Startup Raises $12.2M To Disrupt Commercial Insurance

In the great race(s) that dominates FinTech, the key word is disruption.

Disruption of the status quo, the way funds flow and even the people to whom the funds flow. Disruption needs investment, of course. In one quite recent example of investment — as recent an announcement as this morning — Embroker, the cloud-based risk and insurance management firm, has raised $12.2 million from a series of investors.

The roster this time around, in the second round of financing logged by the company, was led by Canaan Partners, with participation from Nyca Partners and XL Innovate, and a debt facility provided by Silicon Valley Bank. Also seen from the previous round were prior investors, including Bee Partners, Vertical Venture Partners, FinTech Collective and 500 Startups.

The $12.2 million just raised adds onto the $2.2 million brought in during the first round.

In an interview with MPD’s Karen Webster, Founder and Chief Executive Officer Matt Miller stated that the focus of his company is to provide transparency to the insurance industry, among the oldest business endeavors around. The traditional business model, which extends to all but the largest companies, is one where brokers and paperwork can vie to take time away from crucial business operations and where manual processes abound. As noted by Embroker, smaller firms tend to have as many as half a dozen separate insurance policies in place, with up to a million dollars in premiums paid out annually.

“Small and medium businesses tend to get lumped together,” Miller said in the interview, conducted before news broke about the firm’s latest funding round. “But there can be a huge range of businesses — for example, a consultant working at home or someone who runs 20 restaurants … We are building for companies that have real insurance needs but also have needs for multiple policies and a need for risk management. Perhaps they work with a big broker, but they may not be working with top tier there.” With the movement to cloud-based software, such as that offered by Embroker, “technology helps to keep the cost down and to keep from having to bring in a team of six people who then do all the work.”

Miller said that Embroker helps client firms upload policies to compare and contrast beyond pricing and make decisions based more closely on coverage (and non-coverage) tied to those prices. Beyond that, said Miller, initial industries targeted by the firm (launched in 2015) — which gets paid on commission, by carriers, and now with an installed base of 100 clients — include restaurants and real estate.

Data and predictive analytics can help businesses choose among coverage options that may be more suited to that firm’s needs than others. When asked by Webster how insurance companies might view such comparative analytics, he stated that they “are not afraid of transparency but rather of false equivalence. Companies feel good about knowing and having more data about their customers.”

Embroker acquires its customers thru a variety of direct marketing efforts, which to date, have been largely word of mouth. Miller said that an alternative business model that extends its platform to existing brokers to make their work with clients more efficient was considered and may be revisited as the company scales.