Jan 27, 2021

US$125m Series C nets Sidecar Health unicorn status

Sidecar Health
Insurtech
Drive Capital
healthcare
William Girling
2 min
 US$125m Series C nets Sidecar Health unicorn status
Sidecar Health has become the latest insurtech to reach a $1bn valuation, which it attained following a successful $125m Series C funding round...

Sidecar Health has become the latest insurtech to reach a $1bn valuation, which it attained following a successful $125m Series C funding round.

The startup’s platform allows customers to define how much health coverage they need, including deductibles and prescriptions, and then visit any licensed healthcare provider they desire for treatment. 

Members receive a dedicated payment card from Sidecar; when a transaction is processed, 20% (‘estimated expense’) is charged to the user’s designated payment method and the remaining 80% (‘estimated benefit’) is advanced to the plan. 

Once the card is used an itemised expenses bill will be generated. Customers then submit a photo of the bill to Sidecar, which will determine the user’s eligibility and inform them if they paid too much or too little. The user will be credited in the first instant and debited in the latter.

Healthcare’s biggest idea in two decades

The company’s Series C round was led by Drive Capital and featured new investment from BOND, Tiger Global and Menlo Ventures, as well as returning backers Cathay Innovation and GreatPoint Ventures.

Enthusiasm and hype for Sidecar’s innovative approach is already significant: membership increased sharply over 2020, the service has a 4.5/5 score on Trustpilot, and Noah Knauf, General Partner at BOND, called it “the biggest idea I have seen in almost two decades of investing in healthcare.”

Sidecar’s overall philosophy, explains Patrick Quigley, Co-Founder and CEO, is based on the principle that consumers can be capable healthcare purchasers. By adding an unprecedented level of transparency (for a US system), wherein customers can shop for the best deal like other comparison websites, a new era of healthcare could be on the horizon.

"The plans we designed give Sidecar Health members two things: the money they need to purchase care and the information to make decisions that are right for them.

"By doing so, we are turning patients into purchasers of healthcare. This latest funding accelerates us on our mission to make healthcare more affordable and accessible for all Americans," he said.

Using its newly secured funds, the company plans to expand its geographic footprint, its team and develop a new line of products for the uninsured market. According to Sidecar’s official press release this could include an “ACA or ‘Obamacare’” package in 2022.

Image credit: Sidecar Health

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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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