One of the best ways to score enormous long-term returns in the market is by buying the early leader in an industry that is in the top of the first inning of being uprooted by data.
Let’s face it, the world’s dependence on data is growing exponentially. And so are all of the benefits that come with it.
Data driven products and services are consistently creating superior user experiences that are far more convenient and powerful than their legacy incumbents.
The list goes on and on.
This brings us to the insurance industry…
The insurance market has been seemingly allergic to change and technological disruption for decades. In short, drivers are bucketed into a “class” and are all charged the same rate within that class.
When you consider that 35% of drivers drive more than half the miles and cause more than half the losses, the opportunity for innovation seems obvious.
The sweeping generalizations made in pricing and selling existing insurance plans today are inefficient at best. This is an industry ripe for innovation and data driven business.
We’ve said it before… the traditional model of insurance selling is capital-intensive, slow, and inefficient. That’s right… It sucks.
Things that suck don’t last. Eventually, they get replaced.
In the insurance industry, this replacement is happening right now.
Consumers are warming up to the idea of buying insurance online. A decade ago, a Comscore survey found that only 35% of folks would consider buying an auto insurance policy online. But times have changed, and a 2020 J.D. Power survey found that 90% of consumers are open to buying insurance online.
The insurance industry is finally getting its long overdue technological makeover, and consumers are waiting for it.
The implications here are enormous.
And this data driven megatrend is just getting started.
Today, we will tell you all about a company in this space that is beginning to tap into the next wave of digital disruption. When it is all said and done, we think this company might be known as the “State Farm of the future.”
Say “Bye” to Blanket Pricing
Metromile (NASDAQ:MILE) is creating a pay-for-usage market that leverages sensors and big data to more accurately price insurance premiums.
We are generally bullish on companies leveraging big data to combat the inefficiencies of their incumbents and feel as though Metromile is doing just that.
The process here is straight-forward…
Insurance shoppers are no longer bucketed into “classes,” but rather are priced individually based on a dynamic rate using censors and miles driven. You no longer need to pay a premium for the other drivers in your class racking up all the miles and the costs.
Metromile emphasizes they are a data science company first. And as with all data science companies… more data leads to better models, leads to better products. That is why we love Metromile as a first mover in this market.
They’ve established themselves as a high-margin business within the insurance industry and have prioritized their unit economics over growth to date. We believe this has laid the foundation for a unique opportunity as the company is set to make a profitable push into nationwide expansion in the second half of 2021.
Over the next several years, Metromile should be able to build on its pricing advantages. If management continues to execute on this plan, Metromile will only widen its lead as the “top dog” in this space.
Fortunately, we think Metromile has the cash and team in place to do just that. The team is stacked across the board with Harvard and Stanford grads. C-suite executives with experience at all the relevant companies… Google, Uber, Progressive, SoFi, SAP, Salesforce and more.
Make no mistake. Buying Metromile stock today could be like buying Tesla or Facebook in its early innings of growth.
When you bring data to an industry that’s been stuck in its ways for decades, you unlock value across the board for suppliers and consumers. It’s inevitable someone will dominate this space as legacy insurers get left behind.
Metromile is the unrivaled early leader in that market – and yet, the company is worth less than $1 billion today.
So, if you’re looking for a potentially explosive play on a brand new data driven megatrend, you should consider taking a position in Metromile stock today.
On the date of publication, Luke Lango did not have (either directly or indirectly) any positions in the securities mentioned in this video.
By uncovering early investments in hypergrowth industries, Luke Lango puts you on the ground-floor of world-changing megatrends. It’s the theme of his premiere technology-focused service, Innovation Investor. To see Luke’s entire lineup of innovative cutting-edge stocks, become a subscriber of Innovation Investor today.