Mar 18, 2021

Coalition secures US$175m to ‘solve’ cyber insurance

Coalition
Insurtech
cyberinsurance
cyberrisk
William Girling
2 min
Coalition secures US$175m to ‘solve’ cyber insurance
Californian insurtech Coalition has announced the completion of a $175m funding round as it bids to ‘solve’ the problem of cyber risk through insura...

The round, which also pushed the company’s value to over $1.75bn, was led by Index Ventures and featured contributions from returning investors like General Atlantic.

Believing that all modern organisations should invest in resilience to cyber attacks and tech faults, Coalition states that every company has room for improvement. Indeed, despite industries spending $120bn on cybersecurity alone, attacks still incur costs of $1.5trn annually.

Therefore, the company combines “state-of-the-art cybersecurity” with “best-in-class cyber insurance” to produce comprehensive and scalable cover to suit any business.

Investing in the future

“We founded Coalition four years ago with a mission to solve cyber risk, introducing a technology-led approach to risk management and insurance underwriting, pricing, and distribution,” said Joshua Motta, CEO and co-founder of Coalition. 

“Our ambitions now extend beyond cyber insurance. Nearly one in ten Fortune 500 companies is an insurance company, yet most were founded before World War II. With this funding, we plan to bring our technology-driven approach to other lines of commercial insurance as we seek to build the digital insurance company of the future.”

As such, Coalition will be channelling its newly-secured funds into three primary areas:

  1. Investing in technology across its insurance value chain to maintain its edge.
  2. Expanding into new product lines, particularly those which will fill ‘gaps’ in the market.
  3. Focusing on international expansion (Coalition entered the Canadian market in 2020).

Coalition: ‘The clear leader’

The company’s vision and capability is apparently matched by the enthusiasm it has generated among insurance industry giants, notably Swiss Re, Arch Insurance, and Lloyd’s, who are all backers.

Regarding the successful investment round, Shardul Shah, Partner at Index Ventures, called Coalition “the clear leader” in its field and a company well on-track to reimagining commercial insurance.

“Not only does Coalition provide peace of mind after a loss, but also peace from mind: its risk management platform, predictive analytics, and incident response services help organisations decisively and affirmatively remain resilient to risk.”

With COVID-19 prompting both wholesale digital transformation and a subsequent reassessment of enterprise security vulnerabilities, Coalition stands ready to secure a lucrative space in a rapidly developing market.

Image credit: Coalition

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Jun 19, 2021

Insurtechs are winning the race with legacy system companies

Insurtech
Insurance
AI
Technology
Tom Allen, Founder, The AI Jou...
3 min
Insurance has long been due an overhaul. The AI Journal’s founder Tom Allen explains how innovative insurtechs are changing the incumbent narative

Nestled in its own place within the world of financial services, insurance is arguably more unpopular than retail banking.

That’s hardly surprising given that, from a customer service perspective, insurance is something of an off-kilter transaction. You pay a sizable premium in exchange for a service you hope you will never have to use. This image problem is exacerbated by ubiquitous tales of insurers not paying out when it is time to make a claim.

The insurance sector has long been due to an overhaul, and this is where the disruptive force of insurtech comes in - one of fintech’s most upwardly mobile subcategories. Accordingly, last year, insurtech in the UK alone attracted £262m in investment, a growth of 60% on 2019, according to Tech Nation. Insurtech’s momentous growth has been captured in a new report by The AI Journal exploring this burgeoning sector. 

What exactly is insurtech?

Put simply, insurtech refers to technological innovations that seek to make insurance cheaper to buy and more efficient to use. In a similar vein to fintech, the large, established institutions have been dipping their toes into insurtech, but it’s the disruptors who are genuinely looking to shake up the status quo, diving into and exploiting those areas that traditionalists have little imperative to explore.

Examples are price comparison sites (one of the earliest forms of insurtech that was eventually snapped up by the insurers it initially sought to disrupt), claims software, customisable policies, or even smart-tech-enabled dynamic policies whose premiums can fluctuate depending on changing circumstances.

The latter, for instance, could use someone’s fitness tracker or smartwatch to monitor fitness levels, thus reducing the premium of a life insurance policy; or track a GPS system that records the location of a car and assesses risk levels accordingly.

Most consumers tend to shop around for their insurance needs and perhaps end up buying their contents insurance with one provider, their car insurance with someone else, and their pet insurance with yet another underwriter. Managing all these different policies, with their varying renewal dates and payment terms can be complex. This has led to the increase in apps that pull everything together.

More prosaically, insurtechs are developing AI that uses machine learning to act as an insurance broker, eliminating the need for a human intermediary and therefore offering more cost-effective and impartial advice.

Insurtechs and risk

But there are some obstacles in the way of insurtech’s continued evolution.

Insurance companies are averse to risk. Understandably so, as at the crux of the industry is the role of the actuary, whose job it is to analyse and measure the probability and risk of future events. So it’s little wonder that there’s a reluctance among the traditional players to welcome the disruption that insurtech brings.

Insurance is heavily regulated, a minefield of legality and labyrinthine jurisdiction, which means the idea of shaking it up can be anathema. And why would they, when their old-school business models are working perfectly fine?

There’s an understandable nervousness and unwillingness to work with startups, who themselves need to work with the bigger firms in order to underwrite risk.

While it seems like a catch-22 situation, there is growing, if cautious, interest from insurance companies, who can see the benefits of insurance with a friendlier face, innovative solutions, and a competitive edge through differentiation. As that tentativeness dissipates, the growth of insurtech will gather even more momentum.

Tom Allen's analysis is based on the findings of a new report on the fintech and insurtech industries produced by The AI Journal

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