Insurtech leader Ethos raises US$100mn from SoftBank
Following the announcement of a US$200 million Series D round that took its valuation to $2 billion, Ethos, the insurtech leader transforming the life insurance space, has raised an additional US$100 million in capital. The funding, which comes from the investment firm SoftBank, raises Ethos’ value from US$2bn to US$2.7bn and increases the total funds raised to US$400mn.
SoftBank joins other investors in the fuding round, including Sequoia Capital; Accel; GV, General Catalyst, Jay-Z's Roc Nation, and the investment vehicles of stars Will Smith and Robert Downey Jr.
Talking about the company’s aims, Peter Collins, CEO, and Co-Founder of Ethos, said: “Our goal isn't just to offer the best insurance customer experience ever created but to offer it to everyone. Even at this early stage, we've demonstrated that our technology can do this with life insurance. We're excited to apply our technology and data platform in new ways to expand that safety net even further. Everyone should have an opportunity to protect their families”.
According to a recent study by industry research firm LIMRA and non-profit Life Happens, just 58% of men and 47% of women have life insurance, and despite a spike in sales during the pandemic, there are 102mn uninsured and underinsured people in the United States.
Machine learning to increase the life insurance market
Ethos says that it uses innovative machine learning and data science technologies to increase the addressable market for life insurance. Its technology advantage breaks down barriers that prevent customers from purchasing life insurance, including underwriting in minutes with no medical exams, blood tests, or complex paperwork.
According to Ethos’ life insurance model, over 40% of new policyholders in the first half of 2021 had incomes of US$60,000 or less. Almost 40% of new policyholders were under the age of 40.
Munish Varma, Managing Partner at SoftBank Investment Advisers, said, "Ethos is leveraging data and its vertically integrated tech stack to fundamentally transform life insurance in the U.S. Through a fast and user-friendly online application process, the company can accurately underwrite and insure a broad segment of customers quickly. We are excited to partner with Peter Colis and the exceptional team at Ethos”.
CB Insights: US Insurtechs Are Competing In A Global Market
In the first half of the year, insurtech companies around the world have raised US$7.4bn, nearly doubling their funding in Q2. According to Digital Insurance, insurtechs have raised US$4.8bn in Q2—an 89% increase in funding from Q1. But US firms are no longer the sole beneficiaries.
What Are the Stats?
Out of the 15 Q2 mega-rounds—those that top US$100mn—only eight included American firms. Pretty good, you might say. That’s over half! But US companies only made up 38% of the deals, which marks a 10% drop from Q1 and a 12% drop from 2020. Technically, therefore, US insurtechs are less influential than they’ve been in the past. But who says this is a bad development?
Despite my American citizenship, I’d argue that a more globally diverse insurance market is only for the best. Many of the world’s citizens who could most benefit from improved insurance services live outside of the States—and deserve local, tech-savvy services.
Why Does This Matter?
You’re always going to see the typical insurtech contenders from Western countries. For instance:
- German-based wefox: US$650mn Series C
- UK-based Bought By Many: US$350mn Series D
- US-based Collective Health: US$280mn Series F
But it’s critical that we address risk across the world. American insurtechs might be some of the most technologically skilled firms in the industry, but it’s not their first goal to address floods in Southeast Asia, crop destruction in China, and COVID complications in South Africa. That’s why we should celebrate that the recent Q2 round included insurtechs from 35 different countries.
According to CB Insights’ Q2 2021 Quarterly InsurTech Briefing, this was the first time that they’d observed insurtech activity in Botswana, Mali, Romania, Saudi Arabia, and Turkey. And ‘from a product, service, distribution, and underlying risk perspective, we—as a society and as an industry—are moving at an unprecedented speed’, says Dr. Andrew Johnston, Global Head of Willis Re InsurTech.
Just ask CB Insights. InsurTech value propositions have resonated with the world.