Life insurance has had a new lease on life in the era of insuretech, and today one of the companies building a business out of rethinking everything -- from target customers through to how to provision and pay for insurance, and how much coverage to give -- is announcing some funding on the back of strong growth. Ladder, which providers flexible term life insurance policies providing coverage ranging from $100,000 to $8 million, has raised $100 million in equity funding, a Series D that values the company at $900 million.
At a time when mortality is perhaps more present than usual to the average person -- thanks, COVID-19 -- Ladder has had a really strong year, with revenues growing four-fold (exact amount undisclosed). The Palo Alto-based startup, which operates in the U.S. only, is on track to issue $30 billion in coverage by the end of this year.
(The company's valuation is also a measure of that 4x growth: PitchBook estimates that in its last fundraise, in 2020, it was valued at around $238 million.)
Thomvest Ventures and OMERS Growth Equity co-led the Series D, and the company is not disclosing who else is in the round. Previous backers include strategics like the venture arms of Allianz Life and Northwestern Mutual, along with RRE, Canaan Partners, Lightspeed and others.
A wave of startups have emerged in the last several years with a mission to rethink the insurance model. Tapping into some of the same trends we are seeing in fintech, companies are leaning on technology built by others and embedding functionality by way of APIs to provide tools to people to find and get pricing for insurance policies.
Their unique selling points become easier-to-use interfaces on the web and via apps; a wider range of options in terms of pricing and coverage; and using algorithms and other new technology to produce quotes, close deals and initiate coverage much faster.
They are also targeting new demographics -- for example Hedvig in Europe, which is focused on providing insurance services primarily to people under the age of 30. Others include the likes of Lemonade; Marshmallow in the U.K. rethinking inclusive car insurance; YuLife presenting life insurance as a gamified, wellness-focused offering; Bima targeting emerging markets; Ethos lowering the barrier to entry for getting life insurance products; and so on.
By providing flexible term policies that can be searched for and purchased online, Ladder's approach is in the same realm as many of these, with the added critical detail that it is vertically integrated, building not just user-friendly and modern interfaces and the risk-based algorithms that determine pricing, but also the underwriting, instant issue and policy administration.
As with other vertically integrated approaches, this may give Ladder more operational overhead, but also potentially provides it with significantly more control around how it designs policies, how it can implement updates and changes, and of course in the long term, the margins it makes on sales, or conversely the savings it can pass to users. Ladder today claims to provide 40% savings to users compared to others on the market.
“I know first hand how life insurance can change a life,” said Jamie Hale, CEO and co-founder at Ladder, in a statement. “With our carrier in operation and this new round of funding, we are in the position to greatly accelerate innovation in service of families and communities. I am so excited to see our original vision continue to materialize.”
“The world is only becoming more digital, not less, and the life insurance industry to-date has been slow to modernize,” said Don Butler, MD, Thomvest Ventures, in a statement. “We are excited to invest in Ladder’s vision to build the digital life insurance company of tomorrow, and their announcement today that they are the first in operation shows that they are outpacing the industry.”
“Jamie Hale and his visionary management team are building Ladder into an innovative, market-leading digital life insurance company,” added Saar Pikar, MD and fintech lead, OMERS Growth Equity. “We are very pleased to count Ladder as OMERS Growth Equity’s first direct fintech investment – as well as our entry in the insurtech space, expanding on the insurtech presence established by our OMERS Ventures colleagues. We believe that the company offers a truly transformative approach, including through its efficient adjudication of risk and enhanced user experience."