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Exclusive: Embedded insurance company Cover Genius nabs $80M

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May 15, 2024
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Illustration: Shoshana Gordon/Axios

Cover Genius, which embeds insurance into businesses, has raised an $80 million Series E led by Spark Capital, Axios has learned exclusively.

Why it matters: The raise comes as the expansion of e-commerce and the sharing economy have created a need for new kinds of insurance products.

How it works: Cover Genius works with companies to create customized insurance products for their respective customer bases.

  • For example, it has helped create extended warranty programs and shipping protection for retailers, as well as trip insurance for travel booking services.
  • Customers include Uber, Wayfair and Amazon.
  • Founded in 2014, Cover Genius came up with the idea of income insurance for Uber's Brazilian drivers in case of injury, pitching the idea of underwriting using ride-completion history to carriers.
  • After additional diligence and back-and-forth exchanges about the plan, a carrier then underwrites the policy.

Follow the money: The round brings its total funding to $245 million, with Dawn Capital, King River Capital and G Squared also participating.

What they're saying: "Companies across verticals are looking for ways to gain more insights and serve their customers," says Spark Capital's James Kuklinski, who is joining the board. "They're also looking to get high margin ancillary revenue streams that are accretive to both the customer experience and their bottom line."

  • Case in point: Live Nation, the company behind Ticketmaster, has been expanding its revenue streams beyond ticketing.
  • "Ticketmaster's primary job is selling the ticket. The second is: How does it use its platform to make money in ways that aren't tied to the specific service fee?" Live Nation CFO Joe Berchtold said at the company's 2023 Investor's Day, pointing to insurance as an example.

By the numbers: Cover Genius has been diversifying since its start in the travel insurance market.

  • About 25% of its revenue comes from what it dubs "mobility" — the car rental, RV sharing and ride hailing. Travel makes up another 25%, live events are about 15%, and e-commerce is about about 15% to 20% of its revenue, says CEO Angus McDonald.
  • Cover Genius earns revenue whenever a consumer buys its products. It then pays the company — whether it be Amazon or Uber — a portion of that.
  • About $500 million in gross-written premiums has passed thorough its system in the last 12 months, with revenue growing 107% in the same period.

What we're watching: A source familiar with the company says sovereign wealth fund Mubadala is also in talks to potentially invest $50 million in the company as part of this round.

Mubadala did not respond to a request for comment.

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