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Raincoat, a startup developing scalable climate insurance solutions that enable instantly processed individual claims, announced the closing of an additional $6.5 million seed round bringing its total raised to date to $11 million.
The funding round was led by TwoSigma Ventures, along with European-based VC firm Mundi Ventures, Revolution’s Rise of the Rest Seed Fund and EleFund.
This round of capital will support the company’s expansion to new markets to provide Federal Emergency Management Agency (FEMA)-like services — much faster than existing emergency solutions — after disasters such as hurricanes and earthquakes in the Caribbean, Mexico and the Gulf Coast, wildfires in the west, and threats such as flood, drought and excessive rain in Colombia and Brazil.
This funding will continue to accelerate innovation in an industry eager for new solutions and to protect more than 3 billion people and 120 million businesses at risk of being affected by natural disasters, Raincoat said.
In less than a year, Raincoat has provided disaster relief protection to thousands of individuals and families with successfully executed payments in all their active markets.
“Raincoat is positioned as the fastest growing insurtech startup aimed at reinventing the industry by enabling immediate payments following climate disasters and offering coverage for losses that traditional insurance companies typically exclude,” officials said.
Raincoat’s embedded parametric insurance model enables distribution channels to offer protection against the occurrence of a specific event given fixed parameters, such as the magnitude of the event, instead of the magnitude of losses incurred.
Raincoat works with financial institutions, governments and insurers to deploy automated, end-to-end products for protecting individuals and small businesses affected by these natural disasters.
Last week, Popular Insurance announced that it teamed up with Raincoat to launch a hurricane parametric microinsurance policy designed to help customers respond more effectively to emergencies following such weather events.
The insurance product allows customers, depending on the coverage selected, to receive up to $3,000 in cash after a measurable event, in this case, hurricane winds, the bank stated.
The latest data reports that the total losses from natural catastrophes, including those not covered by insurance, were $270 billion in 2022. That is down from around $320 billion in 2021 and near the average of the previous five years.
“We look forward to pushing the limits of what’s possible and bringing our technology to more communities thanks to this new round of capital. Insurance should be there to protect you – and the expectation of payment after a catastrophe should not create anxiety – but rather bring ease,” said Jonathan González, Raincoat CEO and co-founder.
“We are innovating today for the current and future generations and look forward to working with more local and international players to make this happen,” he added.
Raincoat was founded in response to the aftermath of Hurricane María, which struck Puerto Rico in 2017, and destroyed thousands of homes and businesses and left millions without power and water for months.
Residents, including families of the co-founders, waited on a slow and bureaucratic claim process only to be rejected months after submitting it. Three years later, Puerto Rico alone has $1.6 billion in outstanding insurance claims that remain unpaid, the company said.
“Climate disaster is now happening with more frequency and intensity than ever before, and the insurance industry at present, based on manual claim adjustments that take months or even years to process, just cannot scale to match the growing risk. The world needs innovative, scalable data-driven solutions like Raincoat to make businesses and families more resilient,” said Colin Beirne, partner at Two Sigma Ventures.
“Investing in Raincoat represents a strategic opportunity to tap into the transformative potential of parametric insurance. Raincoat’s strong suit positions them as a prominent player in the industry. Their offering of fully automated solutions to address climate risks at-scale sets them apart in this space,” said Moisés Sánchez, general partner at Mundi Ventures.
In August 2022, Raincoat announced it had raised a $4.5 million seed round, led by insurance technology investor Anthemis and investment group SoftBank.
As originally reported by: News is My Business
