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November 14, 2018

Moving from Theory to Practice in Disruption

Credit Karma Unveils New Auto Insurance Solution at ITC 2018

Key Takeaway
A disrupter goes beyond a vision for the future - he launches it at ITC 2018.

An ongoing theme at InsureTech Connect 2018 (ITC18) was finding a customer need and delivering a customer-based solution.  ITC18 went beyond mere discussion from the outset as attendees of Credit Karma founder and CEO Kenneth Lin’s keynote “Karma in Insurance” discovered.  Lin illustrated how today’s insurance world is being disrupted by innovative players on the borders of the industry, leveraging their expertise, insight, technological inventiveness, and consumer focus.

Lin first shared some of the history of Credit Karma, who have built high consumer trust and a huge following by providing its 85 million “members” with the information and tools to enable them to take control of their credit score. He then highlighted two key consumer problems in today’s auto insurance market.  First, it’s difficult for many consumers to determine what kind of coverage is needed. Second, they have little idea of how the cost of coverage is affected by choices they make – including those affecting their credit score.

That’s a problem in and of itself, but when you consider that 28% of consumers have no money at end of the month and need to borrow to make ends meet it’s an even bigger issue.

Rather than simply musing on the implications of these issues, Lin announced that Credit Karma was rolling out a new service that allows customers to estimate the cost of car insurance from different carriers.

And the product doesn't only address the immediate goal of insurance.  Credit Karma’s new service also allows customers to run through a series of counterfactuals, such as: what would happen to my insurance premiums if I got into a car accident, improved my credit score, or bought a nicer car. Lin said the goal is to educate consumers on how their credit score affects their auto insurance rates and how insurance rates work in general.

Credit Karma also connects customers to the carrier of their choice, so they can get an actual quote.

Credit Karma has two big competitive advantages as compared to many insurance industry incumbents.  First, it doesn’t have to ask customers invasive questions, like, “What’s your income?” or “What’s your driver’s license number, age and address?”

The company has a lot of that information already. In fact, about 8 million people have connected their vehicle information and auto insurance information to their Credit Karma profile, said Lin. The company’s second major advantage is that it’s a completely neutral facilitator. Credit Karma doesn’t care which carrier its members chose since it doesn’t sell insurance and presumably doesn’t have relationships with auto carriers. That’s important for a company looking to educate since it reduces chances of conflict of interest.

Lin summed it up well when he said “What is Credit Karma for insurance? It provides rich insights with little to no data entry, and a complete and engaging view into pricing, coverages, and underwriting factors.”

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