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Building a New Insurance Company From Scratch: Clearcover CEO Kyle Nakatsuji (Part 4)

Posted on Sunday, Apr 28th 2019

Kyle Nakatsuji: We thought what if we went the opposite way, and we happened to find an opportunity to deliver a high-quality product by integrating it with other companies where people would prefer to spend their time.

Now, I was running around looking for all of the distribution opportunities we could partner with as an insurance company. Where were all these places where we could plug insurance in and it would fit seamlessly with some other experience?

We learned relatively quickly that it wasn’t quite that easy. Most of the existing insurance company ecosystem wasn’t set up to make these relationships work. At least, not the way that we thought they could. That was the first idea we were working on and that was at the end of 2016.

Fast forward to the middle of 2017, my co-founder and I started working on this idea with a little bit more fervor as an internal project at American Family. That’s when we started to stumble on what became the ultimate thesis for Clearcover. At that point, if you took a look at the insurance tech market, there was a divergence in terms of the kinds of companies that were being built.

One side of the market was leaning very heavily towards being picks and shovels. How do we find ways to support, enable, or make the insurance market as it exists today better? The other side was a smaller group of companies that were saying, “What if we build brand new insurance companies or entities to compete directly with those big companies? Instead of being picks and shovels, let’s just build new versions of those companies.”

As this divergence was happening, my co-founder and I were working on a project to enable this distribution through integrated partnerships. What we realized is for it to work, we had to be on that new company side of the equation. We were not going to be able to take advantage of all of the opportunity that was in front of us as a brand-new entity or with this new approach unless we split it and did it as one of these brand-new insurance entities.

So we went to our American Family who was supportive of us from day one and figured out a way to effectively have Clearcover start as an independent company with their investment support to capitalize on this opportunity. They agreed that it wasn’t actually a spinoff, but we could set up an independent company and they would fund it. We had this idea around distribution.

So, we went to work thinking about what is the division for this new company. We know that being separate and independent is important. We know that we have this distribution opportunity. But what is it that we’re actually building? At the end of 2017, we founded the company.

This segment is part 4 in the series : Building a New Insurance Company From Scratch: Clearcover CEO Kyle Nakatsuji
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