Carillion collapsed two weeks after the start of 2018 weighed down by the massive £2.2 billion debt and pension liabilities, which became the largest corporate bankruptcy in the UK in a decade.

As it turned out, the vast majority of UK suppliers to Carillion did not buy insurance against the risk of not being paid for the goods and services they provided. Out of the estimated losses of £1.2 billion, only £31 million was insured with trade credit insurance insurers according to ABI, amounting to less than 3 percent of their losses.

The chain reaction from the insolvency is now forcing many of its SME suppliers to lay off personnel.

To prevent finding your company in a similar situation, we can only encourage you to speak to us at the earliest opportunity. We work with many insurers active in trade credit insurance. Such insurers paid out about £210 million in claims only in 2016 according to the Association of British Insurance, so the product does respond to bad debt events.

Unfortunately, it is mainly SMEs that are most affected by the domino effect of their larger customers defaulting that often choose to ignore the real dangers of customer non-payments and not invest in a good trade credit insurance policy.

Speaking to us in advance will provide you a peace of mind that should a Carillion situation happen in your sector, you are going to be able to recover your losses. Reach out to us today via any convenient channel, including phone, email, website or live chat.


News, reviews and guides