How 5 Insurance Startups Are Disrupting a Stale Industry

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Whether it’s for home, health, life, or auto, choosing an insurer can be a big decision with long-term financial impacts. 

For all of those essentials, the question is the same: Which company offers the most protection, at the best price, and with the most reliable service? Especially when it means poring over pages of fine print, there’s rarely a clear answer.

Hoping to make insurance more understandable — and, in some cases, more affordable — insurance technology startups have sprung up. Last year alone, U.S. insurtech firms raised more than $2.5 billion — more than twice the amount raised in 2014. Globally, nearly $4 trillion flowed to insurtech in 2018.

Insurtech’s Star Startups

Who are these startups, and what makes investors confident in their chances of disrupting the insurance industry?

1. Say Insurance 

Say Insurance is all about transparency. As part of that commitment, the Missouri-based auto insurer is educating consumers about their auto insurance score. Although most Americans have a general idea of their credit score, few know their auto insurance score or how it affects them.

If you count yourself among them, check yours using Say Insurance’s free online tool. You’ll want to know where you stand before you shop for a new policy. Insurance companies use the metric, which describes how you interact with your financial accounts, to judge your riskiness as a customer. As such, your auto insurance score is a primary factor some insurers consider when quoting you coverages and premiums.

2. Lemonade

Like other insuretech startups, Lemonade’s success stems from its technological savvy. Not only does Lemonade deliver a mobile-first user experience, but it also uses artificial intelligence to streamline claims evaluations. And judging by Lemonade’s juicy customer acquisition rate, it’s an approach that insurance consumers appreciate.

In 2018, the second year of Lemonade’s operations, the insurtech startup claimed more than 400,000 customers and $57 million in premium revenue. Part of Lemonade’s secret recipe is the fact that it’s a licensed insurance carrier, not simply a policy seller. So far in 2019, Lemonade has raised an additional $300 million to fund its expansion. 

3. Simple Disability Insurance

Especially given the precarious future of Social Security, too few Americans are familiar with disability insurance. Among Millennials, just 39% realize that short-term disability insurance can be the difference between destitution and financial well-being.

Simple Disability Insurance realized that the disability insurance market needed some simplification. To help consumers understand what disability insurance is and improve coverage access, the insurtech startup developed a data-rich online platform. Thanks to its automated underwriting, Simple Disability Insurance claims that consumers can get covered in 10 minutes.

4. Hi Marley

Hi Marley, instead of actually offering insurance, seeks to streamline communication between insurance companies and their customers. Because it relies on artificial intelligence to collect and share insurance tips, the insurtech startup can answer consumer questions around the clock and at scale.

Although some insurers are working on their own conversational assistants, Hi Marley’s is by far the most robust. Not only has it won innovation awards, but it’s also attracted more than $8 million in funding and partnerships with providers like Bankers Insurance

5. Oscar Health

When it was founded in 2012, Oscar Health made serious waves in the insurance industry. Not only was it one of the first firms to embrace an internet-based model, but it single-handedly normalized insurance processes that were then seen as tough or impossible to develop. Using AI and online payment technologies, Oscar Health provides on-the-spot cost estimates and authorizations for patients. For doctors, the insurtech company offers in-the-moment claims decisions and payments.

Now operating in six states, Oscar Health scored $375 million in investment from Alphabet, Google’s parent company, last August. Oscar Health is using that money to, among other things, expand its offerings to include Medicare Advantage coverage.

Startups are modernizing the insurance industry faster than many investors thought possible. The question isn’t whether insurance buyers are on board; it’s whether traditional insurance firms can catch up in time. And if they can’t, no insurance policy will protect them. 



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