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Neo Insurance

New insurance models are disrupting a centuries-old industry with a focus on personalization and convenience.

Overview

Novel insurance models are providing coverage for the connected consumer

Neo Insurance refers to a fully digitized insurance product and service provided entirely through digital channels. These new insurance models in the personal lines insurance segment use new technologies and focus heavily on customer experience by providing personalized products that reflect individual circumstances better, allow for instant coverage, feature faster claim processing, and are delivered digitally. They aim to overcome the pain points of traditional insurance where policies are offered based on a one-size-fits-all approach.

Neo Insurance has largely been enabled by the emergence of insurance technology (insurtech) solutions, which make use of technologies such as Internet of Things (IoT) devices, artificial intelligence (AI) and machine learning to automate insurance functions and gather data in real-time, which can lead to more accurate pricing and faster claims processing. On the demand front, consumer expectations for more personalized policies and cost savings for insurers, arising from digitizing insurance functions, have created strong demand for neo insurance products and supporting infrastructure solutions, while inadequate coverage provided by traditional insurers for non-conventional industries, such as ridesharing, have paved the way for new opportunities for neo insurers.

What's driving this industry?
Market Sizing

The market size for the US neo-insurance market will reach USD 53.2-79.9 billion by 2025

Conservative case

USD 53.2 Bn

Base case

USD 66.6 Bn

Expansion case

USD 79.9 Bn

USD billion020406080202020212022202320242025
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COVID-19 IMPACT

  • Restrictions on physical gatherings have pushed consumers toward digital alternatives with insurance being no exception.

    • During 2020, Lemonade’s gross earned premiums more than doubled from the previous year.

    • Root Insurance’s direct written premiums grew by 36.7% YoY during 2020.

    • Bestow, saw sales grow by 450% YoY from January to October 2020, driven by pandemic-induced demand.

  • While the first half of 2020 witnessed a significant decline in venture capital funding, the second half marked a public market debut for key disruptors and a major funding round.

    • Investments in the sector amounted to USD 2.3 billion during the first half of 2020, representing only 17.2% of the full year investment amount (USD 13.4 billion) in this space during 2019. 

    • The second half of 2020, however, saw notable developments on the capital front, as Lemonade and Root Insurance went public, and Metromile followed suit via a merger with a listed special purpose acquisition company (SPAC). Hippo Insurance raised USD 350 million in funding, closing the year with one of the largest funding rounds in the industry.

  • Startups such as Slice Labs and Jetty have laid off a significant number of staff due to the pandemic recession. Premium write offs driven by US government-imposed measures have added further stress to digital insurance startup balance sheets.

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Market Mapping


Neo-insurance products for the automobile, homeowners, and renters markets account for more than one-third of the companies in the Industry Hub, with more than half of the startups under analysis established after 2016 and a majority in their early or growth stages.

Solution-provider startups have attracted close to USD 3.0 billion in funds as of June 2022. These companies' profiles range from turnkey solution providers offering end-to-end infrastructure for launching digital products to companies targeting specific processes within the value chain.

Incumbents have been quick to react to changing market dynamics, especially in the automobile space, where most companies have either developed solutions in-house or partnered with turnkey solution providers and vehicle manufacturers to provide usage-based insurance offerings. Vehicle manufacturers such as Tesla have also ventured into this space, leveraging data from their own connected vehicles.

