InsurTech/M&A/Financeđ°/Collaboration
Toronto Tech Startup Walnut Raises $4.6M to Modernize Insurance Industry
A Toronto financial technology firm has announced the close of a funding round.
Building on capital from 2022, the $4.6 million round of investment into Walnut Insurance was led by NAventures, with participation from TELUS Global Ventures, Diagram Ventures, Portage, and Highline Beta.
Walnut is in the business of modernizing the insurance industry with the latest technology.
âThe insurance industry has yet to complete its digital transformation, with many insurers and brokers still operating in traditional, non-digital fashions,â comments Adrien Niblock, a cofounder of Walnut.
Niblock sees an opportunity to âleapfrog traditional digitization and support a modern API-enabled embedded distribution strategy.â
By embedding insurance products directly into the products and platforms of enterprise businesses and financial institutions, Walnut removes marketing costs and drives insurance distribution through partner-driven
Janoverâs new insurtech platform hits profitability and boosts revenue by 60% in May - Reinsurance News
Janover Inc., a provider of AI-powered solutions for commercial real estate transactions, has recently shared an update on its insurtech subsidiary, Janover Insurance Group.
Launched in March 2024, Janover Insurance achieved profitability by May 2024. During that period, its monthly recurring revenue increased by more than 60% compared to April 2024.
Blake Janover, CEO of Janover, said: âWe officially launched Janover Insurance in March and we are proud to report that it achieved profitability in May, increasing our total recurring revenue, which includes revenue attributed to recurring Insurance and Groundbreaker subscription products, by more than 60% month over month.â
The rise in insurtech revenue led to a 5% increase in overall annual recurring revenue (ARR) from the previous month. This ARR is mainly driven by recurring revenue from the recent Groundbreaker acquisition and Janover Insurance.
Janover continued: âMay revenue from Janover Insurance represents approximately 65% of our monthly Groundbreaker revenues. This is a validation of the economic viability of our insurtech platform and further demonstrates our customersâ demand for a superior insurance offering for their properties and businesses.
Climate/Change/Sustainability/ESG
Is Your Home at Risk From Climate Change? It Depends on the Data Source
The Risky Business of Predicting Where Climate Disaster Will Hit
Climate tech companies can calculate the chances that a flood or wildfire will ravage your home. But what if their odds are all different?
Humans have tried to predict the weather for as long as there have been floods and droughts. But in recent years, climate science, advanced computing and satellite imagery have supercharged their ability to do so. Computer models can now gauge the likelihood of fire, flooding or other perils at the scale of a single building lot and looking decades into the future. Startups that develop these models have proliferated, buoyed by venture capital and private equity.
The models are already guiding the decisions of companies around the US and across the global economy. Hoping to climate-proof their assets, government-sponsored mortgage behemoth Fannie Mae, global insurance broker Aon Plc, major insurers such as Allstate Corp. and Zurich Insurance Group AG, large banks, consulting firms, real estate companies and public agencies have flocked to modelers for help.
Two ratings giants, Moodyâs Corp. and S&P Global Inc., have brought risk modeling expertise in-house through acquisitions.
Thereâs no doubt that this future-facing information is badly needed. The Federal Emergency Management Agency â often criticized for the inadequacy of its own flood maps â will now require local governments to assess future flood risk if they want money to build back after a disaster.
READ ON - SUBSRIPTION MAY BE REQUIRED
Eric Roston, Krishna Karra, Leslie Kaufman and Sinduja Rangarajan
Bloomberg Evening Briefing: Climate Predictions Are Getting Easier and Riskier
Humans have tried to predict the weather for as long as there have been floods and droughts.
But in recent years, climate science, advanced computing and satellite imagery have supercharged their ability to do so. Computer models can gauge the likelihood of fire, flooding or other perils at the scale of a single building lot and looking decades into the future.
Startups that develop these models have proliferated, buoyed by venture capital and private equity. The models are already guiding the decisions of companies around the US and across the globe hoping to climate-proof their assets. And while thereâs no doubt that this future-facing information is badly neededâparticularly by local governments tasked with protecting livesâthereâs a big catch.
