TrustLayer, which provides insurance brokers with risk management services via a SaaS platform, has raised $6.6 million in a seed round.
Abstract Ventures led the financing, which also included participation from Propel Venture Partners, NFP Ventures, BoxGroup and Precursor Ventures. Interestingly, the startup also got some industry validation in the way of investors. Twenty of the top 100 insurance agencies in the U.S. (as well as some of their C-suite execs) put money in the round. Those agencies include Holmes Murphy, Heffernan and M3, among others.
BrokerTech Ventures (BTV), a group consisting of 13 tech-focused insurance agencies in the U.S. and 11 “top-tier” insurance companies, also invested in TrustLayer. The funding actually marked BTV’s first investment in a cohort member of its inaugural accelerator program.
TrustLayer co-founder and CEO John Fohr said the company was founded on the premise that verification of insurance and business credentials is a major pain point for millions of businesses. The process takes time and is not always trustworthy, which can lead to money lost in the long run.
To help solve the problem, San Francisco-based TrustLayer has used robotic process automation (RPA) to build out what it describes as an automated and secure way for companies to verify insurance. It sells its software-as-a-service either through insurance brokers or directly to the companies themselves.
TrustLayer says that companies that use its platform can automate the verification of insurance, licenses, and compliance documents of business partners such as vendors, subcontractors, suppliers, borrowers, tenants, ride-sharing and franchisees. (By verification of insurance, we mean confirming that a company is actually insured and not just pretending to be.)
Recent traction includes companies working in the construction, property management, sports and hospitality industries. Insurance fraud is a real and expensive concern for companies working in those spaces, according to Fohr, who noted that the seed round was “heavily oversubscribed.”
TrustLayer’s long-term goal is to work with dozens of the largest brokers and carriers in the U.S. to build out a digital, real-time proof of insurance solution for businesses of all sizes, across all industries.
“The best analogy to describe what we do is calling us the Carta for insurance,” Fohr told TechCrunch. “We’re automating a process that is hugely painful and manual to help our carrier and broker partners provide better services to their customers and help companies reduce risk and make sure their business partners have the right coverage.”
David Mort, partner at Propel Venture Partners, said that nearly every business relationship requires one or both parties to prove they have the insurance required for engagement.
TrustLayer comes in by “attacking a messy, data-rich, and unstructured problem within the insurance industry that is a major friction source for commerce.”
Mort appreciates that TrustLayer is tackling the problem not by becoming the insurance broker, but by working with the incumbents as a software solution.
Propel is no stranger to investing in fintech, having backed the likes of Coinbase, DocuSign, Guideline and Hippo. Mort acknowledges that much of the innovation in fintech has historically focused on the banking industry while the insurance industry has been slower to innovate.
“The most interesting opportunities we see are around modernizing legacy infrastructure, reducing friction, and improving the customer experience,” he told TechCrunch. “More generally, insurtech companies are well-positioned for this market environment, where recurring revenue (or policies in this case) is valued, and more people are at home shopping for digital financial services. The need for insurance is only increasing.”
Meanwhile, Ellen Willadsen, chief innovation officer at Holmes Murphy and executive sponsor of BrokerTech Ventures, noted that TrustLayer’s expanded digital proof of coverage software “is seeing high adoption” among member agencies.
TrustLayer will use its new capital to (naturally) some hiring of sales, marketing and engineering staff. It also plans to team up with The Institutes RiskStream Collaborative (considered to be one of the largest blockchain insurance consortiums in the U.S.) and insurance carriers to build out its digital proof of insurance offering.
Per a recent TechCrunch data analysis and some external data work on the insurtech venture capital market, it appears that private insurtech investment is matching the attention public investors are also giving the sector.