As baby boomers retire and millennials flock to cities, two insurance giants are making a bet on people driving a lot less.
Tokio Marine Holdings Inc. and Intact Financial Corp. are leading a $90 million investment in Metromile Inc., the San Francisco-based startup plans to announce on Tuesday. Metromile, which offers pay-by-the-mile auto insurance targeted at infrequent drivers, currently operates in California, New Jersey and six other states, with aspirations to go nationwide.
“Initially, our average customer was an urban driver that typically drives less,” said Dan Preston, Metromile’s chief executive officer. “We’ve found over time that while that’s true, there are a number of customers that live in suburban and rural areas that don’t drive that much.”
Metromile started out as an insurance broker but now handles claims itself. Most claims are approved instantly, Preston said. The service is most useful for drivers averaging less than 12,000 miles a year, he said.
Insurance startups have lost some luster among venture capitalists recently. Global VC funding in the sector declined 29 percent last quarter from the previous one, to $468 million, according to research firm CB Insights.
The new $90 million deal for Metromile is the same size as its last stock sale in 2016. Existing backers Index Ventures and New Enterprise Associates participated in the funding. Preston said the company’s valuation increased but declined to disclose details.
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