Insurtech's Resurgence

The Daily Stack
May 12, 2020

Life insurance is suddenly hard to get, at least if you want to get it from a traditional provider. U.S. insurers are doing the once unthinkable, turning away business from some Americans who want a life insurance policy.

This about-face is driven by ultra-low interest rates, which make it harder for insurers to make money in the public markets and meet their liabilities. To safeguard profits, insurers are turning away customers and raising premiums.

However, consumer demand for life insurance remains high, spurred by the pandemic. This supply-demand imbalance has created opportunities for two types of insurance tech startups. One type is marketplace platforms such as Ethos and Leap Life, which match buyers with insurers, replacing traditional brokers. Another type is insurance underwriters backed by larger reinsurers such as the upstart Bestow, which is backed by Munich Re.

The marketplace platforms capitalize on the demand, while not taking on the risk of the potential mismatch in policy duration and potential unmet liabilities. Many of these companies have seen tremendous growth since the pandemic. Ethos confirmed a plan to hire 100 more employees, almost doubling its workforce.

The underwriters, who generally face the same challenges as traditional insurers, have embraced the opportunity created by the pandemic to gain market share. In April, Bestow reported 800% YoY growth as well as an additional $50M in funding from reinsurers. Many are backed by reinsurers and have been successful in fundraising. Sheltered from profit pressures, they have positioned themselves to take in the customers turned away by traditional insurers. Check out all Insurtech startups on the PrivCo platform.

Cars are staging a comeback. Low gasoline prices have finally started to spur demand as more economies are reopening. Cautious travelers have shunned public transportation and embraced car ownership. Online used-car seller Vroom Inc. has filed confidentially for an initial public offering it hopes to stage in June.

Vroom’s public rival Carvana Co. saw shares jump sevenfold since its 2017 IPO. After falling 80% during the broader market’s selloff in March, Carvana’s shares have recovered to trade near record levels.

RV demand is also up as the summer travel and vacation season approaches. RVshare, a market place for RVs, said bookings in some areas have more than doubled compared with last year.

Funding & Deal Highlights:

VBit DC closes $1.1M funding round. The company will use the funding to begin the construction of a 200MW data center in Alberta, Canada. Once completed, VBit’s Alberta data center will be one of the largest data centers in the world dedicated solely to Bitcoin mining operations. The fundraising comes on the eve of the bitcoin halving technical event on Monday, where the reward for mining will be halved. The event occurs every four years and has seen bitcoin valuation tumble following most of the halving events.

Workstream, an automated hiring platform, raises $10M. The startup services the gig economy and its workers by automating the recruiting process and connecting workers with on-demand jobs. Exploiting the shortage of workers in grocery stores and logistic companies exacerbated by the pandemic, coupled with the need for contact-less recruiting, the HR service startup focused its offering and is seeing wide adoption.

Vista Equity Partners to invest $1.5B in India’s Reliance Jio platforms. Private equity firm Vista Equity Partners said on Friday it will invest $1.5B in Reliance Jio, joining social conglomerate Facebook and Silver Lake, who have also made bets on the Indian telecom giant in recent weeks. PrivCo has covered the merger here as one of Facebook's key strategies to monetize Jio's application layers.

MemSQL raises $50M in debt facility for its real-time database platform.

Australia’s Judo Bank closes on $147M Series C for SME loans.

Rogue Games raises $2M to expand indie game publishing.

Airbnb-Backed Zeus’s value is halved in new funding round.

BlackCloak secures $1.9M in funding.

Adfone closed $7.5M seed funding.

PureFacts buys VennScience.

Avidity Science acquires the Casada Laboratory Water Purification product line from Pall Corp.

ClearLight invests in IT managed services provider ICS.

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