Ethos is betting on predictive analytics and big data to shake up the legacy life insurance industry.
And investors are lining up.
On Tuesday, the insurtech startup announced it had raised $60 million in its Series C funding round led by Google Ventures, Goldman Sachs, and Sequoia Capital. That brings the total funding to date to more than $100 million.
Speaking to Yahoo Finance’s The Ticker, CEO and Co-Founder Peter Colis said the company would use the fresh funding to expand its team and build on its momentum.
“We think of Ethos as what Northwestern Mutual has done for the past 100 years, Ethos is going to do for the next 150 years, protecting generations and generations of families to come,” Colis said.
Founded in 2016, Ethos has utilized artificial intelligence technology to overhaul the life insurance model, built by established players like AIG (AIG) and Mass Mutual Financial. Colis says the insurance application process takes on average 15 weeks, in part because of required medical exams and lengthy paperwork.
Ethos uses big data and predictive analytics to determine an individual’s life expectancy and streamline the process. Colis says that allows Ethos to issue insurance on the spot, improving access in the process.
“Ethos lets you buy it while you’re in line at Starbucks. It’s a 10 minute application and you’re done,” Colis said. “It’s an underpenetrated product that should be a household financial product.”
Colis says costs associated with the application process have only added to the coverage gap. While 70% of Americans consider life insurance a necessity, 41% have no coverage, according to industry figures.
“It’s a structural issue where you have commissioned sales agents who are incentivized to sell you the largest most expensive policy to the family that can afford that expensive policy. So they’ll usually try to sell you an investment feature policy that isn’t necessarily right given your need, your ability to pay,” Colis said.
Ethos’s coverage is limited to term life insurance right now, which covers individuals for a set time period instead of their entire life. Its revenue has quadrupled since October 2018, according to a company statement.
The San Francisco-based firm is one of a handful of startups that are using technology to shake up the insurance space globally. Last year alone, VCs poured more than $3 billion into insurtech companies, according to data compiled by the Fintech Global Database.
Akiko Fujita is an anchor and reporter for Yahoo Finance. Follow her on Twitter at @AkikoFujita
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