Nov 26, 2020

Metromile signals that it will become a public company

Metromile
IPO
Insurtech
Cohen & Company
William Girling
2 min
‘Pay-per-mile’ car insurance insurtech Metromile has announced its intention to launch an IPO and become a publicly-listed company
‘Pay-per-mile’ car insurance insurtech Metromile has announced its intention to launch an IPO and become a publicly-listed company...

‘Pay-per-mile’ car insurance insurtech Metromile has announced its intention to launch an IPO and become a publicly-listed company.

Following in the wake of highly successful offerings from its unicorn contemporaries, Lemonade and Root, Metromile is hoping to leverage its cutting-edge, data science-based technology to disrupt the US motor insurance market, worth an estimated US$250bn.

Able to save customers money by charging a low monthly premium and adding a small amount on top for every mile driven, the company’s innovative system has already been integrated by Ford into select new models.

The estimated pro forma enterprise value upon the IPO’s closure currently stands at $956m.

Addressing the industry’s problems

The route to becoming a publicly-traded company involved partnering with asset management firm Cohen & Company and INSU Acquisition Corp.

Dan Preston, CEO of Metromile, is confident that the collaboration will accelerate growth and propel his company to the upper-most echelon of car insurance:

“We founded Metromile to address the vast inequities in auto insurance, and we are proving that our model of real-time, digital auto insurance is both resilient and sustainable.

“We are excited to bring our vision of transforming the auto insurance industry to the public markets by partnering with Daniel Cohen and the team at INSU II [...] Today’s announcement launches Metromile’s new chapter in delivering the fairest, most individualised auto insurance. 

“As a public company, we expect to use our strengthened balance sheet to accelerate our growth, bring Metromile nationwide, and scale rapidly toward sustained profitability. The era of fixed price auto insurance is coming to an end.”

Daniel Cohen himself described the US’ current auto insurance market as “inefficient and ripe for disruption”. Metromile’s advantage, he claims, is its advanced tech platform, of which its legacy competitors do not have an equivalent.

“Led by visionary technologists and complemented by the best veterans from top insurance carriers, Metromile has built a digital auto insurer with compelling and durable unit economics. The team has created a distinct offering that vastly differentiates Metromile in the marketplace,” Cohen concluded.  

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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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