Most private risk modelers closely guard their intellectual property, meaning models often arenât transparent enough to allow for rigorous independent vetting. And given that decisions informed by models that canât be inspected may soon affect billions of lives and trillions of dollarsâwell, you can see the problem.
David Rovella, Managing Editor:Bloomberg Digital
Aon renews climate risk research partnership with Columbia University
Aon has renewed its academic partnership with Columbia University until 2027 to include research on the correlation of climate risk across various perils and regions.
This renewal follows a successful first phase, where Columbiaâs latest peer-reviewed climate science was integrated into Aonâs Impact Forecasting tropical cyclone catastrophe model suite. Consequently, this yearâs release of Impact Forecastingâs Hurricane Model v3.0 incorporates additional climate change perspectives in every stochastic run.
In the second phase of this collaboration, it will continue to explore the effects of climate model biases on future tropical cyclone risks. For example, Columbiaâs research has shown that recent climate model simulations predict excessive warming in the eastern Pacific Ocean due to greenhouse gases.
Research
Lessons learned from Amazon's exit from insurance
Amazon recently discontinued its insurance initiative in the UK. But... Did you give it a try?
I did it for you.
The idea was to explore the level of "innovation" in such an initiative to assess what its termination means for the future of insurance innovation.
To start with, I had to go to the specific website (thanks Google for helping me spot it). Then, the customer journey is split into 5 major steps.
It starts with pages to fill with personal information.
Florian Graillot,Investing in InsurTech with astoryaVC., Curating what matters in insurance innovation & technology since 2015
Commentary/Opinion
Warren Buffett Says The Insurance Business Is Very Tempting: 'Somebody Hands You Money And You Hand Them A Little Piece Of Paper'
During the May 2024 Berkshire Hathaway annual meeting, Warren Buffett gave his signature insights into the insurance industry. With a wealth of experience, Buffettâs reflections on the business are both enlightening and unpretentious.
Warren Buffett described the insurance business as particularly enticing. âItâs so much fun because you get the money at the start, you know, and then you find out whether youâve done something stupid later on,â he quipped.
Insurance companies get their money upfront when people pay their premiums, even though the actual costs (claims) might come later. This makes it an appealing way to do business.
Buffett noted the industryâs deceptive simplicity: âInsurance always looks easier than it is.â This simplicity arises from the basic premise where âsomebody hands you money, and you hand them a little piece of paper.â Still, the real challenge lies in accurately assessing risks and pricing policies.
The discussion about the insurance industry centered around the potential impact of autonomous vehicles on GEICO, Berkshire Hathawayâs auto insurance subsidiary. A Tesla and Berkshire Hathaway shareholder questioned Elon Muskâs ambition to reduce car accidents by 50% with autonomous driving technology. As the shareholder sees it, if Muskâs vision becomes a reality, it could drastically lower insurance premiums due to reduced underwriting risks.
Buffett said that if there were fewer accidents, insurance companies would save money. He used an exaggerated example to make his point: âLetâs say there are only going to be three accidents in the United States next year ... the prices will come down.â
Lessons from the Crowdstrike Meltdown
The outage highlights the need for insurers to evaluate their technology risk and have a robust recovery plan.
As everyone likely knows by now, CrowdStrike, a Texas-based cybersecurity company focused on Microsoft computers, triggered a massive worldwide outage due to an update it pushed out last night. The impact was broad, affecting a number of industries:
- Health care organizations (Harris Health System in Houston had to suspend visits)
- Airlines (flight delays and cancellations across airports and major airlines)
- Access to bank accounts (Australia and New Zealand)
- Stock exchange non-trading services (London)
- Electronic cash register malfunctions impacting stores and restaurants (McDonalds)
- Law enforcement agency systems and emergency response systems (like 911)
- Courts (Marylandâs court system shut down)
Even some television station broadcasting and billboards in Times Square went dark!
Mitch Wein is an Executive Principal in the Insurance Practice at Datos Insights.
