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RPC Insurtech in brief - October 2021

21 October 2021. Published by Neil Brown, Partner and Daniel Guilfoyle, Partner and Lauren Murphy, Senior Associate

Welcome to the October edition from RPC of Insurtech in brief, providing you with a handful of snappy monthly updates from the industry.

Marshmallow raises $85 million and becomes a unicorn 

UK digital car insurance provider, Marshmallow, has raised a $85 million Series B round at a valuation of over $1.25 billion. This raise makes Marshmallow a unicorn – and only the second unicorn in the UK led by black founders (after Zepz, formerly known as WorldRemit, which became a unicorn earlier this year).  

Marshmallow was founded in 2017 and provides vehicle insurance and customer support through its app. Its motto is 'car insurance with a conscience' after the founders started the business to prevent traditional insurers 'cashing in' on migrant drivers. By leveraging technology, data and AI, the start-up aims to make insurance cheaper, faster and fairer for everyone.

The company also works with ClimatePartner to offer a climate offsetting programme to policyholders, appealing to more socially-conscious consumers.

Marshmallow says it will use the funding to expand into international markets (beyond the UK) and develop new products and services, particularly for younger consumers. The funding will also be used to deepen its relationships with existing customers. With the company having sold 100,000 policies to date and its average customer age being between 20 and 40 years old, it has huge scope for future growth. 

Tesla launches innovative vehicle insurance in Texas 

Tesla, the $700 billion electric vehicle company led by Elon Musk, has expanded its car insurance offering to Texas. The company already offers insurance to Tesla drivers in California, which it claims is up to 30% cheaper than non-Tesla insurance.

However, the Texan insurance is not focused on traditional policy metrics; such as credit, age, claims history or driving records. Rather, insurance premiums are calculated based on the driver's real-time driving behaviour. Drivers have "safety scores" informed by factors such as the number of collision warnings, braking too hard and turning corners aggressively. Scores can go up and down, meaning that monthly insurance premiums can also go up and down. 

Safety scores and the real-time insurance model are beta offerings. However, Tesla says it aims to expand the product to California and “most of the US” next year, provided it can obtain regulatory permissions. The company recently 'tweeted' that 'the regulatory process…is extremely slow & complex, varying considerably by state'. 

Tesla does not underwrite the insurance itself. Redpoint County Mutual Insurance Co. underwrites the Tesla insurance in Texas, which is distributed through Tesla Insurance Services of Texas Inc. (Tesla), an MGA formerly known as Samson General Agency.  

 Devoted Health exceeds $12 billion valuation

Devoted Health has raised an enormous $1.15 billion Series D round. The deal reportedly values the company at over $12.6 billion. 

Devoted Health is a tech-enabled health start-up with a mission, "to dramatically improve the health and wellbeing of older Americans". It offers 'Medicare Advantage' insurance plans and complementary services to its members (like its in-house virtual and at-home care provider), all powered by its proprietary software platform. It currently operates in Florida, Texas, Ohio and Arizona.

The company says it will use the proceeds of the funding to significantly accelerate its nationwide expansion. Such expansion could be fuelled by the lowering of the Medicare eligibility age, which is currently under debate between US legislators.

Investors in the round included well-known names such as SoftBank Vision Fund 2, Andreessen Horowitz and the Singaporean sovereign wealth fund, GIC. Commentators expect Devoted Health will eventually go public, following the IPOs of health insurtechs Clover Health, Oscar Health and Bright Health earlier this year.

Digital life insurer Ladder raises $100 million 

Ladder, a US-based digital life insurance company, has raised $100 million in its Series D funding round. Thomvest Ventures and OMERS Growth Equity co-led the round, which values the company at an impressive $900 million.  

The company uses all-digital architecture and real-time underwriting and claims to be the first 'fully digital' life insurer in the US. It provides flexible term life insurance coverage of between $100,000 to $8 million for people aged 20–60 in the US. Interestingly, Ladder targets a younger demographic needing life insurance but who, it argues, have been put off by the time-consuming process. Ladder says its process can take just five minutes.

Established in just 2017, the company raised $40 million in Series B funding in 2018 from the venture arms of major insurance companies like Allianz Life and Northwestern Mutual. It plans to issue $30 billion in 'LadderLife' coverage by year-end.

bolttech extends its record Series A 

bolttech, one of the fastest growing insurtech unicorns in the world, has announced an extension of its $180 million Series A funding round to a total of $210 million. This constitutes the largest ever Series A investment round for an insurtech. 

The additional $30 million will enable bolttech to enhance its technological and digital capabilities, as well as further pursue its international growth strategy through strengthening its presence in South East Asia and Europe alongside its existing markets.

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