RPC Insurtech in brief - June 2021

Welcome to the June edition from RPC of Insurtech in brief, providing you with a handful of snappy monthly updates from the industry.

Insurtech Wefox Raises $650 million in Funding, Valuing Company at $3 billion

German insurtech startup Wefox has raised a record-setting $650 million from investors in a Series C round led by Target Global – the largest ever Series C round for an insurtech globally.

Following this funding round, the company has reached a post-money valuation of $3 billion, making it a unicorn three times over. The funding means Wefox has multiplied three times in value since last fundraising in 2019. Wefox reports that it will use this funding to increase its presence in Europe and expand globally.

Wefox is a digital insurer focused on personal insurance products, such as household insurance, motor insurance and personal liability insurance. Efficiencies are achieved through automation. Wefox has been investing in automation so that common processes are handled by an algorithm. Currently, 80% of its processes are handled automatically.

Wefox distinguishes itself from many other insurtech startups by not selling directly to customers. Instead, prospective clients buy Wefox policies from the company’s 700 agents. Agents sell nine out of every 10 policies in Europe, leaving direct-to-consumer competitors like Lemonade fighting for a smaller piece of the market.

Wefox is also working on prevention. The company has put together an AI team in Paris to advance its plans for delivering a risk prevention service for its customers via an all-in-one insurance policy.

Bought By Many secures £78.4 million in growth equity investment

Bought By Many, a London-based pet insurance provider, has secured a £78.4 million growth equity investment led by FTV Capital, a US financial services-focused growth equity investment firm, alongside follow-on from numerous existing investors.

The capital raise follows significant growth for Bought By Many, which launched its pet insurance policies in 2017 and now insures over 200,000 pets. Bought By Many uses data to find gaps in the market and negotiate offers or create its own products to give consumers a better deal, and was the first pet insurer to offer an online pet insurance claims process with no forms.

Sales of its cat and dog policies increased by more than 150% over the last year, likely linked to the boom in pet ownership during the pandemic. The Pet Food Manufacturers’ Association (PFMA) releases its annual pet population data, confirming that 3.2 million households in the UK have acquired a pet since the start of the pandemic, meaning there are now 34 million pets in the UK including 12 million cats and 12 million dogs.

Bought By Many intends to use the financing to further expand, driving increased market share in the UK and enabling the further development of its product and claims experience.

Bought By Many cat and dog insurance is underwritten by Great Lakes Insurance SE.

Global insurtech investment reaches all-time high of US$2.55 billion in Q1 2021

Following a brief COVID-19 related slowdown a year ago, fundraising in the global insurtech sector has bounced back with global investment in the sector reaching a new quarterly high of US$2.55 billion during the first quarter of 2021. The number of mega-rounds (fundraisings of $100 million or more) reached eight, more than any other three-month period, according to the new Quarterly InsurTech Briefing from Willis Towers Watson.

Total funding during the quarter grew by 180% when compared with Q1 2020, which declined due to COVID-19. The latest total grew by 22% relative to more comparable Q4 2020, while the number of discrete deals increased 42% higher than during the previous quarter. Investment was driven primarily by property and casualty focused companies, which represented 69% of deal share.

This shows great investor appetite for opportunities in the insurtech sector perhaps linked to the pandemic prompting many insurers and other businesses to accelerate their digitisation.

Read the full report here.

Life-insurance startup Ethos Technologies Inc. has raised $200 million in a funding round

Life-insurance startup Ethos Technologies Inc. has secured $200 million in Series D funding from investors valuing the business at $2 billion, an impressive valuation for a firm which began doing business in June 2018.

The company uses innovative machine learning and data science technologies to challenge the traditional life insurance model. Ethos underwrites life insurance in the US with no medical exams, blood tests or complex paperwork. Its website states that what traditionally took weeks can now be done in minutes, and that due to its expedited process most customers enjoy same-day coverage.

The investment, led by General Catalyst, had participation from existing investors including Sequoia Capital, Accel and GV. The startup also attracted celebrity financiers including rapper Jay-Z’s Roc Nation and the investment vehicles of actors Will Smith and Robert Downey Jr.

Revenue and users have grown by more than 500% year over year, and the company expects to issue $20 billion in life insurance coverage by the end of this year which is a massive amount.

“We are on a mission to protect the next million families and will use this money to continue improving the best insurance customer experience ever created,” said Peter Colis, co-founder and CEO of Ethos. “This funding will help us enrich our technology and data platform and help us launch new products to enable everyone an opportunity to protect their families.”