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Where large legacy insurance companies may be slow to change a playbook that has worked for decades, a new generation of insurance companies see an opportunity. What sets them apart is their focus on serving modern consumers with efficient and tech-savvy solutions, like forgoing brick-and-mortar locations and leveraging artificial intelligence claims processing.
The Covid-19 pandemic showcases this, a new era on how we play our day to day and make our decisions. Digital insurance companies were almost prepared for a moment like this since they were by design based on online contactless processes. As people looking for options to purchase insurance without leaving their homes, companies that were already completely digital were positioned to offer a faster response to this shift in consumer behavior.
With digital insurance startups drawing massive funding and rivaling legacy industry giants in Google search volume, we decided that the time was right to help you better understand this innovative and disruptive corner of the insurance industry. Here is a list of digital insurance companies that offer state-of-the-art technology to help you get the best service by just clicking a few buttons. Check them out!
The Top Digital Insurance Companies – 2020
| Primary Insurance Types | States Available (Including Washington, D.C.) | App? | Live Reps? | |
| Lemonade | Homeowners Renters Condo | 24 28 26 | Yes |
*Phone number provided is to be used only in case of emergency.
Date Accurate as of June 8, 2020
What Is Insurtech?
The insurance business is hundreds of years old, and the way large legacy insurers have operated their businesses haven’t changed all that much because, historically, those ways have proven successful. But now, new, agile startups are challenging the status quo.
Insurtech is the term given to the new wave of tech-first insurance solutions modernizing the way people buy insurance. “But insurtech doesn’t just mean offering products more quickly online. It means transforming the offerings and the customer experience,” the Insurance Information Institute explains.
Sean Harper, co-founder and CEO of Kin Insurance says that “the biggest opportunity in insurtech is to redraw everything from scratch.” Insurtechs are finding an edge through innovative business models, user-friendly technology, and specialized product offerings.
Because of their size and legacy business models, it requires immense effort for legacy insurers to make fundamental changes. These insurers have also built trust and loyalty from lifelong customers who may not necessarily be excited about sudden, sweeping changes. As a result, some legacy insurers have invested in insurtech ventures that are changing the insurance industry as we know it.
Is a Digital Insurance Company Right For You?
For an increasing number of people, it makes sense to take a look at what digital insurance companies have to offer. Insurance decisions will always be very personal, but we can help you navigate the decision of whether to choose a digital insurance company.
Digital insurers tend to have improved transparency in their pricing and can offer competitive rates compared to traditional insurers. Another plus about digital insurers is that they already had processes to do everything online, including claims. Covid-19 has forced traditional insurance companies to catch up with the tech era. Regarding how Covid-19 impacts car insurance, Jason Metz, an advisor for Forbes.com states that “many car insurance companies are limiting in-person interactions and recommend filing claims online, through their mobile apps or by calling customer service.” While this could be a new process for more traditional providers, it has been business as usual for digital insurers.
“Startup insurance companies have reduced the need for lengthy or tedious paperwork, making everything much more efficient,” says a Metromile spokesperson we reached out to.
However, this tech-first efficiency means that users lose the face-to-face service, and coverage could require access to more personal data. But as we’ve seen in the past few months with lockdowns and social distancing, online insurance services are here to stay.
Consider what you’re looking for in an insurer
A little over half of all consumers are still looking to interact with a live representative when first reporting their claim, according to the 2019 Future of Claims Study by LexisNexis.
When trying to decide if going with a digital insurance company is the right move, you should consider if you prefer to chat with a representative over the phone or in person. Or would you rather avoid having to speak to a human at all? Look for insurers that provide the service that’s most important to you.
Another thing that you should think about is that traditional insurers tend to advertise themselves as being able to insure every aspect of a person’s life. Meanwhile, insurance startups tend to focus on a niche market, which in turn allows for more personalized support and affordable rates.A new thing that would become important for people looking for insurance once these pandemic times come to an end is how their insurance companies reacted to this situation. And even how they managed to stay in tune with their customer’s needs. Startups such as Lemonade have responded quickly to help their customers stay covered. Likewise, big companies such as Allstate, Farmers, GEICO and Metlife, have taken steps to protect their customers through payment assistance programs and other initiatives.
