In an increasingly digitised world, you’d expect insurance to have become more convenient, available and effective for consumers and businesses. But the global protection gap is actually growing. In fact, at $1.5tn, it’s widened 20% in just the past five years.
It’s a startling figure and a symptom of fundamental challenges in the way insurance is sold. It reflects a market where the insurance purchase has been dislocated from the customers’ point-of-need. Consumers and businesses all want peace of mind, but no one likes spending time buying standalone insurance policies. It’s much more preferable to purchase in situ when the risk is top-of-mind — whether booking flights, renting a car, or moving home.
Digital platforms are therefore extremely well-placed to distribute insurance in sectors ranging from e-commerce, to travel, property, small business, financial services and health. In fact, for these platforms, embedding protection products can be extremely attractive not just as a new and high-margin revenue stream, but as a means of increasing conversions, basket sizes and improving customer experience and retention.
At the same time, embedding insurance products in channels has clear benefits for underwriters. Acquiring customers directly or via broker and price comparison sites is notoriously expensive — distribution represents around 50% of total industry costs. Meeting the customer instead at the point-of-need in existing channels not only decreases distribution costs, but can also provide underwriters with far richer data to improve pricing, personalise product offerings and even monitor ongoing risks.
All together, this has set the scene for an embedded insurance market that already comprises $30bn in GWP and is expected to grow by more than 6X by 2030. But, of course, embedding insurance isn’t easy. Protection offerings need to be tightly integrated into platforms’ existing product and checkout flows. Claims processes must be seamless and customer-focused. And for merchants selling internationally, it’s important to provide integrated customer experiences across multiple geographies. Legacy insurers struggle to meet all these needs with limited product and technological flexibility. So while platforms can see the value and potential of embedded insurance in growing sales, it’s been a practical challenge to implement at scale.
That’s where Cover Genius, our latest investment, comes in. They are the globally-leading embedded insurance platform: a flexible, multi-line offering with global reach that supports some of the world’s largest platforms and millions of end-customers across >60 countries and 50 US states.
I first met the team — CEO Angus McDonald, CIO Chris Bayley and CFO Gavin Dennis — back in 2019. The business was already a sizable international player and the team’s expertise in insurance and affinity with partners’ requirements was abundantly clear. But what was equally impressive was the breadth of the proposition they had built, combining a global set of licences with deep technology infrastructure. The platform is unrivalled, providing a full end-to-end service for partners that includes fully-integrated policy design, pricing, underwriting, distribution, administration, claims assessment, processing, disbursements and remediation. All this alongside advanced analytics for fraud prevention and pricing optimization, as well as their own insurance carrier.
In short, Cover Genius offers the easiest, most convenient route for embedding insurance for global platforms. One API opens up a world of additional products and geographies, providing instant reach and value-add opportunities. So it is no wonder that in the past three years, they’ve picked up some of the world’s largest and most well-recognised platforms such as Booking.com, Skyscanner, Amazon, eBay, Shopee, Flipkart, Quickbooks and OLA.
On many early-morning phone calls (thanks, London-Sydney time difference!), it’s been impressive to see the team capitalise on the opportunity in front of them. Over the past three years, the business has extended deep into the travel and mobility spaces and diversified into e-commerce, shipping, property and ticketing verticals. With 300 employees across 10 global offices, they have doubled their partner base and tripled premiums in the last twelve months reaching $1.1m in daily GWP. And they’ve achieved this all with remarkable efficiency, maintaining strong margins and limited cash burn.
So we are delighted to announce that we are leading Cover Genius’s $70m Series D round, joined by Atlas and existing investors GSquared and KingRiver. From a personal perspective, I’m looking forward to supporting Gus, Chris and Gavin and the wider team on the company’s board as they expand with existing partners, push deeper into a wide set of verticals and territories, and unlock the potential of the embedded insurance market.
Protection should be available when customers need it — at the right time and in the right context — and Cover Genius is ideally placed to offer the experience, scale and flexibility for businesses, consumers and insurers to make this the new normal. We’re excited to see it unfold.