Events
ITC Vegas 2024 - The worldâs largest gathering of insurance innovation
Insurtech Consulting and our âConnectedâ newsletter are proud media partners of ITC Vegas 2024
Event Date: Tuesday, October 15 â Thursday, October 17, 2024
Event Location: Mandalay Bay Convention Center
3950 Las Vegas Blvd S
Las Vegas, NV 89119
ITC Vegas combines unbeatable networking with whatâs new and next, ensuring your time will be spent meeting more people, sourcing more solutions, and creating valuable partnerships.
Discover solutions to your biggest challenges, gain access to unique and meaningful education, and meet the insurance industryâs best and brightest. Join the insurance event that doesnât just bring the industry together â it moves the entire industry forward.
The future of insurance is here â at ITC Vegas. If you arenât here, you are missing out on the conversations that are propelling the industry forward
Register now and save, $200 off. Use promo code 200ITC1813
Code not valid on Independent Agent, Startup, Groups, or LATAM tickets. Discounts only apply to new registrations.
Financial Results
The Yellow Brick Road: Insurtech Root's Path to Profit
As I was reflecting on Rootâs shareholder letter, I couldnât stop thinking about the Wizard of Oz.
In the enchanting land of Insurtech, Root has emerged as an unlikely hero in Q2 2024. Like Dorothy in âThe Wizard of Oz,â Root seems to have found its ruby slippers, clicking its heels towards profitability while its companions Lemonade and Hippo still search for their own paths home.
Over the Rainbow: Rootâs Financial Highlights
Rootâs Q2 2024 results reminded me of what it must have been to see the old Charlie Chaplin movies in Sepia and then witness the vibrancy of Technicolor in the Wizard of Oz. Root has certainly painted a vibrant picture:
- Policies in force nearly doubled to 406,283
- Gross premiums written increased 113% to $308 million
- Net loss improved 79% to $8 million
- Operating income of $4 million and adjusted EBITDA of $12 million
These numbers suggest Root might be nearing the end of its yellow brick road to profitability. As the Scarecrow sang in âIf I Only Had a Brainâ â âI could while away the hours, conferrinâ with the flowers, consultinâ with the rainâ â or in Rootâs case, conferring with algorithms and consulting big data.
The Emerald City: Carvana Partnership
Rootâs bet on Carvana as a distribution channel has paid off handsomely. The partnership has provided Root with a steady stream of customers, much like the Emerald City provided hope for our âOzâ protagonists.
The Wicked Witch of Losses: Melting Away?
While Root still reported a net loss, the trajectory is promising. The companyâs net loss of $8 million is a significant improvement from previous quarters. Itâs as if the wicked witch of losses is slowly melting away, leaving Root to claim its rightful place in the Insurtech kingdom.
Kaenan Hertz is a professional in the areas of block chain, telematics, wearables, analytics, artificial intelligence (AI) and Insurtech. He has played a key role in innovating many start-ups and established carriers. His advice has been widely appreciated in the financial community, which resulted in multiple quotes and publications in various media.
Legal System Abuse/Social Inflation
Georgia Personal Auto Insurance Among Least Affordable States in the Country; Claim Litigation, Uninsured Motorists a Growing Concern, According to New IRC Study
Georgiaâs personal auto insurance affordability has deteriorated in recent years, climbing the ranks of least affordable states over the past decade and a half, according to the new report Personal Auto Insurance Affordability in Georgia, by the Insurance Research Council (IRC), a division of The Institutes.
In 2022, personal #autoinsurance expenditures accounted for 2.0% of median household income in #Georgia, compared with 1.5% average in U.S., according to the Insurance Research Council (IRC).
In 2022 (the latest year for which expenditure data is available), personal auto insurance expenditures accounted for 2.0% of the median household income in Georgia, compared with 1.5% in the United States. Georgia ranked 47th in terms of auto insurance affordability, with only four other states âLouisiana, Florida, Mississippi and New York â showing higher expenditures. This is a marked deterioration from Georgiaâs affordability position back in 2006 when it was the 27th most affordable state.
