InsurePay raises $5m in funding as part of an expansion plan
The US-based workers' compensation administration and insurance billing platform, InsurPay, has raised $5m in a Series A funding round to boost services following increased demand from COVID-19.
The round was led by the Nashville-based capital firm, FINTOP, along with several other industry investors. says the raised investment will be used to 'aggressively' expand the insurtech's marketing and sales team, as well as supporting the addition of the new veteran personnel team.
InsurPay provides an easy-to-use, flexible product that delivers cost benefits to agents, payroll providers, carriers and policyholders. The insurtech, which was founded in 2003, delivers from a cloud-based SaaS platform which calculates, collects and remits insurance premiums each pay cycle using real-time data.
Meanwhile, FINTOP Capital specialises in fintech company investments and has been responsible for several successful startups. The VC brings strong networks experience and capital to entrepreneurs building B2B service-led SaaS software enterprises in the fintech sector.
Speaking about the investment, , CEO and President of InsurePay, said, “We have earned the position as a leading provider of Pay-As-You-Go (PayGo) workers' compensation billing due to our simple, accurate and flexible approach to delivering this beneficial payment option for carriers, agents, payroll providers and policyholders.”
Beck continued; “FINTOP's investment is well-timed to meet the rapidly increasing demand for our solution. We found a partner in FINTOP that shares our values, our passion for the space, and has a tremendous track record of building exceptional businesses. We are thrilled to have access to their resources and thought partnership as we begin our next chapter of growth.”
InsurePay's COO, , explained, “In such unprecedented times, we want to do our part to help alleviate the burden of workers compensation expenses and increase cash flow as quickly as possible,” he said. “InsurePay integrates with 1,400 different payroll providers so that transitioning to a more dynamic payment programme can occur immediately and without interruption.”
“InsurePay's Pay-As-You-Go solution allows premiums to be adjusted concurrently with each pay cycle so that businesses can immediately access cash flow that otherwise wouldn't be available until the end of the year insurance audit adjustment.”
Insurtechs are winning the race with legacy system companies
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.