Carey Anne Nadeau is the Co-Founder and Co-CEO of LOOP, a car insurance agency that makes it their business to serve the underserved, including people who have no or low credit. Using data in novel ways, LOOP is capitalizing on industry-wide mis-pricing, delivering an affordable and dignified experience to its members.

Carey believes that by using data we can reveal and correct for institutionalized bias, supporting smart policy making and building big businesses in the blind spot of legacy financial services institutions.

She’s been chipping away at this problem for 15 years, founding multiple companies, becoming a vocal advocate for justice and equality, and being a thought leader in the smart cities and open data movements.

Carey honed her craft at premier research and academic institutions – the Brookings Institution and the Massachusetts Institute of Technology (MIT), where she holds a Research Affiliate appointment and a Master’s Degree from the Dept of Urban Studies and Planning. She’s been published in books, articles, and won national awards for her cutting-edge work using geospatial statistics to discuss the living wage and urban mobility.

Highlights from the Show

• Carey's career was focused on data and decision making, which is where her interest in insurance as a social good came from, wondering if there was a way for data to create fairer ways to cover people
• She co-founded LOOP as an auto insurer that tries to undo the industry practice of using credit to price risk, and instead do so in ways that are fairer and rely on what actually correlates to risk
• LOOP is the only standard auto insurer that has committed not to using credit, but also doesn't use profession or other things that can drive bias
• Credit's issues stem from very real, normal things that people do, like having student loan debt, working as a 1099 instead of W2 employee and more
• Instead, LOOP considers things like the roads you drive on, and the likelihood of crashes on them rather than credit
• Carey talked about how credit varies in ways that's uncorrelated with risk
• She sees a future 10 years from now that won't include credit
• Regulators are more open to moving past credit than some may think because they care deeply about redlining and ensuring people are getting a fair shake
•  LOOP can show regulators two ZIP codes and crash risk, and that there's an equal probability in the wealthy and poor neighborhood, so why would ZIP be a basis to charge more for the poor neighborhood when the risk is the same?
• When it comes to new data and AI, there's no silver bullet – it's hard work, and you have to figure it out, invest in the models, and monitor them over time; you can't just throw AI at it and pray it works
• The impact is that the average auto policy is $1100, and these people with the same risk but a worse credit profile are paying $1600, which is a massive disadvantage
• Segmentation matters, and many in the industry seemed to have stopped at where we got in the mid-2000s rather than being willing to really challenge things
• We discussed the three waves of InsurTech insurers
  • 1st wave - eSurance, which was about digitizing the process
  • 2nd wave - those who tried to push on tech approaches without considering underwriting mindsets as much
  • 3rd wave - companies like LOOP that are not looking to grow at all costs, but start from a strong underwriting mindset
• There's a return to capital efficiency in today's macro-economic environment, which provides opportunities to get good talent and to stay steady, focused and disciplined while others are stalling or faltering

This episode is brought to you by The Future of Insurance Volume III. The Collaborators, part of the Future of Insurance thought leadership series (future-of-insurance.com) from Bryan Falchuk.

Follow the podcast at future-of-insurance.com/podcast for more details and other episodes.

Music courtesy of Hyperbeat Music, available to stream or download on Spotify, Apple Music, and Amazon Music and more.