Exclusive: Zendrive to spin out a commercial insurance startup
Zendrive, which uses smartphone sensors to measure and improve driver safety, has announced that it's spinning out a new company called Fairmatic, a commercial insurance service that taps such data to determine its pricing.
Why it matters: By relying on actual driving experience rather than more abstract underwriting methods, the company says it can save customers 10% to 20%.
Details: The formal spinout actually happened last year, but Zendrive has kept the change in stealth mode until today, when it is announcing $42 million in Series A funding for Fairmatic.
- Also, Zendrive co-founder Jonathan Matus will become Fairmatic CEO, with Zendrive's other co-founder, Pankaj Risbood, becoming that company's CEO.
- Zendrive will retain a stake in Fairmatic, which raised $42 million in Series A funding, led by Foundation Capital, with former Yahoo CEO Jerry Yang among the others investing.
- Fairmatic has recruited several insurance industry heavyweights, including former Allstate unit president Jamie Trish and Ed Ford, former chief actuary for Progressive Insurance.
How it works: Fairmatic uses smartphones or other sensors to get actual data on miles driven as well as information on safety issues, including hard braking, sharp turns and any time spent distracted looking at the phone. Prices adjust monthly based on the data.
- The company, which has grown to 70 employees from 5 a year ago, is focusing on commercial drivers that aren't long-haul truckers, an area Matus said is wide open for disruption.
Between the lines: Commercial insurance prices have been steadily rising, Matus said, with little opportunity for fleets to control their costs. With Fairmatic, Matus says companies can lower their rates by helping their riskier drivers improve (or by parting ways with drivers who remain unsafe).
- Matus said Zendrive started out working with other insurance companies, but said it often took partners two years to decide what to do and another year to actually do it.
- "We have learned that being a partner for insurance companies can be very slow and somewhat frustrating," Matus told Axios.
Editor's note: This story has been updated to clarify that it's drivers, not "customers," who may be unsafe.