Last year, we gave a brief outline of high-growth UK insurtech companies In our fintech data overview, and predicted that we would see further innovation in this sub-sector in coming years. We’ve taken a closer look at some of those ambitious startups and a few others, and in what ways they’re expanding the sector.
Insurtech companies place their emphasis on increased personalisation and efficiency of insurance services, to meet changing customer needs and offer more in-depth and efficient data insight. Whilst some, such as Zuto and Cuvva, do look to displace the industry incumbents, others look to transition established insurers in to a new age of innovation.
Insurtech is something traditional insurance companies may be dismissive of and reluctant to adopt, due to both strict regulation and legacy technology, but might have to embrace if they wish to remain at the forefront of their industry.
UK insurtech has seen a dramatic increase in fundraising over the past few years. With a meagre 3 deals totalling £709k in 2012 compared with a sizeable 34 deals totalling £61.8m in 2017, confidence in the vertical is growing.
Still, the industry is very much in its infancy, and out of the 63 insurtech startups tracked by Beauhurst, 49% are at seed stage, compared with just 40% of fintech startups. Moreover, the average amount raised by insurtech startups is £1.42m, just less than half that of their fintech counterparts, who have received an average of £2.96m. Insurtech is clearly a less developed and less saturated market.
And yet, the average pre-money valuations are surprisingly similar between the two sectors; £11.3m and £13.7m respectively, suggesting that insurtech is hot on the heels of fintech’s success.
B2C insurtech startups
Zuto (formerly Car Loans 4 U) was founded in 2013 and operates a web-based portal through which customers can find relevant car insurance policies, that promises to be simple and transparent. Customers fill out a short questionnaire, which has a familiar, text message-like design, with personal details and their financial status. Zuto then reviews the application and responds with a tailored finance option. Their first round of fundraising in 2014 saw a substantial injection of £8 million from Scottish Equity Partners (SEP), and since then Zuto has raised a further £6m, at a pre-money valuation of £45.2m.
Cuvva provides car insurance through an app on an hourly, pay as you go basis. It has secured a £1.5million investment from venture capital firm LocalGlobe, taking its total investment figures to over £1.9 million.
In 2017, Cuvva launched a unique subscription service aimed at customers who rarely drive but require comprehensive cover for their vehicle whilst it is unattended. The startup claims the subscription could save customers up to 70% on insurance compared with traditional policies, which has huge potential to disrupt the market by undercutting traditional insurers and assuming a large portion of their customer base.
However, in May 2018 Cuvva announced that it would be retiring the subscription service, citing difficulties in administration and management, but with hopes to launch a refined version later this year.
Marshmallow is another interesting B2C insurtech startup. It aims to provide fairer car insurance for non-UK nationals, in an attempt to rectify the higher costs that foreign born drivers are required to pay by traditional insurers. Founded in 2017, Marshmallow is still very much in its seed stage and hopes to launch later this year. The company has a promising future, with £1.73m of funding secured over two rounds.
B2B insurtech startups
Digital Fineprint uses AI and big data tech solutions to assist SME insurers in drawing meaningful insights from open source information. In 2017, Hiscox partnered with Digital Fineprint to create a tool using social media data to help identify the most relevant insurance cover for small businesses. Eos Venture Partners, Force Over Mass Capital and Pentech Ventures are some of the investors who helped them achieve over £2 million in funding in January 2018.
Kasko attempts to bridge the divide between new digital innovation and the legacy software used by traditional insurers, with an agile, API product platform. In their own words, they help insurers “act like an insurtech startup would”, with the clear aim of leaving no man behind in the innovation race. They have secured £986k with undisclosed investors through two fundraising rounds.
Founded in 2012, The Floow has developed vehicle tracking software to help address issues of cost, inefficiencies and dangers on the road. Their customer base includes insurers, fleet companies, manufacturers and public sector organisations, and they also offer driver coaching programmes and bespoke, scalable telematic solutions. A £2.6 million equity investment by Direct Line Insurance Group plc in 2014 was a clear vote of confidence from the insurance industry. Since then, The Floow has increased its outreach to a global scale with offices in Italy, the US and China, to support its head office in Sheffield. Now a well established company, and with nearly £16 million in funding, the road ahead looks sunny for The Floow.