Leading pet cover insurtech Bought By Many valued at $2bn
An important figure in the funding round was EQT Growth, a Swedish company focused on developing innovative, digital-first companies in the European tech market.
Bought By Many evidently meets this standard: established in 2012, the UK-based company launched its first pet insurance offering in 2017. It sought to differentiate itself from others in the space by conducting close market research with “thousands of cat and dog owners” in order to identify and rectify specific customer policy pain points.
As such, Brought By Many offers several pet insurance plan options:
- Complete: comprehensive cover and vet fees up to £15k
- Regular: vet fees covered up to £7k
- MoneyBack: fees up to £7k and 20% of the premium cost will be paid back per year the pet owner doesn’t claim
- Pre-existing: fees up to £7k and coverage for pre-existing medical conditions
- Value: fees up to £3k
Furthermore, a 15% multi-pet discount is available when placed on the same policy.
Creating a digital pet insurance experience
In the UK, pet ownership grew significantly during the COVID-19 pandemic, with an estimated 3.2 million animals purchased since March 2020. Unexpected veterinary bills are subsequently a growing concern among owners, particularly those struck with financial hardship.
Bought By Many cites the Association of British Insurers that the average pet surgery cost is £1.5k and the average claim is £750. The insurtech’s ability to help customers cope with the necessary expenditures of pet ownership has received industry recognition; it was voted Best Pet Insurance Provider in the 2020 Insurance Choice Awards.
According to Steven Mendel, CEO and Co-Founder, the company’s mission to make the world a better place for pet owners remains undaunted:
“By creating unique policies, dramatically improving customer experience, and working closely with vets, we have made it possible for pets to be healthier and for them to enjoy longer, happier lives with their owners.”
Becoming a leading global insurtech
Bought By Many’s recent expansions into the US and Swedish markets are evidently also making it an enticing investment prospect. Carolina Brochado, Founding Partner at EQT Growth, heaped praise on the insurtech’s value proposition:
“Bought By Many’s digital-first approach is unrivalled in pet insurance, a market that is large and underpenetrated in most European countries and the US. It benefits from secular tailwinds such as the humanisation of pets and higher spend on pet care, and is also uniquely positioned to benefit as global digitalization continues to gather pace.
“In less than five years, Steven and the team have built Bought By Many to be one of Europe’s leading insurtechs and we’re delighted to be working with the company to further accelerate its growth and continue to improve the lives of pets.”
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.