HSCM Ventures, the venture investing arm of insurance-linked securities and reinsurance specialist investment manager Hudson Structured Capital Management Ltd., has led a $4.5 million seed funding round for data-driven workers’ compensation insurtech startup Insurate.
Insurate uses proprietary data and indices it creates to help identify businesses as “safe” to aid in pricing insurance for them.
Its solutions are offered in partnership with specialist workers compensation insurers, including Key Risk (a Berkley Company), Encova, and several additional leading work comp insurers.
The idea is to both identify business risks, but also to save policyholders money by better assessing their likelihood of causing workers comp claims.
Average policy savings to date have been 24%, without applying maximum allowable credits, the company said.
“Many small industrial businesses take safety seriously, but they are penalized up to 95% in the pricing of work comp based on perceptions that their work is dangerous,” explained Joe McIlhon, CEO of Insurate. “We are bringing data intelligence to discern safe from unsafe, which we combine with human intelligence, to bring fair pricing to safety-conscious industrial companies in the $22B high risk segment of the statutory work comp market.”
The independent agent channel is seen as key to Insurate, McIlhon added, “We are building a future where there is a win-win-win relationship between the policyholder, the agent, and the insurance carrier,” he said. “We are aligning fairness, transparency, and value to create the ultimate customer acquisition and retention platform for the trusted partners of high hazard companies, the independent agents.”
“The Insurate team is reimagining a large but difficult segment of workers’ compensation using proprietary data and marketing channels,” Adrian Jones, Partner at HSCM Ventures, who joins Insurate’s Board of Directors, said. “Workers’ compensation insurance is often priced with backwards-looking experience modifiers, which are not statistically credible for companies with few employees in hazardous segments. Insurate has built partnerships with large insurers, data sources, and marketing channels to benefit businesses that take worker safety seriously.”
Hudson Structured invests across the insurance and reinsurance market spectrum, including insurtech, with direct investments into risk via insurance-linked securities (ILS) arrangements, private debt financing and also venture-style equity investments.