How do you get talented engineers to work for a startup in a mundane field at a time when more exciting companies are paying well and hiring aggressively? Here’s an answer from one insurance startup out of Poland called Ominimo: make pay competitive, but more importantly, give those engineers the license to apply their talent and reinvent how the field works.
Launched on a bootstrapped budget just 12 months ago, Ominimo believes it’s found a different and better approach to understanding and pricing risk. The company says it’s already profitable and growing fast, with 300,000 policies signed up in its first market of Hungary. Now, to fuel its next stage of life, it’s taking its first outside investment from a strategic backer, Zurich Insurance Group.
TechCrunch understands from sources that Zurich is making a €10 million (around $11 million) equity investment for 5% of the company, valuing Ominimo at €200 million ($220 million). Neither Ominimo nor Zurich commented on the amount invested, but both have confirmed the valuation.
Ominimo has raised funding at a time when one of the most well-known and well-capitalized insurance startups in Europe — the once-unicorn WeFox — is selling off parts of its business and picking up lifeline financing to stay afloat.
WeFox serves as both a cautionary tale about how to grow an insurance business, but also a clear opportunity. Arguably the reason WeFox grew so fast was because of demand in the market (both from consumers and investors) — a startup only had to surf that wave without wiping out.
Ominimo is already profitable, but it’s arguably a modest effort. Today the startup is active in just one market, Hungary, and focuses only on one kind of insurance, car insurance for consumers. The plan is to replicate its model in more geographies and categories.
The company plans to expand into more than 10 new markets, starting with Poland, Sweden, and the Netherlands. Zurich Insurance will serve as its risk carrier, and Ominimo will operate as a broker, specifically a managing general agent, for Zurich. The startup is focusing initially on automotive insurance, but intends to add property insurance over time as well.
Dusan Komar, Ominimo’s CEO who co-founded the company with Dennis Weinbender (now chief pricing and data officer) and Laslo Horvath (CTO), saw the challenges the insurance industry faced firsthand when he worked for McKinsey. Major insurance firms, he said, were stuck because of three main issues: rigid legacy systems that were challenging, if not impossible, to use to launch new services quickly or work with newer innovations like AI-based pricing; slow decision-making processes at the corporate level; and talent.
“No brilliant software engineer or data scientist dreams of working for an insurance company,” he said.
McKinsey and others like it typically get called in to try to fix all three at once. Komar and his team would build new products from the ground up and “hand over the code” to the insurance client. “It worked to some extent, but not as perfectly as we would have hoped,” he said.
Taking a cue from the worlds of fintech and other insurance startups, Komar and his two co-founders saw an opportunity to develop a product as their own company rather than for a client. They would use APIs to plug in features and functionality from other providers that they might not build themselves, and that is how Ominimo was born.
Ominimo is essentially applying some AI-based reasoning around big-data analytics. When building and pricing an insurance quote, a traditional insurance company might use five or six main parameters (age, economic bracket, type of vehicle, past driving history, or location of car) to determine a price. A newer insurer might add another 10 or 15 parameters to that.
“But there are some not-so-obvious variables that are actually super important,” Komar said. For instance, once you get the license plate of a vehicle, you can tap into a database, he said, which gives you 100 different variables about the vehicle, including the length, height, width, and weight of the vehicle. “It’s interesting, for instance, to see that data shows a very strong correlation between the length of the car and the frequency of accidents during parking,” he said.
Ominimo takes all of these details, plus population density and more, into account to perform its calculations.
There are, of course, a lot of insurance startups in the market already that tout the use of AI across their platforms, both for decision-making in the back-end and to improve customer experience at the front-end. Ditto the existence of dozens of startups in fintech that also lay claim to being built on AI.
Komar’s response to this is that Ominimo’s track record speaks for itself. “I think what really matters is actually performance in the market, so if you compare our performance to Lemonade’s [a key competitor], you will actually see the difference,” he said. He claimed that Ominimo’s “loss ratio” is below the market average, and it’s already picked up a market share of 7% in Hungary, the only country where it operates.
As with a lot of the neobanks in the market — fintech and insurance really do have a lot in common — many “new” insurance players are doing less disruption under the hood as they are creating a more modern user experience.
“There is a difference between claiming to do data science in terms of risk assessment, and actually doing it,” he said. Many of his startup competitors, he believes, “have actually focused on superior customer experience, very nice front-ends, very lean and intuitive journeys. But there was not a lot under the hood.”
Giving talent a place to do the kind of work they want to be doing, he claimed, is how Ominimo has attracted and retained key people. “We have eight medalists from mathematics and physics Olympiads [prestigious competitions in these fields] among our data science team,” he said. “These are really brilliant young minds who now, for the first time, get to deploy their full potential on a global scale. And this really shows in the KPIs that we see.”
That is also what attracted Zurich Insurance, which is looking for more diversified ways to bring in new waves of customers.
“Growing our retail business profitably is a key ambition in Zurich’s 2025-2027 cycle. That is why I am delighted with DA Direkt’s distribution partnership with Ominimo, which will allow us to offer innovative motor insurance solutions and expand our retail customer base in Europe, beyond the markets in which Zurich is already present,” said Alison Martin, CEO of Europe, Middle East and Africa at Zurich Insurance Group, in a statement. “I am also pleased we are strengthening our relationship with a minority stake in Ominimo.”
Source: https://techcrunch.com/
