Pouch, an InsurTech MGA using telematics to reward small businesses for safe driving, disclosed it has raised some initial financing that will help accelerate its launch into the commercial auto insurance market.
ILS Capital is behind the seed round. The Bermuda-based company is an investment firm specializing in insurance-linked securities, according to its web site.
Neither side disclosed financial details of the investment. But Pouch, a Chicago-based startup, said the deal gives it access to “a portfolio ecosystem and expertise,” among other things.
“ILS Capital has given us everything we need to move as fast as possible to take advantage of the opportunities in commercial auto insurance,” Steve McKay, founder and CEO of Pouch, said in prepared remarks. “They helped us bring to market our fresh approach and rewards for safe driving so that we can immediately help businesses protect some of their most valuable assets.
Tom Libassi, co-founder and managing partner at ILS Capital, said in prepared remarks that the startup “opens up access to the direct-to-business market and telematics, which are highly complementary to what we do.”
Pouch frames the investment as giving it competitive advantages, helping it to launch after just eight months rather than the 18 months or more typically required for startups of this nature. The startup sees contractors, landscapers, florists and other small businesses that depend on vehicle fleets as its customers. Coverage includes free GPS tracking for every insured vehicle, helping small business owners better manage and protect their assets while earning discounted rates and other incentives.
Pouch is initially available in Illinois, with plans to roll out in initial states over the coming months. It insures through Stonegate Insurance and Unique Insurance, McKay told Carrier Management through a spokesperson.
How Pouch Works
McKay describes his company as efficiently using telematics data for commercial work in order to build a “uniquely fast” user experience that functions well with partners.
“For example, we can provide a rate to a potential customer that already has telematics data without asking any questions. Because we work with partners, our customers get vehicle tracking services that are much better than what other insurers can offer,” McKay said.
He described the company’s telematics approach as being “richer” than other insurance telematics programs, enabling it to offer features designed specifically for business owners by its software partners.
“Our quote is much faster and connected data is flowing from customers who have existing devices,” he said. “We can give you credit for the data you already have.
McKay added the startup will use whatever telematics/app combinations its partners provide, though it will likely be a device “most of the time. .
In some ways, Pouch’s approach resembles Root Insurance. Root launched a few years ago as an Insurtech auto insurance startup that relied on an iPhone or Android phone app to measure driving behavior, with good drivers getting discounts. The company, a full-stack insurer, raised $724.2 million in an IPO held at the end of October 2020. It lost $363 million in 2020, though the company is pursuing accelerated growth plans in 2021.
Unlike Pouch, however, Root focuses mostly on personal lines.
Pouch also noted its rating is designed for commercial cover – driver agnostic, using the experience in the vehicle to rate.