Loop, a general-purpose agency focused on building an auto insurance model that doesn't use credit scores and zip codes, announced the close of a $ 3.25 million seed round last week.
Freestyle.VC led the funding round, with the participation of Blue Fog Capital, Fontinalis Capital Partners, Concrete Rose, Uprising Ventures and Backstage Capital.
Loop, a B-corp, uses artificial intelligence, big data and telematics in its proprietary auto insurance pricing model that measures road safety and customer driving behavior on the road. The startup executives are committed to the idea of replacing the demographic factors such as credit score and zip code traditionally used in pricing. They argue that those factors perpetuate structural bias towards vulnerable communities, while Loop's AI-based approach is praising customers more fairly.
"The technology and data to more dynamically assess risk has long been available, but insurers have been slow to adapt," said Carey Anne Nadeau, co-founder and co-CEO of Loop.
“We believe there is a great market opportunity to price people more fairly and build a community-first brand in the auto insurance world,” added John Henry, another co-founder and co-CEO.
Nadeau is an MIT-trained statistician and urban planner, former researcher at the Brookings Institution, and founder and CEO of the open data and predictive modeling company Ometry.
Previously known as ODN, Ometry was one of 10 finalists in the QBE Urban Resilience Challenge – a nationwide initiative that emphasizes innovation to strengthen resilience within urban ecosystems. (Ometry was not the winner of the competition in the end.)
Henry brings media expertise as the co-founder of the diversity-focused VC company Harlem Capital, executive producer and host of HUSTLE on VICE TV, and founder and CEO of Mobile City Services, an on-demand service suite with dry cleaning – , laundry and house cleaning.
Nadeau and Henry teamed up to launch Loop in July 2020 after the George Floyd events inspired them to take on a meaningful challenge.
As some states do away with criteria such as credit scores, Loop offers an alternative methodology that measures customer driving more directly, the company's statement said.
Loop isn't alone in looking for an alternative assessment model. Last August, Root Insurance pledged to eliminate the use of credit from the auto insurance pricing model by 2025, a move that insurtech says will help remove bias and discrimination from the process.
"Eliminating credit scores is an important and necessary step toward dismantling archaic industry practices and making auto insurance fairer," said Alex Timm, Root's co-founder and CEO at the time. “We are committed to working with our partners, regulators and industry stakeholders to make this important change, and hope that our announcement today inspires others to join us in combating discrimination, bias and systemic inequality in auto insurance. It's time to drop the score. "
Timm also said removing credit score from insurance policies is a difficult process – hence Root's five-year timeframe.
The journey to a new rating model through AI is complicated in part because AI itself has been criticized for bias, even as insurers introduce it into pricing and claims handling business.
IBM has called for rules aimed at removing bias in AI to address concerns that the technology relies on data that incorporates discriminatory practices from the past and that could harm women, minorities, the disabled, elderly Americans and others .
In a statement on Loop's seed funding, Dave Samuel, founder and managing partner at Freestyle.VC said: “Carey Anne and John are the founders of the highest decile who are seizing a unique opportunity to transform an industry that so many lives & # 39; adding that the special team & # 39; offers a very defensible approach to a valuable problem & # 39;
"The size of this market coupled with the community-first ethos has the potential to build a movement," said Harris Brody, managing partner at Blue Fog Capital, highlighting the prospect that Loop will make a difference in lives of disadvantaged people. by old car insurance models. “This founding team is proven and uniquely combines Carey Anne's deep technical and domain expertise with John's go-to market talent,” said Brody.
“Raising venture capital has now normalized, but it really is a unique and clear privilege. Not many women or colourists go on this journey, and we don't take it for granted, ”said Henry. "We are deeply committed to and driven by our mission to create fair insurance for all."
Loop's angel investors including Kristen Dickey, Steve Schlafman, Songe LaRon, Craig J. Lewis, Gerard Adams, and Joshua Dorkin also entered the seed round.
The most important insurance news, delivered to your inbox every working day.
Receive the trusted newsletter from the insurance industry