April 22, 2021
Trend Watch
Fintech bank latest company to branch out into insurance
What is happening: N26 is a direct bank offering its services throughout most of the Eurozone and in the UK. They are launching insurance with the hopes of getting more out of their current customer base. N26 is launching smartphone insurance first, and then plans to expand into home, life, travel, liability, bike, electronics and pet insurance in the coming months. They’re also planning to expand into the US.
What it indicates: Embedded insurance is taking off. Insurance is an easy upsell for just about anything, but was just too frictional previously. Now, with digitization and strong insurtech offerings that have streamlined the process, it’s a whole lot easier to offer insurance alongside a product. We expect this trend to really take off this year.
Read: N26 steps into the world of insurtech with new on-demand insurance product
Insurtech Update
With just $21M in written premium, Clearcover hits at least a $1B valuation
In the news: In 2020, Clearcover wrote ~$21M in premiums alongside a combined ratio of ~146%. And although the official numbers haven’t been released on the latest round, Clearcover claimed “unicorn” status which means a valuation of at least $1 billion.
Insurtech multiple: Lemonade, Root, and now Clearcover trade at exceptionally high multiples of premium: Lemonade is trading at about 50x written premium while traditional insurers get about 1.5x in their valuation. This valuation is a direct indicator of the growth opportunities in digital insurance, and with the right technology, this growth is available to any carrier out there.
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Read: Insurance startup Clearcover raises $200 mln from Eldridge, others at $1 bln valuation
Insurtech Update
Lemonade expanding its offerings to include Auto Insurance
Insurtech diversification: Lemonade has their foot in the door with over 1 million customers, and now they’re expanding to service more of their customer’s needs. They started with renters, jumped into pets, and auto is next.
Why it matters: Lemonade, like N26, has a captive audience for their offerings and are leveraging that to take additional market share in insurance. Lemonade is known for having a great customer experience and that alone will drive growth for them in these new sectors.
Unsettled Question: Lemonade is focusing their car insurance on electric vehicles which have great self-driving capabilities. These vehicles have a huge unanswered question tied to them: when something goes wrong, will it be on the manufacturer or the individual to cover the cost – who is responsible? It will be interesting to watch.
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