The never-ending innovations in the world of technology have transformed traditional businesses. The business startups, which are at the centre of this revolution, attract the attention of big investors. However, the long-term value of any business startup depends on how its technology simplifies the traditional business process.
The tech companies which provide insurance products on the rails of modern technology are referred to as InsurTech. Ethos, an American business startup, is an InsurTech that provides Life Insurance services.
Ethos’ Business Model
Ethos is an online platform. New users are required to create an online user account. After verifying the email address, the portal asks simple questions regarding applicants’ health. The proprietary “data science and predictive analytics” technology is used to determine an individual’s life expectancy. The portal displays insurance plans based on the result of the computer algorithms.
The displayed insurance plans show tenure, coverage and premium. The user has to choose from those plans. The selection directs the user to the section where the user is required to enter both the basic and advanced information for application processing.
Basic information includes name, date of birth, address, contact information, beneficiary name, social security number, etc. The advanced information includes financial details, credit score ratings, etc.
The application process can be completed in 5 to 10 minutes. The company says it primarily targets this (life insurance) model at people who are in the “prime” of their life, who are less likely to think about applying for life insurance. In most cases, the applications are instantly approved, and the applicant gets immediate insurance coverage.
Ethos claims 99 percent of its customers don’t require a medical exam or blood test to get a policy. However, for insurance coverage above US $1 Million medical exam is compulsory.
Since Ethos is an InsurTech, therefore, it only covers the technical aspect of the insurance business. The insurance policies are underwritten by Assurity Life Insurance Company, USA.
Ethos’ Applicant Eligibility
- Applicant must be 18-75 years old
- Applicant must be a U.S. citizen or green card holder
- Applicant must have lived in the U.S. for at least 24 months
Ethos is headquartered in San Francisco, USA and is licensed to operate in 49 states of the USA. Ethos does not provide coverage in New York State. Therefore, the applicant must live in a state where Ethos has a license to operate.
Following investment firms/companies and family funds have invested in Ethos:
- GV (Venture Capital arm of Alphabet Inc.)
- Stanford University
- Downey Ventures (Robert Downey Junior)
- Durant Company (Kevin Durant)
- Smith Family Circle (Will Smith)
CNBC (30 October 2018) reports:
“Ethos, a start-up that says it can process life insurance applications in a matter of minutes, has raised $35 million in a funding round led by Accel and backed by Google’s venture capital arm.
The latest investment raises the San Francisco-based company’s total funding to over $46 million, and CNBC understands the firm is now valued at more than $100 million”.
Commenting on this investment, Nate Niparko, Partner at Accel said:
“The insurance sector is a $1 trillion industry that is still largely dependent on pen and paper, pushy salespeople, doctor office visits, and legacy systems, which is why we believe there is a tremendous opportunity to simplify the process through technology — and that’s exactly what Ethos has built”.
Nate Niparko will join the firm’s board of directors, while Google Ventures General Partner Tyson Clark will act as an advisor to the board.
“Ethos said it saw ‘robust growth’ this year, with a more than 400 percent jump in revenue, customers and applications in the last four months alone”.
Ethos, InsurTech and the Insurance Industry
Insurance is categorised as non-banking financial service. Insurance companies welcome and adopt technology faster than banks. Many traditional insurance companies have partnered with InsurTech companies. Some of them even have bought InsurTech companies.
So far Ethos has raised more than US $46 Million from its investors. CNBC analysts value the company at over US $100 Million.
The management team of Ethos comprises young and talented individuals. Peter Colis, the CEO of Ethos is an MBA from Stanford University. He is also the Co-founder of Ethos. Before Co-founding Ethos, Peter Co-founded Ovid Corp, an online life insurance exchange.
The future is bright for Ethos. If it stays laser-focused on keeping its tech algorithms fine-tuned for handling business at a large scale it has potential to join the Billion dollar club.