Can FreightInsure change consumer attitudes towards transiting goods?
Schwarz said his offering covers everyday freight deliveries like laptops, bicycles, or household goods. He said the coverage is very different to providing insurance for consumers who purchase products from online retailers.
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“It’s not clear to us that a purchaser of something online is going to want to take out additional purchase protection when they already have statutory consumer protection rights that guarantee delivery or refund of their purchase.”
However, when a customer wants to send or freight something they already own, there’s a gap in the market.
“We’re not working with purchasers of things, we’re working with consigners of things,” said Schwarz. “The business model here that’s unique is a very tight integration into the freight process that nobody’s really done before.”
One of the firm’s sales channels is brokers.
“Brokers will have existing freight clients where we are able to establish programs with them and then insure the consignments of freight from those customers, via whatever platform it is that the broker is using,” said Schwarz.
FreightInsure launched earlier this month and Schwarz expects the introduction of his embedded insurance offering to change consumer behaviour.
“They’ll realize they don’t have cover unless they take out this insurance policy,” he said. “We’re trying to educate the market so there’s understanding that they really do have a risk here that needs covering and this is a cheap and in-place way of covering it as a customer is completing a transaction.”
He also hopes the offering will provide clarity to the market because, currently, sending goods in this way has a grey area in terms of who is liable for loss or damage.
“If DHL loses your racing bike in transit, it’s actually not clear to you whether that bike will be covered or not,” he said. “The fact is it’s not covered; there is a no liability regime in place, so you end up in a fight with your carrier and they’ll offer you some sort of gratuity.”
FreightInsure’s embedded insurance overcomes this issue.
“Once you have a product like this in place, the carriers can be very clear and definitive to their customers: you either take out insurance, in which case you’re covered, or you don’t take out the insurance, in which case you have no claim against us,” said Schwarz.
The CEO said the freight market in Australia is not only “very underinsured”; it’s also “massive”.
“The single carton component of that freight market is exploding as online transactions happen and it becomes easier to send a single item from place to place,” he said.
Until now, he said, there hasn’t been a product like FreightInsure’s that offers embedded, cheap and easy to use insurance coverage in this space.
“We anticipate that we should be able to get quite a lot of traction in what is a very large market very quickly,” said Schwarz.
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Earlier this month, FreightInsure launched following “a significant investment” from Lombard Australia Holdings, the holding company of the insurance firm, Assetinsure.
Doug Laburn, head of risk partners at Assetinsure listed several key features of FreightInsure that precipitated his firm’s commitment.
“Firstly, it’s a sense of building businesses of tomorrow,” said Laburn.
He said this involves thinking “long and hard” about the types of businesses that are going to be successful in the next three to five years.
“Generally, that has a strong data or technology related component, either proprietary data, which we’d be able to do something interesting with, or a particular approach to technology that can create a level of sustainable differentiation,” said Laburn.
He said they found both of these positive features in the FreightInsure environment.
“Secondly, is a sense of the people,” he said. “We simply like to do business with people we like and share a common culture and values with around delivering value to clients and underlying trust.”
The third component involves timing.
“We feel we’ve got a particular skill set in helping build and scale fairly early-stage opportunities that have a close proximity to distribution,” said Laburn. “This skill set covers capital provision, our licence platform and global experience in working closely with founders in building and delivering on strategy.”