What to Look For in a Startup Insurance Company
Understand the coverage you need
“When you purchase insurance, it is essential to take stock of your current coverage and service,” a Metromile spokesperson told us. This can help you understand the coverage you want to replace.
A digital insurer that offers an excellent DIY policy experience is great for shoppers who have a good grasp of what they’re looking for. If you’re looking for more personalized guidance, you can seek out insurers (digital or not) that provide representatives to talk to over the phone.
Get to know the insurer
Insurance startups are often too new, and hold too little market share, to be included in independent industry studies and ratings, like those by J.D. Power or AM Best. This means you’ll have to get more creative when scoping out your options.
Here are some important questions to answer during your search:
Is the company licensed in your state?
You can check with your state’s Department of Insurance to confirm that the insurer you’re interested in is legally allowed to sell insurance in your state. This is a great way to verify any insurer’s license, but it can be especially helpful when vetting a new provider. Regulators not only keep an eye on insurers’ operations, but also ensure that consumers are protected even if the company goes out of business.
Who underwrites your policy?
This information is typically listed at the bottom of the insurers’ web pages or on the “About” page.
“Say a year from now I have a claim, who actually settles it? Who’s in charge?” asks Kin Insurance co-founder and CEO Sean Harper. The answer depends on how that individual company functions.
Take the time to understand how your policy would be handled, because a third-party underwriter can help provide financial stability to an unproven insurer, but it can also mean you’d deal with a different company when filing your claim than you would when you buy your policy.
Harper describes why this matters when working with an insurtech: “It’s cool and new and modern and efficient until you hit that part of the value stack where it’s actually being done by a 100-year-old company.”
How is the insurer’s claims satisfaction?
The process of filing an insurance claim is an important factor when choosing an insurance provider. It can be difficult to judge claims satisfaction for a company that doesn’t have a long track record. When looking at online reviews, we recommend diving deeper than the overall star rating and reading individual reviews.
Pay close attention to any reviews that mention claims experience, as many reviews of a new startup may reflect the ease of buying insurance and how much money new users saved. But those savings can quickly prove counterproductive if you’re left hanging for a major claim.
Along with websites that publish user reviews like Better Business Bureau, another helpful resource is the NAIC’s Complaint Index Report. This tool allows you to search for an insurer and find out the number of complaints it received, adjusted for its market share.
Compare quotes
One of the perks of digital insurers is that they often generate fast quotes. This means you should have no problem collecting several customized quotes. Just make sure you’re comparing the same coverage levels.
And remember, while price is an important factor, the cheapest option isn’t always your best option when it comes to insurance. Weigh the service you can expect as well as the coverage available when making your decision.
Top Startup Insurance Companies
We wanted to give you more information on the companies most people are interested in, so we got our list of the top startup insurance companies by looking for digital insurers with the highest search volume for three main categories: homeowners, renters, and auto insurance. Then we did the research to find out what you should know about each.
Lemonade
- Policies offered: Homeowners, Renters, Condo
- Year founded: 2015
- Policy underwriter(s): Lemonade Insurance Company (Demotech financial strength rating: A)
- NAIC complaint index: Lower than average
- States available:
- Homeowners: AZ, CA, CO, CT, GA, IL, IN, IA, MD, MA, MI, MO, NV, NJ, NY, OH, OK, OR, PA, TN, TX, VA, Washington, D.C., and WI
- Renters: AR, AZ, CA, CO, CT, GA, IL, IN, IA, MD, MA, MI, MO, NM, NV, NJ, NY, OH, OK, OR, PA, RI, TN, TX, VA, Washington, D.C., WA and WI
- Condo: AZ, CA, CO, CT, GA, IL, IN, IA, MD, MA, MI, MO, NV, NJ, NY, OH, OK, OR, PA, RI, TN, TX, VA, Washington, D.C., WA and WI
Lemonade stands out not only for its technological innovations but for its unique business model. Lemonade dedicates a set percentage of premiums to business costs while using the rest to pay out claims and contribute to nonprofit causes, donating over $600,000 in 2019. During the current pandemic situation, they announced on their website that they will “allow customers suffering from financial hardship to defer their payments for up to 60 days while staying covered.” The company also extended its grace period to 60 days for customers who were already behind on their payments.