Incumbents
Growth
Early
Seed
Pre-Seed
Automobile
?
Homeowners & Renters
?
Life
?
Miscellaneous
?
Marketplaces
?
Turnkey Solutions
?
Underwriting Support
?
Claims Processing
?
International
International
International
International
International
International
International
International
Allianz
AXA
State Farm
USAA
Liberty Mutual
Allstate
MetLife
Mercury
American Family Insurance
Progressive
Berkshire Hathaway (GEICO)
CSAA
Tesla
General Motors
MAPFRE Insurance
BMW Group
wefox
Root Insurance
Lemonade
Clearcover
Branch Insurance
Zego
Cuvva
LeoCare
FRIDAY
Marshmallow
Buckle
Getsafe
INSHUR
By Miles
Loop
VOOM Insurance
Mile Auto
InsureScan
Insure The Box
optOn
Just Auto Insurance
Stable Insurance
Surround Insurance
Love Your Miles
Boundless Rider
Ranger
Allianz
Liberty Mutual
Progressive
CSAA
HCI Group
wefox
Hippo Insurance
Root Insurance
Lemonade
Kin Insurance
Branch Insurance
Sure
LeoCare
FRIDAY
Getsafe
Luko
Hedvig
Jetty
Hometree
Honeycomb
FloodFlash
Obie
APOLLO
Swyfft
CoverTree
Delos
Surround Insurance
Savvi Insurance
VYRD
Slide
Ranger
MassMutual
USAA
Lemonade
Ethos
YuLife
Ladder
Bestow
Sproutt
DeadHappy
Fabric Technologies
Amplify
PolicyMe
Dayforward
Jenny Life
Foxo
Bequest
Everyday Life Insurance
Munich Re
Trupanion
AllClear
ManyPets
Lemonade
Sure
LeoCare
SafetyWing
Laka
Wagmo
Koala
Bikmo
Faye
INZMO
MIOO
Coverd
Kanguro
Pattern Insurance
Policygenius
The Zebra
Compare.com
Polly
EverQuote
Clearsurance
Covered Insurance
GoodFetch
Swiss Re
State Farm
Cognizant
Otonomo
ReSource Pro
Verizon
Travelers
MoneyLion
EIS Group
Cambridge Mobile Telematics
Bestow
Sure
Socotra
Instanda
Sureify
Octo Telematics
Trakm8
Zendrive
Covr
Boost
Slice Labs
By Miles
VOOM Insurance
CarVi
Wrisk
CoverGo
REIN
Driveway
Afficiency
Neos
Koala
InsureScan
SureFyre
Insure The Box
Cogitate
Pendella
nSurely
Telematic
Pattern Insurance
Munich Re
Swiss Re
Allianz
AXA
MassMutual
Hannover Re
LexisNexis Risk Solutions
Cognizant
Verisk
Otonomo
Azuga
ReSource Pro
Earth Networks
FRISS
CAPE Analytics
Akur8
Zelros
Accelerant
Zesty.ai
Arturo
Gradient AI
Carpe Data
Quantemplate
Omniscience Corporation
Greater Than
Bdeo
Fenris
TensorFlight
UrbanStat
Neural Metrics
SeekNow
LifeScoreLabs
True Flood Risk
Qumata
iCover
Confianza
Dorothy
InsurGrid
Paper Insurance
Nexilis
Munich Re
Swiss Re
Allianz
Hannover Re
Cognizant
Verisk
Mitchell International
Shift Technology
Tractable
Snapsheet
FRISS
One
Zelros
omni:us
Hi Marley
Arturo
Gradient AI
Five Sigma
Greater Than
Sprout.ai
Claim Genius
Insoore
LeO
Bdeo
Click-Ins
Galaxy.AI
Mody Data Solutions
Paper Insurance
Assured Insurance Technologies

The Disruptors


Neo-insurance startups operate either under a carrier model, where they control all aspects of the process and underwrite their own policies, or under an agency model, where the startups act as a Managing General Agent (MGA)—selling insurance to customers and providing the underlying technology, while larger insurers underwrite the policies. Most of these startups are in early or growth stages.

While most neo-insurance startups are solution providers that enable neo-insurance products for larger underwriters, full-service insurance startups have absorbed most of the funding. The most highly funded of these solution provider startups has been Cambridge Mobile Telematics with a USD 500 million funding round from the Softbank Vision Fund in 2018.

Automobile insurer Root Insurance and renters insurance provider Lemonade filed for an Initial Public Offering (IPO) during the second half of 2020, raising USD 724.4 million and USD 319 million, respectively. The industry has also seen several startups merging with special purpose acquisition companies (SPAC) to go public. Metromile was the first neo-insurer to go public via this route, merging with INSU Acquisition Corp in February 2021. Hippo Insurance followed suit six months later by merging with Reinvent Technology Partners in August 2021. In July 2021, Kin Insurance also announced plans to go public via this route by merging with Omnichannel Acquisition Corp.

wefox has raised the most money of any still-private neo-insurer with a total of USD 919 million following a USD 650 million round led by Target Global in June 2021. Collectively, neo-insurance startups in both the automobile and property markets have exceeded USD 1.5 billion each as of August 2021.

2020 has also presented setbacks to the neo-insurance industry. A provider of on-demand insurance for the gig economy, Slice Labs, suspended its homeshare insurance offering due to the Covid-19 pandemic and had not yet launched its rideshare platform as of August 2021.

Automobile

?

Disruptors

?
Funding in USD Millions
Lemonade
Public - Market cap USD 1.5 bn
Root Insurance
Public - Market cap USD 111.6 mn
wefox
1319
Clearcover
305
Branch Insurance
230
Zego
202
LeoCare
134
FRIDAY
128
Marshmallow
116
Buckle
116
Getsafe
116
INSHUR
37
By Miles
27
Cuvva
22
VOOM Insurance
22
Just Auto Insurance
15
Mile Auto
13
Insure The Box
Unknown
Watchlist
?
Loop
Boundless Rider
Ranger
Stable Insurance
Surround Insurance
InsureScan
optOn
Love Your Miles

Homeowners & Renters

?

