2 minute read
Insurance: Heartcore Consumer Technology Trends 2021
Investors have woken up to the massive opportunity in insurance...
Consumer neo-insurance companies are trading at astonishing multiples on the public market. 2020 was also a record year in terms of funding on the private markets.
Advertisement
EV/Sales multiple (x, NTM)
Lemonade 84.5x | Shopify 39.7x | Zoom 32.7x| Airbnb 26.8x | Doordash 18.4x | Tesla 18.1x | Peloton 10.6x
...for good reasons!
Insurance is a fantastic category. An enormous market that is yet to move online, with notoriously low consumer satisfaction. A business model built around recurring revenues and high retention.
$2,800B
Market in EU/UK +US (Life & Non Life)
<10%
Online penetration in Europe
-11
Industry NPS in Europe (second worst category before car rentals..)
Recurring revenues
80%
Avg. yearly premium retention
Some companies tried to rethink insurance from the ground up...
Most radical attempts at innovating on the insurance model proved unsuccesful so far, with companies pivoting or shutting down.
PIVOT
Raised seed round from Sequoia in 2015 and launched on the vision of disrupting insurance though a P2P model. Blocked by regulators and forced to pivot to a traditional model.
PIVOT
Launched in the UK in 2011 on the vision of bringing “group buying” to insurance i.e. allowing members to get better prices on many products through buying in bulk. Later pivoted to become a traditional pet insurer.
CLOSED
Launched in the UK in 2013 with the vision of disrupting car insurance through a P2P model. Shut down in 2018.
PIVOT
Pioneered P2P insurance in Berlin in 2010, raised > $15M on this vision. Later pivoted.
The immediate opportunity is to bring consumers online and improve their experience.
Insurance feels like where banking was ~ 3 years ago.
Banking
Chime | 2013 | ~10M Customers
Revolut | 2015 | ~15M Customers
N26 | 2013 | ~7M Customers
Insurance
Lemonade | 2015 | ~1M Customers
Root | 2015 | 300K Customers
Wefox | 2015 | ~350K Customers
Monoliners vs bundlers?
There seem to be two schools of thought within new insurance companies: focusing on one vertical only and extending into non-insurance adjacent services or building a pure insurance play across all the needs of consumers.
We believe both models will produce very large outcomes.
Monoliners
• Monoline = Health
• Expanding within Health into doctors appointment or video consultation
• Monoline = Home
• Expanding within Home into repairs & maintenance
Bundlers
• Started in Home
• Expanded into Pets
Heartcore Porfolio
•Started in Home
• Expanded into Cars, Pets, Smartphones, Health
#embedded Insurance
In categories like electronics or home rentals, there's a growing trend towards seamlessly embedding insurance into the POS of other merchants-- just like Klarna or Affirm embedded financing. Some of our portfolio companies such as GetYourGuide and TravelPerk in travel, or Finn in automotive makes insurance disappear inside the core product/service brought by consumers.