Lemonade’s digital-first approach to the entire insurance process, from quote to claim, is appealing to consumers looking for a fully automated experience managed through a smartphone app. But if you don’t have a smartphone, Lemonade won’t be a good fit for you.
Hippo
- Policies offered: Homeowners, Condo
- Year founded: 2015
- Policy underwriter(s): Topa Insurance Company, Spinnaker Insurance Company, Canopius US Insurance (All with an AM Best financial strength rating: A-)
- NAIC complaint index: Lower than average
- States available: AL, AZ, CA, CO, CT, GA, IL, IN, KY, MD, MN, MO, MS, NJ, NM, NV, OH, OR, PA, SC, TN, TX, UT, VA, WA, WI
Hippo uses third-party providers to underwrite its homeowners and condo policies. We like how upfront it is in explaining this partnership with consumers, reassuring prospective customers on its website that it is actively involved in your claims process, offering a “dedicated claims concierge” to help along the way.
Hippo also recently purchased Sheltr, a tech-driven home maintenance company, to provide customers with services that help prevent major issues from arising at all.
Swyfft
- Policies offered: Homeowners
- Year founded: 2014
- Policy underwriter(s): Clear Blue Insurance and others (All with at least an AM Best financial strength rating: A-)
- NAIC complaint index: N/A
- States available: AL, CA, FL, IL, MA, NJ, NV, NY, TX
Unlike traditional homeowners insurance that often involves an intensive application process, Swyfft’s website claims that its advanced data analytics technology can provide users with “a premium quote in a few seconds using just your address.”
Its homeowners policies are underwritten through third parties, but it’s hard to find information on who those underwriters are on its website, as well as information on what Swyfft handles internally and what is handled through its partners.
Kin
- Policies offered: Homeowners
- Year founded: 2016
- Policy underwriter(s): Kin Insurance (Demotech financial strength rating: A)
- NAIC complaint index: N/A
- States Available: FL, GA, TX
Specializing in providing homeowners insurance in disaster-prone areas, Kin Insurance is a full-stack insurer, meaning it doesn’t outsource functions like underwriting and claims. Its website says that Kin uses “publicly available data” to recommend coverage that Kin CEO and co-founder Sean Harper says is based on a more accurate picture of your risk.
We asked Harper if his company is working on an app, and he told us that it is not, choosing to focus instead on providing a top-notch mobile web experience and text communication.
Root
- Policies offered: Auto, Homeowners, Renters
- Year founded: 2015
- Policy underwriter(s): Root Insurance Company (Not rated)
- NAIC complaint index: About average
- States available:
- Auto: AZ, AR, CA, CO, CT, DE, GA, IL, IN, IA, KY, LA, MD, MS, MO, MT, NE, NV, NM, ND, NV, OH, OK, OR, PA, SC, TN, TX, UT, VA and WV
- Homeowners: AZ, CO, CT, DE, IO, IL, MS, NE, NV, OH, OK, OR, UT
- Renters: UT, MO, AR, OH, TN and SC
Unlike traditional auto insurance policies that rely on your driving history (and many other factors) to price your insurance premiums, Root users set their rate through a required “test drive.”During a period of typically two to three weeks, Root’s app tracks your driving habits to give you a tailored quote for coverage. You are only required to take one test drive to start your coverage, but your policy can still change in price at each renewal. Root also offers renters insurance for its car insurance customers, and recently added homeowners insurance to their offering.
Metromile
- Policies offered: Auto
- Year founded: 2011
- Policy underwriter(s): Metromile Insurance Company (Not rated)
- NAIC complaint index: Higher than average
- States available: AZ, CA, IL, NJ, OR, PA, VA, WA
Metromile is one of the only insurers currently offering pay-per-mile auto insurance policies, a product that uses miles driven as the primary risk factor. Miles are tracked by a small device that plugs into your car, and your monthly premium is determined by two components: a fixed monthly rate and a per-mile rate. Although Metromile is currently only available in eight states, it is working to expand in the future.
About the Authors
Samantha Kostaras is an insurance reporter who covers personal finance and insurance. After a degree in finance from the University of Alabama and stint at Morgan Stanley, she worked as a financial analyst before becoming a journalist. Her writing has appeared in The Simple Dollar, Reviews.com, Coverage.com, and elsewhere.
