1. First of all, how are you and your family doing in these COVID-19 times?
Dan Preston : We’re doing well, all things considered. Recent events have reminded us of our privilege of staying safe and healthy, and I hope more people can be safe and healthy now and in the future.
2. Tell us about you, your career, how you founded or joined this company.
Dan Preston : I originally joined Metromile as the chief technology officer and became CEO one year later. The co-founders had the idea to use machine learning and other technology, including car sensors, smartphones, and telematics, to create a new type of car insurance. We founded Metromile to create personalized insurance that is fairer and more affordable.
Before joining Metromile, I was the co-founder and chief technology officer of AisleBuyer, an e-commerce mobile payments startup, which was acquired by Intuit. Before that, I spent time in academia at Harvard and Tufts, publishing research papers on the applications of machine learning in astrophysics, computer vision, disease, and human genetics.
3. How does your company innovate?
Dan Preston : Metromile is the leading pay-per-mile car insurance company in the U.S. We’re a unique insurance company: We didn’t start as a traditional insurer, and everything evolved from being both technology-oriented and having very experienced insurance talent. We became a top insurance carrier by focusing on our user experience and creating a loyal community of drivers.
Our foundation as a technology company has helped us adapt to changing consumer needs. We recently launched fractional insurance, a new type of personal car insurance, in California and Illinois to help reduce the cost of car ownership. With fractional insurance, people who share their cars on Turo are only charged for the miles that they drive. They don’t pay for car insurance when somebody else is renting and driving their car. We invented fractional insurance because conventional insurance companies might not cover car-sharing under their personal policies. These consumers might have to seek out commercial or fleet insurance, which can be complex and expensive.
We also recently launched Metromile Enterprise, which is our software-as-a-service business group. Through Metromile Enterprise, we partner with insurance companies to help them operate with greater efficiency and provide a premium customer experience. Insurance carriers license our platform to automate claims to expedite resolution, reduce losses from fraud, and increase employee satisfaction by empowering them to work on higher-impact experiences.
4. How has the coronavirus pandemic affected your business, and how are you coping?
Dan Preston : We saw a 58% decline in driving from the end of March through the end of April as people drove less because of shelter-in-place orders. Other insurers had to refund customers because they were driving less, as regulators understood insurers were seeing far fewer losses and accidents. But, because our drivers pay per mile, they didn’t have to wait for a refund and saw significant savings when they didn’t drive.
The beauty of our business model is that our revenues are aligned with our costs. Our gross profit is pretty consistent with what it was before the pandemic because when people drive less, they get into fewer accidents.
5. Did you have to make difficult choices and what are the lessons learned?
Dan Preston : Earlier this year, when everything started to change with shelter-in-place orders, we made the decision to shift our expansion to new cities and metropolitan areas in our existing geographies instead of launching in new states. Our new approach gave us the opportunity to focus on our customers and make sure we’re delivering the right product. It also helped us plan for expansion into new U.S. states in the future, as we’ll start from a better foundation when we grow later.
6. How do you deal with stress and anxiety? How do you project yourself and your company in the future?
Dan Preston : Our North Star has always been about providing drivers with more options. We want to personalize our insurance to meet our customer’s lifestyles and adapt to their changing needs. We recently provided flexibility to our customers who couldn’t pay their bills. We extended grace periods, so they have a bridge while everything is shut down now, and committed to not charging late fees or fees for these payment extensions because we understand every bit counts. It all goes back to the concept of flexibility.
7. Who are your competitors? And how do you plan to stay in the game?
Dan Preston : The biggest challenge for us is getting the word out about pay-per-mile insurance. The concept of usage-based insurance has been around for a while now, but many people don’t know the option is available to them.
Many U.S. consumers don’t realize they are considered low-mileage drivers by the insurance industry. The average American drives 37 miles or fewer a day, but our data shows two-thirds of Americans drive 27 miles a day or fewer than 10,000 miles a year on average. With Metromile, these drivers can save up to $741 a year on average on their car insurance.
We are focused on letting people know there are alternatives to other types of car insurance, as many consumers get a recurring billing statement every month or every six months and don’t bother to challenge it or look for a better rate.
Dan Preston : The COVID-19 pandemic is accelerating a massive disruption in the way we all get around. Many people won’t have a commute and will be driving less, and some will be afraid to take public transportation. In a world with a lot of uncertainty and change, the most important thing is to give people options and flexibility to figure out what makes sense for their lifestyle. This is the role Metromile plays, and there’s real customer demand for it.