Last week, Columbus, Ohio car insurance provider Root Insurance became the latest startup to hit a $1 billion valuation — still a rare feat for any startup, and even rarer for those outside of Silicon Valley.
Root’s rapid ascent — it took the company just three years to reach unicorn status — is also indicative of the potential in the Midwest for one promising industry: insurance tech.
Some insurance tech startups underwrite claims and serve as an insurance broker themselves. Others sell data to insurance companies. Regardless, they are using advanced technology, from artificial intelligence to sensor data, to improve some part of the insurance process.
Home to some of the largest insurance companies in the U.S., such as Berkshire Hathaway (Omaha), Nationwide (Columbus), Northwestern Mutual (Milwaukee), State Farm (Illinois) and American Family Insurance (Madison), the Midwest has cultivated plenty of domain experts who understand which legacy insurance processes are ripe for disruption. Root Insurance CEO Alex Timm was formerly a consultant for Nationwide, and Kyle Nakatsuji, the CEO of Clearcover, another venture-backed car insurance startup in the Midwest, used to be a VC with American Family Insurance.
When it comes to hubs for insurance tech startups in the Midwest, Chicago naturally seems to have the most startups tackling insurance. This guest post from last year details a handful of promising insurance tech startups in Chicago, such as Snapsheet and DataCubes, which sell their offerings to insurance companies, and Clearcover and Kin, which act as insurance brokers.
Columbus is also making waves in insurance tech with fast-growing startups that are attracting above-average interest from coastal VCs — both with Root Insurance and Beam Dental, which recently raised a $22 million round led by Kleiner Perkins.
In Madison, Understory is using a mix of hardware and data analytics to aid the insurance industry — the company installs sensors to predict when hail, tornadoes, and other extreme weather will damage a town, so that insurance companies can have a better idea of how many claims adjusters they’ll need to send. The company has raised $9.5 million total in VC funding.
None of this accounts for the activity insurance firms themselves have undertaken to fund or create their own quasi-startups, like Northwestern Mutual, which has created a few of its own VC funds to invest in insurance tech startups (including a new fund detailed in this week’s “From the Heartland Tech channel” section).
Are there any other promising insurance tech startups in the Midwest that I’m missing? If so, send me an email.
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Heartland Tech Reporter
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From the Heartland Tech channel
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