Most Disruptive Insurtech Startups to Watch in 2017
By Ben Deda, VP of Marketing
Across the world, 2016 was the best year for insurtech companies to date. Thirteen experienced acquisitions and IPOs, a higher number than ever before. Insurtech apps are streamlining the way we approach insurance in our daily lives — from health care to automobile insurance to life and home protection — this emerging software is employing algorithms and data collecting technology to provide highly-tailored insurance policies. Let’s take a look at 5 insurtech companies aimed to disrupt the status quo in 2017.
Private Medicare’s competitor is an upstart health insurance company that uses analytics and lab data to determine which patients are vulnerable to certain illnesses while evaluating certain risk factors like age and previous conditions. Although headquartered in San Francisco, Clover is currently only available in certain counties in New Jersey.
However, with their $295 million in funding, they plan to expand to other states in the near future. Clover is a full-service insurance company that implements metrics to figure out the best protocol for a patient who is at risk to health problems. It collates reports from a patient’s various medical services to generate a comprehensive profile of the person’s health.
Clover’s on-call nurse practitioners and social workers keep tabs on patients in ways that regular physicians and nurses are not able to. If a patient hasn’t refilled a prescription, Clover’s staff will intervene with education or follow-up evaluations. Clover’s intimate approach to health insurance could force other insurance companies to step up their game with more directive practices.
The automobile insurance company pegged to Millennials with minimal commutes has gained popularity with its pay-per-mile policy structure. The company recognized for its flashy and hip branding is slowly changing the way the public thinks about car insurance. Using factors such as location, age, and driving history, Metromile calculates a monthly rate and then adds ¢3.2 per mile driven.
Through an apparatus plugged in through your car’s OBD-II port, Metromile securely clocks how many miles you drive. Metromile’s versatile app allows you to review your mileage, keep track of your car’s health, and bookmark your parking spaces. Roadside assistance, tiered deductible options, and medical payments coverage are all apart of Metromile’s program. As of September, Metromile has received $205.5 million in funding from six investors. All of this cash allows the automobile insurers to continue with their pay-per-mile program, and not rely on low-mileage drivers to subsidize those in accidents — unlike most traditional car insurance companies. Metromile is paving the way for a city lifestyle that only require sporadic car use. As more people move to cities, this kind of approach to car insurance will become more appealing.
After UnitedHealth Group Inc. and Humana Inc. ducked out of Colorado’s insurance exchange, Bright Health saw major room for opportunity. Founded by Bob Sheehy, the former CEO of United Healthcare, the Minneapolis-based insurtech startup will launch its plans in early 2017 throughout Colorado. Bright Health distributes Exclusive Provider Organization plans, which allow you to see physicians and specialists in a predetermine network (except in certain emergency circumstances).
Bright Health is coming on the heels of Oscar Health, an insuratech startup with a similar mission to cater individualized narrow health care plans. However, Oscar is scrambling to recoup their major financial losses over the year, and with Sheehy’s extensive experience in the health insurance market, they could be set to succeed where Oscar struggles. Bright Health has already acquired $80 million in funding.
The first of its kind, this insurtech company provides cyber risk analysis in monetary form. The economic cyber risk modeling platform helps companies when they’re the target of cyber-attacks. Cyence uses factors such as probability, severity, and severity to determine the policy rate. They evaluate how the rate of frequency that attacks can occur, the potential resulting damages, and how possible it would be for that type of attack to happen again. Any company with an internet presence is susceptible to a cyber-attack. It’s not a matter of having the right malware protection, sophisticated hackers can use sensitive information from job postings like communication methods and company size to hack into companies’ security system. Cyence also insures companies against cyber-attacks as a result of human error. For example, in the instance that an employee loses a phone of a laptop, their information can be intercepted by a hacker. Just since September, Cyence has accrued $40 million in funding.
One of their leading investors is Kittu Kolluri, a General Partner with the venture capital firm New Enterprise Associates. Kolluri has already invested in other successful insurtech startups, like Metromile. Although they’re new on the scene, this insurtech company could ease tensions and confusion surrounding cyber security.
A completely fresh take on renters and homeowner insurance, Lemonade cuts out of all of the paperwork and red tape associated with traditional insurance, and simplifies the process with a few swipes and buttons. Insurance companies make and save money by refuting claims. Lemonade’s mission is to eliminate this “conflict of interest” between an insurance company and the insured, by taking a flat 20 percent fee from all claims. Besides the insurance feature, Lemonade’s patrons can select non-profits, causes, and charities in their area that Lemonade then donates their unclaimed money to.
Cheaper than household name competitors, Lemonade’s homeowner policies start as low as $35 per month and renter’s at $5 per month. Lemonade is determined to be at the top of the market, and they even cancel your existing insurance policy for you. Everything about Lemonade is completely digital. Customer sign up for the service on the app by answering questions in a text message format and signing with their finger. Claims are made via video recording, and once approved, the money is immediately deposited into their back accounts.
Who will be the most disruptive?
Only time -- and the American consumer -- will tell us. There are so many factors that contribute to the success or failure of a software company that it's extremely difficult to predict the future. Believe me, if I would, I could. But I do know that the past is usually the best indicator of future success. And if I had to place a bet on anyone I'd take a hard look at Bright Health's decision to bring on the ex-CEO of United Healthcare. Bob Sheeny's network and close ties in the industry can probably open doors that other insurtech companies can't. And if he's really good, I'm thinking he'll be able to sway some people's opinions and change some minds about how the insurance industry should approach the future.
What do you think?