John Pletz On Technology

Insurance upstart Clearcover raises $50 million

The online auto carrier is betting it can undercut the big guys. It's growing fast and plans to double tech?jobs this year.

Clearcover CEO Kyle Nakatsuji

79彩票注册网址Clearcover CEO Kyle Nakatsuji 

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Clearcover has raised another $50 million to prove it can offer car insurance cheaper than the big guys.

The Chicago-based company launched in 2016 and started selling insurance online to consumers in California in 2018. It has since expanded to four more states, including Illinois. Clearcover wants to launch in at least 10 more states this year. CEO Kyle Nakatsuji says the company tripled its number of policies last year and is on pace to reach an annual sales rate of about $70 million.

Headcount has grown to 130 from just under 50 a year ago. The company plans to hire more than 50 people this year—mostly in product, engineering and data science—and has started selling through independent agents as well other partners. “We can offer better coverage at lower prices,” Nakatsuji says.

It's making a move as large insurers have been getting more competitive on price, although Geico is raising its rates in Illinois and Allstate rates recently increased after a two-year pause. Venture-backed startups can often undercut large competitors early on but face challenges over the long haul in reaching scale quickly enough to become profitable.

“The folks gaining share in the insurance industry are the Geicos and Progressives, who are taking share from State Farm, Allstate and the legacy players,” says Michael Yang, managing partner at OMERS Ventures, the venture arm of a Canadian pension fund, which led the investment in Clearcover. “What needed to happen next was a tech-driven carrier.

79彩票注册网址"Everyone’s obsessed with the algorithm, but it’s hard to find new data sets that transform underwriting. Clearcover is using software and technology to run a leaner operation.”

With the $43 million Clearcover raised a year ago, the new investment brings its total funding to more than $100 million. In addition to OMERS, its backers include Atlanta-based Cox Enterprises, which owns AutoTrader. Other investors include Lightbank, Hyde Park Angels, American Family Ventures and IA Capital Group.

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