Cleo Capital Insurtech Market Map

Cleo Capital is a thesis-driven fund focused on 3 key areas: The Future of Income, Complicated Consumer, and Decentralized Enterprise. We primarily lead rounds at Pre-Seed, working with amazing founders from day zero. This article is a deep dive into one sector we invest in: Insurtech.

Given numerous recent rapid exits within the insurtech space, it’s become a clear investment target with exciting opportunities. At the surface level, insurtech may not seem to be interesting, especially given that the insurance industry is so entrenched. Yet, insurance’s relatively antiquated technology creates an opportunity for insurtech companies’ to use innovative methods to gain market share from industry giants.

Moreover, insurtech companies are uniquely positioned to generate significant revenues even while holding a relatively small market share because of the insurance industry’s nature. One can think of insurance as one of the most critical subscription services for consumers on one side that allows for diversified risk on the company side. We’ve found an exciting number of companies that are bringing previously under leveraged innovation to the insurance space through our research.

Product Offerings

For many of us, traditional insurance markets either over-cover or under-cover our needs. Insurtech companies like Kin and Metromile tackle this challenge head-on by allowing their customers to customize their coverage. Other companies are democratizing access to previously economically out-of-reach insurance products for many consumers. Some examples include BriteCo, which specifically insures individuals’ jewelry, or SafetyWing and Insured Nomads, which cover remote workers living abroad. In many ways, the tried-and-true insurance models hold strong but are now applied to previously untapped markets. One example of this is paid parental leave, which typically companies have to figure out on their own. Companies like Parento enable companies to offer paid parental leave to their employees, which mutually benefits the companies with employee retention and their employees who want this product.

Technical Solutions

In general, the insurtech market enhances and even automates typical insurance processes through tech advances using big data aggregation and AI modeling. These improvements begin at the initial application process, where companies like Loop and Bestow offer customers instant quotes and access to their services. This trend has existed in the car insurance space and is becoming more prominent in other areas, including life insurance, where individuals can gain coverage without submitting blood tests.

Especially after 2020, many insurtech companies allow personnel to work remotely, which is often a barrier to access in the general insurance market. If claims adjusters can assess photos and videos of a claim instead of in-person, that speeds up their workflow and increases efficiency for the consumer. This also allows for a broader geographic distribution of companies, a trend already evident in the insurtech space.

Business Models

While much of the market applies technical innovations to familiar business models, many companies are creating sector-changing models that have the potential to transform the industry. Companies like Buddy and Slice Labs offer on-demand insurance that is accessible for short-term needs, even for a single day. This accessibility is a fundamental shift in the typical insurance business model, which typically requires individuals to prove their insurability through a time-consuming process.

Tech-driven innovations in the insurtech market are making rapid improvements to the industry, benefitting both consumers and businesses. We’re excited to continue to follow the trends and the companies fueling the progression.

Byline: Cassandra Duchan Saucedo (she/her)
Stanford MBA & Harvard MPP 2023