XL Catlin’s investment arm contributed to a $12.2 million venture-funding round for Embroker, a startup focused on automating the insurance broker experience for small and midsize business owners.
Embroker, launched in 2015, said it has already partnered with more than 10 major commercial insurance carriers, including The Hartford and Travelers.
This is the second funding round for San Francisco-based Embroker, following a $2.2 million seed round in July 2015. Caanan Partners led the financing, though Nyca Partners and XL Catlin’s investment arm XL Innovate also participated. As well, Silicon Valley Bank contributed a new debt facility. Previous investors Bee Partners, FinTech Collective, Vertical Venture Partners and 500 Startups additionally contributed to the new funding.
XL Innovate helped back a $3.9 million seed funding round in March for Slice Labs, an insurance startup designed to provide on-demand, pay-per-use insurance for rideshare drivers.
Embroker describes its technology as a cloud-based risk and insurance management platform that relies on its own software, data and predictive analytics to help businesses buy commercial insurance of all types. Business owner-clients can upload their policies in order to better understand the coverage and compare it to peers. Embroker’s data and predictive analytics then helps recommend coverage to business clients and also find the best pricing.
The startup says it can give customers real-time access and online reporting of losses, with advice on how to minimize them. There’s also the ability to track and manage vendor certificates online and also customize requirements by project or vendor and receive notifications for noncompliance or expired policies. As well, customers can track assets, vehicles and drivers, and add property location information and other variables.
This would be a major improvement over the status quo, Embroker argues. It calculates that small and medium-sized businesses typically have four to six separate insurance policies and spend up to a million dollars a year in premiums. Because the industry relies mainly on manual processes and sells complex products, few small-to-medium businesses review their insurance every year. Embroker aims to improve upon this with its platform that removes the hurdle to optimize coverage and automate the process.
CEO Matt Miller founded Embroker. He’s a principal at the private equity firm Hellman & Friedman, which has interest in a number of insurance-related firms. It owns Hub International and Applied Systems and has investments in Arch Capital Group. Previously, the firm owned Vertafore, which it sold in 2010. Miller was previously on the board of Applied Systems and serves on the Hub International board. Before joining Hellman & Friedman in 2013, Miller worked at Bain Capital in Boston and Hong Kong and at Bain & Co. in New York.
Changing the Broker Game?
In a prepared statement, Miller explained Embroker’s philosophy.
“Until now, all but the largest corporations have relied on traditional insurance brokers and outdated manual processes to make” critical business decisions such as acquiring the right insurance coverage at the right price, Miller said. “By bringing clarity and simplicity to what’s traditionally been an opaque and painful process, we’re enabling business owners to embrace insurance and risk management as tools for growth rather than obstacles.”
Embroker is among a crop of commercial lines instech startups drawing interest from investors. In March, Next Insurance, an online shopper for small businesses, announced a $13 million seed investment led by Zeev Ventures, TLV Partners and Ribbit Capital. Next Insurance plans to launch its first product in the spring. Also in March, New York-based CoverWallet received $2 million for what it calls its online insurance manager from Two Sigma Ventures, Highland Capital Partners, Founder Collective and other angel investors. This concierge-like service offers small businesses automatic risk analysis, document management, benchmarking and data analytics, intelligent data-driven risk and insurance assessments, coverage recommendations, peer risk comparisons, and claims support.
Berkshire Hathaway Inc., owner of GEICO, launched Berkshire Hathaway Direct Insurance Co. in December, with plans to sell insurance directly to businesses over the Internet. Initial plans involve a focus on workers compensation and business owners’ package policies.
Separately, Embroker announced it hired Willis Towers Watson veteran Tom DeMichael as vice president of customer experience. He’s a 23-year veteran of commercial insurance operations management. Before Willis, he was director of property/casualty relations with The Horton Group.
*Material from an Insurance Journal piece was used for this story. You can access IJ’s coverage by clicking here.