Cytora, a London-based insurtech, has secured £25m in Series B funding round, led by EQT Ventures, with participation from Parkwalk, Cambridge Innovation Capital and other investors.
Image: Cytora receives £25m series B funding. Photo: Courtesy of IndypendenZ/FreeDigitalPhotos.net.
Founded in 2014, Cytora was a spin-out of the University of Cambridge. The fintech offers artificial intelligence-powered (AI-powered) solution for commercial insurance underwriting.
Cytora launched its first product in 2016 to several large insurance customers with the aim of applying AI to commercial insurance supported by various public and proprietary data. This includes property construction features, company financials and local weather, combined with an insurance company’s own internal risk data.
The solution developed by Cytora is claimed to enhance risk selection, while improving premium adequacy.
Driven by data, the solution uses thousands of external data points to improve risk selection and pricing. It is claimed to increase underwriting decisions with 70+ additional rating factors.
The insurer can adjust underwriting rules to optimize conversion across target segments. The APIs developed by Cytora define and update custom rating logic and underwriting rules as needed and can enforce trade sector blacklists and whitelists.
Cytora CEO Richard Hartley said: “Commercial insurance underwriting is inaccurate and inefficient. It’s inaccurate because underwriting decisions are made using sparse and outdated information. It’s inefficient because the underwriting process is so manual.
“Unlike buying car or travel insurance, which can be purchased in minutes, buying business insurance can take up to seven days. This means operating costs for insurers are extremely high and customer experience isn’t good leading to a lack of trust.”
Hartley stated that for every £1 of premium paid by businesses to insurers, only 60 pence is set aside to pay total claims. The other 40 pence is claimed to ‘evaporate’ as ‘frictional cost of delivering insurance.’
Cytora claimed that, with AI, it can distill the seven-day underwriting process down to 30 seconds via its API, enabling insurers to underwrite programmatically and build workflows where faster and more accurate decisions are provided.
In January, Cytora’s technology was adopted by QBE to enhance its underwriting decisions across its commercial portfolio. The AI-powered technology can learn patterns from good and bad risks over time and comes up with comprehensive risk profile and score for each business.