The ways in which we live and get around have evolved over the past few decades.
For example, sales of e-bikes are outpacing sales of electric cars in the United States, according to the latest research. Prefabricated and manufactured homes are also gaining popularity as the housing shortage continues globally.
Its popularity seems not to be a passing trend. Light Electric Vehicle Association Expect More than one million e-bikes will be sold in the United States in 2022. Research indicates that Globalism e-bike market It will rise to nearly $41 billion by 2030, a huge jump from $17.56 billion in 2021.
Meanwhile, the United States Census Bureau It is estimated in 2020 that there are currently 22 million Americans living in 6.8 million manufactured homes across the United States As of 2019, about 10% of new single-family homes (including manufactured homes) are classified as manufactured homes.
Sustainability and cost are among the main factors behind the popularity of both e-bikes and manufactured homes. It is therefore not surprising that startups have emerged to meet the unique needs of the owners of both.
Unlimited Racer It is a new insurance company established specifically to serve riders of motorcycles, e-bikes and power sports vehicles. The Boston-based startup recently closed on $4.75 million in an initial funding round led by American Family Ventures, with participation from The Cross Country Group, SiriusPoint Re and Belmont Capital. The company has also previously raised $2 million in seed funding that has not been publicly announced.
CoverTree is a two-year-old startup that came out of stealth with $8 million in seed funding that closed in May and $2 million in pre-incorporation secure collateral has been raised. AV8 Ventures and Distributed Ventures co-led the founding funding, which included participation from Detroit Venture Partners, Ludlow Ventures and Annox Capital.
While the two companies target very different products, they both have one thing in common: a local digital focus on a specific industry.
Historically, motorbike and motorsports insurance were included in traditional auto insurance as a subcategory.
“There is a vast difference between someone who drives to work or running errands and someone who drives their motorcycle, snowmobile, ATV or e-bike on the weekends,” said Boundless Rider CEO and co-founder Blair Baldwin. . “These are niche products with different behaviors that ensure their own unique customer experience, claim experience, unique product design and coverage in a way that is not included in a much larger and broader product category.”
Baldwin describes the Boundless Rider as an independent motorcycle, e-bike, and powertrain product that can be purchased directly from the company or eventually, bundled with a homeowner of another carrier or vehicle insurance product or purchased through the manufacturer at the time of purchase.
CoverTree CEO Adarsh Rachmale — who left his product management role at LinkedIn to focus on building Insurtech with Rishie Modi and Divyansh Sharma — says the company’s goal is to focus solely on residents of prefabricated or manufactured homes. He believes CoverTree’s offering represents the first time consumers have been able to purchase manufactured home insurance online.
“If it’s built in a factory — and that includes modular homes, tiny homes and ADUs,” Rachmale told TechCrunch, “we help secure it.” “And because we’re so focused, we do it better.”
In particular, Baldwin expects demand to only increase for e-bikes, which he believes “is quite a bit of a loophole in the market.”
“E-bikes can get very expensive. They are very portable and get stolen often.” “A lot of them go as fast as 28 mph or even faster and there is real liability if something goes wrong — if there is damage to the bike, if a replacement is needed, or if one of them causes an accident that hurts another person.”
This isn’t Baldwin’s first insurance technology startup. He also co-founded Quilt Company, which was acquired by a MassMutual subsidiary in 2018. The entrepreneur then went on to run MassMutual’s Product Innovation Lab before being recruited by American Family and Cross Country Group projects to help build the Boundless Rider.
There are about 7 million recreational ATVs and UTVs, some of which require insurance. There are about one and a half million snow vehicles in the country. “They now sell about 1 million units of e-bikes a year, and that’s only expected to increase,” Baldwin told TechCrunch. “So when you look at this collectively, it’s actually a universe of about 20 million passengers, all of whom are not getting market services today.”
Boundless Rider plans to use its new capital in the country’s expansion plans as well as in building its data science capabilities. It combines its primary insurance product and optional smartphone app with features that live on proprietary information technologies, according to Baldwin.
So far, CoverTree is available at Arizona, Indiana, Michigan, New Mexico, Ohio, Illinois and Tennessee. It also plans to use its new capital to expand geographically, as well as to build its technology, which includes automated underwriting and AI for classification.
Rather than working directly with consumers, Insurtech’s strategy is to build its customer base through partnerships with “key stakeholders in the manufactured home industry”.
“This helps us to ‘pre-subscribe’ potential policyholders through our pre-selection of partners,” said Rachmel. “Purchasing online also gives insurance shoppers better prices with more data based on our datasets that include, for example, aerial photographs of surfaces.”
Automated underwriting makes its offering affordable because Rachmale said its competitors are “increasing costs and errors by subscribing manually with humans.”
Eventually, CoverTree hopes to move to the Boundless Rider area.
“From an independent survey we conducted, manufactured homeowners are more likely to own things like RVs, motorcycles, ATVs, and boats than non-manufactured homeowners,” Rachmale said. “Our ultimate plan is to build an insurance technology brand around the protection of manufactured homes and ‘gaming’ or insurance technology in Central America and the outdoor lifestyle.”
Venture capital check written
Investors seem to like the niche approaches of startup companies.
Adam Blumencranz, partner at Distributed Ventures, believes the manufactured home industry will play a more important role “in the future for a larger than an already large segment of the population.”
“Reimagining home insurance for the hard-to-serve insurance sector has been a perfect wedge in the marketplace, with huge potential to expand into other risk management related products,” he wrote via email.
Amir Kabir, Partner at AV8 Ventures, said he liked it CoverTree’s ability to “build the company with limited resources and forge significant relationships with leading insurers and home-manufacturing communities.”
Kyle Petty, managing director of American Family Ventures, said his company “has seen the strength of partner-based insurance distribution many times over and I think[s] that when done well, it can provide significant advantages in terms of scale and cost.”
“We also believe that mobile technology offers real customer retention benefits, and we also had a direct role in organizing an established team of experts,” he wrote via email.
As the major insurance technology industry continues to struggle, it will be interesting to see if niche insurers like this one will succeed.
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