Within the digital transformation era, every industry is merging the technology and traditional business. In the same way that the banking industry was disrupted by fintech, the real estate industry by proptech, and the legal sector by lawtech, the zone of insurance is being shaken up by insurtech.
Fast forward to the past, insurance has been one of the oldest and most traditional industries and until recently it has proved fairly resistant to change by the digital transformation. In recent years, the growing numbers of tech startups have appeared and started to embark on the area of the big players.
Particularly, after three years in operation, car insurance startup Clearcover is braced for massive growth.
A Three-year-old Insurtech Startup’s: Overview
Clearcover, a digital car insurance provider, was founded in 2016 established its headquartered in Chicago, Illinois. Kyle Nakatsuji is the Co-Founder & CEO of Clearcover. Clearcover’s investors include OMERS Ventures, American Family Ventures, and Cox Enterprises.
This insurtech startup provides a smarter car insurance option, proposing great insurance at the lowest possible cost. Having launched the API- first approach, it advances customers with better coverage for less money. In advance, the company simplified the car insurance buying process, made it easier to get reliable car insurance in minutes.
In addition, by combining the power of technology and the company’s dedicated Customer Advocate team, Clearcover ensures a quality experience. It is indicated by their customer reviews from experiences.
Aside from that, it is also recognized by others:
“ Clearcover…managed to redesign the car insurance experience, in its own way.” – Venture Beat
“ The claim process was easy. It’s so user-friendly and definitely insurance geared towards the future. I would like to share my claims experience because honestly, it was the same as the best support I’ve ever received after being in a car accident.” – Cat H., a Clearcover customer, described it as a painless claim process.
Clearcover differences: the hidden secret drives this insurtech startup to the dramatic development
The company has a strong belief in being customer-driven. In other words, more than a selling business, Clearcover commits to comprehend their customers by asking questions, knowing what they actually desire, and listening to them.
Additionally, Clearcover has positioned itself as a company for anyone who values convenience and affordability instead of offering a car insurance design services, especially targets to the millennials.
#2. A comprehension of customer insights: Putting itself in their customer’s shoes
With the R&D team’s efforts on an 800-people survey project, the insurance company has figured out what the new generation of drivers thought about car insurance. Their biggest finding showed that the core matter is about the over-stretch on advertising towards drivers instead of translating and providing an easy-to-understand policy to them.
In fact, there are three important findings from the survey’s result.
First, it indicated the over-advertising from those insurance companies have strengthened brand recognition but it wasn’t translating to loyalty. Hence, “87% of survey respondents said they would consider switching carriers if a new brand offered easy-to-understand policies and competitive pricing”.
For deeper examination, the company found out the fact that almost millennials drivers were clear on how much they had spent for the car insurance, but didn’t know what expenses their insurance company would cover if they got in an accident.Thus,the lack of transparency frustrated their customers.
Second, today’s customers pay their attention to insurance more seriously. Not only do they buy car insurance due to the requirement, but they also expect it to protect vitally for themselves and for others. In short, they’ll be on the finding for an insurer with equally high standards.
Third, the all-digital insurance product might not work at all. “90% of survey respondents stated that they’d prefer a hybrid insurance product that blended both human and digital elements.” Despite the digital experience that would match the need for convenience such as easier buying process and accessible insurance policies in the mobile phone, the customer still wants direct interaction with a real person when they come to shove.
Leveraging these important findings, Clearcover has developed its own product in a different and unique way that matches its customers’ needs the most. Particularly, Clearcover has strategically implemented the technology to provide digital car insurance that is simple, convenient, understandable and affordable by minimizing the cost of operations, marketing and distribution and then transferring the savings to clients by proposing economical, higher-quality vehicle insurance packages and products.
More than that, it also ensures their digital solutions never get rid of the human element which is human-to-human customer service. This comprehension of customer insights has contributed to the rapid growth of the three-year-old startup.
A growing number of startups are giving challenges to traditional auto insurance companies such as Geico, Progressive, and Allstate. Clearcover targets to provide more efficient and less expensive car insurance.
Cost-advantage is considered to drive the company to a competitive edge. It’s achieved through the API platform in which the company can to integrate with partners that interact with customers when an offer of insurance or an insurance quote is relevant.
“At our core, we use technology to augment our cost structure and that allows us to offer lower prices,” Nakatsuji had shared with the Crunchbase News. “You could describe us as the ‘Amazon for car insurance.”
By gathering data from partners, Clearcover utilizes it to shorten the insurance purchasing process. Therefore, the company believes that its customer acquisition costs are about half of the others in the industry.
This approach seems to be working. The company’s annual rate is a mere $70 million which is up four times year-over-year, according to Nakatsuji.
Clearcover Takes Flight with $50M Raise in Series C
Clearcover announced on January 3 that it had raised a $50 million Series C round led by OMERS Ventures. Existing backers American Family Ventures, Cox Enterprises, and IA Capital Group also join in the firm’s latest funding round.
