Open Innovation & (nearly) profitable startups.

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A short one this week.
Well, relatively speaking.

Before we dive into the news, next month Sønr is kicking off a ground-breaking study on Open Innovation, interviewing 100+ leading insurance companies worldwide.

We will be exploring the drivers behind their innovation activity, just how they’re going about it, and what they plan to achieve. And hopefully a few learnings en route.

The output will be a white paper, featuring comprehensive insights, a detailed run through the options available, and the key trends we’re seeing. It will also incorporate valuable and unique industry benchmarks for you to compare against.

If you run an innovation team for a big insurer, drop me a line.

With ITC Japan just around the corner and the fact I’m being joined up on stage by two giants of the life insurance world – Dai-ichi Life and Sumitomo Life, I thought I’d kick things off with some relevant news.

Embedded life and streamlined underwriting

In the US, Nationwide has partnered up with DigitalOwl to streamline its life underwriting process.

DigitalOwl’s AI-powered platform processes and analyses vast volumes of medical records, including both conventional and electronic health records.

The output is a beautifully organised set of critical information needed to assess an applicant’s medical history, enabling life underwriters to easily find important and meaningful data. Nice.

On the funding side of things, German life insurance startup Embea has raised  €4m round.

Founded in 2022, the startup offers critical illness insurance that pays out in the event of cancer, heart attack or stroke. What’s particularly interesting is it offers its product to consumers and partners via an embedded solution. Coverage is provided by Quantum Leben, a European insurer.

Embea will use the funding to expand its embedded life insurance platform and add new products.

Plum in India, genitals in Europe, and new CVC for APAC

A mix of interesting health updates this week.

India’s leading employee benefits and digital health and life insurtech, Plum, has shared a report card of its proprietary PolicyGPT tool launched in April 2023 and which now receives 200 queries daily.

The AI-powered bot is successfully resolving 68% of customer inquiries and empowering customer success agents to focus on personalised claims support to deliver a superior customer experience.

One more on the startup side.

The first ever reproductive insurance startup Juniper has raised £1.5m. I appreciate it’s early days for these guys but I’ve a feeling they’re going to do super well. Do check them out.

Founded just last year, Juniper is looking to address the gap in health insurance by providing comprehensive genital insurance for all genders, ensuring easy access for companies and their employees.

When focused on medium to large companies the European market presents a £30bn opportunity alone.

Unlike traditional health insurers prioritising low-frequency, high-value claims rarely used, Juniper concentrates on high-frequency claims with moderate costs, addressing an overlooked niche.

Finally, great to see Bupa Asia Pacific has announced the launch of its new Bupa Ventures Fund.

They’ve set up a $20m pot for start-ups focusing on innovative models of healthcare across a variety of areas including predictive and preventative healthcare, genomics, home care, and remote monitoring.

Great to see. Congrats Nick Stone and team.

Strong cash positions yet continued losses. For now.

I’ve had a few interesting chats with startup founders this week.

Some are staring down the barrel of a rapidly depleting cash runway and wanting out. Others thriving in the tough market and looking for continued growth. It’s crazy times out there.

Two that hit the press this week, and I thought worth sharing, are Alan and Root.

Alan, the health insurer, announced the news they’re on track to reach profitability in 2025…for France.

Despite 39% of revenue growth in 2023 compared to 2022, Alan is still losing a fair chunk of money. In 2023 alone, the company reported $63m in losses. That said, their cash position is more than €180 million with a solvency ratio now at 450%, which is well above the minimum requirement and twice the market average.

I’ve always found them a super interesting, creative and experimental (in a very good way!) business and hope they can get there.

The other I picked up on was Root.

Since closing a $300m term loan from BlackRock in the first quarter of 2022, Root has seriously cut its cash burn compared with the first year after its October 2020 IPO.

In a quote from Megan Binkley, Root’s CFO, she said Root could turn profitable “in a very short term” if it were to stop spending on marketing or trying to grow its customer base. She also said, “we don’t think that’s the right path for us”.

Instead, the company will continue to spend to add policyholders. The theory being, with improved underwriting, these policies will be more profitable and, over time, the surplus between premiums and claims will be big enough to cover fixed operating expenses.

It’s certainly an interesting time ahead.

Pricing, claims and Horizons 1-2

As many of the large incumbents pull back on horizon 3 innovation, focussing much more on evolving the business of today, we’re seeing some great innovation across the board.

A couple on the pricing front:

In Spain, MGS Seguros has partnered with Akur8 to enable its actuarial and pricing teams to build explainable pricing models and establish a predictive modelling framework for its auto and home insurance products.

And Optalitix and Quantee have announced a strategic partnership.

The collaboration aims to streamline the quoting process for insurers, making it easier and more cost-effective to access customers, especially on aggregator sites. It should work well, particularly for high-volume retail insurance products like motor, home and travel.

In the medical claims space, great to see MediConCen, a Hong Kong-based insurtech, raise a $6.85m Series A.

Founded in 208, these guys work with automated insurance claims using AI and blockchain. They work with 16 insurers and with 1m+ insured individuals, and its cashless claim platform has over 1,200 medical providers participating. Nice.

New AI risks (and another reason we should set up Sønr VC)

Last but not least, one of our Forward50 US startups, Armilla AI, has closed a $4.5m seed round.

If you’re not familiar with Armilla, they help enterprises navigate the complexities of AI adoption by providing risk assessments and mitigation solutions.

The company’s focus lies in enabling enterprises to confidently embrace AI technologies while safeguarding against potential failures and liabilities.

Do check them out.

They joined us up on stage at the ITC Vegas launch and had a tonne of interest from the room.

Right, that’s me. Done.

Do get in touch if you’d like to talk open innovation and being part of the upcoming interviews. The more the merrier.

Have a good weekend all.


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