This morning Beam, an insurtech startup that provides dental coverage to corporate employees, announced that it has closed an $80 million Series E. Mercato-affiliated Traverse led the investment, with Nationwide insurance joining the deal. Both are new investors in Beam. Prior investors Drive Capital and Georgian Partners also put capital into the funding event.

The investment comes after rapid growth at the company, a common theme amongst neo-insurance providers. The startup cohort often leans on digital information collection to better information on consumer behavior. The information allows companies like Beam, and auto-insurers incent behaviors that lower costs like brushing, or safe driving, while having more information to inform their risk underwriting activities.

Once the neo-insurers have enough data to prove their underwriting models, they can rapidly scale their businesses, something investors covet.

Beam CEO Alex Frommeyer said in an interview that the dental insurance business, which lacks the occasional catastrophic impact of a home insurer having to cover the cost of a house, for example, is an attractive slice of the coverage market. Per Frommeyer, his company has “sub-70s” loss ratios, meaning that it spends less than $0.70 per dollar of premium it receives on paying claims.

We lack specifics on its combined loss ratio and loss adjustment expenses, but the loss ratio itself points to enough margin in Beam’s core insurance product to possible create an attractive business; some neo-insurnace providers that have been well received by investors are struggling to get their numbers to even similar levels of (Read more...)