Minneapolis’ YouSurance Is Betting Big On Algorithms…To Pinpoint When You Will Die

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GWG Holdings / YouSurance CEO Jon Sabes at Minneapolis HQ

 
The secondary insurance marketplace isn’t exactly top of mind when it comes to technology, though that could be changing this year for GWG Holdings – the parent company of a new brand division called YouSurance that’s operated by CEO Job Sabes.

“We’re on a mission to strap life insurance to a rocket ship and launch it into the future,” he says of their cause, without any hesitation or concern for Minnesota’s typical business conservatism. For Sabes and company, this mission transcends their humble Minneapolis headquarters with big risks and rewards at for everyone involved.

Because if they can better predict your mortality, then they stand to make billions of dollars in the process.

The question of mortality is commonly accepted by industry, though not as often found in consumer parlance.   The secondary insurance market is layer where buyers, sellers, and brokers have been meeting for decades to sell, swap and re-insure bundles of life insurance policies, annuities, and similar pension products owned by millions of individuals around the globe.

Accurately pricing these assets is a science that, historically, is left up to the actuaries who specialize in the math of risk and uncertainty. While the days of paper and pencil are long behind them, there’s an arms race right now for who can identify and develop the best statistical predictive models of answering this eternal question.

GWG has been operating in the secondary market and making their own arbitrage bets for 12 years now under the guidance of Sabes, who is taking a quantum leap with YouSurance into the burgeoning field of epigenetics applied to secondary insurance underwriting. Unlike genetics, this field measures change over time in gene expression due to extrinsic factors such as age, behavior and environment; if our life-span is written in our DNA, then YouSurance wants to crack the code.

Whether YouSurance can ultimately prove successful at this pursuit remains to be seen, though without question it’s a bold new era and YouSurance is a de-facto local leader of the pack.

Here’s what Sabes had to say about it all:

What is the history of parent company GWG Holdings and relationship to YouSurance?

GWG Holdings (NASDAQ: GWGH) is a publicly traded company that has been in the longevity business for 12 years, historically focused as a life insurance finance company operating in the secondary markets.

YouSurance is a wholly-owned subsidiary of GWG Holdings.

We see tremendous opportunities in the life insurance industry by commercializing advanced epigenetic technology for longevity underwriting. To that extent, YouSurance (and sister company Life Epigenetics) is a new product of ours in the longevity space – an expression of our technology applied to the life insurance sector.

We have been working on Life Epigenetics, another wholly-owned subsidiary of GWGH, for about the last four years and licensed our first piece of significant technology in 2017 and have been since building the team and commercializing that IP through YouSurance now.

What state of development and commercialization is YouSurance currently in?

YouSurance is a fully licensed, fully operational life insurance agency, but we consider it to be in a beta stage right now as we’re still working on elements of the business before we go to market.

We are in the final stages of completing a self-designed research study here in Minneapolis with 1,300 individuals who gave us their medical histories and DNA samples. We recruited one of the leading life reinsurance companies to underwriting these individuals for mortality risk classifications and we have top researchers examining the epigenetic markers to correlate the data. From there, we should have a new suite of proprietary algorithms, in addition to those licensed from UCLA.

We expect to have those study results at the end of this quarter and are already in talks with several life insurance carriers. From there we will make our next strategic moves in the path towards commercialization.

How many people overall work for GWG?

We have about 80 in total and roughly 15 of our team are committed to the technology effort.

Why epigenetics applied to life insurance?

The science of epigenetics is relatively new and the research holds a lot of promise in a very wide variety of applications. We have been thinking for some time now about epigenetics in the longevity and life insurance market due to our background and work in the life insurance sector.

There is a lot of movement and change in insurtech that include big investments made, but we have not seen much fundamental technology changes that could improve the whole – underwriting, products, and better pricing for consumers.

So we built a sandbox to explore integration of epigenetics and insurance for the benefit of the market and are calling it YouSurance.

What is the connection between this science and how you see a new model in the life insurance market?

Foremost, the products could fundamentally better serve consumers by capturing more value for them. There is a lot of room for improvement and if we can model risk better by supplanting the traditional underwriting approach – which isn’t as accurate as it could be right now.

So by adding epigenetic data into that model is to know with more precision if someone is a healthy individual (or not) which equates to accurate pricing for people based on the overall health versus traditional life insurance underwriting models.

So presumably, by using epigenetic markers, healthy people would be rewarded with lower pricing and the unhealthy with higher rates or premiums?

Yes. But we believe technology does promise to reduce rates overall (so unhealthy people could still afford the rates) as the productivity efficiencies to be gained in the industry are enormous. The systems used by most carriers are antiquated and carry a significant legacy costs.

And that means more profitability for your parent company at the same time?

That is the overarching goal, yes.

Is if fair to call epigenetics theoretical?

I don’t think so, not at this point. Research has proven that epigenetic biomarkers can accurately identify traditional underwriting factors such as tobacco or alcohol consumption. Surprisingly, these are traditional underwriting factors are not measured very well be carriers today. So we know we can do better. More theoretical are concepts like measuring biological aging and risk of all-cause mortality from epigenetics – that is a new field of science – but it’s proven. (An extensive webinar on the subject can be found here).

How have you found consumer’s react towards predictions of their own mortality?

We have good reason to believe that consumers are interested in their molecular health and wellness. They are interested for entertainment purposes, as evidenced by other companies such as 23&Me and Ancestry.com. We think epigenetics is the next frontier.

Life insurance is not health insurance, so it is somewhat of a luxury. We want to be radically transparent with consumers by informing them about their molecular health, why its important, how it is being used, and how they can improve it and benefit from it. If the are not comfortable then they can and will shop other places.

What is the core technology that you have licensed and which YouSurance is based on?

We have licensed algorithms used for measuring methylation along the human epigenome that was invented by UCLA’s Steve Horvath, a UCLA biostatistician who studies epigenetic changes related to the aging process.

Our exclusive license is specifically as applied to the longevity markets – insurance, annuities, and pension markets – that’s what we specialize in.

If all goes according to plan with YouSurance, what do you see as the upside?

The life insurance industry is a very large stodgy industry that is challenged to think outside the box and innovate for the benefit of its customers. We are determined to see this technology reality at YouSurance to better serve the marketplace. The overused phrase of disruption is certainly applicable here as that’s what we are aiming for – this is a Minneapolis moonshot.

What is the biggest risk around the future of YouSurance?

There’s no such thing as safe ice and there’s still a lot of it ahead.

Are there any analysts who cover YouSurance’s parent company GWG Holdings?

Roth Securities and Maxim Group.

Is there anything you would like to add in closing?

We’re always looking for like minded people who want to jump on board!

 

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