One year after the Chicago-based, this three-year-old startup $43 million through the funding round in January 2019 which was Series B. The accomplishment of the latest round has enhanced the firm’s total capital to over $104 million since it was established in 2016. Clearcover generated the raise up to $11.5 million in 2017.
So, what the company has been up to since its last funding and what it plans to do with its new capital?
During the previous year, Clearcover’s management disclosed that the total policy sales had been tripled year-over-year. By the period of funding via its Series B, California was the only market that the firm had provided its services. However, only in a short period of one year, Clearcover has enlarged its operations to Arizona, Illinois, Ohio, and Utah.
With the same purpose of growing its team through the raise of Series B, Clearcove is going on expanding its platform with the funding from Series C.
Currently, Clearcover has 130 employees, up from 44 one year ago. It intends to add another 50 to 100 people over the next year, according to Nakatsuji. Moreover, it also addresses developing its partnerships and grows its state footprint. The company sets the new goal of being in over 10 states in 2020.
The Digital Transformation Era
Generally speaking, in this digital transformation era, the number of people getting used to the idea of filing claims and looking for insurance digitally is increasing. In fact, ninety percent of Clearcover’s policyholders use its app which the firm declares is “substantially higher than the rest of the industry.” Also, approximately 60% of its customers are able to file claims digitally via its app.
Joshua Dziabiak, COO and CMO at The Zebra – an Austin-based auto insurance comparison marketplace, approves that the low-tech reputation of the insurance industry is turning to be 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 touchpoints to fuel online distribution.”
Moreover, he also shared that most consumers already began their insurance purchasing process online. So, that’s why it means for a company like Clearcover to establish 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.”
Clearcover Is Not the Only Players In the Insurtech Industry
While Clearcover is trying to grow larger, other competitors do exist to challenge this insurtech startup. Here we listed out the top 5 alternatives of Clearcover.
Top 5 competitors or alternatives of Clearcover
Metromile is the leading pay-per-mile car insurance company in the U.S. Powered by data science and machine learning, the company is disrupting a $250 billion auto insurance category. Metromile is building a loyal community of drivers who come for the savings and stay for the experience.
AVA, Metromile’s AI-driven claims system, is designed to speed up the process of verifying and paying out insurance claims. Using Metromile Pulse sensor data, AVA can reconstruct the scene of an accident to instantly determine if claim details are accurate. When the claim is verified, Metromile is able to automatically approve payments within seconds.
#2: Root Insurance Inc
Root insurance is the first licensed insurance carrier powered entirely by mobile. They started by tackling the archaic car insurance industry. Unlike traditional insurance companies that base rates on demographics, they use data and technology to base rates primarily on how people drive. That means with Root, better drivers pay less.
Also, Root offers renters insurance, providing hassle-free coverage that’s easy to use. With just a few taps, renters can get affordable, seamless protection for themselves and their stuff. And the entire Root experience lives in a simple, easy-to-use app.
#3: Insurance Panda
Insurance Panda is a brand new concept in auto insurance, seeks to make finding the cheapest insurance deals simple and easy. Founded in 2013 as a tech start-up in Manhattan, Insurance Panda features a new, easy-to-use auto insurance quote calculator. Visit InsurancePanda.com for a free quote today, or stop by the offices and say HI.
Insurance Panda is located on Madison Avenue near Grand Central Station. It was created in 2013 by Steffen Herrenghaus and James Shaffer. Steffen, a web developer, and James, and insurance agent, saw a void in the market for an easy-to-use insurance quote calculator app. They set up shop on Madison Avenue and got to work.
CoverHound adds transparency to the insurance industry, offering accurate rates and a curated list of best options for both customers’ personal and business insurance needs. Their insurance advisors are compensated based on service and exceeding customers’ expectations, not sales commissions. They offer objective recommendations to find the best policy.
The company comparison shop with trusted insurers to save money. Their Licensed Advisors are here to help make sure all eligible discounts are applied to customer policy. They do not charge any fees to you. CoverHound is free to use. Their carriers pay them a commission based on policy sales and renewals.
#5: Elephant Insurance
Elephant, founded in 2009, is a customer-centric direct automobile insurance company. It is located in Richmond, VA, Elephant, LLC is a wholly-owned subsidiary of Admiral Group, PLC, an FTSE 100 company and one of the U.K.’s leading insurers with a presence in eight countries and over 6 million customers worldwide.
The Bottom Lines
Generally, those insurtech companies tend to emphasize on the personalization and better speed and efficiency of services to meet changing customer needs. With technology advancement, using AI for deeper data insights, they are given a hand in achieving this objective.
Clearcover is a great example that is growing dramatically with its technology. Having done such amazing things within three years operations is not what every startup can do. With the funding via Series C, it’s no doubt that Clearcover can take flight with those investments in 2020.