Cover Genius gets $70 million infusion to expand corporate insurance business
In 2014, Angus McDonald, former head of publisher partnerships at Yahoo (full disclosure: TechCrunch’s parent company), teamed up with ex-Googler Chris Bayley to found Cover Genius, an insurtech platform that rates and processes claims for nearly all lines of insurance. or guarantee. After expanding into all 50 US states and more than 60 countries, Cover Genius is preparing for its next phase of growth, McDonald says, fueled by significant new capital.
Cover Genius announced today that it has raised $70 million in a Series D round led by Dawn Capital with participation from Atlas Merchant Capital, GSquared and King River Capital. Bringing a total of 420 people to the $165 million company, McDonald told TechCrunch that the proceeds will go to “help grow the business” and further expand Cover Genius’ insurance distribution services.
“We have created a wide range of protection solutions for partners in many verticals, including many of the world’s largest airlines and travel companies, retailers and logistics operators, mobility companies, automotive and enterprise companies, banks, fintech and proptech and enterprise companies. software for businesses and event ticketing companies,” McDonald said in an email interview. “Beginning in our early days, raising just over $1 million from early 2014 to our Series B in 2018, we’ve been blessed to have significant partners that ensure a healthy and sustainable cash flow while carrying frugality in our DNA. “
McDonald and Bayley were motivated to start Cover Genius after facing insurance challenges with their previous joint venture, an international online travel agency. They found that traditional insurers were difficult to work with because each country the co-founders wanted to reach required a separate insurance contract with executives in different countries.
In creating Cover Genius, McDonald and Bayley worked to obtain integrated insurance licenses and approvals in most major countries around the world. Unlike typical insurance plans, embedded insurance like Cover Genius is tied to the purchase of a product or service, offered in real time or at the point of sale.
Ride-sharing app Ola uses Cover Genius to insure drivers and passengers. Betterplace, an India-based human resource management software provider, uses Cover Genius technology to provide healthcare to contract workers. As for the buy-now, pay-later provider Zip, Cover Genius has built an AI-powered tool that classifies insured items (eg, a power drill) to recommend warranties to e-commerce customers.
Among the products Cover Genius offers is Shake Shield, an earthquake insurance policy backed by Swiss Re. Image authors: cover genius
“We strongly believe in the embedded insurance model, which is the ability to protect customers at the point of sale or at enrollment, and that there would be a big shift in value from direct-to-consumer and traditional insurers to partnering digital platforms with insurtechs.” McDonald continued. “Customers get access to personalized protection at the right time, eliminating the inconvenient need to take a second step to purchase protection. Partners achieve earnings growth, and more engaged customers and insurers benefit from a data-rich distribution channel.”
There is no doubt that embedded insurance is new in insurtech. Startups in the space, many founded in the past five years, have raised an estimated $800 million in venture capital funding in 2021. And a recent report by Simon Torrance, a consultant for embedded applications and financial strategies, estimated that embedded insurance in property and casualty alone could account for more than $700 billion in gross written premiums by 2030, or 25% of the total world market.
New York-based Cover Genius faces competition from insurance providers such as Extend and Bolttech. But it also has a strong customer base, which includes 10.5 million customers through merchant partners such as Intuit, Kayak, Booking Holdings, Priceline, Turkish Airlines, SeatGeek, Amazon, eBay and Wayfair. Although Cover Genius was initially affected by the pandemic — the company primarily offered travel insurance in 2020, when the industry took a hit — McDonald notes that it has been able to branch out into several new market segments over the past few years.
The branch was created through a combination of product launches and acquisitions. In July, Cover Genius made a strategic investment in Indian insurtech, Ensuredit, and acquired Booking Protect, a ticket refund protection startup that brought SeatGeek to the Cover Genius platform. And in June, Cover Genius launched a “price-optimized” warranty offering for small and medium-sized e-commerce businesses.
One barrier to expansion that Cover Genius will have to overcome is the general sentiment around insurance – which is not positive. A 2019 survey by the Geneva Association, a global association of insurance companies, found that more than half of people (53%) had a bad experience with insurance. In a separate IBM report, less than half of customers said they trust the insurance industry.
McDonald says the Cover Genius products speak for themselves.
“By offering peace of mind and a high-quality customer experience, driven by product relevance and fluidity from sales to complaints, our partners can enter new territories with their customers,” he said. “They’ve had experience working with traditional insurers in the past, which negatively affects the customer experience and inevitably causes churn and backlash against their own brand, or they’ve tried to work with traditional insurers and given up because of all the ‘hard work’ otherwise, stay with them . “