Disruptors

?
Funding in USD Millions
Lemonade
Public - Market cap USD 1.5 bn
Hippo Insurance
Public - Market cap USD 424.2 mn
Root Insurance
Public - Market cap USD 111.6 mn
wefox
1319
Kin Insurance
238
Branch Insurance
230
LeoCare
134
FRIDAY
128
Sure
123
Getsafe
116
Slide
105
Luko
85
Hedvig
68
Jetty
64
Hometree
24
Honeycomb
19
FloodFlash
18
Obie
14
APOLLO
11
VYRD
Unknown
Watchlist
?
CoverTree
Swyfft
Delos
Ranger
Surround Insurance
Savvi Insurance

Life

?

Disruptors

?
Funding in USD Millions
Lemonade
Public - Market cap USD 1.5 bn
Ethos
407
YuLife
207
Ladder
194
Bestow
138
Foxo
63
Sproutt
38
DeadHappy
37
Fabric Technologies
31
Amplify
25
PolicyMe
22
Dayforward
20
Watchlist
?
Jenny Life
Bequest
Everyday Life Insurance

Miscellaneous

?

Disruptors

?
Funding in USD Millions
Lemonade
Public - Market cap USD 1.5 bn
ManyPets
483
LeoCare
134
Sure
123
SafetyWing
47
Laka
23
Wagmo
16
INZMO
8
Koala
2
Bikmo
2
Watchlist
?
Faye
MIOO
Coverd
Kanguro
Pattern Insurance

Marketplaces

?

Disruptors

?
Funding in USD Millions
EverQuote
Public - Market cap USD 216.2 mn
Policygenius
276
The Zebra
257
Compare.com
185
Polly
184
Watchlist
?
Clearsurance
Covered Insurance
GoodFetch

Turnkey Solutions

?

Disruptors

?
Funding in USD Millions
Trakm8
Public - Market cap USD 11.8 mn
Cambridge Mobile Telematics
503
Bestow
138
Sure
123
Socotra
94
Instanda
73
Zendrive
57
Covr
53
Boost
37
Slice Labs
36
Sureify
27
By Miles
27
VOOM Insurance
22
CarVi
20
Wrisk
19
REIN
18
Driveway
12
Afficiency
10
Pendella
8
Koala
2
Insure The Box
Unknown
Octo Telematics
Unknown
Watchlist
?
CoverGo
Neos
InsureScan
nSurely
Telematic
Pattern Insurance
SureFyre
Cogitate

Underwriting Support

?

Disruptors

?
Funding in USD Millions
Greater Than
Public - Market cap USD 125.3 mn
Accelerant
193
FRISS
89
CAPE Analytics
75
Zesty.ai
56
Akur8
41
Arturo
33
Gradient AI
31
Carpe Data
27
Quantemplate
26
Qumata
25
Omniscience Corporation
23
Zelros
16
SeekNow
Unknown
Watchlist
?
Bdeo
iCover
Fenris
TensorFlight
Confianza
Dorothy
InsurGrid
UrbanStat
Paper Insurance
Neural Metrics
Nexilis
LifeScoreLabs
True Flood Risk

Claims Processing

?

Disruptors

?
Funding in USD Millions
Greater Than
Public - Market cap USD 125.3 mn
Shift Technology
540
Tractable
120
Snapsheet
100
FRISS
89
One
52
omni:us
44
Hi Marley
42
Arturo
33
Gradient AI
31
Five Sigma
22
Zelros
16
Sprout.ai
15
Insoore
9
Watchlist
?
Claim Genius
LeO
Bdeo
Click-Ins
Galaxy.AI
Paper Insurance
Mody Data Solutions
Assured Insurance Technologies

Lemonade

Lemonade is a full-stack insurer that provides a range of insurance products that include renters, homeowners, life, car, and pet insurance. The company operates completely digitally, using AI-powered chatbots to onboard clients and process claims. The company’s AI runs several anti-fraud algorithms to eliminate false claims and asserts to handle 30% of claims instantly. The company’s business model is similar to peer-to-peer insurance, where Lemonade donates any unclaimed premiums to charitable causes of the customer’s choosing. Lemonade offers life insurance through its website and mobile apps in partnership with digital life insurance provider, Bestow.

The company most recently launched its own car insurance product, “Lemonade Car” in November 2021, which uses its underlying AI-based technology to process policies and claims, enabling safe drivers to obtain better rates. Lemonade Car has been specifically designed to offer lower insurance rates for low-mileage drivers and environmentally friendly electric vehicles (EVs) and hybrid cars. The offering will use a telematics app to measure factors such as mileage and driving habits and will also provide services such as 24/7 on-location roadside assistance.

