Leaders and winners within InsurTech

While the insurance industry has been struggling with the fast adoption of new digital paths, insurance companies today have to start noticing the growth of highly digitized entrants, some of which they may want to emulate. However, as we have seen from past experiences, the copycat approach is often the least successful of all as only tested breakthrough ideas can yield high financial returns.

Despite the pandemic and in just 6 years, InsurTech startups are now counting at least 23 well-known unicorns within their ranks or companies with a valuation of over $1 billion. These digital insurers or service providers use digital technologies for designing, delivering, and pricing insurance in new unique ways. We estimate that the total valuation of our selected 23 companies today represents over $60 billion in valuation within an 850 strong global portfolio worth $2.4 Trillion. InsurTech represents 2.5% of this unicorn market. Not bad indeed!

The very best of these InsurTech unicorns are tackling big insurance problems. They combine creative problem-solving skills, innovative ideas, advanced technology, and data analytics, they've acquired a clear understanding of how to re-invent customer experiences. And many more will follow suit as we have seen recently several $1 billion dollar club companies emerging.

So here are the 23 InsurTech unicorns you should know about!

Our European six InsurTech leaders

Let's start with the European unicorns first. These top six market players include several pure digital-first startups with fully redesigned pet and health propositions. They also include value chain enablers in the fraud and virtual intelligence claim management spheres, as well as one that realized that ignoring the broker channel may not be the wisest of choices.

Alan:

App-based health insurance platform for individuals and businesses, freelancers, businesses, hotels, restaurants, Alan offers many plans such as Alan Green for health care protection, Alan Blue for reimbursement on uncovered hospitals, Alan Pension for employees. This Paris located startup received $220 million in April 2021 to simplify health insurance. This gives Alan a valuation of $1.6 billion today.

Bought by Many:

Following a recent fundraise of $350 million, Bought By Many reaches a $2 billion valuation. This London-based fast mover has won pet lovers' hearts and minds with its intuitive and consumer-centric pet platform. Over 29 investors are now part of Bought By Many's investors' list with some well-known and respected names.

Shift Technology:

This second Paris-based startup worked hard to combine AI, fraud detection, and claims management software into one platform. I remember meeting the team during one of my InsurTech Lounges in London in 2016. Shift Technology raised $220 million in May 2021. The latter fundraise enabled the company to be valued at $1 billion.

Tractable:

Visual AI insurance claims optimization unicorn, Tractable integrates machine learning algorithms and software technology that can reliably identify risks while speeding the claims process. Tractable accurately calculates the cost of claims for vehicles, fleets, and property and provides quotes from various insurers automatically in less than 30 seconds. Nigel Walsh and I remember the times where we discussed InsurTech innovation at Lloyd's and ACORD with the Tractable team. The team recently raised $60 million, which brings its valuation to $1 billion.

WeFox:

Germany brings to us WeFox, a unicorn which enables users to digitally manage policies and quotes for motor, personal liability, and household insurances. With a focus on the broker, this app-based digital comparison environment links multiple stakeholder groups. WeFox raised $650 million in June 2021, giving it a valuation of $ 3 billion.

Zego:

London-based Zego, the usage-based digital motor insurance app for individuals & fleet owners, did very well this past year. Zego focuses on giving gig economy drivers the ability to manage their risk more effectively by charging them insurance based on how much they drive instead of traditional factors like age, gender, or credit score by combining a series of highly sophisticated data points. As a master of the ecosystem building approach, it raised $150 million in March 2021 valued at $ 1 billion.

The United States leads with 10 unicorns

Out of the 10 names listed below, you will notice that over 50% of these startups are digitizing health insurance, an area that received major investment over the past 12 months. The world's largest number of unicorns are in the USA. Winners have aimed to offer completely digitized services in unique ways within the cyber risk prevention, distribution, home, life, motor, and small business insurance markets.

Bright Health:

This healthcare startup enables others to access, verify and certify patient information via an insurance verification system. Founded in 2016 by Bob Sheehy, Kyle Rolfing, and?Tom Valdivia to tackle issues around "data opacity" within healthcare, The company's first product offering verifies patients' coverage data to ensure that their medical bills are paid correctly. With over 623,000 customers, the company raised $500 million in Sep 2020. Tiger Global and Blackstone share in a recent Reuter article that they expect a valuation of more than $14 billion in the U.S. initial public offering.

ClearCover:

Online automotive insurance unicorn, ClearCover started with just one car insurance product in 2015. Today it provides the cheapest auto insurance rates with high-quality customer service across multiple states. It raised $200 million in April 2021, which gives it a valuation of $1 billion.

Coalition:

Online insurance platform for healthcare, retail, IT, legal, and energy providers, Coalition offers policies for error & omission, cyber insurance, professional liability, computer replacement, or lost business income. It was founded by serial entrepreneurs who believed that building an easy-to-use online digital environment for business owners would help them buy commercial business insurance. The company raised $175 million in March 2021 valued at $1.75 billion.

Collective Health:

As a provider of a cloud-based self-insurance platform for employers to sponsor their employees, Collective Health aims to shift the focus of health insurance from profit to people that need better health plans. It raised $280m in May 2021. The investment is an endorsement of their success within the health space, one of the insurance markets that has welcomed a large portion of the InsurTech investment to date. Valuation stands at $1.5 billion.

Ethos:

Ethos has become one of the fastest-growing usage-based digital term life insurance startup without a commissioned salesperson on staff. Ethos’ technology compresses the multi-week underwriting process into an intuitive online sign-up flow. It is dedicated to improving the lives of people through smarter and more personalized life protection solutions. In May 2021, Ethos raised $202m, which gave it a valuation of over $2 billion.

