life insurance policy with AI
January 24, 2020Small Businesses Insurance
January 29, 2020Vehicle Insurance Policy with Artificial Intelligence
Clearcover raises $50 million to find you a vehicle insurance policy using artificial intelligence.
Millions of car owners in the United States have yet to obtain any type of automotive insurance, which is not surprising given that the average policy costs a whopping $1,099 per year. According to recent estimates, the percentage of uninsured drivers in the United States is 13 percent, or one in every eight drivers, with Florida topping the list by state at 26.7 percent.
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It's what inspired Derek Brigham and Kyle Nakatsuji, former American Family Insurance colleagues, to cofound Clearcover in 2016. The Chicago, Illinois-based startup uses an AI tool trained on millions of data points to match vehicle owners with affordable insurance policies and to speed up the claims-filing process with instant disbursements for accident-related damage repairs.
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Clearcover recently closed a $50 million series C financing round led by Omers Ventures in anticipation of future growth. The capital infusion, which Nakatsuji says will enable growth by accelerating Clearcover's geographic expansion, comes on the heels of a $43 million series B in January 2019, bringing the firm's total raised to $108 million.
“The market is taking notice of how Clearcover is redesigning the model of running an insurance company in order to better serve customers,” Nakatsuji said in a statement.
Nakatsuji claims that because Clearcover, which is available in Arizona, California, Illinois, Ohio, and Utah, runs a lean operation and does not advertise widely, it is able to pass significant savings on to its customers. Another cost-cutting measure? Over 90% of policyholders prefer to service their policy through our award-winning mobile app. As a result, their average service costs are 20% lower than the industry average.
Clearcover also includes lower rates for vehicles equipped with advanced safety technologies, provides policyholders with funds for bikes or rideshares, and delegated most policy management tasks to its Android and iOS mobile apps. In that vein, those apps allow customers to file claims digitally and include features such as a quick view ID card, which displays insurance information even when cellular service is unavailable.
Clearcover has an API on the backend that integrates with personal finance apps, automotive websites, and insurance shopping websites to determine which customers are looking to buy car insurance. (Clearcover pays its API partners based on the number of introductions they can make to potential customers.) A visitor to one of the sites or apps may see an ad for Clearcover quotes, many of which Nakatsuji claims are 15% to 40% less than quotes from large carriers.
The insurance tech market is booming right now — a record $2.5 billion was invested in U.S. startup deals last year — and Clearcover faces stiff competition in the automotive sector. This August, Columbus-based Root Insurance, which uses drivers' smartphones to assess how well they drive, raised $350 million at a $3.65 billion valuation. Last July, Metromile, a pay-per-mile car insurance company that uses AI to automate claims processes, received $90 million in funding.
Nakatsuji, on the other hand, is unconcerned. According to him, Clearcover tripled policy sales year over year while quadrupling total premium. “This [latest] investment enables us to continue providing better coverage and great service for less money to more of the 230 million licenced drivers in the United States,” he said.
Michael Yang, managing partner at Omers Ventures, plans to join Clearcover's board of directors in the coming months, after which Clearcover intends to double its current headcount of about 100 employees across its product, engineering, and data science teams.
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