In July 2022, Lemonade completed the acquisition of Metromile, a pay-per-mile automobile insurance provider, in an all-share transaction valued at USD 145 million or 7.3 million Lemonade shares, excluding cash, worth USD 150 million, which marked Lemonade’s first acquisition. Through the acquisition, Lemonade aimed to bolster its auto insurance offerings by using Metromile’s vast amount of driving data to offer competitive and precise policies and benefit from Metromile’s written premiums of over USD 110 million and insurance licenses in 49 states, compared to the three it owns in Ohio, Illinois, and Tennessee, accelerating its speed to the market throughout the US.

The company holds a pan-European license, which enables it to sell insurance in 31 countries across Europe, and it operated in France, Germany, and the Netherlands as of the same date.

Key customers and partnerships

In August 2022, Lemonade partnered with Mitchell International, to use the latter’s claims management platform to streamline and automate the claims processes of its auto insurance business–Lemonade Car.

Funding and financials

In July 2020, Lemonade sold 11 million shares in an Initial Public Offering (IPO), raising USD 319 million in the process at a valuation of USD 1.6 billion. Lemonade announced a secondary stock offering in January 2021, where the company offered 3 million shares for sale, with the option to purchase additional shares for underwriters to cover higher-than-expected demand. Lemonade also disclosed that certain existing shareholders would also be offering their own shares for sale, amounting to approximately 1.5 million shares.

As of June 2022, the company had close to 1.6 million customers. For the full year FY2021, gross earned premium (GEP) amounted to USD 292 million, almost double from USD 158.7 million in FY2020. Net earned premium (NEP) declined 0.4%, closing at USD 77 million. The company’s gross profit grew 26% YoY to USD 31.2 million from FY2020. The net loss ratio for the full year increased 22 basis points to 93% in FY2021.

Segment:
Automobile
Total funding:
USD 481.5 million
Competitors:
Hippo Insurance, Root Insurance, Jetty, Kin Insurance, Getsafe
Disruptor Funding History

Automobile:

Lemonade
Root Insurance
wefox
Clearcover
Branch Insurance
Zego
LeoCare
FRIDAY
Marshmallow
Buckle
Getsafe
INSHUR
By Miles
Cuvva
VOOM Insurance
Just Auto Insurance
Mile Auto
Loop
Boundless Rider
Ranger
Stable Insurance
Surround Insurance
InsureScan

Homeowners & Renters:

Lemonade
Hippo Insurance
Root Insurance
wefox
Kin Insurance
Branch Insurance
LeoCare
FRIDAY
Sure
Getsafe
Slide
Luko
Hedvig
Jetty
Hometree
Honeycomb
FloodFlash
Obie
APOLLO
CoverTree
Swyfft
Delos
Ranger
Surround Insurance

Life:

Lemonade
Ethos
YuLife
Ladder
Bestow
Foxo
Sproutt
DeadHappy
Fabric Technologies
Amplify
PolicyMe
Dayforward
Jenny Life
Bequest
Everyday Life Insurance

Incumbents


Traditional insurers are opting for a mix of in-house development and partnerships to provide novel products

Incumbents in this space mostly include traditional insurers who are increasingly moving towards developing their own digital, neo-insurance products. Partnerships with digital insurance technology (insurtech) startups are common in instances where incumbents want to leverage the former’s technologies to offer new insurance products or bolster their own offerings. Cross-industry partnerships are also ubiquitous, providing a venue for these traditional insurers to market their product, with common examples including partnerships with auto manufacturers and ridesharing companies.

Most incumbents also have their own venture capital arms and accelerator programmes which provide guidance and capital for promising insurtech startups.

Tesla is an example of a vehicle manufacturer developing its own insurance product which leverages the data from the vehicle's systems. This also provides Tesla with a feedback loop which can then be used to alter its vehicle designs to mitigate common repairs in the long term.

Reinsurance incumbents complement their reinsurance offerings by providing digital solutions to insurers, these include turnkey solutions to implement a new digital insurance product (such as usage-based insurance) or platforms for data analytics and risk management.

Automobile
Homeowners & Renters
Life
Miscellaneous
Marketplaces
Turnkey Solutions
Underwriting Support
Claims Processing
In House Development
M&A
Partnership
Investment
Munich Re
Swiss Re
Allianz
AXA
MassMutual
State Farm
USAA
Liberty Mutual
Allstate
MetLife
Mercury
Hannover Re
American Family Insurance
Progressive
LexisNexis Risk Solutions
Berkshire Hathaway (GEICO)
Cognizant
Verisk
Otonomo
Trupanion
Mitchell International
Azuga
CSAA
Tesla
General Motors
ReSource Pro
Verizon
Travelers
MoneyLion
EIS Group
Earth Networks
MAPFRE Insurance
BMW Group
AllClear
HCI Group

Notable Investors


No investor data is available

Funding data are powered by Crunchbase
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