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Insurtech is more specialized, with products just for e-bikes and factory-built homes • Technology Flow

The ways we live and move have evolved over the past few decades.

For example, according to recent research, sales of e-bikes have surpassed sales of electric cars in the US. And prefabricated and manufactured homes are gaining popularity as housing shortages persist worldwide.

It seems their popularity is not a fleeting trend. The Light Electric Vehicle Association Estimates Research suggests that more than 1 million e-bikes will be sold in the US in 2022 the world The e-bike market will reach about $41 billion by 2030, a big increase from the value of US$ 17.56 billion in 2021.

Meanwhile, the US Census Bureau It is estimated that in 2020, 22 million Americans currently live in 6.8 million manufactured homes across the US, with nearly 10% of new single-family homes (including manufactured homes) classified as manufactured homes by 2019.

Stability and cost are major factors in the popularity of both e-bikes and manufactured homes. So it’s no surprise that startups have emerged to cater to the unique needs of employers of both.

Rider without limits A new insurance company established exclusively to cater to riders of motorcycles, e-bikes and power sport vehicles. The Boston-based startup recently closed $4.75 million in a seed funding round led by American Family Ventures in partnership with The Cross Country Group, Sirius Point and Belmont Capital. The company previously raised $2 million in pre-seed funding, which was never publicly announced.

CoverTree is a two-year-old startup emerging from stealth with $8 million in seed funding that closed in May and $2 million in previously raised “pre-seed” SAFEs. AV8 Ventures and Distributed Ventures co-led the seed financing, which also included participation from Detroit Venture Partners, Ludlow Ventures and Annax Capital.

Although the two companies target very different products, both have one thing in common: a niche, digital native focus on a specific industry.

Historically, motorcycle and power sports insurance has been considered a subcategory of traditional car insurance.

“There’s a difference between someone who drives their car to work or commute and someone who rides their motorcycle, snowmobile, ATV or e-bike on the weekends,” said Blair Baldwin, CEO and co-founder of Boundless Rider. . “These are unique products with different behaviors and they warrant their own unique customer experience, claims experience and their own unique product design and coverage wrapped into a much larger and broader product category.”

Baldwin describes Boundless Rider as a standalone motorcycle, e-bike and power sports product that can be purchased directly from the company or eventually bundled with another carrier’s homeowner or car insurance product or purchased through the manufacturer at the time of purchase.

CEO of CoverTree Adarsh ​​Rachmale — who left his product management role at LinkedIn to focus on building IncerTech with Rishi Modi and Divyansh Sharma — says the company’s goal is to focus solely on pre-fab, or manufactured home residents. He believes CoverTree’s offering represents the first time consumer-made home insurance can be purchased online.

“If it’s factory-built — and that includes modular homes, tiny homes and ADUs, we help insure it,” Rachmel told Technology Flow. “And because we’re so focused, we do it so much better.”

Growing markets

In particular, Baldwin predicts only growing demand for e-bikes, for which he believes “there’s a bit of a hole in the market.”

“E-bikes are very expensive. They are very portable and often stolen,” he said. “Many go 28 mph or more and there is real liability if something goes wrong – if a bike is damaged, or needs replacement, or creates a risk of injury to someone else.”

This isn’t Baldwin’s first insurance technology startup. He also co-founded Quilt Earned 2018 by a subsidiary of MassMutual. The founder ran the product innovation lab at MassMutual before being recruited. American Family Ventures and Cross Country Group to help build Boundless Rider.

“There are approximately 7 million recreational ATVs and UTVs, some of which require insurance. There are about one and a half million snowmobiles in the country. And they’re now selling over a million e-bike units a year and that’s expected to grow,” Baldwin told Technology Flow. “So when you look at it collectively, it’s actually a universe of about 20 million riders, all underserved in the market today.”

Boundless Rider plans to use its new capital to build its data science capabilities alongside its expansion plans in the state. According to Baldwin, it is combining its base insurance product with an optional smartphone app with proprietary telematics features.

By now, CoverTree is available Arizona, Indiana, Michigan, New Mexico, Ohio, Illinois and Tennessee. It, too, plans to expand its new capital geographically, as well as build out its technology, including automated underwriting. And AI for rating.

Rather than working directly with consumers, the insurtech’s strategy is to build its customer base through partnerships with “key manufacturing home industry stakeholders.”

“This helps us ‘pre-underwrite’ potential policyholders through our pre-selection partners,” says Rachmale. “And, buying online gives insurance shoppers a better price with more data built into our own datasets, including, for example, aerial images of rooftops.”

Automated underwriting makes its offering more affordable because its competitors “increase costs and errors by manually underwriting with humans,” Rachmel said.

Ultimately, CoverTree hopes to move into Boundless Rider’s territory.

“In an independent survey we conducted, manufactured home owners are more likely to own RVs, motorcycles, ATVs and boats than non-manufactured home owners,” Rachmale said. “Our ultimate plan is to build an insurance technology brand around manufactured homes and protecting these ‘toys,’ or insurtech for middle America and outdoor lifestyles.”

VCs writing checks

Investors like startups’ unique approaches.

Adam Blumenkranz, a partner at Distributed Ventures, believes the manufactured housing industry will play an even more critical role “in the future for an already significant portion of the population.”

“Redesigning homeowners insurance is a perfect wedge into the market for this struggling insurance segment, with huge potential to expand into other risk management-related products,” he wrote via email.

Aamir Kabir, Partner, AV8 Ventures said CoverTree’s ability to “build a company with limited resources and establish key relationships with leading insurance carriers and manufacturing home associations.”

Kyle Beatty, managing director of American Family Ventures, said his company has “seen many times and believes in the power of partnership-based insurance distribution.[s] When it’s done well, it can provide significant scale and cost benefits.”

“We believe mobile technology offers real customer retention benefits, and we have a first-hand role in managing an entrepreneurial team of experts,” he wrote via email.

As the greater insurtech industry continues to struggle, it will be interesting to see if specialty insurtechs like this one succeed.

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