Austin is Becoming a Hub of Innovation for the Insurance Industry

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Data analysis, machine learning and artificial intelligence are driving big changes in the insurance industry,

And Austin is emerging as a hub of innovation with several new InsureTech startups.

“First of all, the insurance industry has cash and it is a humongous market,” said Miguel Fernandez, CEO and Founder of Claimbot.

Fernandez and David Perez, CEO and Founder of Lumen Insurance Technologies are co-organizers of the Austin InsureTech Meetup group, founded in 2016, which has more than 400 members.

They meet monthly at Galvanize, where Lumen Insurance Technologies is based. And at the last meetup on August 15th about 20 people turned out to hear Craig Delaney, director of commercial growth and sales at Chisel.Ai talk about sales strategies for InsureTech startups. Delaney lives in Austin even though his company is based in Toronto.

“InsureTech plays nicely to Austin’s strengths,” Fernandez said. “Austin is more of a mature startup market.”

The city has a lot of business to business enterprise software companies, Fernandez said. The talent here is strong in that area, he said. He previously worked at Spredfast and Mass Relevance before launching Claimbot in 2016.

Claimbot’s technology is disrupting the call center industry, Fernandez said. Claimbot lets insurance companies communicate with customers through a virtual chat engine powered by artificial intelligence. The chatbot allows them to handle filing claims, requesting roadside assistance, purchasing insurance coverage or paying a bill.

Earlier this year, Fernandez raised a $615,000 seed round from Google Assistant Investments program, Notley Ventures, Social Starts and several angel investors.

In addition to the talent here, Insurance is an area that is attracting a lot of investment right now, Fernandez said.

“I think there is a pretty big reckoning that is happening soon,” said Perez with Lumen Insurance Technologies. About 25 percent of all insurance employees are over the age of 55, the average age of an agent is 55, he said.

“And 25 percent of the insurance industry’s workforce is set to retire by the end of this year,” Perez said.

Only four percent of millennials are interested in the insurance industry, Perez said. That means the industry must turn to technology to fill the worker shortage and the skills gap, he said.

“We are literally left with no choice but to create something,” Perez said.

InsureTech startups are filling those gaps in knowledge and the workforce, Perez said.

“You’re seeing a lot of offshoring. You are seeing a lot of automation,” he said.

Also, the InsureTech startups are focused on reducing friction in an industry that has been intent on asking as many questions as possible, Perez said. Instead, InsureTech startups are collecting a lot of data and analyzing it, he said.

“A lot of data can tell who you are as a person,” Perez said.

And digital natives expect to get answers immediately. They don’t like to wait for an insurance agent to get back to them in a few days with a quote, Perez said. Automated tools online are making it easier to service the digital population, he said.

InsureTech Austin Startups

AgencyKPI, founded by Bobby Billman and Trent Richmond. It develops a business intelligence platform that mines data for the insurance industry. It has raised $3 million in seed-stage funding. www.agencyKPI.com

Claimbot, founded by Miguel Fernandez in 2016, has raised a seed-stage round of funding of $615.000. Claimbot is aimed at insurance and automotive companies. Its software allows those companies to communicate with their customers through a virtual chat engine powered by artificial intelligence. The chatbot allows them to handle filing claims, requesting roadside assistance, purchasing insurance coverage or paying a bill. https://www.claimbotcx.com/

CoverDesk, founded by Andy Priesman in 2018, provides virtual professionals for insurance agencies across the U.S. www.coverdesk.com

Life by Spot, founded by Matt Randall and Maria Miller in 2017, has raised $5.85 million. It offers on the spot coverage with instant approval for life insurance through its online platform. www.lifebyspot.com/

Lumen Insurance Technologies, founded by David Perez in 2016, focuses on providing insurance policies such as directors’ and officers’ liability, general liability and commercial property insurance to Texas technology startups. www.lumeninsure.com

PerfectQuote, founded by Justin Sylvester, the Austin-based startup is changing how insurance brokers procure, analyze, and sell employee benefits insurance. Its software lets people compare hundreds of plans in seconds. perfectquote.io/

PLNAR – founded in 2012 by Andy Greff, the company provides virtual claims solutions for interior property and casualty insurance claims. It has raised $4.1 million. https://plnar.ai/

SANA Benefits, founded by Will Young and Nathan Hackley in 2017, the startup moved last year from California to Austin. It has raised $2.4 million for its health insurance platform that allows small to medium-sized business to access benefits and save money. https://welcome.sanabenefits.com/

PRMM.io, founded by Tom Coffey, the startup helps insurance companies manage the reinsurance process including submissions, actuarial, catastrophe modeling, contracts, claims, accounting, reporting and more. https://prmm.io/

MoxUnion, founded in 2019 by Jennifer Carson, is a cybersecurity insurance platform. “The Mox analytics platform helps customers and carriers model their risks and understand their options,” according to the company. www.moxunion.com/

The Zebra, founded in 2012 by Adam Lyons and Joshua Dziabiak, has raised $63 million. It is a price comparison search engine for automotive insurance. www.thezebra.com/

San Antonio InsureTech Startup

CyberFortress founded in 2018 by Huw Edwards and Michael DeFelice in San Antonio is “building a new kind of online business interruption policy designed for small business. Narrowly-focused and parametric in nature, this policy will begin paying out within 24 hours of a cyber incident – providing valuable cash-on-hand to help their customers weather the immediate storm,” according to the company. www.cyberfortress.com/

Other InsureTech Startups with Offices or Employees in Austin

Hippo, founded in 2015 by Assaf Wand and Eyal Navon, provides homeowners with insurance online. It has raised $209 million to date. It is based in Mountain View, California, but it has a large office in Austin. myhippo.com/

Bright Health, founded in 2015 by Kyle Rolfing, Robert John Sheehy, Tom Valdivia, has raised $440 million. The Minneapolis, Minn.-based startup has a large office in Austin. It offers individual and family health insurance and Medicare Advantage plans with more coverage for less money. brighthealthplan.com/

Bestow, founded in 2016 by Jonathan Abelmann and Melbourne O’Banion. The Dallas-based startup has raised $17.5 million. It provides term life insurance online quickly and affordably. https://hellobestow.com/

Chisel.Ai, founded by Ron Glozman in 2015, the startup is based in Toronto, Canada. It has created artificial intelligence solutions for commercial insurance brokers and carriers to boost sales, reduce human error and increase customer satisfaction. www.chisel.ai/

Correction: an earlier version of this story misstated the amount of money raised by Hippo.