Hippo:

Hippo provides an online portal and mobile app to get quotes, select a policy, pay premiums, and manage claims in one place. More than 450 000 customers use the company's products globally, which enabled Hippo to raise $350 million in November 2020. The latter gave the company a valuation of $1.65 billion.

Next Insurance:

Next Insurance offers online business brokerage services for Health, Life Insurance, general and professional liability insurance, errors & omissions, and commercial auto insurance. Its clients are self-employed professionals who work independently without employing company staff such as engineers, architects, carpenters, contractors, cleaners, beauty salons, and accountants. The startup provides them with insurances to cover risks related to their profession. Its most recent raise was $250 million, which brought its valuation to $4Billion.

SecurityScorecard:

Secured cloud is on the card for many insurers. SecurityScorecard developed cloud-based solutions for security ratings, cybersecurity risk management, threat intelligence, and risk awareness by automated monitoring risk factors in real-time. The company also offers a cybersecurity rating platform that helps companies know their vulnerability to cyber risk, made available for executive-level reporting. It raised $180 million in March 2021 for a valuation of $ 1 billion.

The Zebra:

Another fastest-growing digital insurance startup, Zebra offers a comparison platform for individuals, employers, and small businesses to find a series of insurance products for domestic drivers, homeowners as well as international coverage for both US drivers and international residents. It received $150 million in April 2021 for a valuation of over $ 1 billion.

Asian InsurTechs are mastering Distribution, Data, and Intelligence

We often read about the ABCDs, or Artificial Intelligence, Blockchain, Cloud, and Big Data. Asian InsurTechs have grown from implementing the ABCD of technology and combining those with intelligence and flexible techniques to distribute, price or service customers.

AInnovation:

China-based AInnovation assists insurance companies to intelligently analyze the data underlying various types of customer negligence. It then provides flexible pricing through its AI-based image recognition and text analysis platform to support underwrite and claim management activities. It also provides cloud-based real-time risk assessment and loan strategy generation for housing loans, car loans, and consumer loans then augmenting the full value chain. Recent series D funding from Softbank Vision Fund is undisclosed but definitely above the $1 billion valuation mark.

Earnix:

Well-known Israeli AI-based analytics, data monitoring, and pricing platform, Earnix raised $75 million in funding in February 2021. With over $1.5 billion in valuation, the company is now growing to a point where it should be in the position to IPO soon, said Erel Margalit, the founder of Jerusalem Venture Partners who is set to become Earnix chairman. “This is an industry that’s been waiting for the disruption. It’s been waiting for a platform that is both AI and very dynamic.”

Digit Insurance:

India-based InsurTech, Digit Insurance provides an app-based insurance services platform for individuals. The company offers its own car, home and health cover, and other policies such as pet safety features or breakdown assistance options purchased with monthly direct debits from the customer’s bank account. The startup was founded in 2016 and reached its unicorn startups in 2020. With an estimated $2 billion in valuation, it is now planning for its IPO later in 2021.

PolicyBazaar:

Another India-based fastest-growing app-based online insurance comparison platform, PolicyBazaar provides personal motor and health policies for individuals as well as small-to-medium enterprises. It announces a $165 million funding in February 2019, bringing PolicyBazaar’s valuation to more than $1 billion.

So, who are the investors investing in InsurTechs

Many of these companies are supported not only by well-known angel investors as well as limited partners that are part of well-known and less well-known funds. Here is the list of the 95 investors that have invested in recent high-valued InsurTech businesses. And some invested in more than one of these market leaders.

Journey to IPO and SPAC

As noted before despite the pandemic, a few InsurTech companies have done well during the past few years. They remain few compared with the 1,000s of InsurTechs that have entered the market to utilize technology or data to offer more engaging digital and transparent insurance products and services. Let's also remember that less than 1% of companies. Actually, 0.001% make it to unicorn status.

A few renowned players also decided to take the IPO path. Let's congratulate them.

These include:

• Lemonade which went for IPO in July 2020 in NYC and April 2021 in London with a current market capitalization of $4.5 billion
• Oscar Health which went for IPO on the NASDAQ in March 2021, with a current market capitalization of $ 4.95 billion
• Root Insurance which IPO in October 2020 in NYC with a current market capitalization of $ 2.71 billion

Lastly, Clover Health, whose approach is to offer better data-driven healthcare for senior citizens to manage their medications, became publicly traded through a merger with special purpose acquisition company (SPAC) Social Capital Hedosophia Holdings Corp. III, which gave it a market capitalization of $ 5 billion at the end of last year.

Join the dots... You can find more in the following related articles on the topic:

Scaling with speed like a FinTech unicorn here

Are insurers ready for AI? here

AI & the Cloud: A practical guide to scaling with speed here

Slideshare on the topic delivered in April 2021.

And many more curated viewpoints here.

About Sabine:

Sabine is the CEO and Managing Partner of Alchemy Crew a Venture Lab focused on R&D validation and venture commercialization using open innovation, experimentation techniques, and ecosystem thinking to accelerate the deployment of digitized services. She is a pioneer in building innovation ecosystems working with InsurTechs and Insurers among others, a co-editor of bestseller The INSURTECH Book, a multi-award winner, and a top 50 InsurTech Influencer.?

In December 2020, Sabine was appointed as an Honorary Senior Visiting Fellow for The Business School (formerly Cass) for her InsurTech business model disruption work. She works with the faculty to combine practical knowledge, evidence, and research to determine sustainable growth paths within finance.

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