Key findings:
From the mid-2000s through 2014, Georgians spent about the same on auto insurance as other Americans. Starting in the mid-2010s, however, auto insurance expenditures in Georgia have escalated. Between 2014 and 2022, auto insurance spending in Georgia grew 5.6% annualized, compared with 3.3% in the country overall and faster than in any other state. In 2022, Georgiaâs average expenditure of $1,347 was 20% higher than the U.S. average. RED ON
Affordability issues in Georgiaâs auto insurance market stem from multiple factors - many of which have been faced by the rest of the country - including economic inflation, high replacement costs, poor driving behavior, and legal system abuse. However, several key measures of cost drivers are higher in Georgia, including the propensity to file an injury claim once an accident occurs, underinsured motorists, and claim litigation.
Litigation in auto insurance claims is a growing concern in Georgia, especially as tort reform in neighboring states is potentially pushing legal firms in those states to find opportunities elsewhere. Georgia has experienced elevated attorney advertising rates, particularly in television advertising.
Data Privacy/Cyber Security
[Ed. Note: Excellent Article, Recommended Reading] How to Keep Your Car From Sharing Your Sensitive Data Behind Your Back | Cars.com
Modern cars generate a ton of data on their drivers and occupants, not all of which youâd like to share with the broader world. Yet thatâs exactly the issue uncovered in a recent New York Times report: drivers found that their driving history was making its way to data brokers, who in turn sold the information to insurance companies, often resulting in higher insurance rates.
Sadly, thatâs just one of many examples as to why itâs more important than ever to know exactly who has access to your carâs information â and what red flags to look for when purchasing a new car or signing up for a new service.
Lots of Data, Little Security
A modern connected car generates nearly 25 gigabytes of data per hour, per S&P Global Mobility, with that data ranging from location and driving history to even more sensitive personally identifiable information. Thatâs an unfathomably large amount of data to most of us given that even the flashiest, most picture-heavy PDF I can find on my hard drive is roughly 0.06% of that.
Many of the basic features you interact with in a newer car are an opportunity to collect data, including âembedded features including geolocation and navigation, companion apps, biometrics, voice recognition, on-board diagnostics and driver assistance,â notes S&P Mobility Senior Research Analyst Vivek Beriwal.
âAdditionally, cars can collect data in the background via cameras, microphones, sensors, and connected phones and apps.â
Some of the data collected by cars or included in connected systemsâ terms of service may strike users as a bit creepy. In Hondaâs vehicle data privacy notice, for example, the company says it collects precise vehicle location information at specific points in time thatâs accurate to within a radius of 1,850 feet or less â precisely the kind of data that could be dangerous if the wrong person gains access to it.
Modern Hondas can also store data on what youâve searched for through the carâs infotainment system, recordings of vocal commands youâve given the car, and call history information for any phones connected through the carâs systems (although call data and previous navigation destinations can be wiped through the infotainment system).
News Editor Stef Schrader joined Cars.com in 2024 but began her career in automotive journalism in 2013. She currently has a Porsche 944 and Volkswagen 411 that are racecars and a Mitsubishi Lancer GTS that isnât a racecar (but sometimes goes on track anyway)
Webinars/Podcasts/Interviews
INTERVIEW: The Mutual Group: Solutions for the Unique Challenges of Mutual Insurers | Insurance Innovation Reporter
IIR talks with CEO Tim Fleming about the range of solutions TMG offers, from capital to technology, to improve the underwriting success of its member companies.
Mutual insurers continue to be a very important part of the property/casualty insurance industry, but companies organized on the mutual model face particular challenges relative to stock companies.
What affects the P&C industry in general often creates greater challenges for mutuals, for example geographically concentrated perils exacerbated by changing climate, accelerated technology change, competition for talent, and access to capital.
As reported by the National Association of Mutual Insurance Companies (NAMIC), the largest P&C industry association in the U.S.âwhose members represent the majority of auto and homeownersâ premium, and 31 percent of business insurance premiumâthe combined ratio for mutual insurers for Q2 2022 was 113.8 percent compared to 97.0 percent for stock companies.
Insurance Innovation Reporter