Computers are going to know about customers’ life changes before the customers themselves do, if Colby Tunick gets his way.

Tunick, the co-founder of artificial intelligence startup ReFocus AI, moved to Des Moines from San Diego because he believes he’s found fertile ground for his product. The company bills itself as a retention tool for clients, using an artificial intelligence algorithm to alert businesses about customers who are likely leave for a competitor.

Tunick wants to sell the product to a range of companies. But for now, he is focused on insurance, an industry that collects “millions of records looking at hundreds of data points,” he said.

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This information is fuel for a company like ReFocus AI, where staff can input the reams of data into the algorithm to predict future customer behavior. That means there are few places better to roll out ReFocus AI than the Des Moines metro, where about 25,000 employees work at about 850 insurance firms.

And likewise, Tunick said, there are few business clusters in the United States better positioned to quickly add AI tools than Des Moines’ dominant industry.

“Who else knows you more than the insurance company?” he recently told the Des Moines Register. “…When you sign up for an insurance policy, you’re turning over basically everything.”

AI company that originated in San Diego is putting down Des Moines roots

Tunick and his co-founder, Nisar Hundewale, acclimated themselves to Des Moines last year when they enrolled in the Global Insurance Accelerator, a startup program at 321 E. Walnut St. Though he still lives in California, Tunick keeps a desk at the accelerator’s office and said he wants to continue to work in town at least once a week. (Hundewale still works mostly in Alexandria, Virginia.)

Tunick said the company wants to hire three software engineers, preferably in Des Moines. The company deepened its local roots April 4, when it became one of 12 businesses to form the latest cohort at BrokerTech Ventures, the city’s other insurance technology accelerator.

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Dan Israel, managing director of the Global Insurance Accelerator, said he has seen several good AI pitches in recent years. Companies sell products like image recognition software, which tells insurers whether homes have looming problems.

But Israel believes Tunick and Hundewale offer a product that will appeal to even the least cutting-edge customers.

“(Tunick has) a good passion for what they’re trying to sell and what they’re trying to build,” Israel said. “One of the key things we’re looking at is, ‘Are the founders really trying to solve something?’ Instead of just, ‘We’re a solution to a problem.’”

How the idea for an artificial intelligence company came to be

Tunick said he began mulling how to launch an AI company while working as an associate governmental program analyst at the California Earthquake Authority, a publicly managed firm that sells earthquake insurance policies through other companies.

Tunick said he helped executives and computer programs communicate, speaking both sides’ language. He also sat in on high-level meetings, watching as board members grilled executives about how customers would react to premiums and new product lines.

He said the executives didn’t have confident answers, but he believed they would be able to present precise projections if they analyzed several decades’ worth of past customer information.

“They didn’t know they had the data,” he said.

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Tunick launched ReFocus AI with a couple of friends while still at the earthquake authority in 2019. While insurance companies have a roster of well-trained actuaries who know how to project profits and risk for their customers, Tunick believed only the largest firms knew how to use that information for other parts of their business, such as sales and customer services.

“Advanced analytics are essentially limited to the Top 10 (U.S. insurance companies),” he said. “That leaves a huge playing field of customers who want this technology. But essentially, because of their size, they can’t afford it.”

Finding the right match

After his friends dropped out of the business, Tunick posted on Angelist, an online job board for startups and investors. There, he received a solicitation from Hundewale.

Holding a doctorate in computer science, Hundewale had worked at a consultant for companies like Walmart and Johnson & Johnson. He said he used customer data to help retailers create targeted ads. He also used computer models to help them determine prices for their products and how much inventory to order at a given time.

But Hundewale said he wanted to be part of a startup, where he could help build a business. When he learned about ReFocus AI, he said he understood how he could take advantage of the deep reams of data that insurers collect.

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In Tunick, he also found a good match.

“I wanted another half who knew the business side, would know how to sell the product,” he said. “I don’t know to sell it.”

Said Tunick: “It could have gone either way, for both of us. … When you meet somebody online, you don’t know who they are. But we both just jumped in feet first.”

Small insurers face a challenge: retaining customers

Israel, the Global Insurance Accelerator director, said he learned of ReFocus AI from someone else who works in insurance technology. He reached out to Tunick, and the two met at InsureTech Connect, a trade show.

He said he could see the company’s potential and “badgered” Tunick to apply for the accelerator. (Tunick also remained at the earthquake authority until last August.)

“It’s not so much that there’s a lack of data,” Israel said when asked why companies can’t build AI tools in-house. “And it’s not so much that there’s very, very smart people in insurance companies that can use the data. Sometimes, you just don’t know what you’ve got. Or you can’t access it the right way.”

Tunick said the company has tried to help businesses several different ways. ReFocus AI has suggested which customers might be most likely to buy extra insurance plans from a company. The company also suggested which customers might be open to spending more for a more generous plan.

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But he said that a company he worked with suggested ReFocus AI should dedicate its time to building algorithms that identify customers who are likely to leave. This is the area where smaller and mid-sized companies need the most help, Tunick said he learned.

“They’re already doing that work anyway,” he said. “We’re just helping them do it smarter and faster.”

Chad Combs, a vice president of personal lines underwriting at Ohio Mutual Insurance Group, said his company began working with ReFocus AI to improve Ohio Mutual's customer retention tool about a year ago. The new program, which agents will begin using in April, should tell them which customers to focus on.

Combs said ReFocus AI built an "enhanced" version of the tool that the company previously used. He added that, unlike bigger and established AI companies, Tunick and Hundewale built an algorithm to Ohio Mutual’s specific requests.

“They’re smart people,” he said. “But they’re nimble. They’re small. They can be creative.”

This article originally appeared on Des Moines Register: Why this Des Moines startup is bringing AI to insurance companies