#302
Assurance
Published:
Sep 07, 2019
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In the past few years, several high-flying consumer insurance startups have achieved multi-billion-dollar valuations. However, these companies have had to raise exorbitant amounts of capital to get there.
Oscar (valued at nearly $4b), has raised $1.3b in the process. Lemonade (valued at $2.1b) has raised about $480m. Unicorns Clover Health and Hippo have raised $925m and $209m respectively.
This week we learned that a three-year-old startup called Assurance IQ successfully broke the mold. The company reached an agreement with Prudential to be acquired for $2.35b, with an earnout that could bring the total to $3.5b.
There is no record of Assurance having raised any venture capital – and the press release notes that Assurance IQ is profitable.
Why is it surprising that a D2C insuretech could be so capital efficient? Customer acquisition for insurance is highly competitive and expensive, with Geico alone having spent $1.4b on advertising in 2017. Insurance products also have little virality, so insurance companies have to pay for most of their customers. Additionally, customer engagement is often low, and there are few times in life when insurance is top of mind.
These dynamics make the Assurance IQ story remarkable. While the “secret sauce” remains a secret, the company has clearly succeeded with a combination of elegant user experience and data science to funnel insurance seekers into attractive products.
So to the Assurance IQ team – we salute you!
Portfolio News
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Assurance
Prudential to Pay $2.35 Billion for Online Startup Assurance IQ - Assurance IQ is being acquired for $2.35b upfront, with an earnout that could bring the total purchase price to $3.5b. In contrast to other high-flying direct to consumer insuretech startups, there is no record of Assurance having raised venture capital. Read more
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