AI-Powered Auto Insurance Provider Clearcover Raises $50M Series C
Clearcover, a digital car insurance provider, has raised $50 million in a Series C round led by Omers Ventures.
The raise comes just under one year after the Chicago-based, three-year-old startup closed a $43 million Series B, and brings its total raised to $104.5 million. Existing backers American Family Ventures, Cox Enterprises and IA Capital Group also participated in this latest round. The company declined to reveal its valuation.
I hopped on the phone with Kyle Nakatsuji, co-founder and CEO of Clearcover, to find out what the company has been up to since its last funding and what it plans to do with its new capital.
He told me that Clearcover had raised its Series B with the intent of growing its team and continuing to build out its platform. It also aimed to grow its partnerships and grow its state footprint.
And it plans to do more of the same with its Series C money. Clearcover currently has 130 employees, up from 44 one year ago. It plans to add another 50 to 100 people over the next year, according to Nakatsuji.
Currently, Clearcover is live in Illinois, Arizona, Utah, Ohio and California. And its goal is to be in over 10 states in 2020.
Giving the giants a run for their money
A growing number of startups are challenging traditional auto insurance companies such as Geico, Progressive, and Allstate. Clearcover’s aim is to make purchasing car insurance more efficient and less expensive.
Nakatsuji told Crunchbase News that Clearcover is able to keep its costs down in a number of ways that help it offer lower premiums than competitors. It does this through an API platform which allows the company to integrate with partners that interact with customers when an offer of insurance or an insurance quote is relevant.
The company uses the data gathered from those partners to streamline the insurance purchasing process. As such, Clearcover believes its customer acquisition costs are about half of others in the industry.
“At our core, we use technology to augment our cost structure and that allows us to offer lower prices,” Nakatsuji told me. “You could describe us as the ‘Amazon for car insurance.’”
Clearcover’s approach seems to be working. Its annual run rate is nearly $70 million, and that’s up four times year-over-year, according to Nakatsuji.
Clearcover is one of several well-funded companies in the space, as Savannah Dowling pointed out last year. Root Insurance, for example, is a Columbus-based team that is aiming to reduce the cost of insurance by assessing applicants’ driving behavior through their smartphones. The auto insurance unicorn raised a $100 million Series D from Tiger Global Management in August of 2018.
Unlike Root Insurance, Clearcover does not underwrite its own policies and relies on more traditional models to assess coverage pricing.
In general, more people are getting used to the idea of filing claims and looking for insurance digitally. Ninety percent of Clearcover’s policyholders use its app, the company said, which it claims is “substantially higher than the rest of the industry.” Also, about 60 percent of its customers submit claims digitally through its app.
Joshua Dziabiak, COO and CMO at The Zebra (an Austin-based auto insurance comparison marketplace), agrees that the insurance industry’s low-tech reputation is becoming a thing of the past.
“We’re seeing a rapid shift forward from many of the large incumbents – some of which are becoming major investors in their own right,” he said. “These investments toward new technology and startups are accelerating the digital transformation of insurance. Insurers are leveraging new types of big data to become smarter about how they price their product, developing artificial intelligence to automate claims processing, and integrating modern touch points to fuel online distribution.”
Most consumers already start their insurance shopping process online, he said, and that’s why it makes sense for a company like Clearcover to build its model exclusively around digital distribution, Dziabiak added.
He said, “They can use this differentiator as a means to reduce acquisition costs that many legacy models incur with retail agents or high-dollar marketing campaigns, and then pass some of those savings onto the consumer.”
Original Article Here: https://news.crunchbase.com/news/ai-powered-auto-insurance-provider-clearcover-raises-50m-series-c/