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Austin insurance tech startup Loop raises funding, gets set to launch

Austin American-Statesman logo Austin American-Statesman 1/21/2021 Kara Carlson, Austin American-Statesman

Austin-based Loop, a usage-based insurance technology startup, has raised $3.25 million and says it is close to launching its platform in Texas. 

The funding round was led by Freestyle VC, with participation from Blue Fog Capital, Fontinalis Capital Partners, Concrete Rose, Uprising Ventures, Backstage Capital and a number of angel investors. 

Entrepreneurs John Henry and Carey Anne Nadeau started Loop in July.  The pair, who are from New York and Washington, D.C., respectively, are moving the company in Austin as it emerges from stealth mode. 

Henry said the startup is focused on offering more equitable insurance options by basing rates on what the founders consider more fair metrics than traditional insurance providers. The company uses artificial intelligence, accident data and driver location data to determine insurance pricing individualized to the driver through its mobile platform.  

The company is gearing up to launch in Texas as its first market. Henry said the state not only has diverse communities but is also one of the country's biggest auto insurance markets. 

"We're looking to build an insurance product that resonates with diverse communities. And we believe that there's an abundance of that in Texas," Henry said.

Henry said current insurance providers rely heavily on data points like ZIPS codes, credit score, income, marital status and age, which he said are less relevant methods to measuring risk.  Loop will primarily focus on metrics including the state of roads and driver behavior, he said.

"When you get insured by us, you exchange your location data with us and we get to develop an understanding about how you drive. We believe that that's the most important thing to measure," Henry said. "We measure what matters, so that you don't get penalized for things that you have no control over." 

Users download the Loop app to find a quote based on their location, determined by a dataset that pools complex information from over 100 million car crashes. It creates a personalized quote based on location, traffic volume, infrastructure and weather data to set and adjust rates. 

The company started as just the dataset, with information spanning 27 states that measures anything that could influence a car crash, to develop a robust understanding of how car crashes happen, from weather to traffic volume to road infrastructure. 

At first, the founders looked to simply sell the datasets to local municipalities, which Henry said are slow-moving, or the car insurance industry, which he said has no incentive to change. Along the way, Henry said they also began to discover just how structurally biased the current insurance industry is. 

"That (business to business) model was effectively trying to steer the Titanic with an oar," Henry said. "We felt like we could package the technology, bring it direct to consumer, and realize our vision for a much more equitably priced insurance product and service the customer ourselves."

Henry said Loop's goal is to reshape the insurance industry.

"We believe that there's a lot of newer or more relevant methods to measure risk, rather than proxy for risk by measuring who you are," Henry said. "We believe that we can measure the risk directly." 

The funding round is primarily going to building the employee team and to data science infrastructure for the platform.  The company will also be opening an office and content studio, with plans to staff up its team with tech, customer service, data science and media positions. The company currently employs about 10 people. 

Henry said as geographical proximity matters less, the company wanted to choose a place with a better quality of life and a growing technology hub. The company is also looking to take advantage of the local talent pool. 

"It ends up being an excellent source of talent for us, of just young, energetic people," Henry said. "We benefit from Facebook and Oracle and some of the other giants being nearby. I think together we can contribute to the tech ecosystem of Austin." 

This article originally appeared on Austin American-Statesman: Austin insurance tech startup Loop raises funding, gets set to launch

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