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Kudo is a revolutionary motor insurer with a game-changing driver score and industry-leading engagement programme that rewards safer drivers.
The company was founded by Peter Graham, insurance veteran & former CEO of esure. As one of the original insurance disruptors in this space, Peter had closely monitored innovation that could transform motor insurance profitability.
We sat down with Peter to learn more about his career before Kudo and the mission and future of the brand.
We’d love to know about your career before Kudo and where you first found that entrepreneurial spark.
I’ve held many senior positions in the insurance industry and the entrepreneurial spark came at a very early age. I believe you either have that personality trait, or you don’t. It’s all about the willingness to take risks and if that is not something you are comfortable with, setting up your own business is probably not for you. Success comes from failing and being prepared to learn from those mistakes. It is humanly impossible to get everything right first time so accepting the knock-backs and carrying on regardless requires a certain mentality. At the end of the day, it is a matter of belief in your idea/concept, and fighting to overcome the many bumps in the road.
What is your mission and who is your target audience?
To bring fairer priced insurance, and rewards, to Britain’s safe-drivers. Safe-drivers can be all ages and demographics and that is the beauty of Kudo, it’s all about how you drive – and EVERYONE can influence that aspect of their life.
What makes Kudo different from other auto insurance companies?
We know how someone drives before offering them an insurance policy. How simple is that!
The vast majority of motor insurance policies are sold on the back of asking 30-40 questions – which don’t tell the insurer how someone behaves behind the steering wheel. For example, how do you feel about being judged on how your neighbours have historically driven, or how old you are? Well, that is what happens when you provide your postcode and age to your insurer – they are looking at historical performance of people that live near you or happen to have been born in the same year. Is that fair? Kudo’s primary risk selection factor is how YOU drive, and not other people that live near you.
What can you tell us about the market and how Kudo is positioning themselves for success?
The U.K. motor insurance market is massive, with £16bn of annual premium. It is often reported that the U.K. market is one of the most competitive, with the majority of sales coming via Price Comparison Websites (PCW). However, if you dig a little deeper, of the hundreds of brands you see, a lot of them are owned by a smaller collection of insurers. In fact, most of the cars on the road are insured by about 5 different insurers who operate multiple brands or have their products on a broker panel that is selling through PCWs.
The dominance of PCWs has meant that for the past 20 years or so, the UK insurance industry has been forced to compete on price, with little product differentiation.
Kudo is different; we think about the customer first rather than how we sell insurance to them. By providing feedback to our customers on how they drive, and providing hints and tips to improve, we create a direct mechanism for drivers to influence their insurance price.
We developed the Kudo Koins rewards system that gives customers an incentive to continue to drive safely. We’ve also simplified the insurance quote journey by making it as simple as possible to obtain a policy price – anytime, anyplace, anywhere (assuming a mobile signal of course). We don’t ask the usual 30+ questions – just a slimmed down 7 to get a guaranteed quote. We give a customer many reasons to use the App, and made it simple to purchase insurance.
Our differentiator is just that, with Kudo you get rewarded for driving well, 365 days a year, and we’re not a once in the year sales process. We believe it is fairer to calculate a price on how you drive, not just who you are or what you are driving.
Could you tell us about some of your biggest achievements to date?
I think the biggest achievement has been achieving the customer traction we have had with such a small budget. The feedback we get from our customers has been amazing. Some have given us unprompted pointers and thoughts with the mindset of hoping to help us to get better. Some of our current customers have gone on to invest in Kudo via Seedrs.
The 2nd biggest achievement has to be aligning the insurance eco-system. This is no easy feat. There are so many parties to align, from securing insurance capacity and reinsurance, assembling a team, right through to getting FCA authorisation. It’s not been a simple journey, and this is where the team’s experience and pedigree have really shone through.
How do you plan to create a scalable and profitable business model?
We work backwards. It starts with a great and compelling customer proposition, and then we test the hypothesis via consumer research. We then plan out the steps to develop the proposition and distribution plan.
For a digital business like Kudo, we need to minimise costs but make sure we have the ability to scale without investing heavily in headcount or infrastructure. Clearly that means using Cloud services, and making sure our architecture is modular – allowing us to enhance and develop various parts of the App in manageable chunks.
Scaling distribution is tricky. Direct marketing is expensive – we did some test trials and got the cost of downloads to an acceptable level, but to scale we realised it could get too expensive. So we switched tactics and are working on several partnerships that will give access to customers. We also trialled our member get member scheme, which was very successful, so the plan is to scale up partnership distribution and expand the member get member schemes. This approach will allow us to directly control the pace of growth.
We believe we have a great customer proposition which is easy to adjust to customer sentiment and feedback. Partnerships – where we can tailor the offering to the partnership customers – and member schemes is the way to achieve scale, maintain margins and protect the capital base.
What do you plan to do with the money you raise?
The full details are broken out on our pitch page: broadly it’s 50:50 between growing via our distribution strategy and building our data science capability. The team needs to expand primarily with App developers and operations. This will help speed continuous development and maximise the sales funnel.
What do you love to do in your free time?
Long walks with my wife and our dog, and socialising with the lovely folk in our village. I am also a big football fan and enjoy the occasional game of golf – played badly!
If you weren’t building Kudo, what do you think you’d be doing?
Building another business, it’s just what I do!
What’s the biggest lesson you’ve learnt so far building Kudo ?
Listen to customer feedback and adapt, quickly. Keep iterating your proposition.
Kudo is a revolutionary motor insurer with a game changing driver score and industry leading engagement programme that rewards safer drivers and builds a path to hopefully become profitable. Check out the campaign page here.