InsurTechs, like all companies these days, aren’t immune to business challenges created by the coronavirus pandemic, which has left many businesses shut down or struggling to function in the face of quarantines and social distancing. Many will likely trim their staffs to conserve cash as they seek to reach profitability, but others, even those who have reduced staffing, are still moving ahead with growth plans, either through hiring or the launch of new digital products.
In other words, they’re adapting.
Lemonade said it is continuing with targeted hiring to support an expansion in the Netherlands, even as the coronavirus pandemic creates significant growth obstacles for the economy at large.
“We recently launched in the Netherlands remotely, and our engineering teams continue to deploy updates to the Lemonade product daily. Therefore, we’re hiring for certain roles remotely,” Daniel Schreiber, CEO and co-founder of the New York-based InsurTech, told Carrier Management via email.
Lemonade, with more than 300 employees (according to its LinkedIn profile), launched its digital homeowners and renters insurance in New York in 2016 and has since grown nationally in the U.S. The company, which has raised nearly $500 million in venture financing to date, has since started offering contents and liability insurance in Germany and in early April began marketing similar digital coverage in the Netherlands.
Schreiber said that the hiring is taking place even as Lemonade has taken pandemic-related precautions to ensure employee safety.
“Team Lemonade has been working from home, in all four global locations, since March 13. As a company built on a digital substrate, and while ensuring and prioritizing our team’s safety and well-being, we’ve been able to continue being there for our customers in their time of need,” Schreiber said.
Stability and an Eye on Growth
Hippo, a California-based InsurTech startup and managing general agent focused on digital home insurance, employs 250 people right now. The company, launched in 2015, has raised $209 million in venture financing to date, and it has grown organically and through its November 2019 acquisition of Sheltr, a tech-enabled services startup that provides home wellness checkups. Hippo Chief Insurance Officer Rick McCathron acknowledges “hard times” that its employees and many others are facing, but said the company is still moving ahead with product launches. At the same time, it is not expanding staffing for now but focusing instead on existing employees and filling “business essential” roles as they become open.
“These are trying times that have us focused on our current employee base to ensure their health and well-being while taking a longer look at the evaluation period of new open roles and continuing to hire to fill business essential roles,” McCathron said. Even so, he added that Hippo is seeing some resiliency and immediate growth potential because of its business focus.
“For most Americans, home insurance is considered a necessity to own a home, so we’re not seeing the impact on revenue that many other startups in our D2C space are feeling,” he said. “But we are seeing some serious strain on homeowners across the country during these unique times and are developing new products and practices with our team to support them, like our virtual telemaintenance service.”
Layoffs, Product Refocus
Bold Penguin, an Ohio-based InsurTech and commercial insurance technology provider, has raised more than $50 million in venture funding since its 2016 debut. The company, which employs at least 122 people (according to its LinkedIn profile), said it has reduced its staff due to economic conditions relating to the COVID-19 pandemic. Bold Penguin would not disclose the specific numbers of cuts, but the company explained its actions were meant to ensure its viability and ability to continue to serve customers in new ways.
“Due to the economic conditions surrounding the COVID-19 pandemic, we have been seeing a drop in quote activity across all experiences in small commercial. As a result, we made the difficult decision to make an adjustment to our staffing, primarily around the call center teams, marketing and some longer-range non-core initiatives,” the company said in its statement.
Bold Penguin explained the staff reduction was made in order to adapt to new business volume expectations but also to “customer product demands shifting to self-service digital solutions, a shift in product requests that was dramatically accelerated in March.”
Bold Penguin said that it expects to hire back many of those it laid off “once quoting activity begins to ramp back up and the macro environment for small businesses improves.”
The company added its adjustments internally will help it serve existing clients as well as new ones, “both on the distribution side and the carrier side, to help them find creative ways to service their small business clients.”
While Bold Penguin said it is seeing a slowdown in quote-starts industrywide, it expects this to rebound.
“As many small to midsize businesses reopen after the shelter-in-place is lifted, we believe the inquiries and usage will gradually go up and digital transformation will be key for success,” Bold Penguin said. “We are grateful to be able to continue to focus on our mission during this challenging time: connecting small businesses, agencies and carriers to reduce the time it takes to quote and bind.”
Slice Labs, a New York startup with a cloud services platform and more than $30 million in venture financing, recently disclosed it was letting go 28 staff members, about a third of its colleagues. But CEO and co-founder Tim Attia said in a blog posting that the company, which also sells on-demand insurance, would work with the industry to help carriers adapt to a pandemic-era environment where digital options could be more in demand than they ever have.
“As we work closely with the industry through this process, it is clear that the need for digital transformation is ever apparent and that new insurance services are needed to protect workers and individuals going forward,” Attia wrote. “We look forward to helping carriers achieve the transformation they’re striving for.”